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

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"The Egmont Group is a united body of 165 Financial Intelligence Units (FIUs). The Egmont Group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing (ML/TF). This is especially relevant as FIUs are uniquely positioned to cooperate and support national and international efforts to counter terrorist financing and are the trusted gateway for sharing financial information domestically and internationally in accordance with global Anti Money Laundering and Counter Financing of Terrorism (AML/CFT) standards.

AML risk assessments must beupdatedwhen there aresignificant changes in business operations.

Option A (Correct):New products (e.g.,cryptocurrency services, trade finance) introducenew AML risks.

Option D (Correct):Technology changes(e.g.,AI in transaction monitoring, new digital banking platforms) impactfraud and AML controls.

Option E (Correct):Mergers or acquisitionsintroducenew customer bases, jurisdictions, and compliance frameworks, requiringrisk reevaluation.

Option B (Incorrect):While compliance restructuring is important,it does not change inherent risk exposure.

Option C (Incorrect):Management changesmay affect oversight, but they donot directly alter risk exposure.

When a high volume of incoming wire transfers generates an alert about a client and the funds are immediately debited by cash withdrawals and outgoing wire transfers, the first information that should be reviewed to investigate this alert/case is the customer’s account activity. This is because the account activity can reveal the origin, destination, purpose, frequency, and amount of the wire transfers, as well as any unusual or inconsistent patterns that may indicate money laundering or fraud. The account activity can also help to compare the wire transfers with the customer’s profile, risk rating, expected behavior, and source of funds. Reviewing the account activity can help to determine if the alert is a false positive or a true positive, and if further investigation or reporting is required.

The characteristic of the Financial Action Task Force (FATF) 40 recommendations is that they comprise global standards for countering money laundering, recognized by government bodies across the world. The FATF 40 recommendations provide a comprehensive framework of measures that countries should implement to combat money laundering and terrorist financing. The recommendations are not mandatory, but are widely recognized and followed by countries across the globe. The recommendations cover a range of areas, including customer due diligence, record-keeping, suspicious activity reporting, and international cooperation.

A money remittance business will most likely attract money launderers because it deals primarily in cash transactions, engages in international transactions, and conducts transactions for walk-in customers. These factors make money remittance businesses vulnerable to money laundering risks, such as:

Cash transactions: Cash is the preferred medium of exchange for money launderers, as it is anonymous, untraceable, and easily convertible. Money remittance businesses often deal with large amounts of cash, which can be used to place, layer, or integrate illicit funds into the financial system. Cash transactions also pose challenges for customer identification, record keeping, and transaction monitoring.

International transactions: Money remittance businesses facilitate cross-border transfers of funds, which can be used to move illicit funds from one jurisdiction to another, or to obscure the origin, destination, or purpose of the funds. International transactions also involve exposure to different legal, regulatory, and cultural environments, which may create inconsistencies or gaps in anti-money laundering (AML) and counter-terrorism financing (CTF) standards and practices.

Walk-in customers: Money remittance businesses often serve walk-in customers, who may not have an established relationship with the business, or who may use false or incomplete identification documents. Walk-in customers also increase the volume and complexity of transactions, which may make it difficult to detect suspicious or unusual activity, or to apply risk-based due diligence measures.

ACAMS CAMS Certification Video Training Course1, Module 2: Money Laundering Risks and Methods, Lesson 2.3: Money Laundering Risks and Methods by Sector

ACAMS CAMS Study Guide, 6th Edition2, Chapter 2: Money Laundering Risks and Methods, Section 2.3: Money Laundering Risks and Methods by Sector, pp. 37-38

ACAMS CAMS Examination Preparation Seminar, 6th Edition3, Chapter 2: Money Laundering Risks and Methods, Section 2.3: Money Laundering Risks and Methods by Sector, Slide 16

A risk-based compliance program is one that identifies and prioritizes the highest compliance risks to the FI and implements controls, policies and procedures to mitigate them. A data-based option is the most suitable for a risk-based compliance program, as it allows the FI to collect, analyze and monitor relevant data on its customers, transactions, products, services, geographies and other risk factors. A data-based option also enables the FI to measure the effectiveness of its compliance program and adjust it as needed to respond to changing risks and regulatory expectations12.

1: Risk-Based Approach to Compliance Management2

2: A Risk-Based Approach to Regulatory Compliance1

 According to the FATF Recommendation 12, financial institutions should take reasonable measures to determine whether the beneficiaries of a life insurance policy and/or, where required, the beneficial owner of the beneficiary are politically exposed persons. This should occur at the latest at the time of the payout1. The purpose of this requirement is to prevent the abuse of life insurance products for money laundering or terrorist financing by PEPs or their associates. Therefore, the best way to mitigate the risk of adding a beneficiary to a life insurance policy for a foreign PEP is to perform due diligence on the beneficiary, such as verifying their identity, relationship with the PEP, and source of funds2.

The other options are not correct because they either do not comply with the FATF standards, or do not adequately address the risk of adding a beneficiary to a life insurance policy for a foreign PEP. Determining the source of wealth and source of funds is a measure that should be applied to the PEP as the customer, not the beneficiary, as partof the enhanced due diligence process2. Declining the request if the beneficiary is a foreign PEP may not be feasible or proportional, as not all foreign PEPs are involved in money laundering or terrorist financing, and some may have legitimate reasons to add a beneficiary to their life insurance policy. Declining the request to add a beneficiary due to increased risk may also not be feasible or proportional, as it may violate the contractual rights of the PEP as the customer, and may not be necessary if the due diligence on the beneficiary does not reveal any red flags or suspicions.

 https://complyadvantage.com/insights/peps-life-insurance/

https://www.cfatf-gafic.org/index.php/documents/fatf-40r/378-fatf-recommendation-12-politically-exposed-persons

TheAML supervisory authorityis responsible for overseeing financial institutions' compliance with AML/CFT regulations.

Option D (Correct):AML supervisory authorities, such as theFinancial Conduct Authority (FCA) in the UK,FinCEN in the US, orEuropean Central Bank (ECB) for EU institutions, conduct inspections, issue reports, and enforce penalties when AML deficiencies are found.

Option A (Incorrect):Self-regulatory bodies provide guidelines butdo not have legal authorityto withdraw banking licenses.

Option B (Incorrect):Law enforcement may investigate criminal conduct, butregulatory compliance issuesfall under AML supervisory authorities.

Option C (Incorrect):FATF provides guidance and assessments but doesnot directly enforcecompliance at individual financial institutions.