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Certified Anti Money Laundering Specialist Cams

Instructions:

Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can study here.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

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. FATF Recommendation 17
Financial institutions should have adequate supervision and regulation. Ensure no criminal element in position on control. Money transfer/exchangers should be registered and subjected to monitoring.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
Applied by an authority - it is a special seal which certifies that a document is a true copy of an original. However - it does not and cannot speak to the validity of the document's content.

2. FATF's designated transactional threshold for Financial Insitutions is _____.
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.
Middle East and North Africa Financial Action Task Force
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
The UN Convention against Transnational Organized Crime [Adopted 12/2000].

3. FATF Recommendation 18
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.
Person who - for compensation - provides advice on securities and investments and manages client assets.
Countries should not allow shell banks. Financial institutions should not have correspondent banking relationships with shell banks or banks that allow shell banks to do business through their accounts.
foreign correspondent banks

4. Fraud
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.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
A professional responsible for the securities portfolio of an individual or institutional investor. In return for a fee - the manager has the responsibility of choosing and managing assets.

5. FATF Recommendation 33
A written statement given under oath before an officer of the court - notary public - or other authorized person. Commonly used as the factual basis for an application for a search - arrest or seizure warrant.
Competent authorities should have powers of subpoena - search and seizure.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
The US State Dept issues the report annually.

6. Examples of VSP's
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
Intergovernmental Action Group against Money Laundering in Africa
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.

7. FATF Recommendation 35
tipped off that they are being investigated.
Absolutely NOT. If the decision is based purely on profile - then you are discriminating. you need to file such reports on the ACTIVITY especially if it differs from the 'normal and expected' as reflected in the customer profile.
Expatriates sending money back to their home country or by other individuals sending money abroad.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.

8. FATF Recommendation 7

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9. FATF Recommendation 19
The FIU of Russia
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Financial Action Task Force
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.

10. MENAFATF
Account established by a domestic banking institution to receive deposits from - make payments on behalf of - or handle other financial transactions for a foreign financial institution - usually in the foreign financial institutions's cureency.
To provide a forum for FIU's (Financial Intelligence Unit) to improve support to their respective national AML progrmans and development protocols for the sharing of information.
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
Middle East and North Africa Financial Action Task Force

11. A public perception that a bank is not able to manage its operational risk effectively can...
Competent authorities should have powers of subpoena - search and seizure.
Countering the Financing of Terrorism (Counter Terrorist Financing).
disrupt or adversely afftect the business of the bank.
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.

12. Counter Party
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
A record that financial institutions must retain for each cash sale of bank checks - drafts - money orders - cashier's checks and traveller's checks between $3 -000 and $10 -000.
The opposing part of a transaction or trade.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.

13. Margin
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
If provided for money laundering to be an internationally extraditable offense.
Harmful or Preferrential Tax Regimes.
The means through which the insurance products and services are provided to a customer [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]

14. FATF Sepcial Recommendation on Terrorist Financing -- SR Eight
Penny Stocks
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
They can accrue value as the price of the underlying stock rises.

15. What are the two types of Stored Value Cards?
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
Open and Closed system
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.

16. FATF Recommendation 28
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
Competent authorities should have powers of subpoena - search and seizure.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.

17. OCC Office of the Comptroller of the Currency
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
Countries should not allow shell banks. Financial institutions should not have correspondent banking relationships with shell banks or banks that allow shell banks to do business through their accounts.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.

18. The IMF estimates that laundered funds compromise ______ of the world's GDP
Product is purchsed with terms that it is going to foreign country A. While in transit - the product is diverted back to originating country or to another foreign market where the greatly discounted price provides for extreme profits.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
2% - 5% ($590B - $1.5T)

19. Why do companies export their goods at prices far below those in their home country?
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
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.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.

20. Cash Letter
Funds transfers - Shell Corporations - Contractual Transactions.
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.
Financial Action Task Force
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.

21. Pink Sheets
It conducts investigations in support of a government's confiscation or seizure efforts.
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.
An electronic quotation system that displays quotes of many securities traded over the counter.
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.

22. Reverse Flip

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23. Convertible Bond
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data
A record that financial institutions must retain for each cash sale of bank checks - drafts - money orders - cashier's checks and traveller's checks between $3 -000 and $10 -000.
Corporate bond that includes an option for the holder to convert it into other securities after a specified period at the discretion of the bondholder.

24. Why do convertible bonds oftern have lower interest rates than non-convertible bonds?
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.
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.
Money Laundering - bribery - health care - tax - bankruptcy - securities or environmental frauds etc.
They can accrue value as the price of the underlying stock rises.

