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ACAMS Study Guide Practice Questions and correct provided answers
multiple choice version B
Which of the following is the most common method of laundering money through a legal money services business? A. Exchanging currency and remitting money B. Smuggling bulk cash C. Transferring funds through payable through accounts (PTAs) D. Exchanging Colombian pesos on the black market - a In general, the three phases of money laundering are said to be: placement and A. structuring and manipulation. B. layering and integration. C. layering and smurfing. D. integration and infiltration. - b Which statement is true? A. Systemic weaknesses in free trade zones include inadequate AML/CFT safeguards, minimal oversight by local authorities and weak procedures to inspect goods. B. Cuckoo smurfing is a significant money laundering technique identified by the Financial Action Task Force, wherein a form of structuring uses nested accounts with shell banks in secrecy havens. C. In its 40 Recommendations, the FATF issued a list of designated categories of offense that asserts crimes for a money laundering prosecution. D. E-cash is not attractive to the money launderer because it cannot be completely anonymous and
does not allow for large amounts to be transported quickly and easily. - a Which three of the following is an indication of possible money laundering in an insurance industry scenario? A. Insurance products sold through intermediaries, agents or brokers B. Single-premium insurance bonds, redeemed at a discount C. Policyholders who are unconcerned about penalties for early cancellation D. Policyholders who redeem the policy within the free look period - b, c, d Which two activities are typically associated with the black market peso exchange (BMPE) money laundering system? A. Converting illicit drug proceeds from dollars or euros to Colombian pesos B. Converting illicit drug proceeds from Colombian pesos to dollars or euros C. Facilitating purchases by Colombian importers of goods manufactured in the United States or Europe through peso brokers D. Facilitating purchases by European or U.S. importers of goods manufactured in Colombia through peso brokers - a & c What is the right of reciprocity in the field of international cooperation against money laundering? A. The legal principle that financial institutions that have referred customers to other financial institutions can share information about these customers with the other institutions B. A rule of the Basel Committee allowing properly regulated financial institutes of another member state of the Basel Committee to do business without additional supervision to the degree that the other state grants the same right
C. The résumé of the compliance officer D. The customer base - a, b & d A new customer approaches a bank to open a commercial account. The customer provides an address for the account located across the city from the branch. When asked by the account representative if the customer requires any additional banking services, the customer responds that she is also interested in opening a personal investment account. The account representative refers the customer to the broker- dealer. The customer tells the firm representative she has never had a brokerage account before and has a few questions about how an investment account works. The customer asks how deposits can be made into her account, if there are any reporting requirements, and how to go about moving balances out of the account using wire transfers. No questions are asked about fees associated with these transactions. Which three items would be considered suspicious? A. The customer asks many questions about the brokerage account but - a, c & d Trade-based money laundering requires the ability to A. over- or under-invoice the goods. B. sell the imported goods for as little as possible. C. use goods that do not need to be declared. D. avoid the use of high-value assets such as luxury cars or boats. - a Which of the following statements is true? Correspondent banking is most vulnerable to money laundering when the correspondent account is A. maintained for foreign financial institutions that are banks. B. not used to provide services directly to third parties. C. maintained for a foreign bank that does not have a physical presence in any country. D. maintained for a foreign private bank that is publicly traded and is a qualified intermediary. - c
Which statement is true? A. Lawyers in FATF member countries generally cannot be used to serve as formation agents to set up trusts, front companies or shell companies. B. Lawyers and similar professional gatekeepers are called money services businesses. C. Lawyers generally cannot be used to act as nominee shareholders for a beneficial owner. D. Lawyers can be abused by launderers by using the accounts they set up for them for the placement and layering of funds. - d Which three of the following statements are true in respect to the Fourth EU Anti-Money Laundering Directive? A. Member countries can decide when and if they incorporate it into their local laws. B. It repeals and replaces the Third EU Directive on Anti-Money Laundering. C. Each member country must hold beneficial ownership information in a central registry and it must be made available to competent authorities. D. The definition of a PEP is expanded to include domestic persons. - b, c & d According to the EU Directives, an independent legal professional is obligated to report suspicion of money laundering in a client relationship when A. representing a client in a legal matter. B. ascertaining the legal position for a client. C. participating in financial or corporate transactions. D. obtaining information associated with a judicial proceeding. - c Which of the following is the most difficult regulatory challenge facing a foreign financial institution with a correspondent banking relationship in the U.S.? A. USA PATRIOT Act B. Basel Due Diligence Principles for Banks
