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NEW QUESTION # 60
An analyst reviews an alert for high volume Automated Clearing House (ACH) activity in an account. The analyst's initial research finds the account is for a commercial daycare account that receives high volumes of large government-funded ACH transactions to support the programs. The account activity consists of checks (cheques) made payable to individual names in varying dollar amounts. One check indicates rent to another business.
An Internet search finds that the daycare company owner has previous government-issued violations for safety and classroom size needs, such as not having enough chairs and tables per enrollee. These violations were issued to a different daycare name.
Simultaneous to this investigation, another analyst sends an email about negative news articles referencing local child/adult daycare companies misusing governmental grants. This prompts the financial institution (Fl) to search all businesses for names containing daycare' or "care*. Text searches return a number of facilities as customers at the Fl and detects that three of these businesses have a similar transaction flow of high volume government ACH funding with little to no daycare expenses.
During the investigation, new suspicious patterns and trends related to check cashing are observed. The Fl decides to conduct a training to ensure that 1) the AML program is robust and 2) the training program is relevant and appropriate. Which parties should be trained on emerging trends and red flags? (Select Two.)
- A. Loan department
- B. Branch personnel
- C. The board of directors
- D. Financial crimes investigation unit
- E. Senior management
Answer: B,D
Explanation:
Explanation
The parties that should be trained on emerging trends and red flags are the financial crimes investigation unit (A) and the branch personnel . These parties are directly involved in detecting, investigating, and reporting suspicious activity related to check cashing or other types of fraud or money laundering. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, "the FI should provide regular and relevant training to its staff on the AML program, policies, procedures, and systems, as well as on the latest typologies, indicators, and best practices for financial crimes investigations" (p. 36). The FI should also "ensure that the training is tailored to the specific roles and responsibilities of the staff, and that it is updated and evaluated periodically" (p. 36).
The other parties are not as relevant or appropriate as options A and C. The loan department (B) is not directly related to check cashing or other types of fraud or money laundering, although it may have some exposure to credit or identity fraud. The senior management (D) is responsible for overseeing and supporting the AML program, but not for conducting or supervising financial crimes investigations. The board of directors (E) is responsible for approving and reviewing the AML program, but not for implementing or monitoring it.
References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS
NEW QUESTION # 61
A client with many personal and business deposits with the financial institution (Fl) seeks a business loan. The client wants to guarantee the loan with a trust for which they are the beneficiary.
An investigator examines the trust. The trust has many layers, including shell companies in known tax havens.
The client's ultimate beneficial ownership claim cannot be validated, and the loan is denied.
Two months later, the Fl receives a law enforcement (LE) request on one of the client's business accounts.
While reviewing the business account, the Fl receives another LE request on the same account from another agency. The requested information is shared.
Three months later, a branch manager receives a request to open a business deposit account related to a complex trust. The manager forwarded the request because of the complexity. The trust was the same as the previously examined trust, but the request came from a different client. The second client also has many accounts with the Fl. Further inspection finds links between the second client and the Paradise Papers. The Papers state the client led illegal activities and committed tax evasion.
What steps should the investigator perform in reference to the first client's existing accounts? (Select Three.)
- A. Perform secondary scans of the client's other owners/authorized signers
- B. File SARs/STRs for all accounts at the beginning of the discovery phase and amend later as necessary.
- C. Review Fl approved policies regarding the existing accounts to ensure regulatory requirements were followed.
- D. Review all client-signed documents relating to all accounts.
- E. Inform Fl management of all processes used to investigate the client due to LE inquiry.
- F. Prepare a relationship flow chart of all existing accounts to better understand the client's activities.
Answer: A,D,F
Explanation:
Explanation
The investigator should review all client-signed documents relating to all accounts (A) to check for any discrepancies or red flags. The investigator should also perform secondary scans of the client's other owners/authorized signers (D) to identify any possible connections or associations with the second client or the Paradise Papers. Additionally, the investigator should prepare a relationship flow chart of all existing accounts (F) to better understand the client's activities and patterns. These steps are consistent with the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, which states that investigators should
"review all relevant documentation, including account opening documents, transaction records, and customer correspondence" (p. 23), "conduct enhanced due diligence on all parties involved in the investigation" (p. 24), and "use data visualization tools to map out complex relationships and transactions" (p. 25).
