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ACAMS 120 Study Guide Practice
Questions
What three initial actions should a financial institution take in responding to red flags that indicate that a customer is laundering money through his or her accounts? A. Identify and review internal transactions engaged in by the customer. B. Perform an Internet investigation focused on the customer, including a review of court records. C. Confront the customer about the possible abuse of his or her accounts. D. Compare the income generated by the customer with comparable businesses in the area. - ✔ ✔ a, b & d
The compliance officer of a financial institution has just received an extensive law enforcement subpoena focusing on the potential inadequacy of the institution's AML program. What three steps should the compliance officer take?
A. He or she should advise the employees to maintain the confidentiality of all STRs. B. He or she should notify the board of directors and senior management of the financial institution of the subpoena and its focus on the institution. C. He or she should consider advising the institution to retain outside counsel experienced in this area. D. He or she should consider providing law enforcement with the results of any internal investigation conducted by the institution. - ✔ ✔ b, c & d
What three factors could cause a financial institution to update its existing AML program? A. The launch of a new product B. The acquisition of another financial institution C. The election of a new board of directors D. The passage of time (e.g., 12-18 months) - ✔ ✔ a, b & d What are three factors with regard to how and when to report an STR to the senior management and/or the board of directors of a financial institution?
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 C. FATF Guidance on Terrorist Financing D. UN Security Council Resolution on Correspondent Banking - ✔ ✔ a
D. A specified unlawful activity that is committed through concentration accounts deceiving customers that are not directly related to the account - ✔ ✔ b
What is considered a beneficial owner of an account? A. A person or entity who has direct signatory authority over an account and whose name appears on the account 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
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
In which stage of money laundering would you classify depositing small amounts of cash into several related accounts? A. Integration B. Structuring C. Placement D. Construction - ✔ ✔ c
In which stage of money laundering would you classify the use of laundered funds to purchase high-value assets and luxury items? A. Integration B. Structuring C. Placement D. Construction - ✔ ✔ a
In most money laundering international standards, it is stated that
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
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 Which of the following statements is true? A. Credit cards are not likely to be used in the layering phase of money laundering because of restrictions in cash payments. B. Credit cards are effective instruments for laundering money because the transactions do not create an audit trail. C. A launderer can launder money by prepaying his or her credit card using funds that are already in the banking system, creating a credit balance on his account, and requesting a credit refund. D. A launderer can use illicit funds that are already in the banking system to pay his or her credit card bill for goods purchased, which is an example of placement. - ✔ ✔ c Why is a payable through account vulnerable to money laundering?
A. It can be very difficult to conduct due diligence on the foreign institution customers who are ultimately using these accounts. B. These are concentration accounts located in a domestic branch of a foreign bank. C. These are nested correspondent accounts at a foreign shell bank with customers with whom the domestic bank did not exercise due diligence. D. These are master escrow accounts on which a domestic bank generally does not conduct periodic verification. - ✔ ✔ a
What is the reasoning behind implementing a risk-based anti-money laundering approach? A. It will keep the regulators focused on money laundering controls in sectors beyond banks. B. Institutions can best use their limited resources to focus on matters where the money laundering risks are highest. C. A quantitative approach will generate better results than a qualitative approach.
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
