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NEW QUESTION # 113
Combating the Financing of Terrorism (CFT)]
According to theFinancial Action Task Force (FATF) methodology, which situations would require a financial institution (FI) to consider filing a Suspicious Activity Report (SAR)?
- A. Atransaction involves funds exchanged from crypto to fiat currencies.
- B. Abeneficiary of a transactionis a politically exposed person (PEP).
- C. AFI is unable to verifythe relevant customer due diligence (CDD) documents.
- D. AFI identifies the payeras a dealer in precious metals or stones.
Answer: C
Explanation:
ASuspicious Activity Report (SAR)is required when afinancial institution detects activity that raises suspicion of money laundering, terrorist financing, or fraud.
* Option A (Correct):Inability to verify customer identification documentsis ared flag for potential financial crimeand may requirereporting to the Financial Intelligence Unit (FIU).
* Option B (Incorrect):PEPs require enhanced due diligence (EDD), but their involvement alone does not automatically trigger a SAR.
* Option C (Incorrect):Dealers in precious metals/stones are high-risk, but being in this industry alonedoes not warrant an automatic SAR.
* Option D (Incorrect):Crypto-to-fiat transactions are not inherently suspicious, but they require monitoring for unusual activity.
Key SAR Filing Triggers:
* Transactions that do not match the customer's expected activity.
* Incomplete, fraudulent, or unverifiable customer identification.
* Use of shell companies or unusual intermediaries.
* Large or structured transactions with no apparent legitimate purpose.
Best Practices for SAR Compliance:
* Implement robust customer due diligence (CDD) processes.
* Monitor transaction behavior against expected patterns.
* Follow jurisdictional SAR filing deadlines to avoid penalties.
Reference:
FATF Recommendation 20 (Reporting Suspicious Transactions)
6th EU AML Directive (6AMLD) on Suspicious Transactions Reporting
FinCEN SAR Filing Guidelines
NEW QUESTION # 114
According to the Financial Action Task Force 40 Recommendations, simplified customer due diligence or reduced measures could be acceptable for which of the following types of products or transactions?
1. Life insurance policies where the annual premium is no more than USD/EUR 1,000 or a single premium of no more than USD/EUR 2,500.
2. Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral.
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4. Trusts where the settlor, trustee and beneficiaries are identified and the shares are in bearer form.
- A. 1, 3, and 4 only
- B. 1, 2, and 4 only
- C. 1, 2, and 3 only
- D. 2, 3, and 4 only
Answer: C
Explanation:
According to the Financial Action Task Force (FATF) 40 Recommendations, simplified customer due diligence (CDD) or reduced measures could be acceptable for certain types of products or transactions that have a low risk of money laundering or terrorist financing, based on a reasonable assessment of the risk by countries or by financial institutions. These include:
Life insurance policies where the annual premium is no more than USD/EUR 1,000 or a single premium of no more than USD/EUR 2,500. This is because the amount of money involved is relatively small and the payout is usually contingent on a specific event, such as death or disability, which reduces the likelihood of abuse by criminals.
Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral. This is because the beneficiaries of these policies are usually predetermined and the funds are locked in until retirement age, which limits the possibility of transferring or withdrawing the money for illicit purposes.
A pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages and the scheme rules do not permit the assignment of a member's interest under the scheme. This is because the source of funds is known and verified by the employer and the scheme is regulated and supervised by competent authorities, which reduces the risk of money laundering or terrorist financing.
The other option, trusts where the settlor, trustee and beneficiaries are identified and the shares are in bearer form, is not eligible for simplified CDD or reduced measures, because the use of bearer shares poses a high risk of anonymity and concealment of beneficial ownership, which could facilitate money laundering or terrorist financing.
References:
FATF 40 Recommendations, Recommendation 10 and Interpretive Note to Recommendation 10, paragraphs 17-18.
NEW QUESTION # 115
A local law enforcement officer notifies the bank compliance officer that he is working on an insurance fraud scheme that appears to be running transactions using the account of a bank employee. The law enforcement officer refers to a kiting suspicious transaction report filed by the compliance officer and requests further information.
What action should the compliance officer take?
- A. Provide the information to the law enforcement in response to a formal written request
- B. Inform the board of directors
- C. Allow access to the bank's documents immediately
- D. Call the employee and demand an explanation
Answer: A
NEW QUESTION # 116
What are two sources for maintaining up-to-date sanctions information? (Choose two.)
- A. Financial Action Task Force's list of High Risk and Non-Cooperative Jurisdictions
- B. U.S. Department of the Treasury Office of Foreign Assets Control
- C. U.S. Department of the Treasury - Section 311 - Special Measures
- D. U.S. Federal Bureau of Investigation's National Security Letters
Answer: A,B
Explanation:
The U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. OFAC publishes lists of individuals and entities that are subject to various sanctions programs, such as the Specially Designated Nationals and Blocked Persons List (SDN List), the Sectoral Sanctions Identifications List (SSI List), and the Foreign Sanctions Evaders List (FSE List). These lists are updated frequently and can be accessed through OFAC's website or other sources12.