References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS
NEW QUESTION # 62
Which is the first valid step in the Mutual Legal Assistance Treaties international cooperation process?
- A. The central authority of the requesting country sends a letter of request to the central authority of the other country.
- B. An investigator from the requesting country visits the country where the information is sought and takes statements from the identified witnesses or suspects.
- C. The investigator may remove the evidence collected without asking permission to do so.
- D. The central authority that receives the request sends it to a local judicial officer to find out if the information is available.
Answer: A
Explanation:
Explanation
The first valid step in the Mutual Legal Assistance Treaty (MLAT) international cooperation process is for the central authority of the requesting country to send a letter of request to the central authority of the other country. The letter of request should provide a summary of the facts and information required, the reasons for the request, and any specific legal or procedural requirements that need to be met. (CAMS Manual, 6th Edition, Page 233).
NEW QUESTION # 63
How does the Financial Action Task Force (FATF) measure the effectiveness of a country's efforts to combat money laundering and terrorist financing?
- A. FATF Evaluation Committee
- B. Series of internal audits followed by reporting to FATF
- C. Mutual evaluation
- D. Basel Committee
Answer: C
Explanation:
Explanation
"The FATF measures the effectiveness of a country's efforts to combat money laundering and terrorist financing through a mutual evaluation process. During a mutual evaluation, the FATF assesses a country's legal and institutional framework, its implementation of measures to combat money laundering and terrorist financing, and the effectiveness of its efforts. The FATF then issues a report with recommendations for improvement" [CAMS Study Guide 6th edition, page 15-16].
NEW QUESTION # 64
Which statement most accurately characterizes the methods used by transnational criminal organizations?
- A. They are likely to specialize in one particular method and continue to refine that method to escape detection.
- B. They routinely engage in many different types of criminal activities as long as they think it will benefit them.
- C. They see each other as competitors and rarely cooperate.
- D. They are unlikely to associate with known terrorist organizations due to the reputational risks.
Answer: B
Explanation:
Explanation
The statement that most accurately characterizes the methods used by transnational criminal organizations is that they routinely engage in many different types of criminal activities as long as they think it will benefit them . This is because transnational criminal organizations are flexible and adaptable, and they exploit opportunities and vulnerabilities in different markets and jurisdictions. According to ACAMS2, "Transnational criminal organizations are involved in a wide range of illicit activities, such as drug trafficking, human trafficking, arms trafficking, money laundering, cybercrime, environmental crime, fraud, corruption, and terrorism" (p. 3). They also "operate across borders and regions, using complex networks and structures to evade detection and prosecution" (p. 3).
The other statements are not as accurate or comprehensive as option C. Transnational criminal organizations are unlikely to associate with known terrorist organizations due to the reputational risks (A) is false, as transnational criminal organizations may collaborate or cooperate with terrorist organizations for mutual benefit or convenience, such as sharing resources, routes, or contacts. Transnational criminal organizations are likely to specialize in one particular method and continue to refine that method to escape detection (B) is false, as transnational criminal organizations may diversify or change their methods depending on the circumstances or opportunities, such as shifting products, markets, or modus operandi. Transnational criminal organizations see each other as competitors and rarely cooperate (D) is false, as transnational criminal organizations may form alliances or partnerships with other criminal groups for strategic or tactical reasons, such as sharing information, expertise, or influence.
NEW QUESTION # 65
An analyst reviews an alert for high volume Automated Clearing House (ACH) activity in an account. The analyst's initial research finds the account is for a commercial daycare account that receives high volumes of large government-funded ACH transactions to support the programs. The account activity consists of checks (cheques) made payable to individual names in varying dollar amounts. One check indicates rent to another business.
An Internet search finds that the daycare company owner has previous government-issued violations for safety and classroom size needs, such as not having enough chairs and tables per enrollee. These violations were issued to a different daycare name.
Simultaneous to this investigation, another analyst sends an email about negative news articles referencing local child/adult daycare companies misusing governmental grants. This prompts the financial institution (Fl) to search all businesses for names containing daycare' or care*. Text searches return a number of facilities as customers at the Fl and detects that three of these businesses have a similar transaction flow of high volume government ACH funding with little to no daycare expenses.
