[Full-Version] 2024 New Preparation Guide of ACAMS CAMS-FCI Exam
CAMS-FCI Practice Exam - 102 Unique Questions
NEW QUESTION # 31
CLIENT INFORMATION FORM Client Name: ABC Tech Corp Client ID. Number: 08125 Name: ABC Tech Corp Registered Address: Mumbai, India Work Address: Mumbai, India Cell Phone: "**"'" Alt Phone:
"*""* Email: ........"
Client Profile Information:
Sector: Financial
Engaged in business from (date): 02 Jan 2020 Sub-sector: Software-Cryptocurrency Exchange Expected Annual Transaction Amount: 125,000 USD Payment Nature: Transfer received from clients' fund Received from: Clients Received for: Sale of digital assets The client identified itself as Xryptocurrency Exchange." The client has submitted the limited liability partnership deed. However, the bank's auditing team is unable to identify the client's exact business profile as the cryptocurrency exchange specified by the client as their major business awaits clearance from the country's regulator. The client has submitted documents/communications exchanged with the regulator and has cited the lack of governing laws in the country of their operation as the reason for the delay.
During the financial crime investigation, the investigator discovers that some of the customer due diligence (CDD) documents submitted by the client were fraudulent. The investigator also finds that some of the information in the financial institution's information depository is false. What should the financial crime investigator do next?
- A. Escalate to the compliance officer/money laundering reporting officer to file a SAR/STR.
- B. Contact the client directly and obtain the relevant notarized documents and information.
- C. Report collusion between the cryptocurrency exchange and internal staff in the internal hotline or whistle-blowing channel.
- D. Request that the relationship manager conduct a CDD refresh as it is a material trigger.
Answer: A
Explanation:
Explanation
The correct answer is C. Escalate to the compliance officer/money laundering reporting officer to file a SAR/STR. This is because the financial crime investigator has found evidence of fraudulent documents and false information, which indicate a high risk of money laundering or other financial crimes. The investigator should not contact the client directly, as this may tip them off or compromise the investigation. The investigator should also not report collusion between the cryptocurrency exchange and internal staff, as this is an assumption that has not been verified. The investigator should not request a CDD refresh, as this is not sufficient to address the serious issues identified.
References:
Advanced CAMS-FCI Study Guide, page 291
Advanced CAMS-FCI Study Guide, page 311
Advanced CAMS-FCI Study Guide, page 331
1: https://www.acams.org/en/certifications/advanced-cams/advanced-financial-crimes-investigations
NEW QUESTION # 32
The compliance learn is reviewing multiple data points to include in its data analytics program to detect shell or front company red flags. Which data points should the compliance team include? (Select Two.)
- A. Entities with a large number and variety of beneficiaries not declared at the time of onboarding
- B. Entities with high paid-up capital relative to monthly value of transactions
- C. Entities whose principal place of business is a non-residential address
- D. Entities transacting with or having relation to tax haven or high-risk countries
- E. Entities exhibiting transactions with declared counterparties
Answer: C,D
Explanation:
Explanation
The data points that the compliance team should include in its data analytics program to detect shell or front company red flags are entities whose principal place of business is a non-residential address and entities transacting with or having relation to tax haven or high-risk countries. These data points may indicate that the entities are not conducting legitimate business activities, but rather are used to conceal the identity or location of the true beneficiaries or owners, or to facilitate money laundering, tax evasion, or other illicit activities.
Some of the sources that support these data points as red flags are4567:
Entities whose principal place of business is a non-residential address may indicate that they have no physical presence, operations, assets, or employees. They may use addresses such as post office boxes, mail forwarding services, registered agents, or virtual offices to avoid detection or scrutiny.
Entities transacting with or having relation to tax haven or high-risk countries may indicate that they are involved in offshore financial activities that are designed to evade taxes, regulations, or sanctions. They may also be exposed to higher risks of money laundering, terrorist financing, corruption, or fraud.
References:
How to Identify a Shell Company and the Associated Red Flags
Difference between Shell, Shelf & Front Company | Sigma Ratings
Shell Companies and Money Laundering | ComplyAdvantage
General Comments Incorporation of shell companies - Singapore Police Force
NEW QUESTION # 33
The intended benefits of section 314(b) of the USA PATRIOT Act include: (Select Three.)
- A. sharing the existence and content of SARs/STRs with other participating FIs.
- B. expediting the filing of SARs/STRs due to the information sharing facilitated by 314(b).
- C. providing mandatory results to law enforcement agencies so that they can more easily obtain useful information.
- D. detecting money laundering and TF approaches and schemes across multiple financial institutions (FIs).
- E. obtaining additional information on customers or transactions regarding potential money laundering or terrorist financing (TF).
- F. participating FIs sharing information about suspicious activity by customers that may have otherwise gone unnoticed.