The Financial Action Task Force (FATF) is an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. FATF publishes lists of jurisdictions that have strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CTF) regimes, and calls on its members and other countries to apply enhanced due diligence or counter-measures to protect themselves from the risks emanating from these jurisdictions. These lists are updated periodically and can be accessed through FATF's website or other sources34.
Reference:
1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: Sanctions, p. 63-64 2: U.S. Department of the Treasury Office of Foreign Assets Control, https://home.treasury.gov/policy-issues/financial-sanctions 3: CAMS Certification Package - 6th Edition | ACAMS, Chapter 4: FATF Recommendations, p. 77-78 4: Financial Action Task Force, http://www.fatf-gafi.org/countries/#high-risk
NEW QUESTION # 117
The owner of a local retail store makes multiple deposits daily at a bank. When the owner makes these deposits, it is noted that he goes to different tellers (cashiers). The deposits consist of cash in amounts less than the currency reporting threshold. Which of the following best describes this activity?
- A. commingling
- B. integration
- C. structuring
- D. layering
Answer: D
NEW QUESTION # 118
A bank's anti-money laundering section receives an anonymous tip that a customer might be engaging in possible money laundering.
Which two facts should be considered during the course of an investigation into this matter? (Choose two.)
- A. The customer in on the exempt list for currency transaction reporting requirements
- B. The customer has had a long-standing account at the bank
- C. The customer is issuing a number of wires to several relatively high-risk jurisdictions
- D. The customer's account has had a large volume of activity, but the month-end balance is usually low
Answer: C,D
NEW QUESTION # 119
A politically exposed person (PEP) maintains an account at a bank. Last month a money laundering analyst filed a suspicious transaction report about unusual wire deposits originated by unknown individuals in the home country of the official. Recently a negative news search revealed political corruption in the home country of the official.
To whom should this situation be escalated?
- A. The Financial Action Task Force's PEP Hotline
- B. The line of business executive
- C. The board of directors
- D. The bank's anti-money laundering officer
Answer: D
NEW QUESTION # 120
Which information should be gathered as part of enhanced due diligence (EDD) for a high-risk customer?
- A. Plans for traveling in business trips
- B. Details on individuals with control over the account
- C. Explanations for changes in marital status
- D. Personal references
Answer: B
NEW QUESTION # 121
Which operational situation might indicate that money laundering is occurring at or through a deposit-taking financial institution?
- A. The institution has observed an increase in the adoption of its digital products and services.
- B. The institution has observed a reduced settlement time in the transaction services that support the rapid movement or remittance of funds.
- C. The institution maintains a sequentially numbered log of the monetary instruments it sells.
- D. The institution has observed an increase in customer demand for large-denomination banknotes.
Answer: D
Explanation:
Money launderers prefer large-denomination bills because they facilitate bulk cash smuggling and placement.
Option A (Correct): Increased demand for large-denomination banknotes is a known money laundering red flag.
Option B (Incorrect): Increased digital service adoption is normal banking behavior.
Option C (Incorrect): Faster settlement times may reflect technology upgrades, not financial crime.
Option D (Incorrect): Maintaining a log of monetary instruments is a compliance best practice, not a red flag.
NEW QUESTION # 122
The recommended way lot a financial institution to respond to a request from a law enforcement agency is to:
- A. freeze the identified account immediately
- B. train all staff to enable them to respond to subpoenas.
- C. have an audit trail system to produce requested documentation
- D. hand over documents that are protected by attorney-client privilege
Answer: C
Explanation:
Financial institutions are required by law to maintain records and documentation of customer transactions and to provide this information to law enforcement agencies upon request. However, financial institutions should also have policies and procedures in place to ensure that they comply with legal and regulatory requirements and protect customer privacy. Providing protected documents that are privileged under attorney-client privilege or freezing an account immediately may not be the appropriate response and may expose the financial institution to legal or reputational risks.
NEW QUESTION # 123
Which three criteria does a shell bank meet according to the Wolfsberg Principles on Correspondent Banking?
Choose 3 answers.
- A. It does not conduct business at a fixed address in a jurisdiction in which it is authorized to conduct business.
- B. It does not employ one or more individuals at its fixed address where it is authorized to conduct business or maintain operating records at that address
- C. It is not subject to AML laws that require it to implement an AML program
- D. It is not subject to inspection by the banking authority that licensed it to conduct banking activities
Answer: A,B,C
NEW QUESTION # 124
Which transaction should result in a SAR/STR filing?
