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NEW QUESTION # 180
What are three potential issues for foreign financial institutions maintaining correspondent accounts with U.S.
banks under the Patriot Act? Choose 3 answers

• A. Prohibition of correspondent accounts for shell banks
• B. Forfeiture of funds in a U.S. interbank account
• C. Cancellation of correspondent banking relationships
• D. U.S. residents maintaining private banking accounts

Answer: A,B,C

Explanation:
The Patriot Act, enacted in 2001, introduced several provisions to enhance the anti-money laundering and counter-terrorist financing (AML/CFT) measures for U.S. banks and their foreign correspondent relationships.
Some of the potential issues for foreign financial institutions (FFIs) maintaining correspondent accounts with
U.S. banks under the Patriot Act are:
* Cancellation of correspondent banking relationships: The Patriot Act requires U.S. banks to conduct due diligence and enhanced due diligence on their foreign correspondent accounts, and to terminate any account that poses a significant risk of money laundering or terrorist financing. This may result in the cancellation of correspondent banking relationships with FFIs that do not meet the U.S. standards or cooperate with the U.S. authorities. The loss of correspondent banking relationships may affect the FFIs' ability to access the U.S. financial system and provide services to their customers.
* Forfeiture of funds in a U.S. interbank account: The Patriot Act authorizes the U.S. government to seize and forfeit any funds in a U.S. interbank account that are involved in or traceable to money laundering or terrorist financing activities. This means that FFIs may face the risk of losing their funds in a U.S.
interbank account if they or their customers are suspected or accused of engaging in illicit activities.
The forfeiture of funds may have significant financial and reputational consequences for the FFIs and their customers.
* Prohibition of correspondent accounts for shell banks: The Patriot Act prohibits U.S. banks from establishing or maintaining correspondent accounts for shell banks, which are banks that have no physical presence in any country and are not affiliated with a regulated financial group. This means that FFIs that are shell banks or have relationships with shell banks cannot access the U.S. financial system through correspondent accounts. The prohibition of correspondent accounts for shell banks aims to prevent the use of shell banks as vehicles for money laundering and terrorist financing.
References:
* CAMS Study Guide, 6th Edition, Chapter 4: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 81-841
* USA PATRIOT Act, Title III: International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Sections 312, 319, and 3132
* Wolfsberg Anti-Money Laundering Principles for Correspondent Banking, October 2014, pp. 3-43 Reference: http://www.ffiec.gov/bsa_aml_infobase/pages_manual/olm_027.htm

NEW QUESTION # 181
Which of the following is considered a shell bank as defined by the USA PATRIOT Act?

• A. A local bank with offices in a non-cooperative jurisdiction which is subject to minimal regulatory supervision.
• B. An Internet bank operating in the U.S. providing services worldwide.
• C. A bank run by a foreign holding company with offices and staff in an offshore jurisdiction.
• D. A bank incorporated in an offshore jurisdiction without a physical presence or employees.

Answer: D

NEW QUESTION # 182
According to experts, what is the most effective way to prevent money laundering through financial institutions?

• A. Ensuring that transaction monitoring systems can identify terrorist financing
• B. Collecting information on beneficial owners and foreign customers
• C. Implementing a sound customer due diligence program
• D. Instituting a policy prohibiting the acceptance of funds intended for terrorist financing

Answer: C

Explanation:
Implementing a sound customer due diligence (CDD) program is the most effective way to prevent money laundering through financial institutions, according to experts. CDD is the process of identifying and verifying the identity of customers and assessing their risk profile, source of funds, and expected activity. CDD helps financial institutions to detect and prevent money laundering by enabling them to know their customers, monitor their transactions, and report any suspicious or unusual behavior. CDD is also a key requirement of the international standards and best practices for anti-money laundering and combating the financing of terrorism (AML/CFT), such as the Financial Action Task Force (FATF) Recommendations and the Basel Committee on Banking Supervision (BCBS) Guidelines.
The other options are not as effective as CDD, as they are either too narrow or too broad in scope. Ensuring that transaction monitoring systems can identify terrorist financing is important, but it does not address the broader issue of money laundering, which may involve other types of criminal proceeds or activities. Collecting information on beneficial owners and foreign customers is a part of CDD, but it is not sufficient by itself, as it does not cover the risk assessment and ongoing monitoring aspects of CDD. Instituting a policy prohibiting the acceptance of funds intended for terrorist financing is a good practice, but it is not a preventive measure, as it relies on the assumption that the funds are already identified as such, which may not be the case.
Reference:
Customer Due Diligence - FATF-GAFI.ORG
Sound management of risks related to money laundering and financing of terrorism - Bank for International Settlements CAMS Study Guide 6th Edition, page 36-37.