The analyst determines that site visits should be conducted for the three daycare businesses. Which observations at the on-site visits would justify writing a SAR/STR? (Select Three.)
- A. Signs of severe wear and poor maintenance at the site
- B. Lights turned off at the site during operational hours
- C. Visible signage indicating the purpose of the building
- D. A full parking lot of cars with no staff at the site
- E. A site located in a commercial building
- F. Visible attendance with children being dropped off by parents
Answer: A,B,D
Explanation:
Explanation
The observations at the on-site visits that would justify writing a SAR/STR are signs of severe wear and poor maintenance at the site (A), lights turned off at the site during operational hours , and a full parking lot of cars with no staff at the site (F). These observations suggest that the daycare businesses are not operating legitimately or providing adequate services to their customers, and that they may be misusing governmental grants or laundering money through their accounts. These observations are consistent with some of the red flags for fraud identified by ACAMS2, such as:
Inadequate facilities or equipment for the type of business
Lack of visible activity or customers at the business location
Discrepancy between reported income and expenses
Unusual volume or frequency of transactions
The other observations are not as relevant or indicative of fraud as options A, C, and F. A site located in a commercial building (B) could be a normal or legitimate choice for a daycare business, depending on its size, location, and availability. Visible attendance with children being dropped off by parents (D) could show that the daycare business is providing genuine services to its customers, although it does not rule out possible fraud or money laundering. Visible signage indicating the purpose of building (E) could also show that the daycare business is transparent and legitimate, although it does not guarantee its quality or compliance.
References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS 2: ACAMS Fraud Prevention eLearning Course Module 3: Fraud Detection Techniques
NEW QUESTION # 66
An investigator at a corporate bank is conducting transaction monitoring alerts clearance.
KYC profile background: An entity customer, doing business offshore in Hong Kong, established a banking business relationship with the bank since 2017 for deposit and loan purposes. It acts as an offshore investment holding company. The customer declared that the ongoing source of funds to this account comes from group-related companies.
* X is the UBO. and owns 97% shares of this entity customer;
* Y is is the authorized signatory of this entity customer. This entity customer was previously the subject of a SAR/STR.
KYC PROFILE
Customer Name: AAA International Company. Ltd
Customer ID: 123456
Account Opened: June 2017
Last KYC review date: 15 Nov 2020
Country and Year of Incorporation: The British Virgin Islands, May 2017 AML risk level: High Account opening and purpose: Deposits, Loans, and Trade Finance Anticipated account activities: 1 to 5 transactions per year and around 1 million per transaction amount During the investigation, the investigator reviewed remittance transactions activities for the period from Jul
2019 to Sep 2021 and noted the following transactions pattern:
TRANSACTION JOURNAL
Review dates: from July 2019 to Sept 2021
For Hong Kong Dollars (HKD) currency:
Incoming transactions: 2 inward remittances of around 1.88 million HKD in total from different third parties Outgoing transactions: 24 outward remittances of around 9 4 million HKD in total to different third parties For United States Dollars (USD) currency:
Incoming transactions: 13 inward remittances of around 3.3 million USD in total from different third parties Outgoing transactions: 10 outward remittances of around 9.4 million USD in total to different third parties.
RFI Information and Supporting documents:
According to the RFI reply received on 26 May 2021, the customer provided the bank with the information below:
1J All incoming funds received in HKD & USD currencies were monies lent from non-customers of the bank.
Copies of loan agreements had been provided as supporting documents. All of the loan agreements were in the same format and all the lenders are engaged in trading business.
2) Some loan agreements were signed among four parties, including among lenders. borrower (the bank's customer), guarantor, and guardian with supplemental agreements, which stated that the customer, as a borrower, who failed to repay a loan Which suspicious activity should the investigator identify during the review of the loan agreements?
- A. Online information found that X is the chairman of a business group of companies.
- B. Y signed on behalf of the lenders.
- C. Y is the authorized signatory on the beneficial ownership form.
- D. AAA International Company Ltd.'s account has transactions in HKD and USD.
Answer: B
Explanation:
Explanation
The correct answer is D because it is a suspicious activity that Y, who is the authorized signatory of the customer, also signed on behalf of the lenders. This indicates a possible conflict of interest, collusion, or fraud.
