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Certified Anti Money Laundering Specialist Cams

Instructions:

Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. What must a financial institution do if they have 'Exempt Accounts'?
To reduce financial crime - including money laundering and terrorit financing.
EurAsian Group
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.

2. What is one of the Financial Service Authority's (UK) tasks?
To reduce financial crime - including money laundering and terrorit financing.
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.

3. FATF Recommendation 22
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
FATF principles should apply to all branches and subsidiaries of a financial institution - even those abroad. Inability to do should re reported to parent institution's regulatory/supervisory authority.
Penny Stocks

4. What does a 'Commission Rogatoire' normally specify?
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
The nature of the request - the relevant criminal charges in the requesting country - the legal provision under which the request is made - and the information that is sought.

5. What do boiler room salespeople typically sell?
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
Penny Stocks
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.

6. Who issues the Internationa Narcotics Control Strategy Report (INCSR) and how often?
The US State Dept issues the report annually.
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
A deliberate attempt to interfere with the free and fair operation of the market and create artificial - false or misleading appearances with respect to the price of - or market for a security - commodity or currency.
The world's largest private DB of stolen art.

7. What criterion does the US need to enforce its 'Extraterritorial Reach'?
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.

8. What tend to be the markings of Private Banking transactions?
The US State Dept issues the report annually.
Processes transactions for merchants who accept credit cards.
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.

9. Examples of White-collar crime
Issue and cancel securities certificates to reflect chagnes in ownership - act as an intermediary for the issuing company - and hanlde lost - stolen or destroyed certificates.
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
A security that offers the owner the right to subscribe for ordinary shares of a company at a fixed date - usually at a fixed price. Equivalent to stock options.

10. Reverse Flip
A fund setup by an investment trust in which the number of shares can fluctuate as investors' move in and out the fund. Share prices moves in direct proportion of the net asset value of the underlying investments (no premium or discount).
A co-operative property seller agrees to sell home at a well-below market reported price - then accepts the difference 'under the table'. When launderer later sells house - he recognizes 'gain' and all funds appear legitimate as it sold at market.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.

11. Why is 'refining' critical to a money launderer's efforts?
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Processes transactions for merchants who accept credit cards.

12. According to FATF - financial transactions above a designated threshold may include situations where the transaction takes place in a single operation or in several operations...
Combines funds from various members and users them to trade in futures or options contracts.
Countering the Financing of Terrorism (Counter Terrorist Financing).
that appear to be linked
Review customer files and conduct random sampling of accounts.

13. 'Commission Rogatoire' known in English as?
If provided for money laundering to be an internationally extraditable offense.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Letters Rogatory
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.

14. Why do companies export their goods at prices far below those in their home country?
Intergovernmental Action Group against Money Laundering in Africa
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.

15. USA Patriot Act Section 312 'Offshore Bank'
No.
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.

16. How is 'Identity theft' often accomplished?
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
Use of electronic clearing houses to facilitate electronic transfers of money that complete transactions between two parties where the buyer receives securities - goods - services etc. in exchange for the money.

17. What is the significance of 'Non-Financial Trades and Businesses' in realtion to Money Laundering?
Strengthen customer identification measures in iternational and domestic wire transfers.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Charles Ponzi - an Italian immigrant to the US who spent 10 years in jail for a scheme that defrauded 40 -000 people out of $15 million.
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B

18. FATF Recommendation 13
Refers to express trusts or other similar legal arrangements - such as fiducie - treuhand and fideicomiso [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.

19. In general terms - EDD requires what of a financial institution?
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.

20. What were recently identified as Emerging Money Laundering risks?
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
Funds transfers - Shell Corporations - Contractual Transactions.
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
It was the first law in any country to make money laundering a crime.

21. FATF's designated transactional threshold for Casinos (including Internet Casinos) is _____.
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B
A co-operative property seller agrees to sell home at a well-below market reported price - then accepts the difference 'under the table'. When launderer later sells house - he recognizes 'gain' and all funds appear legitimate as it sold at market.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)

22. (Stock) Warrants
A security that offers the owner the right to subscribe for ordinary shares of a company at a fixed date - usually at a fixed price. Equivalent to stock options.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
Strengthen customer identification measures in iternational and domestic wire transfers.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.

23. Why does a launderer try to run transactions through a concentration account of a financial institution?
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.
Countering the Financing of Terrorism (Counter Terrorist Financing).
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
bear the mark 'APOSTILLE'

24. Mutual Fund
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.

25. Bust-out
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
Funds transfers - Shell Corporations - Contractual Transactions.
Securities with very low marker price - volume and/or liquidity that are traded on a securities exchange or on the OTC markets. They tend to be more volatile than those on the major exchanges.

26. Retail Banking
Typical mass-market banking where individual customers use local branches of larger commercial banks.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
No.
Court order directing a law enforcement officer to seize and detain a particular person and require them to provide an answer to a compliant or otherqise appear in court.

27. Why is 'Know Your Correspondent Bank' important?
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
As a key tool in detecting suspicious or money laundering activity - it is important because correspondent accounts are often used as conduits to launder criminal proceeds in international settings.
Solicits potential customers and issues the credit cards.
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.

28. FATF Recommendation 38
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
Take expeditious action to requests by foreign countries to identify - freeze - seize and confiscate property that is proceeds of money laundering or a predicate crime.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.

29. Three stages of money laundering
Impose AML requirements on alternative remittance systems.
Placement - Layering - Integration.
They can accrue value as the price of the underlying stock rises.
a chain-referral scheme.