Answer: D,E,F
Explanation:
Explanation
Section 314(b) of the USA PATRIOT Act allows financial institutions to share information with each other, under a safe harbor that offers protection from liability, in order to better identify and report potential money laundering or terrorist financing activities. The intended benefits of this information sharing include:
Participating financial institutions sharing information about suspicious activity by customers that may have otherwise gone unnoticed. For example, if a customer is conducting transactions with multiple financial institutions that individually do not appear suspicious, but collectively indicate a pattern of money laundering or terrorist financing, the financial institutions can share this information and report it to the authorities.
Detecting money laundering and terrorist financing approaches and schemes across multiple financial institutions. For example, if a financial institution identifies a new typology or modus operandi of money laundering or terrorist financing, it can share this information with other financial institutions to help them prevent or detect similar activities by their customers.
Obtaining additional information on customers or transactions regarding potential money laundering or terrorist financing. For example, if a financial institution has incomplete or insufficient information on a customer or a transaction that raises suspicion, it can request more information from another financial institution that may have dealt with the same customer or transaction.
References:
Section 314(b) | FinCEN.gov
Section 314(b) Fact Sheet - FinCEN.gov
NEW QUESTION # 34
A financial institution <FI> might use which option as intelligence to file a SAR/STR?
- A. The Fl discovers a large number of securities transactions that appear to be related to day trading.
- B. A customer receives a large, one-time wire from a law firm.
- C. A customer makes several deposits in one month that appear to exceed their expected monthly income.
- D. The Fl is unable to obtain evidence of required licensing or registration despite suspicion of money transmitting.
Answer: D
Explanation:
Explanation
The correct answer is C because the FI is unable to obtain evidence of required licensing or registration despite suspicion of money transmitting, which is a red flag for money laundering and a violation of federal and state laws. Option A is incorrect because making several deposits in one month that appear to exceed their expected monthly income might not be indicative of suspicious activity, depending on the customer's profile and source of funds. Option B is incorrect because receiving a large, one-time wire from a law firm might not be indicative of suspicious activity, depending on the customer's relationship with the law firm and the purpose of the wire. Option D is incorrect because discovering a large number of securities transactions that appear to be related to day trading might not be indicative of suspicious activity, depending on the customer's investment strategy and risk tolerance.
References: Money transmitter - Wikipedia; The Quick Guide To Money Transmitter Licenses - Surety Bond Insider; Financial Crime Typologies - Intermediate Certificate, Module 3.
NEW QUESTION # 35
A client with many personal and business deposits with the financial institution (Fl) seeks a business loan. The client wants to guarantee the loan with a trust for which they are the beneficiary.
An investigator examines the trust. The trust has many layers, including shell companies in known tax havens.
The client's ultimate beneficial ownership claim cannot be validated, and the loan is denied.
Two months later, the Fl receives a law enforcement (LE) request on one of the client's business accounts.
While reviewing the business account, the Fl receives another LE request on the same account from another agency. The requested information is shared.
Three months later, a branch manager receives a request to open a business deposit account related to a complex trust. The manager forwarded the request because of the complexity. The trust was the same as the previously examined trust, but the request came from a different client. The second client also has many accounts with the Fl. Further inspection finds links between the second client and the Paradise Papers. The Papers state the client led illegal activities and committed tax evasion.
What steps should the investigator perform in reference to the first client's existing accounts? (Select Three.)
- A. Review all client-signed documents relating to all accounts.
- B. Perform secondary scans of the client's other owners/authorized signers
- C. Review Fl approved policies regarding the existing accounts to ensure regulatory requirements were followed.
- D. Inform Fl management of all processes used to investigate the client due to LE inquiry.
- E. File SARs/STRs for all accounts at the beginning of the discovery phase and amend later as necessary.
- F. Prepare a relationship flow chart of all existing accounts to better understand the client's activities.
Answer: A,B,F
Explanation:
Explanation
The investigator should review all client-signed documents relating to all accounts (A) to check for any discrepancies or red flags. The investigator should also perform secondary scans of the client's other owners/authorized signers (D) to identify any possible connections or associations with the second client or the Paradise Papers. Additionally, the investigator should prepare a relationship flow chart of all existing accounts (F) to better understand the client's activities and patterns. These steps are consistent with the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, which states that investigators should
"review all relevant documentation, including account opening documents, transaction records, and customer correspondence" (p. 23), "conduct enhanced due diligence on all parties involved in the investigation" (p. 24), and "use data visualization tools to map out complex relationships and transactions" (p. 25).
References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS
NEW QUESTION # 36
SAR/STR NARRATIVE
A SAR/STR has been submitted on five transactions conducted on the correspondent banking relationship with ABC Bank.
Client Information:
Remitter information: DEF Oil Resource Ltd. is the oldest member of the DEF Group. It was founded in 1977 as a general trading business with a primary focus on exports from Africa and North America. The group has business activities that span the entire energy value chain. Their core field of endeavor is centered within the oil and gas industry and its associated sub-sectors.
