CAMS Online Practice Questions

Explanation:
A sound Customer Due Diligence Program (CDD) is a key component of an effective anti-money laundering and counter-terrorism financing (AML/CFT) framework. According to the Financial Action Task Force (FATF), the global standard-setter for AML/CFT, CDD involves the following elements1:
Identifying the customer and verifying their identity using reliable, independent sources of information or documents.
Identifying the beneficial owner and taking reasonable measures to verify their identity, so that the financial institution understands who ultimately owns or controls the customer or the funds.
Understanding and obtaining information on the purpose and intended nature of the business relationship.
Conducting ongoing due diligence on the business relationship and scrutinizing transactions to ensure that they are consistent with the financial institution’s knowledge of the customer, their business and risk profile, and the source of funds.
Therefore, the three elements of a sound CDD program that are listed in the question are:
Determination of what type of customer the financial institution will accept: This involves defining the customer acceptance policy and risk appetite of the financial institution, and applying appropriate risk-based measures to accept or reject customers based on their risk profile and the financial institution’s ability to manage and mitigate those risks2.
Training as to how and to what extent to identify prospective customers: This involves providing adequate and regular training to the staff who are responsible for conducting CDD, and ensuring that they are aware of the legal and regulatory requirements, the internal policies and procedures, the risk indicators, the verification methods, and the reporting obligations3.
Obtaining date of birth and address of a prospective customer: This is part of the basic information that is required to identify and verify the customer’s identity, and to establish their risk profile and the source of funds. The date of birth and address can also be used to check against various databases and watchlists to detect any potential matches with sanctioned or high-risk individuals or entities4.
The element that is not part of a sound CDD program is:
Determination of who in the institution should be assigned to the prospective customer as a liaison: This is not a mandatory or essential element of CDD, although it may be a good practice to assign a dedicated relationship manager or contact person to each customer, especially for high-risk or complex customers, to ensure effective communication, monitoring, and service delivery.
FATF Guidance on Customer Due Diligence and Financial Inclusion 1
ACAMS Study Guide for the CAMS Certification Examination (6th Edition), Chapter 2: Compliance
Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) 2
ACAMS Study Guide for the CAMS Certification Examination (6th Edition), Chapter 4: Developing an AML/CFT Program 3
ACAMS Study Guide for the CAMS Certification Examination (6th Edition), Chapter 5: Conducting and Supporting the Investigation Process 4
Wolfsberg Group Guidance on Customer Due Diligence (CDD)

Explanation:
A customer who is nervous, uneasy, or in a hurry to cash a large cashier’s check may be trying to launder money or evade reporting requirements. The teller should complete the transaction as normal, but also flag the customer’s account for further monitoring and review. The teller should look for any unusual or suspicious patterns of activity, such as frequent large cash transactions, transfers to or from high-risk jurisdictions, or transactions that do not match the customer’s profile or expected behavior. The teller should also document the transaction and the customer’s demeanor, and report any findings or concerns to the appropriate authority within the bank.
The teller should not confer with the bank’s account going forward, as this may alert the customer to the bank’s suspicion or compromise the investigation. The teller should not file a SAR on the customer, unless there are other grounds to suspect money laundering or terrorist financing, as this may be premature or unnecessary. The teller should not file a CTR on the customer by the end of the day, unless the transaction exceeds the threshold of $10, 000, as this is a legal requirement for cash transactions in the US.
[ACAMS Study Guide for the CAMS Certification Examination, 6th Edition], Chapter 4: Conducting or Supporting the Investigation Process, pp. 103-104, 107-108.
Suspicious Activity Reporting - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 4-5.
Currency Transaction Reporting - Overview, Federal Financial Institutions Examination Council, April 2018, pp. 1-2, 4-5.
17 AML Analyst Interview Questions and Answers, CLIMB, July 15, 2022.

Explanation:
Making payments via a company located in a jurisdiction that is known to have lax anti-money laundering controls is a sign of suspicious activity and should be reported. When making a payment of this nature, the insurance company should be aware of the client's source of funds and the possible risks associated with the transaction.

Explanation:
This potential action is authorized by Section 319 of the USA PATRIOT ACT, which allows the U.S. government to seize funds from a foreign bank’s correspondent account in the U.S. if the foreign bank refuses to cooperate with a request for records relating to an investigation of money laundering or terrorist financing. The U.S. government can seize an amount equal to the funds in the account of the target of the investigation, regardless of whether those funds are actually in the correspondent account. In this case, the U.S. government can seize $1 million from Bank A’s correspondent account in the U.S. because Bank A holds $1 million in the account of the WTS, which is the target of the forfeiture action.
The other potential actions are not authorized by the USA PATRIOT ACT or other U.S. laws. The U.S. government cannot seize Bank A’s entire $5 million correspondent account in the U.S. because that would exceed the amount in the WTS’s account and would violate the principle of proportionality.
The U.S. government cannot seize the WTS’s $1 million account at the non-U.S. branch of Bank A because that would require the cooperation of the foreign jurisdiction where the branch is located, which may not be forthcoming. The U.S. government cannot seize $5 million from the non-U.S. branch of Bank A where the WTS’s account is located because that would also require the cooperation of the foreign jurisdiction and would exceed the amount in the WTS’s account.
CAMS Certification Package - 6th Edition | ACAMS, Chapter 3: International Standards and Global Initiatives, pp. 67-68
CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Study Guide, pp. 54-55
How Does the Patriot Act Affect Criminal Investigations? | Nolo, Section 319: Forfeiture of Funds in United States Interbank Accounts
The USA PATRIOT Act at 20: Sneak and Peek Searches - CRS Reports, Section 319: Forfeiture of Funds in United States Interbank Accounts

Explanation:
When assessing and managing money laundering risks while operating in foreign jurisdictions different from that of the head office, an effective AML monitoring program should conform to the foreign jurisdiction policies to align with the head office policies. This ensures that the organization's AML/CFT risk management remains consistent across all jurisdictions, while allowing local compliance staff to assess and manage the risks specific to their jurisdiction. Additionally, the program should be tailored to the higher of standards between the jurisdictions, and should be consistent with the head office audits. Providing all foreign jurisdiction reports to the head office for approval is not necessary, as long as the program is consistent with the head office policies.