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 24
Designated non-financial businesses and professions should be subject to regulatory and supervisory measures. Casinos should prevent criminal ownership - operations or management.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
A firm or person that solicits or accepts orders on futures contracts or commodity options and accepts funds for their execution.
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.


2. How do most governments view Private Banking?
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.
As a financial institution service that is very vulnerable to money laundering.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)
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.


3. 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.
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.
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.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.


4. What is the Serious Organised Crime Agency (SOCA)?
The FIU of the UK
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Countries should enable their competent authorities to freeze - seize and confiscate laundered property or proceeds.


5. Convertible Bond
have in place compulsory currency reporting requirements.
no regulatory power or function
Letters Rogatory
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.


6. What are the two types of Stored Value Cards?
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
Open and Closed system
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
To take additional steps of examination and caution in identifying their customers and confirming that the customers' activities and funds are legitimate.


7. Why is it imperative to have a strong Know Your Employee program?
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.
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 corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
Foreign Corrupt Practices Act


8. When was the Offshore Group of Banking Supervisors established? What was the impetus behind its establishment?
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.
2% - 5% ($590B - $1.5T)
In many major money laundering operations - it is not unusual to find a complicit employee in financial institution.


9. Money Mules
October 1980. The instigation of Basel Committee on Banking supervision (with which the group maintains close contact).
A person who tranfers stolen money (or merchandise) from one country to another - often as a result of online scams. Transfers - can be done electronically - via mail or courier service or in person.
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
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.


10. Dormant Account
Intergovernmental Action Group against Money Laundering in Africa
An account that does not show activity other than the posting of interest or account maintenance fees.
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.
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.


11. Investigative Log
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Reliable - independent source of documents - data or information.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.


12. The IMF estimates that laundered funds compromise ______ of the world's GDP
2% - 5% ($590B - $1.5T)
A fund - offered by an investment company - that offers shares while investing the capital in diversified securities of other companies.
A corporation - often established in an offshore jurisdiction with tight secrecy laws to protect the financial privacy of its owners.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.


13. Dematerialization of Securities

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14. 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...
that appear to be linked
Direct or indirect advisor on buying and selling futures or commodity options.
Canada
To reduce financial crime - including money laundering and terrorit financing.


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

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16. FATF Recommendation 40
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
Financial Action Task Force on Money Laundering in South America
As 'felonies' or 'all offenses in the criminal code'.


17. Retail Banking
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.
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
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.
Typical mass-market banking where individual customers use local branches of larger commercial banks.


18. Common types of 'Derivatives'
It analyzes and processes information and disseminates it to appropriate government authorities in support of AML efforts and financial crime investigations.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data
An order from government authority requiring a financial institution to provide transaction information on a suspect account for a specified period of time.
Futures contracts - forwards - swaps or options.


19. FATF Recommendation 27
The world's largest private DB of stolen art.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.
A US Federal Court
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.


20. FATF Recommendation 36
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.
Provide mutual legal assistance.
Countries should maintain comprehensive statistics to gauge effectiveness of their AML and CTF efforts.
Person who - for compensation - provides advice on securities and investments and manages client assets.


21. Short Sale

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22. Why do companies export their goods at prices far below those in their home country?
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.
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.
To create new overseas markets - dispose of excess goods - or otherwise recover their costs.
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.


23. Three stages of money laundering
Placement - Layering - Integration.
An account that does not show activity other than the posting of interest or account maintenance fees.
An electronic quotation system that displays quotes of many securities traded over the counter.
The FIU of Russia


24. Why is 'refining' critical to a money launderer's efforts?
2% - 5% ($590B - $1.5T)
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization


25. 'Kiting' via credit card
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.
Preferred stocks that includes an option for the holder to convert it into common stock at a specified covnersion rate.
Financial Action Task Force
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.


26. Who appear to be predominant users of hawalas and other alternative remittance systems?
To reduce financial crime - including money laundering and terrorit financing.
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.
Money Laundering and Tax Evasion
Expatriates sending money back to their home country or by other individuals sending money abroad.