NEW QUESTION # 183
A compliance analyst is reviewing recent activity between a publicly traded company and a company in a high risk jurisdiction. Which detail suggests that escalation is warranted?

• A. The activity is a reputational risk to the financial institution.
• B. Beneficiary is active in a related industry.
• C. It is the first time the originator wires the beneficiary.
• D. Payments to the beneficiary are for large dollar amounts.

Answer: D

NEW QUESTION # 184
What is the currency threshold under the European Union Fourth Anti-Money Laundering Directive?

• A. 5,000 Euros
• B. 10,000 Euros
• C. 3,000 Euros
• D. 15,000 Euros

Answer: B

Explanation:
The European Union Fourth Anti-Money Laundering Directive (4th AMLD) is a legal framework that aims to prevent the use of the Union's financial system for the purposes of money laundering and terrorist financing.
One of the provisions of the 4th AMLD is to lower the currency threshold for cash payments from €15,000 to
€10,000. This means that any person who makes or receives cash payments of €10,000 or more, whether in a single transaction or in several linked transactions, is subject to customer due diligence and record-keeping obligations. The 4th AMLD also extends its applicability to providers of gambling services, which are now listed as 'obliged entities'.
:
Directive - 2015/849 - EN - Fourth Anti-Money Laundering Directive - EUR-Lex, Article 11 and Recital 23.
EUR-Lex - 02015L0849-20210630 - EN - EUR-Lex, Article 11 and Recital 23.
Key elements of the 4th EU Anti-Money Laundering Directive, Section: Cash payments.
Anti-money laundering and countering the financing of terrorism legislative package, Section: New EU AML
/CFT Regulation.
Reference:https://www.acams.org/aml-resources/eu-fourth-aml-directive/

NEW QUESTION # 185
What action does the USA PATRIOT Act allow the US government to take regarding financial institutions (Fls) that are based outside of the US?

• A. Allow all US regulators to place a non-US FI on the Specially Designated Nationals and Blocked Persons List.
• B. Revoke the banking licenses of non-US Fls in countries outside the US.
• C. Subpoena documents from Fls that have no presence in the US.
• D. Sanction a country when an individual FI does not comply with US law.

Answer: C

Explanation:
Section 319(b) of the USA PATRIOT Act authorizes the U.S. government to subpoena records from any foreign bank that maintains a correspondent account in the U.S., regardless of whether the foreign bank has a physical presence in the U.S. or not. The subpoena may request any records relating to the correspondent account or any account at the foreign bank, including records maintained outside the U.S. If the foreign bank fails to comply with the subpoena, the U.S. government may direct any U.S. financial institution to terminate its correspondent relationship with the foreign bank and impose civil penalties.
References:
Bank Records Related to Anti-Money Laundering Programs, FinCEN, accessed February 2024.
How Patriot Act Affects Financial Institutions?, Sanction Scanner, November 2020.

NEW QUESTION # 186
Why would a credit card account likely not be used in the placement stage of money laundering?

• A. Credit cards can access ATMs globally
• B. Credit refunds have a waiting period
• C. Customer identification is required
• D. Cash payments are generally restricted

Answer: D

NEW QUESTION # 187
What does the Financial Action Task Force (FATF) urge its members and all other jurisdictions to do when a jurisdiction is identified as having lax anti-money laundering / counter financing of terrorism controls?

• A. Apply counter-measures to that jurisdiction
• B. Consider customers from that jurisdiction as high risk
• C. Cease doing business with that jurisdiction immediately
• D. Apply economic sanctions until otherwise notified by FATF

Answer: A

Explanation:
The FATF is an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system1. The FATF identifies jurisdictions with serious strategic deficiencies in their anti-money laundering / counter financing of terrorism (AML/CFT) regimes and issues public statements to warn the international community of the risks emanating from these jurisdictions2. These jurisdictions are also known as high-risk jurisdictions subject to a call for action, or the "black list" in external sources2. The FATF urges its members and all other jurisdictions to apply counter-measures to protect themselves from the money laundering and terrorist financing risks posed by these jurisdictions2. Counter-measures are enhanced due diligence or restrictive measures that go beyond the normal AML/CFT requirements, such as requiring additional information or documentation, rejecting transactions, restricting business relationships, or terminating correspondent banking relationships3. The FATF also provides guidance on the types and levels of counter-measures that may be appropriate, depending on the specific risks and circumstances of each jurisdiction3.
Reference:
1: What is the FATF? | FATF
2: High-Risk Jurisdictions subject to a Call for Action | FATF
3: Guidance on Counter Proliferation Financing - The Implementation of Financial Provisions of United Nations Security Council Resolutions to Counter the Proliferation of Weapons of Mass Destruction | FATF

NEW QUESTION # 188
Which trading pattern may be indicative of money laundering in capital markets?

