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. What can result from on institution's disregard for the Basel Due Diligence Principle?
The financial institution can become subject to lawsuits from the failure to observe mandatory KYC standards or from the failure to practise due diligence.
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.
Firm or person that solicits and accepts commodity futures orders from customers but does not accept funds. Two types of IB_C's: Guaranteed and Independent.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.


2. Under the US Bank Secrecy Act - SAR filings are confidential and the institutions employees cannot ____?

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3. FATF Sepcial Recommendation on Terrorist Financing -- SR Nine
High-speed matching of known or suspected patterns in very large DB's using recognition algorithms.
The US State Dept issues the report annually.
Terrorism and Terrorist Financing
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.


4. FATF Recommendation 23
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.
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.
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.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.


5. FATF Recommendation 25
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.


6. What must a financial institution do if they have 'Exempt Accounts'?
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.
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 exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.


7. Reverse Flip

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8. Cash Log

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9. Counter Party
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.
The opposing part of a transaction or trade.
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.
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.


10. FATF Sepcial Recommendation on Terrorist Financing -- SR One
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
Take immediate steps to ratify and implement the UN instruments.
Financial institutions may rely upon intermediaries to perform certain CDD elements provided the intermediary is supervised and regulated. However - ultimate responsibility remains with the financial institution.
Processes transactions for merchants who accept credit cards.


11. FATF Sepcial Recommendation on Terrorist Financing -- SR Eight
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
USD/EUR 3 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
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.


12. In Emerging Money Laundering Risks - what 3 areas are associated with 'Contractual Transactions'?
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
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 ensure that secrecy laws do NOT inhibit implementation of these Recommendations.


13. FATF Recommendation 27
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
The International Monetary Fund (IMF) and the world bank conduct the joint program.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
The FIU of the UK


14. Basel committee's 'Customer Due Diligence for Banks' when verifying a unit's compliance with KYC policies and procedures - the home country supervisors or auditors should do what?
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
Review customer files and conduct random sampling of accounts.
To reduce financial crime - including money laundering and terrorit financing.
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.


15. FCPA (US)
Foreign Corrupt Practices Act
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 beneficial owners of a correspondent bank and the type of activity that wil be 'normal and expected' for the bank.
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.


16. Automated Sale
Report suspicious transactions linked to terrorism.
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.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
bear the mark 'APOSTILLE'


17. Fraud
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.
Urge investors to buy 'house stocks' - stocks that the firm buys and sells as a market maker or has in its inventory. Oftentimes - they are running a 'pump-and-dumo' scheme.


18. EAG
An electronic quotation system that displays quotes of many securities traded over the counter.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Freeze and confiscate terrorist assets.
EurAsian Group


19. FATF Sepcial Recommendation on Terrorist Financing -- SR Five

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20. 'Kiting' via credit card
Financial institutions may rely upon intermediaries to perform certain CDD elements provided the intermediary is supervised and regulated. However - ultimate responsibility remains with the financial institution.
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.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.


21. FATF Sepcial Recommendation on Terrorist Financing -- SR Seven
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
have in place compulsory currency reporting requirements.
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).
Strengthen customer identification measures in iternational and domestic wire transfers.


22. Legal Arrangements (Insurance Industry)
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]
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
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.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.


23. How does 'Product Diversion' work?
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
Take immediate steps to ratify and implement the UN instruments.
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.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.


24. MENAFATF
Middle East and North Africa Financial Action Task Force
The International Monetary Fund (IMF) and the world bank conduct the joint program.
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
It was the first law in any country to make money laundering a crime.


25. Investment Adviser
Person who - for compensation - provides advice on securities and investments and manages client assets.
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.
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.
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.


26. Should one ever file a Suspicious Transaction Report (STR/SAR) based on a person's profile?

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27. GIABA
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.
Intergovernmental Action Group against Money Laundering in Africa
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.


28. What does an Extradition Treaty specify?
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).


29. A pyramid scheme is also called...
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Direct or indirect advisor on buying and selling futures or commodity options.
a chain-referral scheme.


30. Why do convertible bonds oftern have lower interest rates than non-convertible bonds?
Pouch activity.
They can accrue value as the price of the underlying stock rises.
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 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.


31. FATF Recommendation 30
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.


32. Why is it imperative to have a strong Know Your Employee program?
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
Stored Value Cards - Mobile Payments - Internet Payments.
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
As a financial institution service that is very vulnerable to money laundering.


33. What are the three main functions of a 'Transfer Agent'?
Harmful or Preferrential Tax Regimes.
Strengthen customer identification measures in iternational and domestic wire transfers.
a Sr Management level
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.


34. Convertible Bond
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.
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.
disrupt or adversely afftect the business of the bank.
Firm or person that solicits and accepts commodity futures orders from customers but does not accept funds. Two types of IB_C's: Guaranteed and Independent.


35. Respondent Bank

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36. Three stages of money laundering
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).
Urge investors to buy 'house stocks' - stocks that the firm buys and sells as a market maker or has in its inventory. Oftentimes - they are running a 'pump-and-dumo' scheme.
Placement - Layering - Integration.
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.


37. Why is 'Know Your Customer's Customer' important?
A market is which securities are bought and sold outside of establisehd securities markets.
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
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.
The world's largest private DB of stolen art.


38. (Credit card) Acquiring Bank
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
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.
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
Processes transactions for merchants who accept credit cards.


39. Portfolio Manager
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
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.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.


40. 'Loan Back' method. Give example of how it works.

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41. What is meant by 'Know Your Customer's customer'?
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
Report suspicious transactions linked to terrorism.


42. What is the FCPA primarily known for?
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
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).
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.


43. Bust-out
Criminalize the financing of terrorism - terrorist acts and terrorist organisations.
Customer makes payments on account with bad checks - then takes cash advances before they clear - thereby expanding his credit.
Preferred stocks that includes an option for the holder to convert it into common stock at a specified covnersion rate.
The FIU of the UK


44. What does the 'SEC' (US Securities and Exchange Commission) do?
that appear to be linked
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.


45. What is meant by 'Know Your Correspondent Bank'?

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46. (Credit Card) Third-Party processor
Expatriates sending money back to their home country or by other individuals sending money abroad.
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.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
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.


47. How do most governments view Private Banking?
Placement - Layering - Integration.
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.
As a financial institution service that is very vulnerable to money laundering.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.


48. What the primary objectives of Offshore Group of Banking Supervisors?
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
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.
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.
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.


49. 'Closed-end Mutual Fund' (Or Comany)

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50. 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).
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
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.