New Release CAMS AML Certification Questions

The correct answer is B, C, and E, as these three present the highest anti-money laundering or sanctions risk and will require controls prior to launch. According to the FATF Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers1, P2P transactions pose significant challenges for AML/CFT compliance, as they may involve anonymous or pseudonymous parties, cross-border transfers, real-time settlement, and limited information on the beneficiaries. These factors increase the risk of money laundering, terrorist financing, and sanctions evasion, as well as the difficulty of detecting and reporting suspicious activity. Therefore, the institution should implement appropriate controls to mitigate these risks, such as:

Conducting enhanced due diligence on customers who use the P2P service, especially if they are located in high-risk jurisdictions or are involved in high-risk activities1.

Implementing transaction monitoring systems that can identify and flag unusual or suspicious patterns of behavior, such as large or frequent transfers, transfers to or from sanctioned entities or countries, or transfers that do not match the customer’s profile or expected activity12.

Applying the travel rule, which requires the originator and beneficiary VASPs (or financial institutions) to exchange and retain information on the parties involved in the transfer, such as their names, account numbers, addresses, and national identification numbers13.

Establishing information-sharing and cooperation mechanisms with other VASPs, financial institutions, and regulators, to facilitate the exchange of relevant data and intelligence on P2P transactions and customers14.

References: 1: Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers - FATF, page 13-16, 28-29, 32-33, 40-412: AML and Compliance Solution for The P2P Industry - Sanction Scanner3: P2P Money Laundering: How to Comply - ComplyAdvantage4: 2024 National Money Laundering Risk Assessment - U.S. Department of the Treasury, page 17.

"Increasingly, countries are using economic sanctions instead of military force as an instrument of foreign policy"

The primary consideration the institution should keep in mind when deciding whether to agree to the law enforcement request is whether the institution can continue to meet its regulatory obligations with the accounts open. This is because the institution has a duty to comply with the applicable laws and regulations, and to protect its reputation and integrity from being associated with money laundering or terrorist financing. The institution should assess the risks and benefits of keeping the account open, and consult with its legal counsel and senior management before making a decision. The institution should also document its decision and the rationale behind it, and communicate it to the law enforcement agency12.

References:

1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 7: Conducting or Supporting the Investigation Process, p. 143-144 2: FATF Guidance: Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, February 2013, p. 50-51,

According to the ACAMS study guide1, some of the common red flags for money laundering or financing terrorism are:

Customers who provide insufficient or suspicious information, such as unusual or unverifiable identification documents, different taxpayer identification numbers, or vague or inconsistent information about their business or source of funds.

Transactions that have unusual features, such as large cash payments, unexplained payments from a third party, use of multiple or foreign accounts, complex or illogical transactions, or transactions that are inconsistent with the customer’s profile or expected behavior.

Geographic concerns, such as transactions involving high-risk jurisdictions, offshore financial centers, secrecy havens, or countries subject to sanctions or embargoes.

Ultimate beneficial ownership that is unclear, such as customers who use shell companies, trusts, or other legal entities to obscure their identity or the identity of the true owners or controllers of the funds or assets.

In this scenario, two red flags that could indicate money laundering or financing terrorism are:

B. The guarantor company’s ownership structure is overly complex. This could be an attempt to hide the true source or destination of the funds, or to evade regulatory or law enforcement scrutiny. The use of a trust formed in a Caribbean island and a holding company based in a European secrecy haven could also indicate geographic concerns, as these jurisdictions are known for their low transparency and high confidentiality.

D. The ultimate beneficial owner is a young lady who has gained her wealth through a small business. This could be a case of false or misleading information, as the source of funds is not commensurate with the size or nature of the transaction. The fitness studio business could be a front or a cover for illicit activities, or the young lady could be a nominee or a straw man for the real owner or beneficiary.

References: = 1 ACAMS. (2020). Study Guide for the Certification Examination: Sixth Edition. Miami, FL: ACAMS.