B. A person or entity who is ultimately entitled to the funds in the account, even though his or her name may not appear on the account C. A person or entity who is the originator and the destination of most (but not all) transactions conducted within the account but who does not ultimately control such funds D. A person or entity who is a gatekeeper, has the legal title to the account and typically transfers the funds to a trust - b FinCEN's Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance, published in 2014, listed six areas of emphasis. Which three areas are included in that list? A. Leadership should be engaged. B. Information should be shared throughout the organization. C. Leadership and staff should understand how their BSA reports are used. D. The organization must have an appropriately qualified compliance officer. - a, b & d Which of the following should a national legislature consider when criminalizing money laundering in line with the CFATF 19 Recommendations? (Choose three.) A. Defining money laundering based on the model laws issued by the Organization of American States B. Permitting forfeiture in all cases following conviction C. Indicating whether it is relevant that a predicate offense may have been committed outside the local jurisdiction D. Requiring money laundering offenses to prove that the offender has actual knowledge of a criminal connection to the funds - a, b & c Which three statements are true about the Fourth EU Directive on Money Laundering?
A. It updates European Community legislation to be further in line with the Financial Action Task Force (FATF) 40 Recommendations. B. It repeats the definition of a politically exposed person in previous directives. C. It repeats the customer due diligence requirements of the previous directives but adds more detail to the requirements by, for example, including a specific requirement to identify the beneficial owner and includes ongoing monitoring requirements. D. It includes new definitions for correspondent relationships and senior management. - a, c & d Which one of the following statements is correct in respect of the FATF 40 Recommendations? Countries should A. not allow bearer shares and legal persons that are able to issue bearer shares. B. gather statistics on STRs; prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance, but not necessarily on other international requests for cooperation. C. consider the feasibility of a system in which banks and other financial institutions and intermediaries would report currency transactions without indicating a minimum fixed amount. D. not approve the establishment or accept the continued operation of shell banks. - d The Egmont Training Group published FIUs in Action: 100 Sanitized Cases. Which two of the items noted below were listed in the report as part of the six most frequent indicators of money laundering? A. Defensive stance to questioning B. Use of precious stones for moving value C. Unrealistic wealth compared to client profile D. Significant use of prepaid cards - a & c
B. integration. C. investing. D. structuring. - d In which case might a suspicious transaction report not be necessary? A. A customer deposits money of suspicious origins and refuses to answer questions from the financial institution's staff. B. A customer tries to move money that is suspected of being derived from criminal activity. C. A customer owns a large supermarket and deposits large amounts of cash several times a day. D. A customer's account is showing transaction activities that are beyond his known financial capability. - c As part of their role in fighting money laundering, financial institutions should A. designate a compliance officer. B. depend solely on the state's staff for combating money laundering. C. refuse small cash deposits under the reporting threshold. D. not open accounts for people from high-risk jurisdictions. - a Over lunch with a friend from the computer operations department, a junior compliance analyst learns that there was a problem during the previous week related to data being transmitted to the transaction monitoring application. The friend states that because it was purely a technical computer system issue, he was quietly proud that he was able to rectify it quickly himself during the early hours of the morning. What action should the analyst take? A. Congratulate his friend on his prompt action. B. Congratulate his friend and, as soon as possible, ensure that the compliance officer is aware of the situation.
