Changed CAMS Exam Questions

A low number of sanctions screening alerts relative to the size and scope of operations may indicate overly restrictive or inappropriate monitoring parameters. Revisiting and adjusting the post-transaction monitoring system parameters and thresholds ensures that the system is calibrated to detect potential sanctions breaches effectively.

Independent testing is critical for the third line of defense to provide unbiased and effective oversight, ensuring that reviews and audits are objective and free from influence by the first or second lines of defense.

The risk-based approach (RBA) is a foundational principle of FATF standards. It requires countries, regulators, and financial institutions to identify, assess, and understand their money laundering and terrorist financing risks.

Once risks are understood, entities must apply proportionate mitigation measures. Higher risks require stronger controls, while lower risks may justify simplified measures. However, no risk is ignored or exempted from mitigation.

Regulators do not expect all residual risks to be reduced to low; rather, risks must be managed within an acceptable risk appetite. Resource allocation under an RBA prioritizes AML/CFT activities, not unrelated tasks.

Therefore, the correct definition of an RBA focuses on understanding and managing risk proportionately.