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Certified Anti Money Laundering Specialist Cams

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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. Open System Stored Value Card
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.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.

2. FATF Recommendation 40
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Funds transfers - Shell Corporations - Contractual Transactions.
The FIU of Russia

3. The IMF estimates that laundered funds compromise ______ of the world's GDP
Financial Action Task Force on Money Laundering in South America
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
The FIU of Russia
2% - 5% ($590B - $1.5T)

4. FATF Recommendation 23
Terrorism and Terrorist Financing
Competent authorities should provide guidelines in applying national AML/CFT measures - especially for detecting and reporting suspicious activity.
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.
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.

5. Arrest Warrant
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.
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.
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Funds transfers - Shell Corporations - Contractual Transactions.

6. Abusive Squeezes
Funds transfers - Shell Corporations - Contractual Transactions.
Countries should ensure policy makers - the FIU - law enforcement and supervisors have effective mechanisms to enable cooperation.
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'.
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.

7. The Palemo Convention
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
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 UN Convention against Transnational Organized Crime [Adopted 12/2000].
The transfer of physical - hard-copy security certificates to book entry credits of a security holder's interest.

8. MENAFATF
Middle East and North Africa Financial Action Task Force
no regulatory power or function
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.
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.

9. Commodity Pool Operator
Middle East and North Africa Financial Action Task Force
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.

10. 'Coucil of Europe Convention on Laundering - Search - Seizure and Confiscation of the Proceeds from Crime' is known for what?
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
Extending the offense of money laundering to include money laundering associated with all serious offenses - not only with drug trafficking [Adopted 9/90].
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
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.

11. FATF Recommendation 22
They can accrue value as the price of the underlying stock rises.
The exempt accounts must be documented and the financial institution that secures the exemptions must still monitor their financial transactions.
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.
Financial institutions should be required - by law or regulation - to report suspicious activity to their national FIU.

12. Identification data
Letters Rogatory
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
Reliable - independent source of documents - data or information.
Intergovernmental Action Group against Money Laundering in Africa

13. What is the primary use of a 'Mutual Legal Assistance Treaty'?
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 allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
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.

14. The Vienns Convention
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.
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 UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.

15. FATF Recommendation 27
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
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.
Any item that a bank is wiling to accept for immediate - provisional credit to a customer's account - instantly increasing the account's balance.
The FIU of the UK

16. FATF Recommendation 21
A US Federal Court
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.
disrupt or adversely afftect the business of the bank.
no regulatory power or function

17. FATF Recommendation 11
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Stored Value Cards - Mobile Payments - Internet Payments.
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.
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.

18. Why is understanding 'Product Diversion' important to the AML investigator?
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
Placement - Layering - Integration.
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.
Contract issued by an insurance company under which an investor provides the insurer with funds (a lump-sum or series of payments). The insurer then agrees to make periodic payments to the investor starting the immediately or in the future.

19. FATF Recommendation 20
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.
Take immediate steps to ratify and implement the UN instruments.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)

20. FATF Recommendation 4
Countries should ensure that secrecy laws do NOT inhibit implementation of these Recommendations.
A market is which securities are bought and sold outside of establisehd securities markets.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Impose AML requirements on alternative remittance systems.

21. Corporate Bank
Type of foreign bank that is incorporated in the host country but is considered to be owned by a foreign parent bank. It only needs to operarted under the host country's regulations.
Helps to identify financial system strengths and vulnerabilities and to reduce the potential for crisis.
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
The US State Dept issues the report annually.

22. Downstream Correspondent Clearer
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.
Freeze and confiscate terrorist assets.
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.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.

23. When was the Offshore Group of Banking Supervisors established? What was the impetus behind its establishment?
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).

24. 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?
Review customer files and conduct random sampling of accounts.
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
Person who - for compensation - provides advice on securities and investments and manages client assets.
To reduce financial crime - including money laundering and terrorit financing.

25. Credit Card Associations
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.
A bank which uses the services of another bank - such as check clearing - wire transfers - etc. The bank providing the service is the 'Correspondent Bank'
As a financial institution service that is very vulnerable to money laundering.

26. What does FIU do beyond what FIU does?
It conducts investigations in support of a government's confiscation or seizure efforts.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.