Beneficiary Information:
As per the response received from ABC Bank, it was determined that the beneficiaries are related to DEF Oil Resource Ltd. These were created by DEF Oil Resource Ltd. to purchase property in a foreign country on behalf of their senior management as part of a bonus scheme. The purpose behind this payment was for the purchase of property in another country.
Payment Reference:
ABCXXXXX31PZFG2H
ABCXXXXXX51PQGEH
ABCXXXXXX214QWVG
ABCXXXXXX41PSXA2
ABCXXXXXX815QWS3
Concerns:
* We are unsure about the country of incorporation of the beneficiaries.
* We are concerned about the transactional activity since the payment made towards entities (conducted on behalf of individuals) appears to be possible tax evasion.
* There appears to be an attempt to conceal the identity of individuals (senior management), which again raises concerns about the source of funds.
* Referring to the response received from ABC Bank, we are unclear about the ultimate beneficiary of funds.
* The remitter is involved in a high-risk business, (i.e., oil and crude products trading), and the beneficiary is involved in real estate business which again poses a higher risk.
While reviewing the account activity, it is noted that several transfers are sent to a company located in an offshore jurisdiction. Which step should the investigator take next?
- A. File a SAR/STR to the FIU where the company is located.
- B. Request information from the company.
- C. Request information about the beneficiaries related to the company.
- D. Conduct an open-source search to determine the ownership and registration of the company.
Answer: C
Explanation:
Explanation
The best step for the investigator to take next is to request information about the beneficiaries related to the company. This will help to identify the ultimate beneficial owners of the funds and the purpose of the transactions. Requesting information from the company or filing a SAR/STR to the FIU where the company is located may not be feasible or effective, as the company may not cooperate or the FIU may not have jurisdiction over the offshore entity. Conducting an open-source search may provide some information about the ownership and registration of the company, but it may not be sufficient or reliable to determine the nature and legitimacy of the transactions.
References:
SAR Narrative Guidance Package
Best Practices for Drafting an STR or SAR
NEW QUESTION # 37
A financial institution (Fl) has considered the available relevant factors in a transaction and has determined it will file a SAR^STR. Which is needed to support the contents of the report to the financial intelligence unit?
- A. No factual description of the suspicious activity
- B. Definitive proof that suspicious activity occurred
- C. Low evidentiary threshold about the suspicious activity
- D. Enough circumstantial evidence about the suspicious activity for a criminal proceeding
Answer: C
Explanation:
Explanation
A SAR/STR does not require definitive proof or enough circumstantial evidence of suspicious activity, as these are high evidentiary thresholds that may be difficult or impossible to obtain by the FI. A SAR/STR should include a factual description of the suspicious activity, as this is essential for the FIU to analyze and disseminate the information. A low evidentiary threshold means that the FI has reasonable grounds to suspect that the activity is related to money laundering, terrorism financing, or other financial crimes, based on the available relevant factors. This is the main criterion for filing a SAR/STR.
References: Advanced CAMS-FCI Certification | ACAMS, Suspicious activity report - Wikipedia, Suspicious Transaction Report (STR) / Suspicious Activity Report (SAR ...
NEW QUESTION # 38
Which test should be included in a bank's Office of Foreign Assets Control sanctions screening audit program?
- A. Ensuring that all clients with foreign identification are subject to enhanced due diligence
- B. Examining Human Resources processes for conducting criminal background checks on executives
- C. Reviewing wire transfer screening processes to ensure that potential name hits are investigated promptly
- D. Looking at copies of suspicious activity reports filed with regulators to ensure completeness
Answer: A
Explanation:
Explanation
The OFAC sanctions screening audit program should include the requirement that all clients with foreign identification are subject to enhanced due diligence, as this provides an extra layer of protection against potential violations of OFAC sanctions.
NEW QUESTION # 39
During transaction monitoring. Bank A learns that one of their customers. Med Supplies 123, is attempting to make a payment via wire totaling 382,500 USD to PPE Business LLC located in Mexico to purchase a large order of personal protective equipment. specifically surgical masks and face shields. Upon further verification.
Bank A decides to escalate and refers the case to investigators.
Bank A notes that, days prior to the above transaction, the same customer went to a Bank A location to wire
1,215,280 USD to Breath Well LTD located in Singapore. Breath Well was acting as an intermediary to purchase both 3-ply surgical masks and face shields from China. Bank A decided not to complete the transaction due to concerns with the involved supplier in China. Moreover, the customer is attempting to send a third wire in the amount of 350,000 USD for the purchase of these items, this time using a different vendor in China. The investigator must determine next steps in the investigation and what actions, if any. should be taken against relevant parties.
Upon further investigation. Bank As investigator learns that both the Mexico- and Singapore-based companies are linked to the alleged suppliers in China. Which additional indicators would the investigator need to identify to determine if this fits a fentanyl (drug) trafficking typology? (Select Two.)
- A. Review of the Food and Drug Administration (FDA) product certifications provided by the customer reveals that documents were falsified.
- B. Review of the invoices and transportation documents, provided by the customer, reveal significant discrepancies between the description of goods.
