Acams Advanced-CAMS-Audit Exam Practice Test Instant Access

Question 1

Which finding indicates issues that could result in clients being subject to incorrect scenarios and thresholds?

AFirming 2

BFinding 4

CFinding 5

DFinding 7
Significance of Finding 4 in Scenario and Threshold Calibration:
Finding 4 typically points to issues with the alignment of customer segmentation or risk profiling. Incorrect segmentation or categorization directly impacts the assignment of scenarios and thresholds, leading to clients being subjected to inappropriate monitoring settings.
For example, placing a low-risk client in a high-risk threshold group can cause unnecessary alerts, while the opposite scenario might miss genuine suspicious activities.
Other Options Evaluated:
Finding 2: May relate to broader systemic issues but does not specifically highlight misalignment with thresholds or scenarios.
Finding 5: Typically involves data accuracy concerns but does not directly result in the application of incorrect scenarios or thresholds.
Finding 7: Often pertains to gaps in coverage or monitoring rather than specific issues in the calibration of scenarios and thresholds.
Advanced CAMS-Audit Context:
Advanced CAMS-Audit emphasizes the importance of precise customer segmentation and scenario calibration to ensure transaction monitoring systems operate efficiently and effectively. Findings pointing to misalignments in these areas are critical indicators of potential weaknesses.
Regulatory Relevance:
FATF and Basel Committee standards require risk-based monitoring tailored to the risk profile of each customer. Misaligned thresholds violate this principle, potentially leading to regulatory scrutiny.
Conclusion:
The correct answer is B. Finding 4, as it identifies the misalignment of scenarios and thresholds with customer risk profiles, which is a critical issue in ensuring effective AML monitoring systems.

Answer : D

Question 2

An auditor is asked to select a judgmental sample from a population of 1 000 clients onboarded during the previous 12 months. Which step should the auditor take first?

AReview the CDD onboarding policies and procedures to determine the criteria for selection.

BEvaluate quality assurance processes tor onboarding new clients.

CInitially sample 10% of new clients onboarded.

DRequest a list of high-risk clients onboarded from management.
First Steps for Sampling:
Reviewing onboarding policies ensures the sampling aligns with established risk criteria, improving the relevance and accuracy of the audit findings.
Regulatory Emphasis:
FATF guidance stresses aligning audit sampling with organizational risk assessments and onboarding standards.

Answer : A

Question 3

Which recommendation should the audit team provide to address transaction monitoring (TM) issues?

ASwitch off those detection scenarios that are producing too many false positives.

BApply the same thresholds across all client types to ensure alignment of risk coverage.

CPerform a coverage assessment of the current suite of TM detection scenarios against the bank's money laundering and terrorist financing risks

DProvide training for first-line staff on how to review and disposition TM alerts.
Importance of Coverage Assessment:
Coverage assessment ensures that the TM scenarios address the full spectrum of identified money laundering (ML) and terrorist financing (TF) risks relevant to the organization.
This aligns with FATF Recommendations on risk-based approaches and the effectiveness of transaction monitoring systems.
Key Reference Justification:
Basel Committee guidelines stress that financial institutions must regularly review their transaction monitoring coverage to ensure alignment with the risk landscape.

Answer : C

Question 4

The auditor determines that the population for transaction monitoring testing can be stratified into five distinct categories. To complete testing which sampling method should the auditor use to identify the sample size?

AJudgmental

BProportional

CStatistical

DRisk-based
Importance of Statistical Sampling in Transaction Monitoring Testing:
Statistical sampling is the most suitable method when dealing with stratified populations, as it ensures a representative sample is drawn from each distinct category.
This method allows auditors to achieve reliable results by applying mathematical and probabilistic models to calculate the required sample size, ensuring unbiased and valid conclusions.
Relevance to Stratified Populations:
When the transaction monitoring population is divided into distinct categories, statistical sampling ensures that each category is proportionately represented based on its size or risk level within the overall population.
Evaluation of Other Options:
Judgmental Sampling: Relies on auditor discretion and may introduce bias, making it unsuitable for ensuring proportional representation in stratified populations.
Proportional Sampling: Focuses only on proportional representation but does not leverage statistical tools to determine the optimal sample size or confidence levels.
Risk-Based Sampling: While effective in certain contexts, it is better suited for focusing on high-risk categories rather than ensuring comprehensive representation of all strata.
Alignment with Advanced CAMS-Audit Standards:
Advanced CAMS-Audit recommends statistical sampling for stratified populations to ensure that all categories are adequately tested and results are statistically valid for compliance and performance assessments.
Conclusion:
The auditor should use statistical sampling to identify the sample size when testing a stratified population for transaction monitoring. This ensures a reliable, unbiased, and mathematically sound basis for the audit.

Answer : C

Question 5

An auditor is writing the scope for an AML review of a financial institution. The objective is to evaluate how effectively existing controls are designed and operating. Which areas should be assessed? (Select Two.)

AClients of the institution for more than 10 years

BPrevious correspondent banking relationships

CClient base stability

DRecent audit findings

EAML corporate governance
Recent Audit Findings:
Reviewing past findings ensures the institution has addressed previous deficiencies and allows the auditor to assess the effectiveness of implemented corrective actions.
AML Corporate Governance:
Corporate governance is a critical component of AML compliance, involving oversight structures, policies, and accountability mechanisms to prevent money laundering risks.
Alignment with CAMS-Audit Principles:
Advanced CAMS-Audit emphasizes evaluating governance structures and learning from recent audits to maintain robust AML controls.

Answer : D, E

Question 6

Which is the most significant risk associated with KYC requirements being considered a low priority not designed into processes and subsequently implemented after the products are already launched?

AProduct launches may not be adequately prepared.

BClient experience improves as accounts can be opened more quickly.

CProduct launches will motivate frontline to get more customers.

DFrontline will not complete adequate CDD.
Critical Impact:
Absence of CDD processes during product launch leaves the institution exposed to onboarding high-risk customers without proper risk assessment.
Guidelines and Compliance:
FATF standards emphasize embedding CDD in all stages of customer interaction to mitigate ML/TF risks.
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Answer : D

Question 7

A financial institution utilizes an automated daily validation report to validate the accuracy of the data flowing into its monitoring software. An auditor is responsible for testing the data used to create the report. This is an example of testing which type of effectiveness?

AProgram

BSoftware

CDesign

DOperating
Testing Operating Effectiveness:
Operating effectiveness testing evaluates whether controls and systems are functioning as intended on a daily basis, including the accuracy and reliability of automated validation processes.
Relevance to Data Validation:
The auditor's role in this scenario ensures that the data flowing into the monitoring software is accurate and aligned with operational requirements, reflecting day-to-day effectiveness.
CAMS-Audit Emphasis:
The emphasis on ongoing operational validation is consistent with Advanced CAMS-Audit practices, which stress continuous monitoring of AML system effectiveness.

Answer : D

Acams Advanced-CAMS-Audit Advanced CAMS-Audit Certification Exam Practice Test