AML Certification Changed CAMS Questions

The audit function should report to the audit committee of the board of directors (or similar oversight body) and independently evaluate the risk management and controls of the bank through periodic assessments, including the adequacy of the bank’s controls to mitigate the identified risks, the effectiveness of the bank’s staff’s execution of the controls, the effectiveness of the compliance oversight and quality controls and the effectiveness of the training.

Internet gambling is an ideal web-based money laundering method because it allows criminals to move funds across borders quickly, anonymously, and with minimal oversight12. Internet gambling sites can facilitate the placement, layering, and integration stages of money laundering by accepting cash deposits, issuing virtual credits, allowing bets on various games, and paying out winnings through different payment methods12. Internet gambling also poses challenges for law enforcement and regulators, as it operates in a complex and dynamic environment that involves multiple jurisdictions, service providers, and technologies12.

ACAMS CAMS Study Guide (the 6th edition), Chapter 2: Money Laundering Risks and Methods, page 671

ACAMS Today, The Growing Threat of Online Gambling Money Laundering2

ARisk-Based Approach (RBA)allows financial institutions toallocate compliance resources effectivelyandprioritize higher-risk areasforenhanced due diligence (EDD).

Option A (Correct):An RBA enables institutions to tailor their AML controls based on risk exposure, ensuring better resource allocation.

Option B (Incorrect):While RBAimproves efficiency, itdoes not guarantee faster implementationof controls.

Option C (Incorrect):RBA is a regulatory requirement, butit is not necessarily determined by customer acceptance.

Option D (Incorrect):RBA provides guidance on risk mitigation, but itdoes not dictate specific resource usage.

Benefits of a Risk-Based Approach (RBA):

Efficient use of compliance resourcesby focusing onhigh-risk transactions, customers, and geographies.

Regulatory compliance alignmentwithFATF, Basel Committee, and Wolfsberg Group AML principles.

Flexibility to adjust AML controlsas new threats emerge.

Best Practices for Implementing RBA in AML Compliance:

Conduct enterprise-wide risk assessments (EWRAs).

Classify customers and transactions based on risk levels.

Apply enhanced due diligence (EDD) for high-risk clients.

The practice of brokerage firms maintaining securities as nominees and the speed of the transactions are two factors specific to the securities industry that increase the exposure to money laundering risk. Nominee accounts can be used to conceal beneficial ownership and obscure transaction trails. The speed of transactions can make it difficult to detect and prevent suspicious activity in real time.