27. Cash Equivalent

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28. FATF Recommendation 1
A market is which securities are bought and sold outside of establisehd securities markets.
It was the first law in any country to make money laundering a crime.
It conducts investigations in support of a government's confiscation or seizure efforts.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.


29. FATF Recommendation 15
The FIU of the UK
A federal regulator in the US - responsible for auditing risk and compliance measuers of federally chartered banks.
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
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. Identification data
The opposing part of a transaction or trade.
Reliable - independent source of documents - data or information.
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.
Letters Rogatory


31. FATF Recommendation 17
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)
Countries should have effective criminal - civil and administrative sanctions for money laundering or terrorist financing violations.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.


32. What normal business practise makes 'Product Division' possible?
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
They are businesses such as ariplane - automobile and boat dealers - lawyers - jewelers - real estate brokers and others that are subjec to BSA regulations (US).
Harmful or Preferrential Tax Regimes.
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.


33. How does 'Product Diversion' work?
It was the first law in any country to make money laundering a crime.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.
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.


34. Transparency International
Berlin- based - non-governmental organization with goal of improving government accountability and curbing national and international corruption.
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.
Maintaining correspondent accoutnts at US Financial Institutions (USA Patriot Act)
bear the mark 'APOSTILLE'


35. What is a 'Trust'?
Countering the Financing of Terrorism (Counter Terrorist Financing).
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.
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.
They can accrue value as the price of the underlying stock rises.


36. What do boiler room salespeople typically do?

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37. FATF Recommendation 6
To promulgate good practices in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations and laws
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
No.
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.


38. (Credit card) Acquiring Bank
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.
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.
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
Processes transactions for merchants who accept credit cards.


39. Examples of VSP's
The FIU of the UK
Attorneys - accountants - broker-dealers - communication and transportation providers - bankers and other financial service providers - concealment trap (hiding places) builders etc.
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
Middle East and North Africa Financial Action Task Force


40. FATF Recommendation 10
Electronic transmissions of funds between financial institutions on behalf of themselves or their customers.
The US State Dept issues the report annually.
Record retention: 5 years - data to recreate any individual transaction; 5 years after relationship ends - all customer identification data
Pouch activity.


41. Investment Adviser
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
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.
As 'felonies' or 'all offenses in the criminal code'.
Person who - for compensation - provides advice on securities and investments and manages client assets.


42. FATF Sepcial Recommendation on Terrorist Financing -- SR One
Intentional misrepresentation - concealment or omission of the truth for the purpose of deception or manipulation to ther detriment of a person or organization.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Take immediate steps to ratify and implement the UN instruments.
USD/EUR 15 -000 (Interpretive Note to Reommendations 5 - 12 and 16)


43. 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.
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.
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
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.


44. What is a Financial Intelligence Unit?
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 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.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
An intelligence gathering law enforcement or regulatory body that receives financial information form covered financial institutions - businesses and persons in tis respective country.


45. The USA Patriot Act enacted a number of statutory provisions that bear directly on the procedures US financial institutions must follow in connection with their...
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.
foreign correspondent banks
Operator or solicitor of funds for a commodity pool - which combines funds from members and trades futures or options contracts.
A prepaid card that is linked to the global funds network - which can allow for worldwide ATM with-drawls and purchases with many merchants.


46. What is a 'NCCT'?
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.
Non-Coperative countries and Territories. Country or territory that has been designated by the FATF as non-cooperative with international AML principles and procedures.
Assess any international correspondent's bank nature - ownership - management - reputation - supervision and AML & Terrorist Financing controls. Also. document relationship responsibilities.
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.


47. What was the effect of the 1988 Vienna Convention as it relates to extradtition?
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
Normally seen as non-violent or involving 'business-related' schemes rather than violent or threat or violence crimes.
If provided for money laundering to be an internationally extraditable offense.
Countries should ensure that there is adequate - accurate and timely information on the beneficial ownership and control of legal persons.


48. Reverse Flip

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49. MENAFATF
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.
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
Letters Rogatory
Middle East and North Africa Financial Action Task Force


50. What is one of the cental stragetic tools required for effective action against money laundering?
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).
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
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.
Confiscation