CAMS Exam Dumps - Certified Anti-Money Laundering Specialist (the 6th edition)

According to the research report by the Council of Europe1, one of the typologies of money laundering through online gambling is the use of multiple accounts and identities to conceal the source and destination of funds. This can be done by opening several accounts under the same name using different IP addresses, or by using false or stolen identification documents to create multiple accounts. Another typology is the use of online gambling platforms that are not regulated or authorized by the jurisdiction where the customer is located, or that do not require know-your-client information from users. This can allow money launderers to access the online gambling services from multiple countries, without being subject to any verification or monitoring by the authorities.

1: Research report - The use of online gambling for money laundering and the financing of terrorism purposes, Council of Europe, April 2013.

The key factor that would result in the decision for a financial institution (FI) to exit a client relationship is when the level of residual client risk exceeds the FI’s risk appetite. Residual client risk is the remaining risk after applying the FI’s risk mitigation measures, such as customer due diligence, transaction monitoring, and suspicious activity reporting. Risk appetite is the level and type of risk that the FI is willing and able to accept inpursuit of its business objectives. If the residual client risk is higher than the risk appetite, the FI may decide to terminate the relationship to avoid potential regulatory, reputational, or operational consequences.

The other options are not necessarily key factors for exiting a client relationship, because:

The client is a registered charity known to remit funds to high risk geographies where there is limited due diligence information available. This option may indicate a higher level of inherent client risk, but it does not necessarily mean that the FI should exit the relationship. The FI may be able to apply enhanced due diligence, ongoing monitoring, and risk-based controls to mitigate the risk and comply with the regulatory requirements. The FI may also consider the nature and purpose of the client’s activities, the source and destination of the funds, and the potential impact on the client’s beneficiaries.

Closing the client accounts will help reduce the number of transaction monitoring alerts. This option may suggest a possible benefit of exiting the relationship, but it is not a key factor for making the decision. The FI should not base its decision solely on the volume of transaction monitoring alerts, but rather on the quality and relevance of the alerts, the results of the investigation, and the risk assessment of the client. The FI should also ensure that its transaction monitoring system is properly calibrated and validated to avoid generating excessive or false alerts.

Client transactions generate ongoing transaction monitoring alerts that did not result in any SAR/STR filings. This option may indicate a need for reviewing and improving the transaction monitoring system or the investigation process, but it does not necessarily imply that the FI should exit the relationship. The FI should not assume that the absence of SAR/STR filings means that the client is low risk or that the alerts are irrelevant. The FI should conduct a thorough and timely investigation of the alerts and document the rationale for filing or not filing a SAR/STR. The FI should also consider the overall risk profile of the client and the nature and frequency of the transactions.

ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 3: AML Programs, Section 3.2: AML Program Components, Subsection 3.2.2: Risk Assessment, pp. 77-79

FFIEC BSA/AML Examination Manual, Section: Assessing Compliance with BSA Regulatory Requirements, Subsection: Suspicious Activity Reporting, pp. 4-5

Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations, Question 2, pp. 2-3

This is a common red flag of money laundering that involves layering, which is the process of moving funds through multiple accounts or entities to conceal their origin and ownership. Layering often involves cross-border transfers, especially to high-risk jurisdictions, and rapid movement of funds to avoid detection or tracing. A compliance officer should prioritize this red flag for investigation, as it may indicate a complex money laundering scheme or the financing of terrorism or proliferation.

AML Red Flags – What are the Top 10 Indicators? - ComplyAdvantage, section “Red flags related to transaction patterns”

AML 101: The 10 Most Common Red Flags - KYC-Chain, section “Red flag indicators related to geographical risks”

Anti-money laundering red flags, page 2, bullet point 5

 Structuring transactions is a common method of money laundering, where cash deposits or withdrawals are broken down into smaller amounts to avoid reporting or record-keeping requirements. Employees who unintentionally assist customers in structuring transactions may not be aware of the legal and regulatory implications of their actions, or may have been misled or coerced by the customers. Therefore, the most appropriate and proportionate response is to provide remedial training to these employees, to ensure they understand the anti-money laundering policies and procedures, the red flags of suspicious activity, and their reporting obligations. Terminating, contacting law enforcement, or transferring these employees may be excessive, premature, or ineffective measures, depending on the circumstances and the level of involvement of the employees.

ACAMS Study Guide for the CAMS Certification Examination - 6th Edition, Chapter 2: Money Laundering Risks and Methods, page 31.

ACAMS CAMS Certification Video Training Course, Module 2: Money Laundering Risks and Methods, Lesson 2.3: Structuring and Smurfing.