The other options are not suspicious activities based on the information given.
References: [Advanced CAMS-FCI Study Guide], page 17-18
NEW QUESTION # 67
Which is a key characteristic of the Financial Action Task Force (FATF) Regional Style Bodies for combatting money laundering/terrorist financing?
- A. Emphasizing regional co-operation between member countries
- B. Implementing regional mutual evaluation procedures
- C. Enabling FATF standards to be specific to each region
- D. Instructing each member country to place FATF recommendations into law
Answer: B
Explanation:
Explanation
According to the CAMS study guide, the Financial Action Task Force (FATF) Regional Style Bodies are organizations created by the FATF to promote the implementation of anti-money laundering and countering the financing of terrorism (AML/CFT) measures in specific regions. One of the key characteristics of these bodies is the implementation of regional mutual evaluation procedures.
Regional mutual evaluations involve member countries evaluating each other's AML/CFT regimes to identify strengths and weaknesses and to develop best practices for improvement. This process allows for greater cooperation between countries and can help to identify and address regional AML/CFT risks more effectively.
It also promotes consistency in AML/CFT standards and practices within the region.
NEW QUESTION # 68
Which information is it best practice to share at the very beginning of a well-written SAR/STR narrative?
- A. A specific description of the involved accounts and transactions, including the origination and application of funds
- B. Information about any follow-up actions conducted by the financial institution on the account
- C. The purpose of the SAR/STR narrative and a general description of the known or alleged violation
- D. Any and all relevant facts about the parties who facilitated the suspicious activity or transactions
Answer: C
Explanation:
Explanation
The best information to share at the very beginning of a well-written SAR/STR narrative is the purpose of the SAR/STR narrative and a general description of the known or alleged violation. This is because this information provides an overview of why the SAR/STR is being filed and what type of suspicious activity or transaction is involved. It also helps to capture the attention of the reader and set the tone for the rest of the narrative.
References: Reporting Suspicious Activity Certificate, Module 4, page 7.
NEW QUESTION # 69
CLIENT INFORMATION FORM Client Name: ABC Tech Corp Client I.D. Number: 08125 Name: ABC Tech Corp Registered Address: Mumbai, India Work Address: Mumbai. India Cell Phone: ***"- Alt Phone:
Email: ********
Client Profile Information:
Sector: Financial
Engaged in business from (date): 02 Jan 2020
Sub-sector: Software-Cryptocurrency Exchange
Expected Annual Transaction Amount: 125.000 USD
Payment Nature: Transfer received from client's fund
Received from: Clients
Received for: Sale of digital assets
The client identified themselves as "Cryptocurrency Exchange" Client has submitted the limited liability partnership deed. However, the bank's auditing team is unable to identify the client's exact business profile as the cryptocurrency exchange specified by the client as their major business awaits clearance from the country's regulator. The client has submitted documents/communications exchanged with the regulator and has cited the lack of governing laws in the country of their operation as the reason for the delay.
Investigators determine the ultimate beneficial owner of ABC Tech Corp is a high-net-worth client. The client owns a real estate agency left to her when her spouse died. The spouse provided seed capital for ABC Tech Corp through a direct 1,000.000 Great British Pound (GBP) deposit.
What additional information would trigger filing a SAR/STR?
- A. The funds for the seed capital were in the form of 50 cashier's checks of 10,000 GBP each and 50 money orders of 10,000 GBP.
- B. The client's spouse's source of wealth was a salary of 250,000 GBP per annum for the past 4 years and rental of properties of 150,000 GBP per annum for the past 6 years.
- C. An open-source search revealed that the client's spouse was a PEP.
- D. The client's current net asset value is 8 million GBP, of which 7.5 million GBP was derived from the inheritance.
Answer: A
Explanation:
Explanation
The additional information that would trigger filing a SAR/STR is the fact that the funds for the seed capital were in the form of 50 cashier's checks of 10,000 GBP each and 50 money orders of 10,000 GBP. This is because this indicates a possible attempt to avoid the reporting threshold of 10,000 GBP for cash transactions, which is a common money laundering technique known as structuring or smurfing12. The other options are not necessarily suspicious, as they do not involve cash transactions or indicate any illicit source of funds. The fact that the client's spouse was a PEP does not automatically make the transaction suspicious unless there are other red flags or risk factors associated with the PEP34 References: 1: Money Laundering Techniques 2: Structuring 3: Politically exposed person 4: PEP Definition
& Meaning - Merriam-Webster
NEW QUESTION # 70
The intended benefits of section 314(b) of the USA PATRIOT Act include: (Select Three.)