25. Downstream Correspondent Clearer
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
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.
Transportation/transfer of funds (even clean) to/from the US - if done to promote unlawful activity - or with knowledge that the funds are illicit - or to conceal/disguise the nature - location - source - ownership - etc. of funds - or to avoid feder
Passed in 1977 - the US law is primarily known for its anti-bribery provisions (it also applies to foreign companies with stocks covered by the Securities and Exchange Act of 1934).

26. FATF Recommendation 27
Refers to dishonest broker-dealers who set up a group of high pressure salespeople who use banks of telephones to make cold calls to as many potential investors as possible.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
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.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.

27. Many jurisdictions have legislation to ensure that suspects are not ____?
The US State Dept issues the report annually.
tipped off that they are being investigated.
The means through which the insurance products and services are provided to a customer [FATF Risk-Based approach - Guidance for the Life Insurance Sector - Oct 09]
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.

28. What was the target of UN Security Council Resolution 1373?
Terrorism and Terrorist Financing
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
As 'felonies' or 'all offenses in the criminal code'.
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.

29. Moneyval
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.

30. FATF Sepcial Recommendation on Terrorist Financing -- SR Nine
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
Person who - for compensation - provides advice on securities and investments and manages client assets.
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.
Combines funds from various members and users them to trade in futures or options contracts.

31. Respondent Bank

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32. In Emerging Money Laundering Risks - what 3 methods are identified as 'Funds Transfers'?
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).
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]
The world's largest private DB of stolen art.
Stored Value Cards - Mobile Payments - Internet Payments.

33. The Joint Money Laundering Steering Group (UK) has published a series of AML Guidance Notes for different sectors of the financial community. But - As a group of trade associations - it has...
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.
no regulatory power or function
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.

34. Retail Banking
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
A record that financial institutions must retain for each cash sale of bank checks - drafts - money orders - cashier's checks and traveller's checks between $3 -000 and $10 -000.

35. FATF Recommendation 36
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
Provide mutual legal assistance.
A contractual arrangement whereby the trustee manages the property for the benefit of the beneficiary in accordance with the contractual terms set by the grantor.
Financial Action Task Force

36. Why is understanding 'Product Diversion' important to the AML investigator?
Strengthen customer identification measures in iternational and domestic wire transfers.
Their financial institution may - wittingly or unwittingly - handle the proceeds of this crime while believing it is serving a legitimate client with major account balances.
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.

37. OTC markets Over-The-Counter
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
A market is which securities are bought and sold outside of establisehd securities markets.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.

38. Who are the parties involved in a trust?
Solicits potential customers and issues the credit cards.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
tipped off that they are being investigated.
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).

39. FATF Recommendation 14
Through the use of experts - the program optimizes expert resources - reduces duplication of efforts and provides uniform advice in financial sector work.
As 'felonies' or 'all offenses in the criminal code'.
The principal US money laundering law can apply to a non-US citizen if the 'conduct' occurs 'in part' of the US.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.

40. FATF Recommendation 5
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)
Absolutely NOT. If the decision is based purely on profile - then you are discriminating. you need to file such reports on the ACTIVITY especially if it differs from the 'normal and expected' as reflected in the customer profile.

41. Wholesale Banking
Banking services between merchant banks and other financial institutions.
An electronic quotation system that displays quotes of many securities traded over the counter.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.

42. FATF Recommendation 8
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
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.
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.

43. FATF Recommendation 20
The right - but not the obligation - to buy or sell a set amount of something - such as a share or commodity - at a set price after a set expiration date.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
The world's largest private DB of stolen art.

44. FATF Sepcial Recommendation on Terrorist Financing -- SR Two
People who help move the billions of dollars drug traffickers earn around the world.
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
An account that does not show activity other than the posting of interest or account maintenance fees.
A market is which securities are bought and sold outside of establisehd securities markets.

45. How do 'Hedge Funds' operate?

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46. What normal business practise makes 'Product Division' possible?
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
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.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.

47. Account Monitoring Order (UK and several other countries)
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
Middle East and North Africa Financial Action Task Force
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.

48. Characteristics of an 'Open System Stored Value Card'
tipped off that they are being investigated.
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.
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.

49. What is one of the Financial Service Authority's (UK) tasks?
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.
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
To reduce financial crime - including money laundering and terrorit financing.

50. Why is a 'money order' attractive to a money launderer?
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
a chain-referral scheme.
Middle East and North Africa Financial Action Task Force
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.