The FATF measures the effectiveness of a country’s efforts to combat money laundering and terrorist financing through a process known as mutual evaluation. This process involves peer reviews, where experts from other member countries assess the technical compliance and the effectiveness of a country’s anti-money laundering and counter-terrorist financing (AML/CTF) framework. The FATF has developed a methodology that identifies 11 key areas, or immediate outcomes, that an effective AML/CTF system should achieve, and uses them as the basis for the mutual evaluation. The FATF publishes the mutual evaluation reports, which provide an in-depth analysis of the strengths and weaknesses of each country’s AML/CTF regime, as well as recommendations for improvement.

1: An effective system to combat money laundering and terrorist financing, FATF, February 2013.

2: Report on the State of Effectiveness and Compliance with the FATF Standards, FATF, June 2021.

3: Financial Action Task Force (FATF) | Meaning, Functions, Impact, Finance Strategists, September 2023.

4: FATF Recommendations, FATF, October 2020.

 One of the common methods used by money launderers to hide the origin and destination of illicit funds is to create complex corporate structures that obscure the identity of the real owners or controllers of the assets. Lawyers can facilitate this process by providing legal services such as setting up shell companies, trusts, foundations, or other entities in jurisdictions with weak AML regulations or high secrecy. By doing so, lawyers can help their clients evade taxes, avoid sanctions, conceal criminal activities, or launder money. This is why lawyers are considered high-risk professionals for AML purposes and are subject to due diligence and reporting obligations.

= Some of the references that support this answer are:

ACAMS Study Guide for the CAMS Certification Examination, Chapter 3, Section 3.2.2, page 77: “Lawyers are often used to create complex corporate structures that can be used to hide the beneficial ownership of assets.”

Money Laundering Reporting Officer: The Role Of MLRO, Section “Money Laundering Risks For Lawyers”: “Lawyers are at risk of being used by criminals to launder money through various means, such as creating corporate entities, conducting transactions, or providing advice.”

New York Lawyer Pleads Guilty to Ponzi Scheme, Money Laundering, Section “Lawyer agrees to forfeit $19 million from investment scheme”: “A New York lawyer admitted Monday to money laundering and orchestrating an $18.8 million Ponzi scheme using his Forest Hills-based law firms, Wisnicki & Associates LLP and Wisnicki Neuhauser LLP.”

The potential red flag that alludes to money laundering is option B, where the trio engage in minimal gambling and combine the funds to request a casino cheque for the chips presented. This behavior is indicative of structuring, which involves breaking down large transactions into smaller ones to avoid detection by the casino and regulatory authorities. The fact that the trio only used a small amount of chips to play games, and then combined their funds to request a casino cheque, raises suspicions that they may be attempting to disguise the origin of their funds.

 A financial institution located in a Financial Action Task Force (FATF) member country should address the following issues in its anti-money laundering program when dealing with customers located in countries/jurisdictions that are not members of FATF:

The requirement to identify the beneficial owners of accounts: Beneficial owners are the natural persons who ultimately own or control a customer or a legal entity. Identifying the beneficial owners of accounts is a key component of customer due diligence (CDD) and helps the financial institution to assess the risk profile of the customer, prevent the misuse of legal entities for money laundering or terrorist financing, and comply with the FATF Recommendations12.

The requirement for customer identification for the opening of new accounts: Customer identification is the process of verifying the identity of a customer using reliable and independent sources of information or documents. Customer identification is another essential element of CDD and helps the financial institution to establish a business relationship with the customer, prevent identity fraud, and comply with the FATF Recommendations13.

The financial institution’s obligation to report suspicious transactions: Suspicious transactions are transactions that have no apparent economic or lawful purpose, or are inconsistent with the customer’s known profile or business activities, or indicate involvement in money laundering or terrorist financing. Reporting suspicious transactions to the competent authorities is a core obligation of the financial institution under the FATF Recommendations14 and helps to detect and deter illicit activities and support law enforcement investigations.

The obligation to freeze funds involved in suspicious transactions is not an issue that should be addressed in the anti-money laundering program, as it is not a requirement under the FATF Recommendations. The FATF Recommendations require the financial institution to freeze funds or other assets of designated persons and entities that are subject to targeted financial sanctions related to terrorism, proliferation of weapons of mass destruction, or other threats to the international financial system1 . However, the financial institution is not obliged to freeze funds involved in suspicious transactions, unless it receives a specific order from the competent authorities or the courts.

The FATF Recommendations, as amended November 2023

Interpretive Note to Recommendation 10 (Customer Due Diligence), paragraphs 5(b) and 6

Recommendation 10 (Customer Due Diligence), paragraph 1

Recommendation 20 (Reporting of Suspicious Transactions)

Recommendation 6 (Targeted Financial Sanctions Related to Terrorism and Terrorist Financing), Recommendation 7 (Targeted Financial Sanctions Related to Proliferation), and Recommendation 8 (Non-Profit Organisations)