ACAMS Updated CAMS Exam Questions and Answers by aysha

Political system changes can have an impact on an organization's AML risk as they can affect the legal and regulatory framework in which the organization operates. For example, changes to the laws or regulations related to AML, or changes in the way in which the government enforces AML regulations, can have an impact on the organization's AML risk by increasing or decreasing the likelihood of it being exposed to AML risk. In addition, changes in the political environment or political stability in a specific jurisdiction can also affect the organization's AML risk.

According to the Basel Committee on Banking Supervision’s Customer Due Diligence for Banks, the compliance function should provide an evaluation of a bank’s policies and procedures independent from its management. The compliance function is responsible for ensuring that the bank adheres to the relevant laws, regulations, and standards on customer due diligence, anti-money laundering, and combating the financing of terrorism. The compliance function should also monitor the implementation and effectiveness of the bank’s customer due diligence policies and procedures, identify and report any breaches or deficiencies, and recommend corrective actions or improvements. The compliance function should have sufficient authority, independence, resources, and access to information to perform its duties effectively.

Customer due diligence for banks, Basel Committee on Banking Supervision, October 2001, paragraphs 55-56

CAMS Study Guide - 6th Edition, Chapter 6, page 172

CAMS Certification Exam Outline, Domain 3, Task 3.1, Skill 3.1.2

Anti-Money-Laundering Guidance: Basel Committee Consultative Paper …, Office of the Comptroller of the Currency, February 2001, page 2

The Basel Committee on Banking Supervision (BCBS) is a global standard-setting body for the prudential regulation of banks. It does not have any formal authority to enforce its standards, but relies on its members’ commitment and peer pressure to implement them. The BCBS’s principles on customer due diligence (CDD) are part of its guidelineson anti-money laundering and combating the financing of terrorism (AML/CFT), which aim to enhance the soundness and integrity of banking systems. The BCBS’s principles on CDD provide guidance to banks and bank supervisors on the essential elements of a CDD programme, such as customer acceptance, identification, verification, risk assessment, monitoring, and record-keeping. The BCBS’s principles on CDD are not legally binding, but are intended to be a benchmark for national practices and for banks to design their own policies and procedures. The BCBS’s principles on CDD are consistent with the recommendations of the Financial Action Task Force (FATF), the global standard-setter for AML/CFT.

Customer due diligence for banks 1, BCBS, October 2001.

The Basel Committee on Banking Supervision report on customer due diligence 2, Journal of Banking Regulation, 2002.

TheBasel Committee on Banking Supervision (BCBS)setsglobal standards for bank governanceand states that theBoard of Directors plays a critical rolein AML oversight.

Option D (Correct):The Board is responsible for:

Establishing and approving the AML compliance function.

Ensuring the compliance function has adequate authority and resources.

Overseeing risk management efforts and policies.

Option A (Incorrect):The Board should be actively involved, not just informed when required.

Option B (Incorrect):The compliance function must have direct access to the Boardto ensure independent oversight.

Option C (Incorrect):The Board must be involved in policy establishmentfor effective compliance management.

Why Board Oversight is Critical:

Ensures effective AML governance and accountability.

Reduces regulatory risks and potential financial penalties.

Strengthens financial institution stability and reputation.

Best Practices for Board Oversight in AML Governance:

Establish independent compliance reporting lines to the Board.

Ensure regular AML risk assessments and policy reviews.

Mandate regular AML training for senior management.