Passed Exam Today CAMS

Enhanced Due Diligence (EDD) applies to high-risk customers and transactions, includingpolitically exposed persons (PEPs), high-risk jurisdictions, and correspondent banking relationships.

Option C (Correct):Correspondent banking relationships with high-risk jurisdictions require EDDto prevent cross-border financial crime.

Option D (Correct):Ambassadors are considered PEPs, which require EDD due to corruption risks.

Option E (Correct):A current prime minister is a high-profile PEP, requiringEDD and ongoing transaction monitoring.

Why Other Options Are Incorrect:

Option A (Incorrect):The individual no longer holds a PEP position and is in a low-risk country, soEDD is not required.

Option B (Incorrect):A local footballer does not present a high financial crime risk warranting EDD.

EDD Best Practices for High-Risk Customers:

Verify the source of wealth and funds for PEPs.

Conduct ongoing transaction monitoring on high-risk accounts.

Apply stricter controls on correspondent banking with high-risk jurisdictions.

Theart and antiquities marketis frequently exploited formoney laundering and terrorist financing.

Option A (Correct):Art storage facilities in tax-free zonesallowanonymous transactions, creatinghigh AML risk.

Option C (Correct):Third-party art advisorscan be used asintermediariestoobscure true ownership.

Option D (Correct):Selling art on social mediawithout proper vetting allows foranonymous transactions.

Option B (Incorrect):Paying fair market valuedoes not indicatesuspicious activity.

Option E (Incorrect):Authenticity verificationdoes notincrease AML risk.

The first step in a financial investigation is to review and analyze allinternalsources of information related to the suspicious transaction.

Option C (Correct):Gathering and assessing internal data helps investigators establish a baseline for normal vs. suspicious customer behavior. This includes reviewing KYC (Know Your Customer) documentation, transaction history, and any previous alerts on the customer.

Option B (Incorrect):This is part of the investigation, but an investigator first needs togatherdata before determining consistency with expected behavior.

Option A (Incorrect):An FIU is typically contactedafterinternal analysis has been completed and a Suspicious Activity Report (SAR) is warranted.

Option D (Incorrect):External information is useful, but internal data should be reviewed first to confirm whether a case needs escalation.