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Exceptional Practice To Advanced CAMS-Financial Crimes Investigations Pass the First Time
NEW QUESTION # 47
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 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.
- 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 wires were mainly funded by multiple cash deposits, conducted in amounts of 10.000 USD or below.
- D. Review of the Food and Drug Administration (FDA) product certifications provided by the customer reveals that documents were falsified.
Answer: B,D
NEW QUESTION # 48
Sanctions screening requirements include that a financial institution should:
- A. report an individual whose name appears on a sanctions list to the police.
- B. immediately freeze the bank account of an individual that appears on a sanctions list.
- C. compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies.
- D. immediately close the bank account of an entity who appears on a sanctions list.
Answer: C
Explanation:
Explanation
Compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 595, which states: "Sanctions screening requirements include that a financial institution should compare customer and transaction records against periodically updated sanctions lists provided by governmental bodies."
NEW QUESTION # 49
A client at a financial institution deposits large amounts of money into an account, and almost immediately, the funds are then distributed to numerous individuals' accounts. The transaction activity described in the scenario is a pattern of:
- A. geographic usage.
- B. deposit trading.
- C. account usage.
- D. safe deposit custody.
Answer: B
Explanation:
Explanation
Deposit trading is a pattern of suspicious activity where a client deposits large amounts of money into an account, and then transfers the funds to other accounts, often in different jurisdictions or countries. This could be an attempt to disguise the source or destination of the funds, or to avoid reporting requirements. Deposit trading is also known as layering, which is the second stage of money laundering.
References: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, page 43; ACAMS Glossary, page 34.
NEW QUESTION # 50
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. 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.
- D. Review significant discrepancies between the values of the product reported on the invoice and the fair market value.
- E. For customers who are determined to be at high risk, review their risk rating and apply risk mitigation measures as appropriate.
- F. Periodically validate integrity and accuracy of information used for IT systems such as customer information, customer identification records, and transaction records.
Answer: A,B,F
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 # 51
The training department is conducting awareness training for unusual customer identification scenarios. Which two indicators should be included? (Select Two.)
- A. The customer's internet protocol address does not match the identifying information provided during online registration.
- B. The customer frequently exchanges small bills for large bills.
- C. The customer's name and home address cannot be verified
- D. The customer requests payment of proceeds to an unrelated third party.
- E. The customer opens the account in the name of a family member who begins making large deposits.
Answer: C,E
Explanation:
Explanation
This information can be found in the Certified Anti-Money Laundering Specialist (CAMS) study guide, 6th edition, under the section on Unusual Customer Identification Scenarios. The guide explains that two indicators that should be included in awareness training for unusual customer identification scenarios are:
A: The customer opens the account in the name of a family member who begins making large deposits.
This is an indicator of potential structuring, where a customer may be attempting to avoid triggering reporting thresholds by depositing funds in smaller amounts over time. It is important for staff to be aware of this scenario and to monitor accounts for potential suspicious activity.
B: The customer's name and home address cannot be verified.
This is an indicator of potential identity theft or other fraudulent activity. If a customer's identifying information cannot be verified, it is important for staff to conduct additional due diligence to ensure that the customer is legitimate and that the account is not being used for illicit purposes.
NEW QUESTION # 52
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:
1J 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 a loan Which suspicious activity should the investigator identify during the review of the loan agreements?
- A. Online information found that X is the chairman of a business group of companies.
- B. AAA International Company Ltd.'s account has transactions in HKD and USD.
- C. Y is the authorized signatory on the beneficial ownership form.
- D. Y signed on behalf of the lenders.
Answer: D
Explanation:
Explanation
The correct answer is D because it is a suspicious activity that Y, who is the authorized signatory of the customer, also signed on behalf of the lenders. This indicates a possible conflict of interest, collusion, or fraud.
The other options are not suspicious activities based on the information given.
References: [Advanced CAMS-FCI Study Guide], page 17-18
NEW QUESTION # 53
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 for a fee before returning it to investors.
The investigator discovers that the bank has no records pertaining to ownership of the LLC. What would this mean for the bank and/or investigator?
- A. The bank is out of compliance with CIP regulations.