• A. Remittance of a round dollar amount
• B. Transacting with multiple counterparties
• C. Trading on an account
• D. Free of payment asset transfer

Answer: B

NEW QUESTION # 189
Combating the Financing of Terrorism (CFT)]
Which is a key role of FATF-Style Regional Bodies (FSRBs)?

• A. Bring additional terrorist financing laws into action in the region
• B. Support the system of mutual evaluation
• C. Setting regional standards for combatting money laundering
• D. Enforce the specific FATF laws in the region

Answer: B

Explanation:
one of the key roles of FATF-Style Regional Bodies (FSRBs) is to support the system of mutual evaluation, which is a peer review process that assesses the level of compliance and effectiveness of each member country's anti-money laundering and counter-terrorism financing (AML/CFT) regime12. FSRBs conduct mutual evaluations in accordance with the FATF's methodology and standards, and share the results and recommendations with the FATF and other FSRBs3. Mutual evaluations help identify the strengthsand weaknesses of each country's AML/CFT system, and provide a basis for technical assistance and follow-up actions4.
:
What are the 9 FATF-Style Regional Bodies (FSRBs)? - Sygna1
FATF-Style Regional Bodies (FSRBs) - Asia/Pacific Group on Money Laundering2 The Role of FATF Style Regional Bodies (FSRBs) in Combating ... - IDMerit3
9 FATF-Style Regional Bodies (FSRBs) - fineksus.com4

NEW QUESTION # 190
In which situation can money laundering adversely affect a country's currencies and interest rates due to launderers investing dirty funds?

• A. They invest in high risk ventures with high rates of return
• B. They invest in legitimate companies as a way of making their funds appear to be legitimate
• C. They invest in a way to hide funds rather than get a high rate of return
• D. They invest in shell companies in secrecy havens that intentionally manipulate rates

Answer: C

Explanation:
Money laundering can have negative effects on a country's currencies and interest rates, as it distorts the allocation of resources and the demand and supply of money. According to the IMF1, money laundering can also adversely affect currencies and interest rates as launderers reinvest funds where their schemes are less likely to be detected, rather than where rates of return are higher. This can create artificial fluctuations and imbalances in the exchange and interest rates, and undermine the effectiveness of monetary policy. For example, if launderers invest in low-yield assets such as government bonds or real estate, they may drive up the prices and lower the yields of these assets, while reducing the availability of funds for more productive investments. This can also affect the inflation and growth prospects of the country.
Reference:
1: Macroeconomic Implications of Money Laundering by Peter J. Quirk, IMF Working Paper, 1996
2: Understanding Money Laundering: How It Impacts the Global Economy by Tookitaki, 2019
3: Money Laundering by U.S. Department of the Treasury, 2021
4: The Consequences of Money Laundering and Financial Crime by John McDowell and Gary Novis, U.S. Department of State, 2001

NEW QUESTION # 191
What is a key objective of the Egmont Group?

• A. To provide best practices for financial institutions on how to report suspicious activity to best share the information with law enforcement.
• B. To safeguard the financial system from illicit use and combat money laundering and promote national security.
• C. To find ways to promote the development of Financial Intelligence Units and the sharing of expertise.
• D. To issue binding standards that establish consistently operated Financial Intelligence Units in member jurisdictions.

Answer: B

Explanation:
Explanation/Reference: https://egmontgroup.org/en

NEW QUESTION # 192
Financial Intelligence Units (FIUs) are responsible for:

• A. sharing evidence with other FIUs.
• B. responding to requests from law enforcement agencies for information contained in regulatory reports.
• C. receiving confirmed reports about committed crimes from accountable and reporting institutions.
• D. the timely dissemination of cases to law enforcement agencies.

Answer: D

Explanation:
Reference:
https://knowledgehub.transparency.org/assets/uploads/helpdesk/Financial-Intelligence-Units_Design-Mandate-P

NEW QUESTION # 193
Combating the Financing of Terrorism (CFT)]
When a bank performs a risk assessment, what areas should an institution focus on?