- A. sharing the existence and content of SARs/STRs with other participating FIs.
- B. detecting money laundering and TF approaches and schemes across multiple financial institutions (FIs).
- C. obtaining additional information on customers or transactions regarding potential money laundering or terrorist financing (TF).
- D. expediting the filing of SARs/STRs due to the information sharing facilitated by 314(b).
- E. participating FIs sharing information about suspicious activity by customers that may have otherwise gone unnoticed.
- F. providing mandatory results to law enforcement agencies so that they can more easily obtain useful information.
Answer: B,C,E
Explanation:
Explanation
Section 314(b) of the USA PATRIOT Act allows financial institutions to share information with each other, under a safe harbor that offers protection from liability, in order to better identify and report potential money laundering or terrorist financing activities. The intended benefits of this information sharing include:
Participating financial institutions sharing information about suspicious activity by customers that may have otherwise gone unnoticed. For example, if a customer is conducting transactions with multiple financial institutions that individually do not appear suspicious, but collectively indicate a pattern of money laundering or terrorist financing, the financial institutions can share this information and report it to the authorities.
Detecting money laundering and terrorist financing approaches and schemes across multiple financial institutions. For example, if a financial institution identifies a new typology or modus operandi of money laundering or terrorist financing, it can share this information with other financial institutions to help them prevent or detect similar activities by their customers.
Obtaining additional information on customers or transactions regarding potential money laundering or terrorist financing. For example, if a financial institution has incomplete or insufficient information on a customer or a transaction that raises suspicion, it can request more information from another financial institution that may have dealt with the same customer or transaction.
References:
Section 314(b) | FinCEN.gov
Section 314(b) Fact Sheet - FinCEN.gov
NEW QUESTION # 71
A SAR/STR regarding money-mule activity prompts law enforcement action. Under U.S. law, the alleged money mules can be prosecuted:
- A. unless they can prove they were not aware of the origin of the funds.
- B. only if they were aware of their role and actively participated.
- C. even if they were unaware that money was transferred.
- D. in a country only if funds were transferred between accounts maintained in the same country.
Answer: C
Explanation:
Explanation
According to U.S. law, money mules can be prosecuted even if they were unaware that money was transferred, as long as they acted with reckless disregard of the source of the funds or the purpose of the transaction1.
This is because money mules are considered to be aiding and abetting money laundering, which does not require proof of specific intent2.
References: 1: Money Mule Awareness Booklet, page 8 2: Money Laundering: An Overview of 18 U.S.C. § 1956 and Related Federal Criminal Law, page 7
NEW QUESTION # 72
The training department is conducting awareness training for unusual customer identification scenarios. Which two indicators should be included? (Select Two.)
- A. The customer's internet protocol address does not match the identifying information provided during online registration.
- B. The customer frequently exchanges small bills for large bills.
- C. The customer opens the account in the name of a family member who begins making large deposits.
- D. The customer requests payment of proceeds to an unrelated third party.
- E. The customer's name and home address cannot be verified
Answer: C,E
Explanation:
Explanation
This information can be found in the Certified Anti-Money Laundering Specialist (CAMS) study guide, 6th edition, under the section on Unusual Customer Identification Scenarios. The guide explains that two indicators that should be included in awareness training for unusual customer identification scenarios are:
A: The customer opens the account in the name of a family member who begins making large deposits.
This is an indicator of potential structuring, where a customer may be attempting to avoid triggering reporting thresholds by depositing funds in smaller amounts over time. It is important for staff to be aware of this scenario and to monitor accounts for potential suspicious activity.
B: The customer's name and home address cannot be verified.
This is an indicator of potential identity theft or other fraudulent activity. If a customer's identifying information cannot be verified, it is important for staff to conduct additional due diligence to ensure that the customer is legitimate and that the account is not being used for illicit purposes.