Internet research reveals that suppliers are newly established companies with no history of sales of medical equipment. - C. Review of the account activity reveals that account is inconsistent with the expected business activity as it shows multiple charges at various hotels, transportation tickets for unrelated 3rd parties, etc.
- D. Review of the account activity reveals that wires were mainly funded by multiple cash deposits, conducted in amounts of 10.000 USD or below.
Answer: A,B
NEW QUESTION # 40
An investigator at a corporate bank is conducting transaction monitoring alerts clearance.
KYC profile background: An entity customer, doing business offshore in Hong Kong, established a banking business relationship with the bank since 2017 for deposit and loan purposes. It acts as an offshore investment holding company. The customer declared that the ongoing source of funds to this account comes from group-related companies.
* X is the UBO. and owns 97% shares of this entity customer;
* Y is is the authorized signatory of this entity customer. This entity customer was previously the subject of a SAR/STR.
KYC PROFILE
Customer Name: AAA International Company. Ltd
Customer ID: 123456
Account Opened: June 2017
Last KYC review date: 15 Nov 2020
Country and Year of Incorporation: The British Virgin Islands, May 2017 AML risk level: High Account opening and purpose: Deposits, Loans and Trade Finance Anticipated account activities: 1 to 5 transactions per year and around 1 million per transaction amount During the investigation, the investigator reviewed remittance transactions activities for the period from Jul
2019 to Sep 2021 and noted the following transactions pattern:
TRANSACTION JOURNAL
Review dates: from July 2019 to Sept 2021
For Hong Kong Dollars (HKD) currency:
Incoming transactions: 2 inward remittances of around 1.88 million HKD in total from different third parties Outgoing transactions: 24 outward remittances of around 9 4 million HKD in total to different third parties For United States Dollars (USD) currency:
Incoming transactions: 13 inward remittances of around 3.3 million USD in total from different third parties Outgoing transactions: 10 outward remittances of around 9.4 million USD in total to different third parties.
RFI Information and Supporting documents:
According to the RFI reply received on 26 May 2021, the customer provided the bank with the information below:
1) All incoming funds received in HKD & USD currencies were monies lent from non-customers of the bank.
Copies of loan agreements had been provided as supporting documents. All of the loan agreements were in the same format and all the lenders are engaged in trading business.
2) Some loan agreements were signed among four parties, including among lenders. borrower (the bank's customer), guarantor, and guardian with supplemental agreements, which stated that the customer, as a borrower, who failed to repay the loan After reviewing the transaction journal, request for information response, and supporting documentation, the investigator determines that additional information is needed. Which additional information should the investigator request?
- A. Source of the incoming funds to the group-related companies
- B. Adverse news screening on all names listed in the formation documents
- C. Formation document/description of the group-related companies
- D. Previously filed SARVSTR unrelated to the customer, but similar in content
Answer: A
Explanation:
Explanation
The additional information that the investigator should request is the source of the incoming funds to the group-related companies. This is because the customer declared that the ongoing source of funds to this account comes from group-related companies, but the transaction journal shows that the customer received funds from different third parties, not from group-related companies. Therefore, the investigator should verify the relationship and legitimacy of these third parties and their funds with the customer and the group-related companies. The other options are not relevant or necessary for this investigation.
References: Advanced CAMS-FCI Certification | ACAMS
NEW QUESTION # 41
An analyst reviews an alert for high volume Automated Clearing House (ACH) activity in an account. The analyst's initial research finds the account is for a commercial daycare account that receives high volumes of large government-funded ACH transactions to support the programs. The account activity consists of checks (cheques) made payable to individual names in varying dollar amounts. One check indicates rent to another business.
An Internet search finds that the daycare company owner has previous government-issued violations for safety and classroom size needs, such as not having enough chairs and tables per enrollee. These violations were issued to a different daycare name.
Simultaneous to this investigation, another analyst sends an email about negative news articles referencing local child/adult daycare companies misusing governmental grants. This prompts the financial institution (Fl) to search all businesses for names containing 'daycare' or *care'. Text searches return a number of facilities as customers at the Fl and detects that three of these businesses have a similar transaction flow of high volume government ACH funding with little to no daycare expenses.
Which red flags would be an indicator that activity is connected to a corruption/bribery typology? (Select Two.)