- A. A national food-chain restaurant makes multiple, anticipated cash transactions that are above the daily reporting threshold.
- B. A small business owner deposits checks totaling $9,950 USD on a daily basis without providing a legitimate purpose.
- C. A national food-chain restaurant with multiple cash transactions at various branch locations.
- D. A small business owner deposits $25,000 USD in cash proceeds with a business equipment bill of sale.
Answer: B
Explanation:
Ref This transaction should result in a SAR/STR filing because it indicates possible structuring, which is a form of money laundering that involves breaking down large amounts of cash into smaller deposits to avoid detection or reporting requirements. Structuring is often done to conceal the source or destination of illicit funds, or to evade taxes, regulations, or sanctions. A small business owner who deposits checks just below the
$10,000 USD threshold on a daily basis without providing a legitimate purpose raises a red flag for suspicious activity and should be reported to the relevant Financial Intelligence Unit.
References:
Suspicious Transaction Report (STR) / Suspicious Activity Report (SAR)
What Is a Suspicious Activity Report (SAR)? Triggers and Filing
How to decide if SAR filing is needed
erence: https://aml-cft.net/library/suspicious-transaction-report-str-suspicious-activity-report-sar/
NEW QUESTION # 125
A typical red flag regarding potential money laundering in connection with an art purchase occurs when a customer:
- A. asks to pay a large amount in cash without a comprehensible reason.
- B. asks to pay in installments and pays from two differently named accounts.
- C. buys a painting as an anonymous bidder and provides the source of wealth.
- D. pays more at an auction for a painting than the estimated maximum price.
Answer: A
Explanation:
Paying a large amount in cash for an art purchase is a typical red flag of potential money laundering, as it may indicate an attempt to avoid traceability and reporting requirements. Cash transactions are often used by criminals to launder illicit funds, as they are difficult to track and verify. According to the FATF guidance on money laundering and terrorist financing risks in the art trade, cash payments above a certain threshold should be subject to enhanced due diligence and reporting obligations by art market participants (AMPs). AMPs should also be wary of customers who provide insufficient or inconsistent information about the source of funds, the purpose of the transaction, or the identity of the beneficial owner.
References:
Money Laundering and Terrorist Financing Risks and Vulnerabilities Associated with Gold, FATF, July
2023, p. 22-23.
Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals, FATF, June 2023, p. 38-39.
Red Flags Money laundering and terrorist financing risks, Responsible Art Market, 2017, p. 2.
NEW QUESTION # 126
Historically, a tour guide has made monthly cash deposits averaging $10,000. Over the past three months, the monthly deposits have averaged $100,000. When the financial institution questions the increased deposits, the tour guide explains that there have been numerous conventions in town so business has increased substantially.
Which further action(s) should the financial institution take?
- A. Schedule a periodic review of activity
- B. Perform further investigation, if appropriate report the activity to the authorities and place a limit on future transactions
- C. Perform further investigation, it appropriate report the activity to the authorities and consider terminating the relationship
- D. Immediately terminate the relationship
Answer: C
NEW QUESTION # 127
Combating the Financing of Terrorism (CFT)]
At a minimum, who should receive role-specific AML training? (Select Three.)
- A. Consultants
- B. Human resources staff
- C. Information technology staff
- D. AML/Compliance staff
- E. Customer facing staff
- F. Board of Directors
Answer: C,D,E
Explanation:
1. Information Technology Staff: These employees handle systems, databases, and software used for transaction monitoring, customer due diligence (CDD), and other AML processes. They need to understand how to configure and maintain AML systems, recognize suspicious patterns, and ensure data security.
2. Customer Facing Staff: Frontline employees, such as tellers, relationship managers, and customer service representatives, interact directly with customers. They play a crucial role in identifying red flags, conducting enhanced due diligence (EDD), and reporting suspicious activities. Training helps them recognize unusual behavior and follow proper procedures.
3. AML/Compliance Staff: These professionals are directly responsible for AML program management, policy development, and regulatory compliance. They need in-depth knowledge of AML laws, regulations, and best practices. Training ensures they stay updated and can effectively implement AML controls.
References:
1. Financial Crime Academy: Ensuring Compliance - Building an Effective AML Training Program
2. ACAMS: AML Training - Preparing Auditors to Adequately Assess AML Programs
3. Financial Crime Academy: AML Training for High-Level Executives
4. Financial Crime Academy: Senior Management AML Training Workshops
NEW QUESTION # 128
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ACAMS CAMS Certification Exam is a computer-based exam consisting of 120 multiple-choice questions that must be completed within three and a half hours. CAMS exam covers four main areas: AML/CFT compliance programs, money laundering risks and methods, compliance standards for correspondent banking and money services businesses, and conducting AML/CFT investigations.
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