CAMS Exam Dumps - Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition)

The origin of the funds is a primary financial crime risk when dealing with a TCSP connected to a high-risk country. Funds originating from such jurisdictions may be linked to illicit activity, especially if source verification is weak or absent.

PEPs are recognized by CAMS 6th Edition and FATF as posing elevated risk due to:

A. The family members and close associates of PEPs may be involved in illicit activities:“The risks extend beyond the PEP to family members and close associates, who may be used to conceal the movement of illicit funds.”(CAMS 6th Edition, PEP Risk Factors; FATF Guidance)

C. PEPs may exploit embassy activities to conceal bribery and corruption transactions:“PEPs may use their position or diplomatic privileges, such as embassy operations, to disguise or facilitate the movement of illicit funds.”(CAMS 6th Edition, Corruption and PEP Risks)

Incorrect Options:

B: There is no such legal provision granting PEPs financial immunity or unlimited credit.

D: Banks may (and often must) exit PEP relationships not in line with their risk appetite.

FATF and CAMS 6th Edition highlight certain third-party activities as red flags for money laundering in the life insurance sector:

Payments are regularly received from third parties that have no apparent relationship with the policy holder (C):“Red flags include payments made by third parties, especially where there is no apparent connection between the third party and the policy holder.”(FATF, Risk-Based Approach for Life Insurance Sector, Section IV: Red Flags; CAMS 6th Edition, Customer Due Diligence for Life Insurance)

A customer names an apparently unrelated third party as a beneficiary (D):“Another warning sign is when beneficiaries have no apparent relation to the policyholder.”(FATF, Ibid; CAMS 6th Edition, Life Insurance ML/TF Red Flags)

Incorrect Options:

A: Consulting an attorney is not, by itself, a red flag.

B: Policy transfer may warrant review but is not specifically a red flag for third-party involvement.

Risk assessment is the foundation of an effective AML compliance program. It enables an organization to identify, understand, and prioritize its exposure to money laundering and terrorist financing risks, which in turn informs the development of appropriate controls, including policies, procedures, and customer due diligence measures.

While regulatory compliance, cost efficiency, and operational considerations are important, the primary objective of AML/CFT measures is to reduce and manage the risks and threats of financial crime. FATF emphasizes that effectiveness should be measured by outcomes, not merely by technical compliance.

An AML/CFT framework may fully comply with laws and still be ineffective if it fails to detect, deter, or disrupt money laundering and terrorist financing. Regulators increasingly focus on whether systems and controls actually identify suspicious activity, prevent misuse of the financial system, and support law enforcement efforts.

Minimizing operational burden and controlling costs are secondary considerations and must not compromise risk mitigation. A cost-effective system that fails to detect financial crime would not meet regulatory expectations.

Therefore, the true measure of effectiveness lies in how well systems and controls mitigate financial crime risks and threats in practice.