- A. Checks issued to an unrelated entity referencing "rent" and "utilities" in the memos
- B. The same beneficial owner owning several daycare centers in different locations
- C. Negative news found on the customer related to government-issued violations for safety
- D. Multiple daycare locations with no active business operations or related account activity
- E. Large checks issued to various individuals with the memos noting "gift", "thank you", "favor"
Answer: C,E
Explanation:
Explanation
The red flags that would be an indicator that activity is connected to a corruption/bribery typology are large checks issued to various individuals with the memos noting "gift", "thank you", "favor" (A) and negative news found on the customer related to government-issued violations for safety (B). These red flags suggest that the customer is involved in paying or receiving bribes or kickbacks to or from government officials or other parties in exchange for favorable treatment or contracts. These red flags are consistent with some of the indicators of corruption/bribery identified by ACAMS1, such as:
Payments made to or from third parties that are not directly related to the business Payments made to or from high-risk jurisdictions or sectors Payments made with vague or incomplete descriptions or justifications Negative news or reputation of the customer or its associates The other options are not as relevant or indicative of corruption/bribery as options A and B. Checks issued to an unrelated entity referencing "rent" and "utilities" in the memos could be a legitimate business expense or a sign of other types of fraud or money laundering, such as tax evasion or shell company schemes. Multiple daycare locations with no active business operations or related account activity (D) could also be a sign of other types of fraud or money laundering, such as embezzlement or front company schemes. The same beneficial owner owning several daycare centers in different locations (E) could be a normal or legitimate business practice, depending on the size, location, and profitability of the centers.
NEW QUESTION # 42
An investigator receives an alert documenting a series of transactions. A limited liability corporation (LLC) wired 59.000.000 USD to an overseas account associated with a state-run oil company. A second account associated with the state-run oil company wired 600,000,000 USD to the LLC. The LLC then wired money to other accounts, a money brokerage firm, and real estate purchases.
The investigator initiated an enhanced KYC investigation on the LLC. The financial institution opened the LLC account a couple weeks prior to the series of transactions. The names associated with the LLC had changed multiple times since the account opened. A search of those names revealed relations with multiple LLCs. Public records about the LLCs did not show any identifiable business activities.
Open-source research identified mixed reports about the brokerage firm. The firm indicated it purchased mutual funds for its clients and dispensed returns to clients. Media reports claimed the firm laundered money by holding money for a fee before returning it to investors.
What is the total suspicious transaction amount that the investigator should report?
- A. 59,000,000 USD
- B. 659,000,000 USD
- C. 600,000,000 USD
- D. 541.000,000 USD
Answer: B
Explanation:
Explanation
The total suspicious transaction amount that the investigator should report is 659,000,000 USD. This is the sum of the two transactions involving the LLC and the state-run oil company, which are 59,000,000 USD and
600,000,000 USD respectively. The other transactions that the LLC made to other accounts, a money brokerage firm, and real estate purchases are not relevant to the question, as they are not part of the series of transactions that triggered the alert.
References: Advanced CAMS-FCI Certification | ACAMS
NEW QUESTION # 43
How does the Asian/Pacific Financial Action Task Force <FATF>-Style Regional Body help its members implement recommendations from the FATF? (Select Two.)
- A. Facilitates the adoption and implementation of internationally accepted AMI measures by member jurisdictions
- B. Requires members to maintain lists of regional money laundering and terrorists financing issues relevant to their region
- C. Encourages cooperative AML efforts in the region
- D. Endorses regulations that define money laundering based on the model laws issued by the respective member states
- E. Promotes laws that allow judicial challenges to seizure orders by an administrative body
Answer: A,C
Explanation:
Explanation
The Asian/Pacific Financial Action Task Force-Style Regional Body (APG) helps its members implement recommendations from the FATF by facilitating the adoption and implementation of internationally accepted AML measures by member jurisdictions (CAMS Manual, 6th Edition, Page 22). The APG also encourages cooperative AML efforts in the region, which can include information-sharing and mutual evaluations to assess member compliance with FATF recommendations (CAMS Manual, 6th Edition, Page 25). Therefore, options C and D are the correct answers.
NEW QUESTION # 44
A criminal is engaged in chain hopping while trying to launder ransomware payments. The criminal will likely:
- A. obscure the funds using a mixer.
- B. store the funds in a cold wallet.
- C. convert the funds to a different type of cryptocurrency.
- D. move the funds to an offshore cryptocurrency wallet.
Answer: C
Explanation:
Explanation
Chain hopping is a technique used by criminals to obscure the traceability of cryptocurrency transactions by converting the funds to a different type of cryptocurrency, often using multiple exchanges or platforms. The other options are not related to chain hopping. References: Advanced CAMS-FCI Study Guide, page 38.
NEW QUESTION # 45
Why is a more robust supervisory approach needed by regulators when overseeing small- and medium-sized money service businesses (MSBs) compared to larger MSBs for combatting terrorist financing (TF)?
- A. Small- and medium-sized MSBs need to be targeted to ensure that competition in the industry remains constant and uniform.
- B. Small- and medium-sized MSBs are more at risk of allowing transactions linked to TF due to the lack of skilled compliance resources.
- C. Small- and medium-sized MSBs need to be robustly supervised so the regulator can maintain visibility in combatting TF.
- D. Small- and medium-sized MSBs are more likely to falsify records to appear less risky in order to keep the banking relationship.
