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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. Retail Banking
Entities such as American Express - Master Card and VISA - which license member banks to issue bankcards - authorize merchants to accept those cards - or both.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].

2. How do most governments view Private Banking?
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.
As a financial institution service that is very vulnerable to money laundering.
Money Laundering and Tax Evasion
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.

3. Dormant Account
Open and Closed system
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.
Review customer files and conduct random sampling of accounts.
An account that does not show activity other than the posting of interest or account maintenance fees.

4. 'Kiting' via credit card
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.
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
Countries should apply Recommendations to any business or profession that poses a money laundering or terrorist financing risk.

5. What does the 'SEC' (US Securities and Exchange Commission) do?
Processes transactions for merchants who accept credit cards.
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
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.

6. Why is 'Know Your Customer's Customer' important?
Respondent banks may be used by other banks and customers to conduct transactions through a correspondent account.
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
The world's largest private DB of stolen art.
Ensure that entities - in particular non-profit organizations - cannot be misused to finance terrorism.

7. Who are the parties involved in a trust?
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.
Typical mass-market banking where individual customers use local branches of larger commercial banks.
The grantor (the owner of the property) - a beneficiary and the trustee (the manager of the property).
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.

8. What is important about the US Money Laundering Control Act (MCLA)?
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.
It was the first law in any country to make money laundering a 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.
General recommendations for client acceptance - updating client files - practices when identifying unusual or suspicious activity - monitoring - control responsibilities - reporting - education and records retention.

9. 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?
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.
Competent authorities should have powers of subpoena - search and seizure.
Review customer files and conduct random sampling of accounts.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.

10. Counter Party
Reliable - independent source of documents - data or information.
Open and Closed system
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
The opposing part of a transaction or trade.

11. FATF Recommendation 7

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12. Convertible Preferred
Preferred stocks that includes an option for the holder to convert it into common stock at a specified covnersion rate.
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.
Provide the widest possible range of assistance to other countries' law enforcement and regulatory authorities for terrorist financing investigations.
a Sr Management level

13. What were recently identified as Emerging Money Laundering risks?
Funds transfers - Shell Corporations - Contractual Transactions.
Processes transactions for merchants who accept credit cards.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.
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.

14. Futures Commission Merchant (FCM)
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).
It was the first law in any country to make money laundering a crime.
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.

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

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16. What is one of the Financial Service Authority's (UK) tasks?
www.artloss.com
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.
To reduce financial crime - including money laundering and terrorit financing.
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).

17. What is the FCPA primarily known for?
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
To profit all kinds of markets by pursuing leveraging and other speculative investment practises thay may increase the risk of investment loss.
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.
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).

18. What is the Federal Service for Financial Monitoring?
The FIU of Russia
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
A contemporaneous record of the steps - observations - evidence - findings and decisions of an investigation.
Countries should ensure that their competent authorities provide the widest possible range of international cooperation to their foreign counterparts.

19. FATF Recommendation 26
Countries should establish national centers to receive and disseminate AML/CFT information and have access to law enforcement and others.
Combines funds from various members and users them to trade in futures or options contracts.
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.
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.

20. Vital Service Providers (VSPs)
PEP accounts need to be identified - approved by senior management - and have ongoing enhanced monitoring. Sources of Wealth and funds must also be established.
Countries should take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.
People who help move the billions of dollars drug traffickers earn around the world.
Financial instrument whose price is realted to the underlying commodity - currency - economic variable - financial istrument or security.

21. In general terms - EDD requires what of a financial institution?

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22. FATF Recommendation 12
They can accrue value as the price of the underlying stock rises.
The CDD and record-keeping requirements (of Rec 5 - 6 - 8 & 11) apply to non-financial businesses and professions.
EurAsian Group
Financial Action Task Force on Money Laundering in South America

23. Why is understanding 'Product Diversion' important to the AML investigator?
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.
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]
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.
Intergovernmental Action Group against Money Laundering in Africa

24. FATF Recommendation 14
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]
Council of European committee of Experts on the Evaluation of AML measures and the Financing of Terrorism
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.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.

25. The IMF estimates that laundered funds compromise ______ of the world's GDP
2% - 5% ($590B - $1.5T)
Futures contracts - forwards - swaps or options.
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.
Countering the Financing of Terrorism (Counter Terrorist Financing).

26. Why is 'Know Your Correspondent Bank' important?
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.
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.
Financial Action Task Force on Money Laundering in South America
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.

27. In what country is the Egmont Group Secretariat now located?
Financial institutions should NOT keep any anonymous or fictionally named accounts - plus they should undertake customer due diligence measures.
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
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.
Canada

28. Cash Letter
The FIU of the UK
Pouch activity.
Ad interbank transmittal form - resembling a deposit slip - used to accompany cash and cash equivalent items sent from one bank to another.
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).

29. FATF Recommendation 15
Financial institutions should have AML/CFT programs that include approved policies - employee screenings & ongoing training and an audit function to test it all.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.
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.
Funds transfers - Shell Corporations - Contractual Transactions.

