ACAMS Updated CAMS Exam Questions and Answers by gurbaaz

Money launderers preferlarge-denomination billsbecause theyfacilitate bulk cash smuggling and placement.

Option A (Correct):Increased demand for large-denomination banknotesis a knownmoney laundering red flag.

Option B (Incorrect):Increased digital service adoption isnormal banking behavior.

Option C (Incorrect):Faster settlement times may reflecttechnology upgrades, not financial crime.

Option D (Incorrect):Maintaining a log of monetary instruments isa compliance best practice, not a red flag.

Money laundering risks arise whentransaction patternsareinconsistent with a business’s expected activity.

Option D (Correct):Multiple cash deposits in different branchesis a knownstructuring (smurfing) technique, used toevade cash transaction reporting thresholds.

Option A (Incorrect):Depositing intoboth checking and savings accountsisnormal behavior.

Option B (Incorrect):Irregular incoming paymentsmay require further review but arenot inherently suspicious.

Option C (Incorrect):Industry-related expenses (e.g., conference tickets)arenormal business activity.

Customer due diligence (CDD) is a key component of anti-money laundering (AML) and counter-terrorism financing (CTF) compliance. CDD helps financial institutions identify and verify their customers, assess their risk levels, and monitor their transactions for suspicious activity.

One of the main objectives of CDD is to understand the nature and purpose of customer relationships, which involves collecting and analyzing relevant information about the customer’s business activities, expected transaction patterns, source and destination of funds, and beneficial ownership. This information helps financial institutions develop a customer risk profile, which is a tool to measure and manage the risk exposure of each customer.

A customer risk profile reflects the financial institution’s risk appetite, which is the level and type of risk that the institution is willing and able to accept. By comparing the customer’s risk profile with the institution’s risk appetite, the institution can determine if the customer operates in line with the firm’s expectations and requirements for a specific industry segment. For example, if the institution has a low risk appetite for customers involved in high-risk sectors such as gambling, cryptocurrency, or arms trade, it can use the customer risk profile to identify and mitigate any potential risks associated with such customers.

Therefore, to understand if the customer operates in line with the firm’s risk appetite for a specific industry segment, a financial institution must obtain sufficient customer information to understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile.

TheEgmont Groupis aninternational network of Financial Intelligence Units (FIUs)thatenhances cooperation and information sharing to combat financial crime.

Option A (Correct):The Egmont Groupimproves global cooperationby enabling FIUsto exchange financial intelligence securely.

Option C (Correct):Thegroup facilitates secure communication channelsforsharing money laundering and terrorist financing intelligence.

Option E (Correct):TheEgmont Group fosters trust between FIUs, allowing them to work collaborativelyon cross-border investigations.

Why Other Options Are Incorrect:

Option B (Incorrect):The Egmont Groupdoes not negotiate case-by-case memoranda of understanding (MoUs)for individual cases.

Option D (Incorrect):The Egmont Groupdoes not draft AML legislation; itprovides guidance but does not have regulatory authority.

Key Functions of the Egmont Group:

Facilitating cross-border cooperation among FIUs.

Providing a secure network (Egmont Secure Web) for intelligence sharing.

Developing best practices for AML/CFT investigations.