30. OCC Office of the Comptroller of the Currency
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
The possibility that lawsuits adverse judgements or contracts that turn out to be unenforceable can disrupt or adversely affect the operatinos or condition of a financial siutation.
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
An introducing broker-dealer with an exclusive written agreement with a Futures Commission Merchant (FCM) that obligates the FCM to assume responsibility for the introducing broker's performance.

31. The Palemo Convention
that appear to be linked
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
May involve movement or large sums of money going cross-border and often through multiple casinos - all by a third party (the operator). Sometime operator does not identify funds owners.
Review customer files and conduct random sampling of accounts.

32. FATF Recommendation 21
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
They can accrue value as the price of the underlying stock rises.
Securities with very low marker price - volume and/or liquidity that are traded on a securities exchange or on the OTC markets. They tend to be more volatile than those on the major exchanges.
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.

33. Underwriting
The process of agreeing to purchase a new issue of securities from an issuer and distribute it to investors. The underwriter makes a profit between the price paid to the issuer and the public offering price.
To promote the effective supervision of banks in their jurisdictions; to further international cooperation in the supervision between the Offshore Banking Supervisors - and with Basel committee member nations and other banking supervisors.
Expanding/Systemising the exchange of financial intelligence - improving expertise/capabilities of their personnel - fostering better communication by applying new technologies and sharing financial crimes investigations information.
Funds transfers - Shell Corporations - Contractual Transactions.

34. Cash Equivalent
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
While it is normally known as a Personal Investment Company (PIC) - in some jurisdictions - the international business company or exempt company is also the same.

35. Under the US Bank Secrecy Act - SAR filings are confidential and the institutions employees cannot ____?
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
a chain-referral scheme.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.

36. FATF Recommendation 19
EurAsian Group
Money Laundering and Tax Evasion
Funds transfers - Shell Corporations - Contractual Transactions.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.

37. Transparency International
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
Harmful or Preferrential Tax Regimes.
Represents a profession and is made up of member professionals; has a role in regulating the persons who are qualified to enter and who practise the profession; performs cetain supervisory or monitoring type function.
Court order directing a law enforcement officer to seize and detain a particular person and require them to provide an answer to a compliant or otherqise appear in court.

38. Why is a 'money order' attractive to a money launderer?
The opposing part of a transaction or trade.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
Review customer files and conduct random sampling of accounts.

39. FATF Recommendation 27
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.

40. Commodity Pool
Refers to express trusts or other similar legal arrangements - such as fiducie - treuhand and fideicomiso [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
Financial institutions should pay special attention to (and examine & document) complex - unusual large transactions - and all transactions which have no apparent economic or lawful purpose.
Combines funds from various members and users them to trade in futures or options contracts.
Market participants intentionally restrict a security's liquidity. May lead to increased profits when the security's price rises due to the lack of 'supply'.

41. When was the Offshore Group of Banking Supervisors established? What was the impetus behind its establishment?
If provided for money laundering to be an internationally extraditable offense.
Canada
A bank whose license has conditions that prohibhit the licensed entity from conducting banking activities with the citizens - or with the local currency - of the country that issued that license.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).

42. What is the Serious Organised Crime Agency (SOCA)?
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
foreign correspondent banks
The FIU of the UK
Casinos - real estate agents - precious metal/stone dealers - lawyers - notaries - accountants and trust & company service providers.

43. (Credit card) Acquiring Bank
Expatriates sending money back to their home country or by other individuals sending money abroad.
Processes transactions for merchants who accept credit cards.
Financial Action Task Force on Money Laundering in South America
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.

44. Foriegn Shell Banks are vehicles for ______ & ______?
Money Laundering and Tax Evasion
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
A market is which securities are bought and sold outside of establisehd securities markets.
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.

45. Credit Card Associations
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.
Often co-branded by financial institution; may have VISA or MasterCard logos; can be reloadable; usually can access ATMs for withdrawls globally; non-customers can buy them.
Open and Closed system
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.

46. Downstream Correspondent Clearer
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
A Correspondent Banking Client who receives Corresponding Banking services from an institution and itself provides Correspondent Banking services to other financial institutions in the same currency as the account it maintains with the institution.
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
Use of electronic clearing houses to facilitate electronic transfers of money that complete transactions between two parties where the buyer receives securities - goods - services etc. in exchange for the money.

47. FATF Recommendation 16
weakness in the implementation of bank programs - ineffective control procedures and failure to practice due diligence.
Money Laundering and Tax Evasion
Dealers in precious metals/stones - trust and company services providers - lawyers - notaries and accountants should all be required to report suspicious activity - but legal privilege cannot be violated.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)

48. May a shell bank maintain a correspondent account with a US bank?
Quite simply - a plan. While in the US - this term is often associated with a nefarious plan - it should NOT be assumed to be evil - especially as it may appear on the ACAMS exam.
No.
disrupt or adversely afftect the business of the bank.
a chain-referral scheme.

49. Agent (Insurance Industry)
The sale of a stock that the investor does not own. To do so - a securities intermediary 'loans' the stock to the investor - which comes from the intermediary's own inventory - another client's margin account or another intermediary.
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
Refers to where the agent is acting under a contractual arrangement with the insurer to carry out its CDD functions (i.e. the agent is regarded as synonymous with the insurer) [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 0
Countries should recognize money laundering as an extraditable offense.

50. 'Loan Back' method. Give example of how it works.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
2% - 5% ($590B - $1.5T)
They pool investors' money and invest those funds in financial instruments in an effort to turn a profit. They typically issue securities in 'private offerings' that are usually not required to be registered with sa securities or financial regulator.
Direct money of Criminal A is sent to foreign bank account of company B. Investment company C is formed as A's country. A is appointed as director of C. C borrows money from B and buys building which is rented to 3rd parties. with rent - C pays off B

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