C. Nothing because the appropriate controls are in place for such events. D. Immediately report the situation to the regulators. - b What is willful blindness defined as? A. Failing to file a suspicious transaction report for dealing with companies or financial institutions from offshore tax havens B. Not following customer identification procedures as set out in the institution's procedures C. Deliberate avoidance of knowledge of the facts or ignoring obvious money laundering red flags D. Deliberate avoidance of a customer based on the assumption that his or her behavior suggested a potential threat as money launderer and/or terrorist - c In anti-money laundering terminology, a red flag is A. a warning sign indicating potentially suspicious, risky transactions or activities. B. a general banking term used once the balance is negative or overdue. C. the standard flag of countries not cooperative in fighting money laundering and terrorist financing. D. an indicator that a customer is listed on an economic sanctions list. - a The money laundering reporting officer of a financial institution should A. report everything that comes his or her way from anyone in the organization. B. report everything that comes his or her way from senior management or Board of Directors. C. review all available information and file a suspicious transaction report in respect of any unusual or potentially suspicious activity. D. report only what the reporting officer's superior agrees should be reported. - c
According to the FATF 40 Recommendations, designated nonfinancial businesses and professions include A. casinos, real estate agents and dealers in precious stones. B. money service businesses, gatekeepers and issuers of electronic money. C. dealers in precious metals, lawyers and commodity futures traders. D. life insurance companies, real estate agents and notaries. - a
- According to the European Union's Fourth Directive, the threshold for entities obliged to report suspicious transactions decreased to A. $5,000 euros. B. $10,000 euros. C. $15,000 euros. D. $20,000 euros. - b Tom works as a compliance officer at ABC Bank. He is looking at the transactions of one of the bank's customers, Mr. Brown, the owner of a check cashing company. Over the last six months, Mr. Brown has not made withdrawals of cash against check deposits. He also deposited two checks for $2,000 each that were issued by a casino. When checking the KYC file, Tom sees that, when opening the account, Mr. Brown had requested information about fees and commission that are charged by the bank. What should arouse Tom's suspicion the most? A. Mr. Brown deposited checks from casinos. B. Mr. Brown has not made cash withdrawals against check deposits. C. Mr. Brown asked for information about commissions and fees charged. D. Mr. Brown does not have an escrow account. - b
A small broker-dealer has an AML compliance program that addresses procedures for filing suspicious transaction reports and includes policies, procedures and internal controls for customer identification, monitoring accounts and identifying money laundering red flags. Every employee of the broker dealer is trained via the Internet in January and in July on AML issues. The board does not take the Internet training. Instead, the compliance officer organizes a luncheon for them where an outsider comes in and trains them. The program provides for the appointment of a compliance officer, and once a year the compliance officer conducts an audit to test the program. In what respect does the program need improvement? A. The AML program should be tested by an independent person, not the compliance officer. B. The AML program should be tested more than once per year. C. The board should receive the same training provided to th - a The Basel Committee in Banking Supervision can be defined as a committee A. that develops the guidance for FATF. B. of the CEOs of the major international banks. C. of senior members of international law enforcement who harmonize international AML/CTF laws. D. of the G10 central bank governors, which issues guidance on subjects including customer due diligence, risk management and cross-border wire transfers. - d Which of the following best describes the alternative remittance system? A. The transfer of value between countries, outside of the legitimate banking system B. A nonelectronic data remittance system used in several foreign countries to report suspicious activities C. Old-fashioned reporting requirements commonly used in non-cooperative countries and territories
Which of the following statements is true? A. The Egmont Group membership comprises national FIUs. B. The Wolfsberg Group membership comprises central bank governors of the G10. C. The European Union recommends legislation to be passed in the member countries. D. The Basel Committee levies fines on the member countries for non-compliance with AML laws. - a Which three of the following statements are included in Section 313 of the PATRIOT Act definition of physical presence in respect to shell banks? A. There is a fixed address. B. It employs at least one full-time employee. C. The majority of the board of directors must be local residents. D. Banking records are kept at the fixed address. - a, b, & d The FATF has consistently noted the use of casinos in money laundering schemes in its annual typologies reports. One laundering technique involving casinos is A. asking for winners' checks to be made out in the name of third persons or without a payee. B. abusing casinos by circumventing its gatekeepers. C. prepaying a casino token or chip by using funds that are already in the casino system, creating a debit balance. D. extensive gambling via multiple games throughout the casino. - a Which of the following should an anti-money laundering specialist include on an internal investigation log?