NEW QUESTION # 73
A client at a financial institution deposits large amounts of money into an account, and almost immediately, the funds are then distributed to numerous individuals' accounts. The transaction activity described in the scenario is a pattern of:
- A. deposit trading.
- B. geographic usage.
- C. account usage.
- D. safe deposit custody.
Answer: A
Explanation:
Explanation
Deposit trading is a pattern of suspicious activity where a client deposits large amounts of money into an account, and then transfers the funds to other accounts, often in different jurisdictions or countries. This could be an attempt to disguise the source or destination of the funds, or to avoid reporting requirements. Deposit trading is also known as layering, which is the second stage of money laundering.
References: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, page 43; ACAMS Glossary, page 34.
NEW QUESTION # 74
While each is potentially important, which allows an investigations analyst to better write a SAR/STR narrative that is useful to law enforcement? (Select Two.)
- A. Including an explanation of the internal process that brought the transaction to the attention of the analyst
- B. Including contact information for individuals at other institutions with whom correspondence has occurred
- C. Including a detailed description of the known or suspected criminal violation or suspicious activity
- D. Including information about the general activity trends in the area where the suspicious transactions were conducted
- E. Ensuring all information in the SAR/STR is complete and accurate based on what the institution knows
Answer: C,E
Explanation:
Explanation
A SAR/STR narrative that is useful to law enforcement should include a detailed description of the known or suspected criminal violation or suspicious activity, as well as ensure that all information in the SAR/STR is complete and accurate based on what the institution knows. These elements help law enforcement to understand the nature and scope of the suspicious activity, and to follow up with further investigation if needed. The other options are not essential for a useful SAR/STR narrative, as they either provide irrelevant or redundant information, or could compromise the confidentiality of the report.
NEW QUESTION # 75
A financial institution (Fl) banks a money transmitter business (MTB) located in Miami. The MTB regularly initiates wire transfers with the ultimate beneficiary in Cuba and legally sells travel packages to Cuba. The wire transfers for money remittances comply with the country's economic sanctions policies. A Fl investigator on the sanctions team reviews each wire transfer to ensure compliance with sanctions and to monitor transfer details.
An airline located in Cuba, unrelated to the business, legally sells airline tickets in Cuba to Cuban citizens wanting to travel outside of Cuba. The airline tickets are purchased using Cuban currency (CUC).
The MTB wants 100,000 USD worth of CUC. Purchasing CUC from a Cuban bank includes a 4% fee. The MTB contacts the airline to ask if the airline will trade its CUC for USD at a lower exchange fee than the Cuban bank. The airline agrees to a 1% fee. The MTB initiates a wire transfer to the airline which appears as normal activity in the monitoring system because of the business' travel package sales.
Which investigative actions should the investigator take concerning the 100.000 USD wire transfer? (Select Three.)
- A. Gather all account activity for Fl clients that purchased packages from the airline.
- B. Review a sampling of wire transfers initiated by travel companies with Cuba travel packages.
- C. Locate and review licenses, registrations, and account operating agreements associated with the MTB account.
- D. Review regulations applicable to foreign currency trading transactions.
- E. Recommend a plan for the Fl's management to restrict the account relationship.
- F. Review the wire transfer protocols for this customer.
Answer: C,D,F
Explanation:
Explanation
The investigator should take the following investigative actions concerning the 100,000 USD wire transfer:
Review the wire transfer protocols for this customer. This will help the investigator to determine if the wire transfer is consistent with the customer's normal business activity and risk profile, or if it deviates from the established patterns or thresholds.
Review regulations applicable to foreign currency trading transactions. This will help the investigator to assess if the wire transfer violates any laws or regulations related to currency exchange, such as reporting requirements, licensing requirements, or sanctions compliance.
Locate and review licenses, registrations, and account operating agreements associated with the MTB account. This will help the investigator to verify if the MTB has the necessary authorization and documentation to conduct currency exchange transactions and if it has disclosed this activity to the FI.
References: Advanced CAMS-FCI Study Guide, pages 32-33.
NEW QUESTION # 76
A client with many personal and business deposits with the financial institution (Fl) seeks a business loan. The client wants to guarantee the loan with a trust for which they are the beneficiary.
