Exactprep CAMS Questions

According to the Financial Action Task Force (FATF) 40 Recommendations, countries should implement measures to prevent the abuse of non-profit organizations (NPOs) for the financing of terrorism. One of these measures is to ensure that NPOs cannot be used to conceal or obscure the diversion of funds intended for legitimate purposes to terrorists’ organizations. This means that countries should have effective mechanisms to monitor and supervise NPOs, especially those that are at risk of terrorist financing abuse, and to take appropriate actions against NPOs that are involved in such activities. Countries should also ensure that NPOs maintain adequate records of their activities and transactions, and that these records are accessible to competent authorities. Furthermore, countries should promote transparency and accountability in the NPO sector, and encourage NPOs to conduct due diligence on their donors, beneficiaries, and associates.

References: =

FATF 40 Recommendations, Recommendation 8 and Interpretive Note to Recommendation 8

Best Practices on Combating the Abuse of Non-Profit Organisations, FATF, June 2015

COMBATING THE ABUSE OF NON-PROFIT ORGANISATIONS (RECOMMENDATION 8), FATF, June 2015

 The correct answer is B, as a customer acceptance policy is an essential element of KYC standards according to the Basel Committee’s Customer Due Diligence for Banks paper1. A customer acceptance policy defines the types of customers that the bank is willing to accept, and the conditions and limitations that apply to such relationships. A customer acceptance policy helps the bank to avoid customers who are likely to pose a higher than average risk of money laundering or terrorist financing, or who are not willing to provide sufficient information for identification and verification purposes1.

References: 1: Customer due diligence for banks - Bank for International Settlements, page 9.

The junior account manager should file a suspicious transaction report (STR) with the Financial Intelligence Unit (FIU) of Country A, as he has reasonable grounds to suspect that the customer is involved in money laundering or terrorist financing. The customer’s attempt to deposit a large sum of cash, followed by a series of smaller wire transfers from a high-risk jurisdiction, indicates a possible case of structuring or smurfing, which are techniques used by criminals to avoid detection and reporting thresholds. The junior account manager should not close the account, as this could alert the customer and disrupt the investigation by the FIU or law enforcement. The junior account manager should also not notify the anti-money laundering specialist of his bank, as this could create a conflict of interest or breach of confidentiality, unless the bank’s policy requires such notification. The junior account manager should also not offer the customer a more secure method of depositing, as this could be seen as facilitating or condoning the customer’s illicit activities, or exposing the bank to legal or reputational risks.

References:

CAMS Study Guide, pages 97-98, 103-104, 107-108.

CAMS Exam Questions and Free Practice Test, Question 272.

This is when a customer or a transaction does not provide sufficient or credible information about their identity, source of funds, business activity, or purpose of the transaction. Lack of transparency can indicate that the customer or the transaction is trying to conceal the origin, ownership, or destination of illicit funds, or to evade regulatory scrutiny or reporting obligations. Lack of transparency is a common risk factor for money laundering and terrorist financing, especially in high-risk jurisdictions or sectors.

The other options are not necessarily red flags, although they may increase the risk or require further due diligence depending on the circumstances and the risk profile of the customers and countries involved. Option A describes a referral by a longtime friend of the dealer, which may be a legitimate source of trust or business relationship, but it does not substitute the need for proper customer identification and verification. Option B describes the location of the precious metals dealer, which may be a high-risk jurisdiction due to factors such as weak governance, corruption, crime, or sanctions, but it does not imply that the dealer or the customer is involved in money laundering. Option C describes the amount and nature of the transaction, which may be unusual or large, but it does not necessarily indicate money laundering, as long as the customer can provide a reasonable explanation and evidence for the source and use of funds.

References:

ACAMS CAMS Certification Video Training Course - 6th Edition1

Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)2

ACAMS CAMS Study Guide - 6th Edition, Chapter 3, pages 64-65