- B. The bank is out of compliance with beneficial ownership regulations.
- C. The bank may not be able to file a SAR/STR without the ownership data.
- D. The bank cannot respond to law enforcement requests without the ownership data.
Answer: A
Explanation:
Explanation
The bank is out of compliance with CIP regulations because it did not obtain the minimum identifying information from the customer prior to opening the account, as required by 31 CFR § 1020.220(a)(2)(i)(A).
The bank should have obtained the name, date of birth, address, and identification number of the customer, as well as verified the identity of the customer to the extent reasonable and practicable. The lack of ownership data may also indicate a violation of beneficial ownership regulations, but that is not the primary issue in this case.
NEW QUESTION # 54
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. The suspicious accounts and transactions identified
- B. All relevant tables, spreadsheets, and other supporting documentation
- C. Personal tax records pertinent to the owners to indicate tax evasion
- D. The investigator's concerns based on their subjective opinion
Answer: A
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 # 55
Which pattern of activity most strongly indicates an individual is a foreign terrorist fighter?
- A. A series of small cash deposits made in rapid succession totaling just over 10,000 USD followed by a purchase at a jewelry store
- B. A large purchase at a gas station immediately followed by several smaller purchases at an electronics store
- C. A large cash advance on a credit card and purchases at travel and sporting goods websites
- D. A series of small deposits followed by a large international wire to a well-known international charity
Answer: C
Explanation:
Explanation
The pattern of activity that most strongly indicates an individual is a foreign terrorist fighter is a large cash advance on a credit card and purchases at travel and sporting goods websites. This is because this pattern may suggest that the individual is preparing to travel to a conflict zone and purchase equipment or supplies for terrorist activities. According to the United Nations Office on Drugs and Crime, some of the indicators of foreign terrorist fighters include1:
Sudden or increased financial activity, such as cash withdrawals, transfers, or deposits, especially in large amounts or involving foreign currency or locations.
Purchases of travel-related items, such as airline tickets, passports, visas, luggage, or clothing, especially to or from high-risk destinations or transit hubs.
Purchases of items that could be used for terrorist purposes, such as weapons, explosives, chemicals, communication devices, or survival gear.
Changes in behavior, such as expressing radical views, cutting ties with family or friends, joining extremist groups, or displaying signs of emotional distress.
References:
Foreign Terrorist Fighters - United Nations Office on Drugs and Crime
NEW QUESTION # 56
A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer which social/economic consequence?
- A. Increased organized crime and corruption
- B. US sanctions
- C. Reputation risk for the port
- D. Loss of tax revenue
Answer: A
Explanation:
Explanation
A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer increased organized crime and corruption as a social/economic consequence. "Weaknesses in the AML/CFT regime can lead to a range of economic and social consequences, including...increased crime and corruption." (CAMS Manual, 6th Edition, page 32)
NEW QUESTION # 57
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. The same beneficial owner owning several daycare centers in different locations
- B. Large checks issued to various individuals with the memos noting "gift", "thank you", "favor"
- C. Negative news found on the customer related to government-issued violations for safety
- D. Checks issued to an unrelated entity referencing "rent" and "utilities" in the memos
- E. Multiple daycare locations with no active business operations or related account activity
Answer: B,C
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 # 58
A financial regulator is evaluating the effectiveness of a financial institution's (Fl) anti-financial crime program. Which condition should be met to satisfy the regulator?
- A. The program is aligned with the financial industry's anti-financial crime priorities.
- B. The program meets the minimum requirements of anti-financial crime standards, which are published by a financial industry association.
- C. In the past 3 years, internal auditing results show no high-severity issues and a maximum of three medium-seventy and four low-severity issues.
- D. The program is drafted using a risk-based approach to avoid the Fl being used as a conduit for criminal activities.
