CAMS-FCI Online Practice Questions and Answers

Correct Answer: C

The reason why it is important for the casino to maintain control of the output from the provider is that the casino maintains ultimate responsibility for this activity and should maintain control to avoid non-compliance ? This is because the casino is accountable for its own AML/CFT obligations and cannot delegate or outsource them to a third-party provider. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should ensure that it has adequate oversight and control over any third-party providers that it engages for AML/CFT purposes, such as conducting due diligence, verifying information, or monitoring transactions" (p. 25). The FI should also "review and evaluate the performance and quality of the third-party providers on a regular basis, and address any issues or gaps that may arise" (p. 25).

The other options are not as relevant or accurate as option C. The clients of the casino prefer to know that the casino is keeping their information secure when being held by a third-party (A) is not a reason why the casino should maintain control of the output from the provider, but rather a customer expectation or preference. As with all third-party relationships, proper control must be maintained to ensure profitability (B) is not a reason why the casino should maintain control of the output from the provider, but rather a general business principle or objective. Other casinos are frequently looking to reduce costs and share ideas, so if this relationship is successful, the model can be used by other businesses (D) is not a reason why the casino should maintain control of the output from the provider, but rather a potential benefit or outcome.

Correct Answer: BEF

Section 314(b) of the USA PATRIOT Act allows financial institutions to share information with each other, under a safe harbor that offers protection from liability, in order to better identify and report potential money laundering or terrorist financing activities. The intended benefits of this information sharing include:

Participating financial institutions sharing information about suspicious activity by customers that may have otherwise gone unnoticed. For example, if a customer is conducting transactions with multiple financial institutions that individually do not appear suspicious, but collectively indicate a pattern of money laundering or terrorist financing, the financial institutions can share this information and report it to the authorities. Detecting money laundering and terrorist financing approaches and schemes across multiple financial institutions. For example, if a financial institution identifies a new typology or modus operandi of money laundering or terrorist financing, it can share this information with other financial institutions to help them prevent or detect similar activities by their customers. Obtaining additional information on customers or transactions regarding potential money laundering or terrorist financing. For example, if a financial institution has incomplete or insufficient information on a customer or a transaction that raises suspicion, it can request more information from another financial institution that may have dealt with the same customer or transaction. References:

Section 314(b) | FinCEN.gov Section 314(b) Fact Sheet - FinCEN.gov

Correct Answer: B

According to the Financial Action Task Force (FATF), the use of large amounts of cash is a common method for money launderers to move illicit funds [1]. Purchasing luxury items with cash can indicate an attempt to convert illegal funds into tangible assets that can be easily resold or moved across borders. As a result, businesses that deal with luxury items are required to implement enhanced due diligence measures, including monitoring transactions involving large amounts of cash [1]. Reference: [1] Financial Action Task Force. (2013). Money Laundering and Terrorist Financing Through the Real Estate Sector. https://www.fatf- gafi.org/media/fatf/documents/reports/ML-TF-through-real-estate.pdf

Correct Answer: CE

The correct answer is C and E. The investigator should provide additional information to the LE upon receiving a formal request, and gather all the information that would be useful for LE and recommend filing a SAR/STR. These steps are consistent with the best practices of conducting financial crime investigations and reporting suspicious activity. The investigator should not close the customer's accounts or the investigation, as this may interfere with the ongoing LE inquiry and violate the FI's policies and procedures. The investigator should also not contact local LE directly, as this may compromise the confidentiality of the investigation and the FIU's authority. References: Advanced CAMS-FCI Study Guide, Chapter 4: Reporting Suspicious Activity, pages 40-411 Advanced CAMS-FCI Study Guide, Chapter 5: Governance of an AFC Investigations Unit, pages 48-491 Advanced CAMS-FCI Certification | ACAMS

Correct Answer: DE

The actions that the investigator should recommend to mitigate risk are conducting enhanced due diligence (D) and re-evaluating the customer risk profile (E). These actions are appropriate and prudent, as they allow the investigator to obtain more information and evidence about the nature and purpose of the transactions, the source and destination of the funds, and the identity and legitimacy of the parties involved. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries" (p. 24). The FI should also "re-assess the customer risk profile based on any new information obtained during the investigation, and adjust the customer due diligence and monitoring requirements accordingly" (p. 25).