Answer: B
Explanation:
Explanation
A more robust supervisory approach is needed by regulators when overseeing small- and medium-sized MSBs compared to larger MSBs for combatting TF because small- and medium-sized MSBs are more at risk of allowing transactions linked to TF due to the lack of skilled compliance resources. Small- and medium-sized MSBs may face challenges in implementing effective AML/CFT controls, such as conducting risk assessments, applying customer due diligence measures, monitoring transactions, detecting suspicious activities, and reporting to the authorities. They may also have limited access to training, guidance, and tools to enhance their compliance capabilities. Therefore, regulators need to provide more supervision and support to small- and medium-sized MSBs to ensure that they comply with the AML/CFT requirements and mitigate the TF risks.
References:
Sustainable Growth for Small and Medium-Sized Enterprises ... - MDPI
Lessons on Resilience for Small and Midsize Businesses - HBR
NEW QUESTION # 46
SAR/STR NARRATIVE
A SAR/STR has been submitted on five transactions conducted on the correspondent banking relationship with ABC Bank.
Client Information:
Remitter information: DEF Oil Resource Ltd. is the oldest member of the DEF Group. It was founded in 1977 as a general trading business with a primary focus on exports from Africa and North America. The group has business activities that span the entire energy value chain. Their core field of endeavor is centered within the oil and gas industry and its associated sub-sectors.
Beneficiary Information:
As per the response received from ABC Bank, it was determined that the beneficiaries are related to DEF Oil Resource Ltd. These were created by DEF Oil Resource Ltd. to purchase property in a foreign country on behalf of their senior management as part of a bonus scheme. The purpose behind this payment was for the purchase of property in another country.
Payment Reference:
ABCXXXXX31PZFG2H
ABCXXXXXX51PQGEH
ABCXXXXXX214QWVG
ABCXXXXXX41PSXA2
ABCXXXXXX815QWS3
Concerns:
* We are unsure about the country of incorporation of the beneficiaries.
* We are concerned about the transactional activity since the payment made towards entities (conducted on behalf of individuals) appears to be possible tax evasion.
* There appears to be an attempt to conceal the identity of individuals (senior management), which again raises concerns about the source of funds.
* Referring to the response received from ABC Bank, we are unclear about the ultimate beneficiary of funds.
* The remitter is involved in a high-risk business, (i.e., oil and crude products trading), and the beneficiary is involved in real estate business which again poses a higher risk.
When drafting the SAR/STR narrative, the investigator notes several payment references. What additional information should the investigator include in the narrative?
- A. All relevant tables, spreadsheets, and other supporting documentation
- B. The suspicious accounts and transactions identified
- C. Personal tax records pertinent to the owners to indicate tax evasion
- D. The investigator's concerns based on their subjective opinion
Answer: B
Explanation:
Explanation
The SAR/STR narrative should include the suspicious accounts and transactions identified, as well as the reasons why they are considered suspicious. The narrative should provide a clear and concise description of the activity, the parties involved, the dates, amounts, and frequencies of the transactions, and any other relevant information that would assist law enforcement in understanding the nature and purpose of the activity.
The narrative should not include the investigator's subjective opinion, personal tax records, or supporting documentation that is not essential to explain the suspicious activity. Supporting documentation can be attached separately to the SAR/STR form or provided upon request by law enforcement.
NEW QUESTION # 47
A government entity established a trust to provide social welfare programs. The entity wants cash payments made to persons without supporting documentation. These persons would oversee the allocation of funds to beneficiaries without complying with internal disbursement of government funds controls. Which is the main premise for filing a SAR/STR?
- A. Cash disbursements are not allowed for social welfare programs.
- B. The entity is not implementing adequate internal controls according to what is expected, and mishandling of funds could be occurring.
- C. Social welfare programs are difficult to document because the beneficiaries are from the informal sector.
- D. Trust service providers are not obliged by law to follow government internal controls.
Answer: B
Explanation:
Explanation
The main premise for filing a SAR/STR is that the entity is not implementing adequate internal controls according to what is expected, and mishandling of funds could be occurring. This raises suspicion that the entity may be involved in corruption, fraud, or diversion of funds for illicit purposes. Trust service providers are obliged by law to follow government internal controls, as they are subject to AML/CFT regulations and supervision. Cash disbursements are allowed for social welfare programs, but they should be properly documented and verified. Social welfare programs are not necessarily difficult to document, as there are ways to identify and monitor the beneficiaries, such as biometric data or unique identifiers.
NEW QUESTION # 48
Which actions should financial institutions perform to ensure proper data governance? (Select Three.)
- A. Establish an appropriate data management method for collecting and storing information.
- B. Ensure the accuracy of customer identification records and transaction records and appropriately manage data as a prerequisite for the effective use of IT systems.
- C. Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records.
- D. For customers who are determined to be at high risk, review their risk rating and apply risk mitigation measures as appropriate.
- E. Review significant discrepancies between the values of the product reported on the invoice and the fair market value.
- F. Evaluate the nature of foreign remittance under a risk-based structure of AML/CFT and take necessary measures in accordance with the risk-based approach.