Answer: D
Explanation:
Explanation
The condition that should be met to satisfy the regulator is that the program is drafted using a risk-based approach to avoid the FI being used as a conduit for criminal activities. A risk-based approach means that the FI identifies, assesses, and understands its exposure to financial crime risks and applies appropriate measures to mitigate them. This is consistent with the international standards and best practices for anti-financial crime compliance. The program being aligned with the financial industry's anti-financial crime priorities, meeting the minimum requirements of anti-financial crime standards published by a financial industry association, or having no high-severity issues in internal auditing results are not sufficient to satisfy the regulator, as they do not necessarily reflect the specific risks faced by the FI or demonstrate its effectiveness in preventing and detecting financial crimes.
References: [Advanced CAMS-FCI Study Guide], page 14-15; [FATF Guidance on Risk-Based Approach for Effective Supervision], page 7-8.
NEW QUESTION # 59
While each is potentially important, which allows an investigations analyst to better write a SAR/STR narrative that is useful to law enforcement? (Select Two.)
- A. Including a detailed description of the known or suspected criminal violation or suspicious activity
- B. Ensuring all information in the SAR/STR is complete and accurate based on what the institution knows
- C. Including contact information for individuals at other institutions with whom correspondence has occurred
- D. Including an explanation of the internal process that brought the transaction to the attention of the analyst
- E. Including information about the general activity trends in the area where the suspicious transactions were conducted
Answer: A,B
Explanation:
Explanation
A SAR/STR narrative that is useful to law enforcement should include a detailed description of the known or suspected criminal violation or suspicious activity, as well as ensure that all information in the SAR/STR is complete and accurate based on what the institution knows. These elements help law enforcement to understand the nature and scope of the suspicious activity, and to follow up with further investigation if needed. The other options are not essential for a useful SAR/STR narrative, as they either provide irrelevant or redundant information, or could compromise the confidentiality of the report.
NEW QUESTION # 60
When writing or reviewing a SAR/STR, it is important to:
- A. ensure that the narrative is detailed with all available information so that law enforcement can decide what is relevant.
- B. avoid mentioning suspect names in case it is seen by someone involved in criminal activity, effectively tipping them off.
- C. keep the introduction brief but ensure all relevant transactions, account numbers, and suspect names are listed in the conclusion summary.
- D. ensure the narrative is kept to the point; easy to read; and addresses the who, what, when, where, why, and how.
Answer: D
Explanation:
Explanation
The correct answer is A because a SAR/STR narrative should be concise, clear, and complete, addressing the who, what, when, where, why, and how of the suspicious activity. Option B is incorrect because providing too much information can make the narrative confusing and irrelevant. Option C is incorrect because the introduction should provide a summary of the suspicious activity, not the conclusion. Option D is incorrect because suspect names should be mentioned in the narrative to identify the parties involved in the suspicious activity.
References: Advanced CAMS-FCI Certification Handbook, page 17; Leading Complex Investigations Certificate, Module 3.
NEW QUESTION # 61
Law enforcement (LE) suspects human trafficking to occur during a major sporting event. LE officers asked several financial institutions (FIs) to monitor financial transactions occurring before, during, and after the event.
An investigator identified a pattern linked to a business. The business' account received multiple even dollar deposits between midnight and 4:00 AM. They occurred each day for several days prior to the date of the sporting event. Also, large cash deposits, typically between 2,000 USD and 3,000 USD. made by a person to the business' account occurred in many branches in the days after the sports event.
There was little information about the company. The company did not have any history of employee payroll expenses or paying taxes. Expenses from the business account included air travel and hotel expenses. Searches about the person making cash deposits showed little. An online social media platform webpage with the individual's name showed ads for dates" and "companionship." The Fl receives a keep open' letter from LE for the identified account and agrees to keep the account open.
What is the Fl required to do?
- A. Ensure that the request includes an end date.
- B. Contact the client for information relating to the account.
- C. Stop filing SAR/STR reports on the account and/or customer.
- D. Notify LE immediately after new transactions.
Answer: A
Explanation:
Explanation
The FI is required to ensure that the request includes an end date when it receives a keep open letter from LE for the identified account. This is because the FI has to balance its legal obligations to cooperate with LE and to protect its customers' privacy and rights. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should request a written confirmation from LE that includes a specific end date for the request, as well as a point of contact for any questions or concerns" (p. 35). The FI should also document the request and its compliance with it, and continue to monitor the account for any suspicious activity.
