ACAMS Updated CAMS Exam Questions and Answers by malik

The art and antiquities market is highly vulnerable to money laundering and terrorist financingdue toanonymity in transactions, lack of regulatory oversight, and difficulty in tracing ownership.

Option A (Correct):Art storage in tax-free zones can be used to obscure ownership and avoid AML scrutiny.

Option C (Correct):Using third-party art advisors can facilitate anonymous transactions and shield beneficial ownership.

Option D (Correct):High-value art sold on social media without proper provenance raises ML/TF risksdue tolack of financial oversight.

Why Other Options Are Incorrect:

Option B (Incorrect):Paying fair market value does not indicate illicit activity—underpricing or rapid resale are bigger red flags.

Option E (Incorrect):Authenticity verification is common in legitimate art transactions and is not a direct ML/TF red flag.

Red Flags for Art & Antiquities Money Laundering:

Frequent high-value art transactions with no clear business purpose.

Use of intermediaries to conceal beneficial ownership.

Rapid resale of newly purchased art at below-market prices.

Best Practices for AML in the Art Market:

Conduct enhanced due diligence (EDD) on high-value art transactions.

Monitor transactions involving politically exposed persons (PEPs).

Report suspicious transactions linked to high-risk art traders.

ARisk-Based Approach (RBA)allows financial institutions toallocate compliance resources effectivelyandprioritize higher-risk areasforenhanced due diligence (EDD).

Option A (Correct):An RBA enables institutions to tailor their AML controls based on risk exposure, ensuring better resource allocation.

Option B (Incorrect):While RBAimproves efficiency, itdoes not guarantee faster implementationof controls.

Option C (Incorrect):RBA is a regulatory requirement, butit is not necessarily determined by customer acceptance.

Option D (Incorrect):RBA provides guidance on risk mitigation, but itdoes not dictate specific resource usage.

Benefits of a Risk-Based Approach (RBA):

Efficient use of compliance resourcesby focusing onhigh-risk transactions, customers, and geographies.

Regulatory compliance alignmentwithFATF, Basel Committee, and Wolfsberg Group AML principles.

Flexibility to adjust AML controlsas new threats emerge.

Best Practices for Implementing RBA in AML Compliance:

Conduct enterprise-wide risk assessments (EWRAs).

Classify customers and transactions based on risk levels.

Apply enhanced due diligence (EDD) for high-risk clients.

TheBasel Committee’s AML guidelinesemphasizerisk-based customer due diligence (CDD) and beneficial ownership transparency.

Option A (Correct):CDD policies must be risk-basedto applyenhanced due diligence (EDD) for high-risk customersandsimplified due diligence (SDD) for low-risk customers.

Option C (Correct):Banksmust verify the identity of customers and beneficial ownersto prevent financial crime risks.

Why Other Options Are Incorrect:

Option B (Incorrect):Numbered accountsare not strictly prohibitedbut requirestrict transparency and due diligence measures.

Option D (Incorrect):CDD proceduresmust be risk-based, not uniform across all customers.

Option E (Incorrect):Transactionsshould not be processed until full due diligence is completed, except in rare cases where regulatory exceptions apply.

Best Practices for Risk-Based Customer Due Diligence:

Apply EDD for high-risk entities (e.g., PEPs, offshore companies).

Ensure full beneficial ownership transparency.

Implement ongoing transaction monitoring for risk assessment.

Money laundering through real estate transactions involves integrating illicit funds into the legitimate financial system while providing a relatively “safe” property investment. In this context, the most relevant factor to examine is the beneficial owner of the asset. Identifying the true owner behind a property helps uncover potential money laundering schemes. Criminals often use third parties, shell companies, or complex ownership structures to distance the transaction from the source of illicit funds. Investigating the beneficial owner’s identity is crucial for detecting and preventing real estate-related money laundering12.