A. A government order on a customer that garnishes his wages for failure to pay child support B. Supporting documentation and materials for denying service to a client with a bad credit rating C. Notes pertaining to activity that is unusual but for which a suspicious transaction report has not been filed D. Reference to a memorandum to the company's corporate management relating to budgetary and similar concerns - c What are the three key criteria in AML risk rating? A. Customer type, geographic location, products and services used B. Geographic location, customer type, employment status C. Products and services used, customer type and prior banking relations D. Employment status, customer type, products and services used - a A financial institution is looking to establish an online account opening service. The institution plans to offer this product to new and existing customers within the country. Which of the following would be the best plan of action for an AML specialist to recommend enabling the institution to verify the customer's identity? A. Do not offer the product, because it is too high risk because the customers cannot be seen to verify their identities. B. Require all customers to send a copy of valid photo identification to the institution. C. Ensure that the institution has a reliable third-party source that will enable verification of the customers. D. Allow customers to enter required information but require all customers to come to the institution in person for verification. - c
A. Whether the new account systems will be able to handle customers with foreign names B. Whether the correspondent accounts will be approved by government regulators C. Whether the correspondent accounts will be able to provide evidence of their customers' identities at account opening D. Whether the correspondent accounts will be able to be monitored by the institution's monitoring systems - d What are three specific sources of funds for financing terrorism? A. Kidnapping for ransom B. Trafficking in humans and arms C. Contributions to charities D. Wiring funds internationally - a, b & c A customer wants to establish a sizable relationship with a financial institution. The AML officer is not comfortable with the client's explanation for the source of the funds, but the client manager vouches for the client and is eager to open the relationship quickly. What should the AML officer do to validate the client's sources of funds? A. Accept the client manager's approval of the client. B. Allow the account to be opened but be sure to monitor the account activity. C. Perform a background investigation to determine whether the client's source of funds is credible. D. Decline the account. - c An AML compliance officer is investigating unusual activity that she has noticed in a customer's accounts. The customer has a retirement account, a savings account in trust for his son, a joint checking account with his wife, a company checking account and an individual brokerage account. The compliance officer believes the customer may be embezzling funds from his business. Which is the best
path for her to follow up on her suspicions? A. Focus on the checking accounts, as the checking accounts allow the fastest movement of funds. B. Ignore the savings and brokerage accounts, as these are not used in the placement stage of money laundering. C. Look at the movement of funds in all the accounts, as the customer may be using all of them tolaunder money. D. Focus on the business account, as the customer is embezzling money from the company. - c Identify three risks to financial institution employees for violations of AML laws. A. Civil penalties B. Termination of employment C. Criminal penalties D. Loss of passport - a, b & c A customer at a brokerage firm indicated that he was primarily a conservative, long- range investor. The customer has recently been engaging in day trading in penny stocks. What should an AML compliance officer do in such a situation? A. Check with the account officer to see if the customer has indicated a change in his investment strategy. B. Report the customer as suspicious due to investing in penny stocks. C. Contact the customer and ask why he is engaged in high-risk day-trading activity. D. Refer the customer to senior management for approval. - a The Annex IV General Guide to Account Opening Consultative Document published in February 2016 by the Basel Committee lists information that should be obtained for the identification of legal persons. Which three items are recommended? A. Name, legal form, status and proof of incorporation of the legal person