An investigator examines the trust. The trust has many layers, including shell companies in known tax havens.
The client's ultimate beneficial ownership claim cannot be validated, and the loan is denied.
Two months later, the Fl receives a law enforcement (LE) request on one of the client's business accounts.
While reviewing the business account, the Fl receives another LE request on the same account from another agency. The requested information is shared.
Three months later, a branch manager receives a request to open a business deposit account related to a complex trust. The manager forwarded the request because of the complexity. The trust was the same as the previously examined trust, but the request came from a different client. The second client also has many accounts with the Fl. Further inspection finds links between the second client and the Paradise Papers. The Papers state the client led illegal activities and committed tax evasion.
What steps should the investigator take to review the accounts held by the second client who is listed in the Paradise Papers? (Select Two.)
- A. Inform Fl management of deficiencies in their AML program because the second client's activities were not detected.
- B. Monitor all accounts and entities related to the second client
- C. Recommend a SAR/STR be filed regarding the second client's use of a questionable trust to open an account.
- D. Review all accounts being reviewed by AML investigators over the past year that have opened trust accounts.
- E. Inform Fl management of the start of a serious risk-based investigation that could result in losses and reputation risk.
Answer: B,C
Explanation:
Explanation
The investigator should recommend a SAR/STR be filed regarding the second client's use of a questionable trust to open an account, as this could indicate an attempt to conceal the source and ownership of funds, and to evade taxes and sanctions. The investigator should also monitor all accounts and entities related to the second client, as they may be involved in illegal activities or pose a high risk to the FI. The investigator should not review all accounts that have opened trust accounts, as this would be too broad and inefficient. The investigator should not inform FI management of deficiencies in their AML program, as this is not their role or responsibility. The investigator should not inform FI management of the start of a serious risk-based investigation, as this may compromise the confidentiality and integrity of the investigation.
NEW QUESTION # 77
A criminal is engaged in chain hopping while trying to launder ransomware payments. The criminal will likely:
- A. convert the funds to a different type of cryptocurrency.
- B. obscure the funds using a mixer.
- C. store the funds in a cold wallet.
- D. move the funds to an offshore cryptocurrency wallet.
Answer: A
Explanation:
Explanation
Chain hopping is a technique used by criminals to obscure the traceability of cryptocurrency transactions by converting the funds to a different type of cryptocurrency, often using multiple exchanges or platforms. The other options are not related to chain hopping. References: Advanced CAMS-FCI Study Guide, page 38.
NEW QUESTION # 78
Which reputations risk consequence could a financial entity face for violating AML laws?
- A. Increased audit costs to monitor behavior
- B. Seizure of assets
- C. Monetary penalties
- D. Loss of high-profile customers
Answer: C
Explanation:
Explanation
According to the Certified Anti-Money Laundering Specialist (CAMS) Manual [1], 6th edition, financial entities that violate Anti-Money Laundering (AML) laws can face several reputational risks such as loss of high-profile customers, seizure of assets, increased audit costs to monitor behavior, and monetary penalties.
For example, the US Treasury's Financial Crimes Enforcement Network (FinCEN) imposes civil money penalties on "persons who willfully violate, attempt to violate, conspire to violate, or cause any violation of any provision of the Bank Secrecy Act or its implementing regulations." (CAMS Manual, 6th edition, page
26).
NEW QUESTION # 79
An investigator receives an alert documenting a series of transactions. A limited liability corporation (LLC) wired 59.000,000 USD to an overseas account associated with a state-run oil company. A second account associated with the state-run oil company wired 600,000,000 USD to the LLC. The LLC then wired money to other accounts, a money brokerage firm, and real estate purchases.
The investigator initiated an enhanced KYC investigation on the LLC. The financial institution opened the LLC account a couple of weeks prior to the series of transactions. The names associated with the LLC had changed multiple times since the account opened. A search of those names revealed relations with multiple LLCs. Public records about the LLCs did not show any identifiable business activities.
Open-source research identified mixed reports about the brokerage firm. The firm indicated it purchased mutual funds for its clients and dispensed returns to clients.
Media reports claimed the firm laundered money by holding for a fee before returning it to investors.
The investigator discovers that the bank has no records pertaining to ownership of the LLC. What would this mean for the bank and/or investigator?