27. UK courts view on 'Suspicion'
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.
A degree of satisfaction not necessarily amounting to belief but extending beyond specualtionas to whether an event has occured or not. Though suspicion requires a lesser factual basis than a belief - it must be built upon some foundation.
If provided for money laundering to be an internationally extraditable offense.
Placement - Layering - Integration.

28. Free Look Period
a chain-referral scheme.
A contractual provision that allows the contract owner the right to return the contract within a specified period for a refund.
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
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.

29. Agent (Insurance Industry)
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
Placement - Layering - Integration.
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.
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.

30. What do boiler room salespeople typically do?
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
A fund setup by an investment trust that issues a fixed number of shares to its investors. As such - the market price of the shares fluctuates - often selling at a premium or discount to the fund's net asset value (NAV).
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.
The world's largest private DB of stolen art.

31. What is one of the Financial Service Authority's (UK) tasks?
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.
To reduce financial crime - including money laundering and terrorit financing.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].

32. Variable Annuity
All admininstrative and law enforcemnt authorities concerned wiht combating money laundering and terrorist financing - including the FIU and supervisors.
Contract issued by an insurance company under which an investor provides the insurer with funds (a lump-sum or series of payments). The insurer then agrees to make periodic payments to the investor starting the immediately or in the future.
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).

33. Account Monitoring Order (UK and several other countries)
No.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.
To allow for mutual assistance in legal proceedings and access to documents and witnesses and other legal and judicial assistance in the respective countries.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.

34. (Credit card) Acquiring Bank
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.
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.
Processes transactions for merchants who accept credit cards.
People who help move the billions of dollars drug traffickers earn around the world.

35. What are included in the Wolfsberg AML Principles on Private Banking?
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.
Stored Value Cards - Mobile Payments - Internet Payments.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.

36. What do boiler room salespeople typically sell?
A bank which uses the services of another bank - such as check clearing - wire transfers - etc. The bank providing the service is the 'Correspondent Bank'
Penny Stocks
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.
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.

37. FATF Recommendation 2
Futures contracts - forwards - swaps or options.
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.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.

38. Fraud
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.
It one wants to open a bank account overseas - but do it through the mail - the bank may need to be assured that the copy of the passport is correct. The Apostille mark can assure this.
Firm that contracts with issuing or acquiring banks to provide transaction processing and other credit-card related services for the banks.
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.

39. 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.
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
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. Why is 'Know Your Correspondent Bank' important?
Middle East and North Africa Financial Action Task Force
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.
Freeze and confiscate terrorist assets.
An association of global financial institutions that issues guidelines is such areas as correspondent banking - private banking - terrorist financing etc.

41. Why is a 'money order' attractive to a money launderer?
As a financial institution service that is very vulnerable to money laundering.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
Stored Value Cards - Mobile Payments - Internet Payments.

42. FATF Recommendation 14
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
Stored Value Cards - Mobile Payments - Internet Payments.

43. Commodity Trading Advisor
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Financial institutions should pay to any threats from new or developing technologies - especially with non f2f relationships.
Direct or indirect advisor on buying and selling futures or commodity options.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.

44. Retail Banking
It one wants to open a bank account overseas - but do it through the mail - the bank may need to be assured that the copy of the passport is correct. The Apostille mark can assure this.
EurAsian Group
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
Typical mass-market banking where individual customers use local branches of larger commercial banks.

45. Wholesale Banking
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.
Render mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required - classification should not be an issue.
Banking services between merchant banks and other financial institutions.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.

46. Why does a launderer try to run transactions through a concentration account of a financial institution?
Funds transfers - Shell Corporations - Contractual Transactions.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
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.

47. Short Sale
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
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.
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.
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.

48. Investment Adviser
The UN Convention against Transnational Organized Crime [Adopted 12/2000].
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.
Person who - for compensation - provides advice on securities and investments and manages client assets.

49. How is 'Identity theft' often accomplished?
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
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
tipped off that they are being investigated.
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.

50. What does the 'SEC' (US Securities and Exchange Commission) do?
Futures contracts - forwards - swaps or options.
Procedures used to determine the identities of the account holders of a respondent bank in a correspondent banking relationship.
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.

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