Answer: A,B,C
Explanation:
Explanation
Financial institutions should perform the following actions to ensure proper data governance:
Establish an appropriate data management method for collecting and storing information. This is important to ensure that the data is consistent, reliable, and accessible for various purposes, such as risk assessment, compliance reporting, and customer service. Data management methods may include defining data standards, policies, and procedures; implementing data quality controls and validation checks; and using appropriate data storage systems and formats.
Ensure the accuracy of customer identification records and transaction records and appropriately manage data as a prerequisite for the effective use of IT systems. This is important to comply with the anti-money laundering and counter-terrorist financing (AML/CFT) requirements, such as customer due diligence, transaction monitoring, and suspicious activity reporting. Accurate and complete customer and transaction data also enables financial institutions to use IT systems more effectively for data analysis, risk management, and decision making.
Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records. This is important to ensure that the data remains up-to-date, relevant, and reliable over time. Data validation may include verifying the source and quality of the data; identifying and correcting any errors or inconsistencies; and updating or deleting any obsolete or redundant data.
References:
Data Governance for Financial Institutions - Capgemini
Small and Medium-Sized Deposit-Taking Institutions (SMSBs) Capital and Liquidity Requirements - OSFI
NEW QUESTION # 49
What action does the USA PATRIOT Act allow the US government to take regarding financial institutions (FIs) that are based outside of the US?
- A. Revoke the banking licenses of non-US FIs in countries outside the US.
- B. Allow all US regulators to place a non-US Fl on the Specially Designated Nationals and Blocked Persons List.
- C. Subpoena documents from FIs that have no presence in the US.
- D. Sanction a country when an individual Fl does not comply with US law.
Answer: C
Explanation:
Explanation
According to the CAMS manual 6th edition, the USA PATRIOT Act allows the US government to subpoena documents from foreign financial institutions (FIs) that have no presence in the US (option B). The manual states that "The USA PATRIOT Act provides US law enforcement agencies with the power to subpoena documents from foreign banks that maintain correspondent accounts with US banks or have no presence in the United States" (p. 77).
NEW QUESTION # 50
Which information is it best practice to share at the very beginning of a well-written SAR/STR narrative?
- A. The purpose of the SAR/STR narrative and a general description of the known or alleged violation
- B. Information about any follow-up actions conducted by the financial institution on the account
- C. Any and all relevant facts about the parties who facilitated the suspicious activity or transactions
- D. A specific description of the involved accounts and transactions, including the origination and application of funds
Answer: A
Explanation:
Explanation
The best information to share at the very beginning of a well-written SAR/STR narrative is the purpose of the SAR/STR narrative and a general description of the known or alleged violation. This is because this information provides an overview of why the SAR/STR is being filed and what type of suspicious activity or transaction is involved. It also helps to capture the attention of the reader and set the tone for the rest of the narrative.
References: Reporting Suspicious Activity Certificate, Module 4, page 7.
NEW QUESTION # 51
A compliance officer of a financial institution is reviewing a payment for sanctions compliance between two parties in Europe and Asia. The payment is in Euros and involves the provision of services to a company located in a jurisdiction subject to Office of Foreign Assets Control secondary sanctions. Which factor is most important in determining the compliance officer's response?
- A. Secondary sanctions only target specific sectors of the economy such as the banking and finance sectors.
- B. The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus.
- C. Asset freezes only prohibit US companies from engaging in certain activities with counterparts from a sanctioned jurisdiction.
- D. A one-off commercial transaction conducted between parties in Europe and Asia is not subject to secondary sanctions.
Answer: B
Explanation:
Explanation
The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page
591, which states: "It is important to note that the threat of US sanctions against foreign individuals and entities continues to exist even when there is no direct US nexus (i.e., no US persons or assets involved)."
NEW QUESTION # 52
An investigator receives an alert documenting a series of transactions. A limited liability corporation (LLC) wired 59.000,000 USD to an overseas account associated with a state-run oil company. A second account associated with the state-run oil company wired 600,000,000 USD to the LLC. The LLC then wired money to other accounts, a money brokerage firm, and real estate purchases.
The investigator initiated an enhanced KYC investigation on the LLC. The financial institution opened the LLC account a couple of weeks prior to the series of transactions. The names associated with the LLC had changed multiple times since the account opened. A search of those names revealed relations with multiple LLCs. Public records about the LLCs did not show any identifiable business activities.
Open-source research identified mixed reports about the brokerage firm.
The firm indicated it purchased mutual funds for its clients and dispensed returns to clients.
Media reports claimed the firm laundered money by holding money for a fee before returning it to investors.
Which information should the investigator review first when examining the wire transaction documentation?