The other options are not correct. The FI should not contact the client for information relating to the account (A), as this could compromise the LE investigation or alert the client of the suspicion. The FI should not stop filing SAR/STR reports on the account and/or customer (B), as this could violate its regulatory obligations and expose it to legal risks. The FI should not notify LE immediately after new transactions (D), as this could also interfere with the LE investigation or tip off the client. The FI should follow the instructions of LE regarding when and how to share information.
NEW QUESTION # 62
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 high paid-up capital relative to monthly value of transactions
- B. Entities exhibiting transactions with declared counterparties
- C. Entities transacting with or having relation to tax haven or high-risk countries
- D. Entities with a large number and variety of beneficiaries not declared at the time of onboarding
- E. Entities whose principal place of business is a non-residential address
Answer: C,E
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 # 63
CLIENT INFORMATION FORM Client Name: ABC Tech Corp Client I.D. 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 client's fund
Received from: Clients
Received for: Sale of digital assets
The client identified themselves as "Cryptocurrency Exchange" 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.
Investigators determine the ultimate beneficial owner of ABC Tech Corp is a high-net-worth client. The client owns a real estate agency left to her when her spouse died. The spouse provided seed capital for ABC Tech Corp through a direct 1,000.000 Great British Pound (GBP) deposit.
What additional information would trigger filing a SAR/STR?
- A. The client's spouse's source of wealth was a salary of 250,000 GBP per annum for the past 4 years and rental of properties of 150,000 GBP per annum for the past 6 years.
- B. An open-source search revealed that the client's spouse was a PEP.
- C. The funds for the seed capital were in the form of 50 cashier's checks of 10,000 GBP each and 50 money orders of 10,000 GBP.
- D. The client's current net asset value is 8 million GBP, of which 7.5 million GBP was derived from the inheritance.
Answer: C
Explanation:
Explanation
The additional information that would trigger filing a SAR/STR is the fact that the funds for the seed capital were in the form of 50 cashier's checks of 10,000 GBP each and 50 money orders of 10,000 GBP. This is because this indicates a possible attempt to avoid the reporting threshold of 10,000 GBP for cash transactions, which is a common money laundering technique known as structuring or smurfing12. The other options are not necessarily suspicious, as they do not involve cash transactions or indicate any illicit source of funds. The fact that the client's spouse was a PEP does not automatically make the transaction suspicious unless there are other red flags or risk factors associated with the PEP34 References: 1: Money Laundering Techniques 2: Structuring 3: Politically exposed person 4: PEP Definition
& Meaning - Merriam-Webster
NEW QUESTION # 64
Which are some of the negative impacts from illegal wildlife trade and environmental crimes? (Select Two.)
- A. Threats to a country's political stability
- B. Threats to biodiversity
- C. Loss of potential tax proceeds
- D. Barriers to banking by low income population
- E. Public health consequences
Answer: B,C
Explanation:
Explanation
Some of the negative impacts of illegal wildlife trade and environmental crimes are loss of potential tax proceeds and threats to biodiversity. Loss of potential tax proceeds occurs when illegal wildlife trade and environmental crimes evade taxation and customs duties, depriving governments of revenues that could be used for public services and development. Threats to biodiversity occur when illegal wildlife trade and environmental crimes endanger species, habitats, and ecosystems, reducing their resilience and ability to provide essential services for human well-being. Public health consequences and threats to a country's political stability are not directly related to illegal wildlife trade and environmental crimes, but rather to other types of financial crimes such as money laundering, terrorism financing, or corruption.
References: [Advanced CAMS-FCI Study Guide], page 68-69; [FATF Report on Money Laundering from Environmental Crime], page 9-10.
NEW QUESTION # 65
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 take to review the accounts held by the second client who is listed in the Paradise Papers? (Select Two.)
- A. Inform Fl management of the start of a serious risk-based investigation that could result in losses and reputation risk.
- B. Review all accounts being reviewed by AML investigators over the past year that have opened trust accounts.
- C. Inform Fl management of deficiencies in their AML program because the second client's activities were not detected.
- D. Recommend a SAR/STR be filed regarding the second client's use of a questionable trust to open an account.