The other options are not as appropriate or effective as options D and E. The investigator should not recommend exiting the relationship with the customer (A), as this could be premature or disproportionate, as well as potentially discriminatory or illegal. The investigator should not recommend documenting and maintaining a file with the investigative findings (B), as this is not an action to mitigate risk, but rather a standard procedure for any investigation. The investigator should not recommend discussing the investigation findings with the customer ? as this could compromise the integrity and objectivity of the investigation, as well as expose the FI to legal or regulatory risks. References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide

Correct Answer: AD

Here is the exact information from the Financial Action Task Force (FATF) Guidance for a Risk-Based Approach for Trust and Company Service Providers:

"Understanding the management and ownership structure of a trust is crucial in assessing the ML/TF risk it poses. This includes the identity of all settlors, trustees and beneficiaries, and their respective roles and responsibilities, as well as the

nature and purpose of the trust."

"TCSPs should obtain and maintain up-to-date information on the purpose and intended nature of the business relationship, the source of funds and wealth, and where relevant, the source of funds or wealth of the settlor and beneficiaries."

Based on this information, the correct answers are A and D. Trust and Company Service Providers must understand the responsibility and authority in the structure, as well as the general purpose behind the structure in order to assess the

overall risk of the trust and ensure that any transactions with the trust are legitimate.

Correct Answer: A

One of the actions that is part of the enhanced due diligence process is collecting beneficial ownership details regarding the client's account. This is important to identify the natural persons who ultimately own or control the client, and to

assess the potential risks associated with them. According to the Financial Action Task Force (FATF), beneficial ownership information should include1:

The name, nationality, and country of residence of each beneficial owner. The date of birth or incorporation of each beneficial owner. The nature and extent of the beneficial interest held by each beneficial owner. The means by which the

beneficial ownership or control is exercised.

References:

FATF Guidance on Transparency and Beneficial Ownership

Correct Answer: B

The next best course of action for the investigator is to file a SAR/STR on the account activity in relation to a potential funnel account. This is because a funnel account is a type of money laundering scheme that involves depositing funds from multiple sources into a single account, and then transferring them to another account, often in a different jurisdiction. A funnel account can be used to conceal the origin, ownership, and destination of illicit funds, and to evade currency transaction reporting requirements. The investigator should report the suspicious activity to the relevant authorities and document the findings and actions taken. The other options are incorrect because:

A. Completing the monthly review and noting the activity for next month's review is not sufficient, as it delays the reporting of a possible money laundering scheme and exposes the financial institution to regulatory and reputational risks. C. Recommending the account for exit due to frequent global transactions is not appropriate, as it does not address the underlying issue of potential money laundering and may alert the customer of the investigation.

D. No further action is required as the customer is already rated at high-risk and the monthly spending is within expectations is not acceptable, as it ignores the red flags of a funnel account and fails to comply with the anti-money laundering obligations of the financial institution. References: Advanced CAMS-FCI Certification | ACAMS, Section 2: Investigating Financial Crimes, page 9 Leading Complex Investigations Certificate | ACAMS, Module 2: Identifying Red Flags, page 5

Correct Answer: C

The FI is required to ensure that the request includes an end date ?when it receives a keep open letter from LE for the identified account. This is because the FI has to balance its legal obligations to cooperate with LE and to protect its

customers' privacy and rights. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should request a written confirmation from LE that includes a specific end date for the request, as well as a

point of contact for any questions or concerns" (p.

35). The FI should also document the request and its compliance with it, and continue to monitor the account for any suspicious activity.

The other options are not correct. The FI should not contact the client for information relating to the account (A), as this could compromise the LE investigation or alert the client of the suspicion. The FI should not stop filing SAR/STR reports

on the account and/or customer (B), as this could violate its regulatory obligations and expose it to legal risks. The FI should not notify LE immediately after new transactions (D), as this could also interfere with the LE investigation or tip off the

client. The FI should follow the instructions of LE regarding when and how to share information.

Correct Answer: ACF

The observations at the on-site visits that would justify writing a SAR/STR are signs of severe wear and poor maintenance at the site (A), lights turned off at the site during operational hours ? and a full parking lot of cars with no staff at the site (F). These observations suggest that the daycare businesses are not operating legitimately or providing adequate services to their customers, and that they may be misusing governmental grants or laundering money through their accounts. These observations are consistent with some of the red flags for fraud identified by ACAMS2, such as:

Inadequate facilities or equipment for the type of business Lack of visible activity or customers at the business location Discrepancy between reported income and expenses Unusual volume or frequency of transactions The other observations are not as relevant or indicative of fraud as options A, C, and F. A site located in a commercial building (B) could be a normal or legitimate choice for a daycare business, depending on its size, location, and availability. Visible attendance with children being dropped off by parents (D) could show that the daycare business is providing genuine services to its customers, although it does not rule out possible fraud or money laundering. Visible signage indicating the purpose of building (E) could also show that the daycare business is transparent and legitimate, although it does not guarantee its quality or compliance.

References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS 2: ACAMS Fraud Prevention eLearning Course Module 3: Fraud Detection Techniques