Selected CAMS AML Certification Questions Answers

A (Enhanced due diligence): EDD is a key control at onboarding for high-risk customers, involving deeper scrutiny, additional documentation, and approval layers to address increased ML/TF risk.

“High-risk customers must be subject to enhanced due diligence during onboarding to ensure a thorough understanding of potential ML/TF risks.”(CAMS 6th Edition, CDD/EDD for High-Risk Customers)

 According to the BSA/AML Manual1, once a financial institution files a SAR, it should maintain a copy of the SAR and the original or business record equivalent of any supporting documentation for a period of five years from the date of filing the SAR. The supporting documentation should be identified and maintained by the financial institution as such, and be deemed to have been filed with the SAR. The financial institution should make all supporting documentation available to FinCEN or any federal, state, or local law enforcement agency, or any federal regulatory authority that examines the financial institution for compliance with the BSA, upon request. Therefore, the best action to take regarding a particular account once suspicious activity is reported by the institution is to secure all supporting documentation, as it may be needed for further investigation or examination.

BSA/AML Manual1

Suspicious Activity Reporting - Overview2

Suspicious Activity Report (SAR) Basics3

The most important consideration when deciding whether to recommend closing the account is the requests from the competent authority, such as the Financial Intelligence Unit (FIU), the regulator, or the law enforcement. According to the FAQs related to Suspicious Transaction Reporting issued by theFinancial Monitoring Unit of Pakistan1, reporting entities should not terminate the relationship with the customer after filing a STR, unless instructed by the competent authority. This is because closing the account may alert the customer of the STR, compromise the investigation, or hinder the collection of further evidence. Therefore, the reporting entity should consult with the competent authority before taking any action to close the account.

The other options are less important or irrelevant considerations. The institution’s anti-money laundering policy may provide some guidance on how to handle high-risk customers or accounts, but it should not override the requests from the competent authority. Customer relations and the Chief Executive’s reputational risk are not valid reasons to keep the account open if there is evidence of money laundering or terrorist financing. The reporting entity should act in accordance with the law and the best interests of the public, not the personal or business interests of the customer or the bank’s management.

1: Frequently Asked Questions (FAQs) related to Suspicious Transaction Reporting, 5

free of payment asset transfer is a trading pattern that may be indicative of money laundering in capital markets. Free of payment asset transfer is a method of transferring securities without any corresponding payment, which can be used to avoid detection of the origin or destination of the funds. This can facilitate the layering or integration stages of money laundering, as the launderer can move the assets across different accounts, jurisdictions, or institutions without leaving a clear audit trail. Free of payment asset transfer can also be used to evade taxes, sanctions, or other regulatory requirements.

ACAMS Study Guide 6th Edition, Chapter 1, Section 1.8, page 28: “Methods to launder money using broker-dealers, investment advisors, and the capital markets (e.g., securities, futures)”.

ExamTopics, Question 476: “Which trading pattern may be indicative of money laundering in capital markets?”