30. What was the target of UN Security Council Resolution 1373?
Terrorism and Terrorist Financing
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.
Large companies often export their branded products at wholesale prices far below those at which those products are offered in that country.
EurAsian Group

31. FATF Recommendation 34
Countries should ensure that there is adequate - accurate and timely information on express trusts - including information on the settlor - trustee and beneficiaries.
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 take immediate steps to become party to and implement fully the relevant international conventions related to AML and CFT efforts.
Have measures in place to detect the physical corss-border transportation of currency and bearer negotiable instruments - including a declaration system.

32. Foriegn Shell Banks are vehicles for ______ & ______?
The FIU of the UK
Money Laundering and Tax Evasion
Because it represents funds drawn on the account of a financial institution and not on a particular individual.
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.

33. What is meant by 'Know Your Customer's customer'?
Under what authority? Among other things - it regulates brokers and dealers - under authority of the Securities Exchange Act of 1934.
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.
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.

34. As considered by UN and OECD - these are jurisdictions that have no or low tax rates - and do not attract real business or foreign investment
Penny Stocks
Harmful or Preferrential Tax Regimes.
Countries should criminalize money laundering and apply it to all serious offenses - even if committed in another country.
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.

35. In Emerging Money Laundering Risks - what 3 areas are associated with 'Contractual Transactions'?
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.
An account that does not show activity other than the posting of interest or account maintenance fees.
Real Estate - Insurance Transactions - Trade-Based Money Laundering.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.

36. FATF Recommendation 39
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.
Countries should recognize money laundering as an extraditable offense.
Goods such as food - grains and metals that are usually traded in large amounts on a commodities exchange - usually through future contracts.
The FIU of Russia

37. FCPA (US)
Countries should ensure that knowledge can be inferred. Additionally - legal persons should be subject to theses laws.
Because they are accounts through which funds are transferred and commingled without personally identifying the originator.
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.
Foreign Corrupt Practices Act

38. FATF Recommendation 27
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
With respect to STR/SAR reporting - financial institutions should be afforded safe harbor - yet barred from any unauthorized disclosures.
Should give special attention to relationships or transactions of people - companies or financial institutions from countries showing little regard for these Recommendations.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.

39. What was the target of UN Security Council Resolution 1267?
Adopted in 1999 - it imposed sanctions on Taliban-controlled Afghanistan for its support of Osama Bin Laden and the Al-Qaeda organization
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.
bear the mark 'APOSTILLE'
Countries should have a central authority to collect suspicious activity and international currency reports. Should have secure - computerized data base.

40. FATF Recommendation 30
Placement - Layering - Integration.
People who help move the billions of dollars drug traffickers earn around the world.
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.
Competent authorities should be provided with adequate financial - human and technological resources. Personnel should be of high integrity.

41. Express Trust
Supervisors should have powers to monitor and ensure compliance - including the ability to compel production of information and to impose sanctions.
A trust clearly created by the settlor - usually in the form of a document - such as a written deed or trust.
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
If one needs to transport currency across borders - one needs to have the smallest package possible to avoid detection.

42. Many jurisdictions have legislation to ensure that suspects are not ____?
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.
tipped off that they are being investigated.
'Tip Off' a customer that a report has been filed. Failure to maintain confidentiality is a violation of law.
A merchant submits a saled transaction on his personal bankcard account to ontain cash advances through their business.

43. What are the two types of Stored Value Cards?
They can accrue value as the price of the underlying stock rises.
Open and Closed system
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
Futures contracts - forwards - swaps or options.

44. UK courts view on 'Suspicion'
A detailed report on the narcotics trade and a lengthy narrative on the status of the related money laundering issues in most nations.
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.
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.
Countries should designate law enforcement authorities with AML/CFT responsibilities and allow them special investigative techniques.

45. What does an Extradition Treaty specify?
An arrangement whereby an investor pays for part of a securities purchase and borrows the rest from a securities intermediary.
The terms of such exchanges - the persons subject to being exchanged - and the crimes for which exchanges will be permitted.
A market is which securities are bought and sold outside of establisehd securities markets.
Countries should recognize money laundering as an extraditable offense.

46. GAFISUD
By acquiring personal information about the victim (e.g: DOB - address - CC numbers) through stealth and misrepresentations.
no regulatory power or function
that appear to be linked
Financial Action Task Force on Money Laundering in South America

47. When is a jurisdiction considered to be 'ring-fenced'?
The UN Convention against Illicit Trafficking in Narcotic drugs and Pyshotropic substances [Adopted 12/88].
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.
When residents are prevented from benefiting from a tax-regime or when non-residents are prevented from accessing the domestic market.
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.

48. Apostille

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49. Penny Stocks
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'
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.
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.
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.

50. A public perception that a bank is not able to manage its operational risk effectively can...
disrupt or adversely afftect the business of the bank.
Confidentiality - complex beneficial ownership arrangements - offshore investment vehicles - tax shelters and credit extension services.
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.
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.