• A. The type and location of the institution's clients
• B. The amount of the money the institution earns prior to taxes
• C. The nature and breadth of the services and products the institution provides
• D. The geographic locations where the institution does business

Answer: A,C,D

Explanation:
A bank's risk assessment is a process of identifying, measuring, and mitigating the potential risks that the bank faces in its operations, products, services, and customers. According to the ACAMS Study Guide, a bank should focus on the following areas when performing a risk assessment1:
* The type and location of the institution's clients. This involves analyzing the customer base, the types of accounts and transactions, the source and destination of funds, the level of due diligence and verification, and the risk profile of the customers. For example, a bank should consider whether its customers are individuals or entities, domestic or foreign, politically exposed persons, high-net-worth individuals, non-profit organizations, or cash-intensive businesses. The location of the customers may also indicate the level of exposure to money laundering, terrorist financing, sanctions, or tax evasion risks.
* The nature and breadth of the services and products the institution provides. This involves evaluating the range and complexity of the products and services offered by the bank, the delivery channels, the payment methods, and the innovation and technology involved. For example, a bank should consider whether it offers wire transfers, correspondent banking, trade finance, private banking, trust and fiduciary services, prepaid cards, mobile banking, or cryptocurrency services. The nature and breadth of the services and products may also affect the level of transparency, traceability, and compliance of the transactions.
* The geographic locations where the institution does business. This involves assessing the jurisdictions where the bank operates, where its customers reside, where its counterparties are located, and where the funds flow. For example, a bank should consider whether it has branches, subsidiaries, or affiliates in high-risk countries, whether it serves customers from high-risk countries, whether it engages in cross- border transactions, and whether it complies with the local laws and regulations of the countries where it does business. The geographic locations where the institution does business may also influence the level of exposure to political, legal, regulatory, or reputational risks.
:
1: ACAMS Study Guide, Chapter 2: Risk Assessments, 1

NEW QUESTION # 194
Combating the Financing of Terrorism (CFT)]
What are the rules imposed by the Office of Foreign Assets Control (OFAC) for legal entities and persons related to the US? (Select Two.)

• A. A foreign individual visiting the US for a short vacation is obligated to follow OFAC rules.
• B. Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules.
• C. The head office of a foreign legal entity which has a branch in the US does not need to comply with OFAC rules.
• D. A subsidiary of a legal entity of the US, which is formally registered in a foreign country, is exempt from OFAC rules.
• E. Nationals of the US must comply with OFAC rules, regardless of where they are located in the world.

Answer: B,E

Explanation:
The rules imposed by the Office of Foreign Assets Control (OFAC) for legal entities and persons related to the US are:
Nationals of the US must comply with OFAC rules, regardless of where they are located in the world. This means that US citizens, permanent residents, and entities organized under US law are subject to OFAC sanctions and prohibitions, even if they operate or reside outside the US12.
Any foreign corporation is also penalized if it conducts transactions with sanctioned countries under OFAC rules. This means that non-US entities that engage in trade or financial dealings with OFAC-designated countries, entities, or individuals are liable to face civil or criminal penalties, as well as secondary sanctions that could restrict their access to the US market or financial system34.
The other options are not correct, because:
A subsidiary of a legal entity of the US, which is formally registered in a foreign country, is not exempt from OFAC rules. This means that foreign-incorporated entities that are owned or controlled by US persons or entities are also subject to OFAC sanctions and prohibitions, unless they are specifically authorized or licensed by OFAC12.
A foreign individual visiting the US for a short vacation is not obligated to follow OFAC rules. This means that non-US persons who are temporarily present in the US are not subject to OFAC sanctions and prohibitions, unless they are involved in transactions that have a US nexus or violate other US laws.
The head office of a foreign legal entity which has a branch in the US does not need to comply with OFAC rules. This means that non-US entities that have a presence or operation in the USare not subject to OFAC sanctions and prohibitions, unless they are involved in transactions that have a US nexus or violate other US laws.
References:
ACAMS CAMS Certification Video Training Course - Exam-Labs3
Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)4 ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 7, page 147: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-7.pdf ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 7, page 148: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-7.pdf ACAMS Study Guide for the Certification Examination, 6th Edition, Chapter 7, page 149: https://www.acams.
org/wp-content/uploads/2019/08/ACAMS-Study-Guide-6th-Edition-Chapter-7.pdf

NEW QUESTION # 195
On-line financial technologies are susceptible to money laundering risk because

• A. The identity of the people who conduct transactions may be unknown.
• B. Baring staff are familiar with how this technology can be abused.
• C. The risk of identity theft is greatly increased.
• D. Viruses significantly damage communications and commerce.

Answer: A

Explanation:
Explanation
Correct but to be recheck with B

NEW QUESTION # 196
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