- E. Monitor all accounts and entities related to the second client
Answer: D,E
Explanation:
Explanation
The investigator should recommend a SAR/STR be filed regarding the second client's use of a questionable trust to open an account, as this could indicate an attempt to conceal the source and ownership of funds, and to evade taxes and sanctions. The investigator should also monitor all accounts and entities related to the second client, as they may be involved in illegal activities or pose a high risk to the FI. The investigator should not review all accounts that have opened trust accounts, as this would be too broad and inefficient. The investigator should not inform FI management of deficiencies in their AML program, as this is not their role or responsibility. The investigator should not inform FI management of the start of a serious risk-based investigation, as this may compromise the confidentiality and integrity of the investigation.
NEW QUESTION # 66
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. Asset freezes only prohibit US companies from engaging in certain activities with counterparts from a sanctioned jurisdiction.
- B. A one-off commercial transaction conducted between parties in Europe and Asia is not subject to secondary sanctions.
- C. Secondary sanctions only target specific sectors of the economy such as the banking and finance sectors.
- D. The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus.
Answer: D
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 # 67
Which reputations risk consequence could a financial entity face for violating AML laws?
- A. Increased audit costs to monitor behavior
- B. Seizure of assets
- C. Monetary penalties
- D. Loss of high-profile customers
Answer: C
NEW QUESTION # 68
A SAR/STR regarding money-mule activity prompts law enforcement action. Under U.S. law, the alleged money mules can be prosecuted:
- A. unless they can prove they were not aware of the origin of the funds.
- B. even if they were unaware that money was transferred.
- C. in a country only if funds were transferred between accounts maintained in the same country.
- D. only if they were aware of their role and actively participated.
Answer: B
Explanation:
Explanation
According to U.S. law, money mules can be prosecuted even if they were unaware that money was transferred, as long as they acted with reckless disregard of the source of the funds or the purpose of the transaction1.
This is because money mules are considered to be aiding and abetting money laundering, which does not require proof of specific intent2.
References: 1: Money Mule Awareness Booklet, page 8 2: Money Laundering: An Overview of 18 U.S.C. § 1956 and Related Federal Criminal Law, page 7
NEW QUESTION # 69
An EU bank account received 1.8 million EUR from a Swiss bank. The EU bank determines the originator was indicted by U.S. law enforcement, arrested in Switzerland, and extradited for alleged insider trading.
Which is the best reason the EU bank should file a SAR/STR?
- A. The originator was indicted by U.S. law enforcement.
- B. The events raise concerns that the payment represents proceeds from insider trading.
- C. The Swiss bank filed a SAR/STR with the Money Laundering Reporting Office Switzerland.
- D. Insider trading is a predicate offense in the U.S. and Switzerland.
Answer: B
Explanation:
Explanation
The best reason the EU bank should file a SAR/STR is that the events raise concerns that the payment represents proceeds from insider trading, which is a form of market abuse and a predicate offense for money laundering in many jurisdictions. The fact that the originator was indicted by U.S. law enforcement, arrested in Switzerland, and extradited for alleged insider trading indicates that there is a strong suspicion that the funds are derived from criminal activity. The other options are not sufficient reasons to file a SAR/STR, as they do not directly relate to the nature or source of the funds.
References: [Financial Action Task Force Report on Money Laundering and Terrorist Financing Risks and Vulnerabilities Associated with Gold], page 17 : [Leading Complex Investigations Certificate], page 12
NEW QUESTION # 70
A retail bank prepares a yearly AML risk assessment. Which inherent risk factor is likely the most relevant?
- A. The provision of remote check deposit services
- B. The provision of cash services
- C. The provision of payable through accounts
- D. The provision of brokerage services
Answer: B
Explanation:
Explanation
Retail banks typically have a high inherent risk of money laundering due to their provision of cash services.
This is because cash is a preferred medium of exchange for criminals and terrorists, and retail banks provide a convenient way for them to move large sums of money without detection. Retail banks are also vulnerable to money laundering through the use of false identities and other deceptive practices. (CAMS Manual, 6th Edition, Page 8).
NEW QUESTION # 71
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