- A. The bank is out of compliance with beneficial ownership regulations.
- B. The bank may not be able to file a SAR/STR without the ownership data.
- C. The bank is out of compliance with CIP regulations.
- D. The bank cannot respond to law enforcement requests without the ownership data.
Answer: C
Explanation:
Explanation
The bank is out of compliance with CIP regulations because it did not obtain the minimum identifying information from the customer prior to opening the account, as required by 31 CFR § 1020.220(a)(2)(i)(A).
The bank should have obtained the name, date of birth, address, and identification number of the customer, as well as verified the identity of the customer to the extent reasonable and practicable. The lack of ownership data may also indicate a violation of beneficial ownership regulations, but that is not the primary issue in this case.
NEW QUESTION # 80
The compliance learn is reviewing multiple data points to include in its data analytics program to detect shell or front company red flags. Which data points should the compliance team include? (Select Two.)
- A. Entities with high paid-up capital relative to monthly value of transactions
- B. Entities with a large number and variety of beneficiaries not declared at the time of onboarding
- C. Entities whose principal place of business is a non-residential address
- D. Entities exhibiting transactions with declared counterparties
- E. Entities transacting with or having relation to tax haven or high-risk countries
Answer: C,E
Explanation:
Explanation
The data points that the compliance team should include in its data analytics program to detect shell or front company red flags are entities whose principal place of business is a non-residential address and entities transacting with or having relation to tax haven or high-risk countries. These data points may indicate that the entities are not conducting legitimate business activities, but rather are used to conceal the identity or location of the true beneficiaries or owners, or to facilitate money laundering, tax evasion, or other illicit activities.
Some of the sources that support these data points as red flags are4567:
Entities whose principal place of business is a non-residential address may indicate that they have no physical presence, operations, assets, or employees. They may use addresses such as post office boxes, mail forwarding services, registered agents, or virtual offices to avoid detection or scrutiny.
Entities transacting with or having relation to tax haven or high-risk countries may indicate that they are involved in offshore financial activities that are designed to evade taxes, regulations, or sanctions. They may also be exposed to higher risks of money laundering, terrorist financing, corruption, or fraud.
References:
How to Identify a Shell Company and the Associated Red Flags
Difference between Shell, Shelf & Front Company | Sigma Ratings
Shell Companies and Money Laundering | ComplyAdvantage
General Comments Incorporation of shell companies - Singapore Police Force
NEW QUESTION # 81
Which most likely indicates that a business email compromise attack has occurred?
- A. A company adds a new employee as an authorized signer.
- B. A company sends a larger-than-normal check to an existing supplier.
- C. A company has a new beneficial owner.
- D. A company sends a recurring payment to a new account number.
Answer: D
Explanation:
Explanation
When writing or reviewing a SAR/STR, it is important to ensure that the narrative is kept to the point; easy to read; and addresses the who, what, when, where, why, and how. This is because the narrative is the most crucial part of the SAR/STR, as it provides a clear and concise summary of the suspicious activity or transaction that triggered the report. The narrative should include all the relevant information that would help law enforcement or regulators to understand the nature and context of the activity or transaction, such as123:
The who: The names, addresses, account numbers, and other identifying information of the parties involved in the activity or transaction, such as customers, beneficiaries, intermediaries, or third parties.
The what: The type, amount, frequency, and purpose of the activity or transaction, such as cash deposits, wire transfers, check payments, or purchases of goods or services.
The when: The date, time, and duration of the activity or transaction, and whether it was a one-time occurrence or part of a pattern or trend.
The where: The location or channel of the activity or transaction, such as branches, ATMs, online platforms, or mobile applications.
The why: The reason or rationale for the activity or transaction, and why it was considered suspicious or unusual based on the customer's profile, behavior, or expected activity.
The how: The method or mechanism of the activity or transaction, such as cash, check, debit card, credit card, cryptocurrency, or prepaid card.
References:
How to write the perfect "Suspicious Activity Reports" (SAR)? | i-AML
Writing for Prosecution: Best Practices For Composing SAR Narratives That Assist Prosecutors | ACAMS SAR Writing Examples and Proper Formatting: Write for Your Reader - Alessa
NEW QUESTION # 82
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