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

 A U.S. bank must block or reject an international funds transfer when there is an OFAC designated party to the transaction, regardless of the beneficiary or the correspondent bank. This is because the U.S. bank is prohibited from dealing with any person orentity that is on the Specially Designated Nationals and Blocked Persons List (SDN List) or subject to any other OFAC sanctions program1. The SDN List includes individuals, groups, and entities, such as terrorists and narcotics traffickers, that are designated under programs that are not country-specific2. The U.S. bank must also report any blocked or rejected transactions to OFAC within 10 business days3.

 1: FFIEC BSA/AML Office of Foreign Assets Control - Office of Foreign … 2: Specially Designated Nationals And Blocked Persons List (SDN) Human … 3: [Reporting Blocked Transactions | Office of Foreign Assets Control]

The correct next course of action is to request that the new product approval committee include the compliance officer. This is because the compliance officer has the responsibility to ensure that the new financial service complies with the applicable laws, regulations, and standards, and does not pose any undue risks to the institution or its customers. The compliance officer should be involved in the new product development process from the beginning, and provide guidance and feedback on the potential compliance implications and requirements of the new service12.

1: CAMS Certification Package - 6th Edition | ACAMS, Chapter 6: Developing an Effective Anti-Money Laundering Program, p. 121-122 2: FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and Terrorist Financing, October 2013, p. 28, http://www.fatf-gafi.org/media/fatf/documents/reports/Role-of-hawala-and-similar-in-ml-tf.pdf

The Basel Committee on Banking Supervision (BCBS) issued a paper in October 2001 titled Customer due diligence for banks, which outlined four essential elements of a sound Know Your Customer (KYC) programme. These elements are: customer acceptance policy, customer identification, on-going monitoring of higher risk accounts, and risk management. The paper also recommended that these standards should be applicable to all banks in all countries, regardless of their size, nature, or location. The paper stated that "KYC safeguards go beyond simple account opening and record-keeping and require banks to formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk accounts, and includes proactive account monitoring for suspicious activities."1

Customer due diligence for banks by the Basel Committee on Banking Supervision, October 2001.

Consolidated KYC Risk Management by the Basel Committee on Banking Supervision, October 2004.

Editorial The Basel Committee on Banking Supervision report on customer … by Journal of Banking Regulation, 2002.

 The next course of action for the anti-money laundering officer to take is to determine if there is a readily identifiable cause for the increase in compliance deficiencies. This could involve analyzing the data, interviewing the staff, reviewing the procedures, or conducting a root cause analysis. The anti-money laundering officer should try to find out if the deficiencies are due to human error, system failure, policy ambiguity, training gap, external factors, or any other reason. By identifying the cause, the anti-money laundering officer can then take appropriate corrective or preventive measures to address the issue and improve the compliance performance.

CAMS Study Guide - 6th Edition, Chapter 6, pages 171-172

CAMS Certification Exam Outline, Domain 3, Task 3.1, Skill 3.1.2

Anti-Money Laundering & Know Your Customer eBook, Chapter 5, pages 63-64

Summary of the Global Anti-Money Laundering Know Your Customer Policy, page 3

A large cash deposit is a potential indicator of money laundering, especially if it is inconsistent with the customer’s profile or behavior. Therefore, the bank should ask the customer about the source and purpose of the funds, and verify the information if possible. In this case, the customer claims to have sold a used car and received cash, which may be a reasonable explanation. However, the bank should not rely solely on the customer’s statement, but should also monitor the account for any further cash transactions or suspicious activity that may indicate money laundering. For example, the bank should check if the customer withdraws the cash soon after the deposit, transfers the funds to other accounts or jurisdictions, or engages in structuring or smurfing to avoid reporting thresholds.

The bank should not do nothing, as this may expose the bank to regulatory or reputational risks, or facilitate money laundering. The bank should also not file a Suspicious Transaction Report (STR) unless there are other grounds to suspect money laundering, as this may be premature or unnecessary. The bank should not close the account before another issues arise, as this may be disproportionate or discriminatory, and may also alert the customer to the bank’s suspicion.

[ACAMS Study Guide for the CAMS Certification Examination, 6th Edition], Chapter 4: Conducting or Supporting the Investigation Process, pp. 103-104, 107-108.

Customer Identification Program - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 4-5.

Suspicious Activity Reporting - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 4-5.

18 AML Analyst Interview Questions (With Example Answers), ResumeCat, accessed on February 9, 2024.

 A significant reduction in suspicious transaction report (STR) filings at a particular branch could indicate that the branch is not properly identifying and reporting suspicious activities, or that the branch is experiencing a change in customer behavior or risk profile. Therefore, the most appropriate action for an anti-money laundering specialist is to review the branch exception reports, which are reports that highlight transactions or activities that deviate from the expected or normal patterns, based on the customer profiles and risk assessments. By reviewing the branch exception reports, the specialist can determine whether there are any changes in activity that warrant further investigation or reporting, or whether there are any gaps or weaknesses in the branch’s compliance program or procedures.

The other options are not as appropriate as reviewing the branch exception reports, as they do not directly address the issue of suspicious activity reporting. Placing the branch on the watchlist may be a subsequent action, but it does not provide immediate insight into the reason for the reduction in STR filings. Analyzing the branch activity reports may show whether there has been a decrease in branch activity, but it does not explain why the activity has decreased, or whether the remaining activity is suspicious or not. Reviewing the staff records may reveal whether inexperienced personnel are in critical positions without appropriate training, but it does not account for other factors that may affect the branch’s compliance performance, such as management oversight, internal controls, or customer risk.

ACAMS CAMS Certification Study Guide (6th edition), page 361; ACAMS CAMS Certification Video Training Course, Module 2, Lesson 12; What Is a Suspicious Activity Report (SAR)? Triggers and Filing3; Reporting suspicious transactions to FINTRAC4.

According to the BSA/AML Manual1, a financial institution is required to file a SAR for any transaction conducted or attempted by, at, or through the institution that involves or aggregates at least $5,000 in funds or other assets, and the institution knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part): (a) involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity; (b) is designed to evade any requirements of the BSA or its implementing regulations; © has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or (d) involves use of the institution to facilitate criminal activity. In this case, Bank A is the institution that processes the wire transfer and deems it suspicious, based on its own assessment of the transaction and the customer. Therefore, Bank A is responsible for filing a SAR for the transaction in Country A, where it is located and where the transaction takes place. Bank A does not need to file a SAR for the transaction in Country B or Country C, as it does not have jurisdiction or authority over those countries or the other banks involved. However, Bank A may share information about the suspicious transaction with Bank B or Bank C, subject to certain conditions and limitations, as described in the BSA/AML Manual1.

BSA/AML Manual1

Suspicious Activity Reporting - Overview2

Suspicious Activity Report (SAR) Basics3

From Microsoft Start Partners

Another simpler way of looking at the problem is by seeing this case as a Correspondent Banking relationship:

-A is the primary correspondent bank.

-B is the respondent bank.

-C is the receiving bank (of the wire transfer).

Since A is conducting the transaction on behalf of B's customer via the correspondent relationship deemed suspicious, it is the transaction in Country A by the correspondent bank that files the STR. Also, per the regular process, it is on the transaction, not the bank, that the STR is filed against.