- A. Whether the wire transfers were initiated domestically
- B. How the wire transfers were initiated (e.g., phone, online, branch visit)
- C. The Travel Rule requirements for recordkeeping
- D. The sanctions screening tool to see if the transaction was stopped
Answer: B
Explanation:
Explanation
The investigator should review how the wire transfers were initiated first, because this could indicate the level of involvement and knowledge of the LLC account holders. If the wire transfers were initiated online or by phone, it could suggest that the account holders were trying to avoid face-to-face contact with the bank staff and reduce the chances of being questioned or identified. If the wire transfers were initiated in person at a branch, it could indicate that the account holders were confident or careless about their activities, or that they had some relationship with the bank staff. The method of initiation could also affect the quality and quantity of information collected by the bank about the wire transfers, such as the purpose, source, and destination of the funds. References: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, page 65.
NEW QUESTION # 53
An analyst reviews an alert for high volume Automated Clearing House (ACH) activity in an account. The analyst's initial research finds the account is for a commercial daycare account that receives high volumes of large government-funded ACH transactions to support the programs. The account activity consists of checks (cheques) made payable to individual names in varying dollar amounts. One check indicates rent to another business.
An Internet search finds that the daycare company owner has previous government-issued violations for safety and classroom size needs, such as not having enough chairs and tables per enrollee. These violations were issued to a different daycare name.
Simultaneous to this investigation, another analyst sends an email about negative news articles referencing local child/adult daycare companies misusing governmental grants. This prompts the financial institution (Fl) to search all businesses for names containing daycare' or "care*. Text searches return a number of facilities as customers at the Fl and detects that three of these businesses have a similar transaction flow of high volume government ACH funding with little to no daycare expenses.
During the investigation, new suspicious patterns and trends related to check cashing are observed. The Fl decides to conduct a training to ensure that 1) the AML program is robust and 2) the training program is relevant and appropriate. Which parties should be trained on emerging trends and red flags? (Select Two.)
- A. Senior management
- B. Financial crimes investigation unit
- C. The board of directors
- D. Branch personnel
- E. Loan department
Answer: B,D
Explanation:
Explanation
The parties that should be trained on emerging trends and red flags are the financial crimes investigation unit (A) and the branch personnel . These parties are directly involved in detecting, investigating, and reporting suspicious activity related to check cashing or other types of fraud or money laundering. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should provide regular and relevant training to its staff on the AML program, policies, procedures, and systems, as well as on the latest typologies, indicators, and best practices for financial crimes investigations" (p. 36). The FI should also "ensure that the training is tailored to the specific roles and responsibilities of the staff, and that it is updated and evaluated periodically" (p. 36).
The other parties are not as relevant or appropriate as options A and C. The loan department (B) is not directly related to check cashing or other types of fraud or money laundering, although it may have some exposure to credit or identity fraud. The senior management (D) is responsible for overseeing and supporting the AML program, but not for conducting or supervising financial crimes investigations. The board of directors (E) is responsible for approving and reviewing the AML program, but not for implementing or monitoring it.
References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS
NEW QUESTION # 54
A U.S. financial institution (Fl) receives a grand jury subpoena for a corporate client's account. The Fl should:
- A. file a SAR/STR.
- B. review the corporate account's activity and transactions.
- C. request the client's consent for the disclosure of account information.
- D. provide the client with a copy of the subpoena.
Answer: B
Explanation:
Explanation
The Fl should review the corporate account's activity and transactions. This is because a grand jury subpoena is a legal request for information or testimony that may be used in a criminal investigation or prosecution. The Fl should review the account for any suspicious or unusual activity that may be related to the subpoena or indicate money laundering, terrorist financing, or other financial crimes. The Fl should also document its review and retain any relevant records.
References: Leading Complex Investigations Certificate, Module 3, page 14.
NEW QUESTION # 55
The investigations team of a financial institution (Fl) wants to perform enhanced due diligence measures on operations done by a foreign bank related to transactions of companies that export scrap gold and silver. What would be the next best steps for the investigations team? (Select Two.)
- A. Ask the respondent bank if it has a risk rating for the exporting companies, if the customer profiles are updated, and if so. when was the last time it was done.
- B. Ask the respondent bank if it can file a SAR/STR in its jurisdiction since the investigations team also plans to do the same in the Fl's home country.
- C. Ask the respondent bank if the exporting companies have obtained an official license that permits the exporting of scrap gold and silver.
- D. Ask the business manager who handles the relationship of the respondent bank if they can persuade the bank to close the accounts of the export companies.
- E. Ask the legal department if it can proceed to rescind the contract of the correspondent banking relationship since the export of scrap gold and silver is a high-risk activity.
Answer: A,C
Explanation:
Explanation
The correct answers are B and C because these are the most relevant and reasonable steps for the investigations team to perform enhanced due diligence on the operations of the foreign bank and its customers.
Asking for the risk rating, customer profiles, and official licenses would help the team assess the level of risk and compliance of the foreign bank and its customers, who are engaged in a high-risk activity of exporting scrap gold and silver. The other options are not appropriate because they are either premature or ineffective.
Rescinding the contract, filing a SAR/STR, or closing the accounts would require more evidence and justification, and they may also damage the relationship with the foreign bank.
References: : Precious Metals & Stones
NEW QUESTION # 56
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