Acams Advanced CAMS-Financial Crimes Investigations CAMS-FCI Exam Practice Test

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Question 1

Which might suggest misuse of crowdfunding resources by a terrorist?

AA small charge at a gas station followed by a large charge at an electronics store

BA large deposit followed by multiple charges at a sporting goods store

CMultiple small deposits followed by a wire transfer to a large well-known international charity

DMultiple small deposits followed by the purchase of airplane tickets >

Answer : D

The purchase of airplane tickets after receiving multiple small deposits from a crowdfunding platform might suggest that the funds are being used to facilitate travel for terrorist purposes. The other options are not necessarily indicative of terrorist financing, as they could be explained by legitimate reasons or other types of financial crimes.

Question 2

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:

1) 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 the loan

After reviewing the transaction journal, request for information response, and supporting documentation, the investigator determines that additional information is needed. Which additional information should the investigator request?

APreviously filed SARVSTR unrelated to the customer, but similar in content

BFormation document/description of the group-related companies

CSource of the incoming funds to the group-related companies

DAdverse news screening on all names listed in the formation documents

Answer : C

The additional information that the investigator should request is the source of the incoming funds to the group-related companies. This is because the customer declared that the ongoing source of funds to this account comes from group-related companies, but the transaction journal shows that the customer received funds from different third parties, not from group-related companies. Therefore, the investigator should verify the relationship and legitimacy of these third parties and their funds with the customer and the group-related companies. The other options are not relevant or necessary for this investigation.

Question 3

During transaction monitoring. Bank A learns that one of their customers. Med Supplies 123, is attempting to make a payment via wire totaling 382,500 USD to PPE Business LLC located in Mexico to purchase a large order of personal protective equipment. specifically surgical masks and face shields. Upon further verification. Bank A decides to escalate and refers the case to investigators.

Bank A notes that, days prior to the above transaction, the same customer went to a Bank A location to wire 1,215,280 USD to Breath Well LTD located in Singapore. Breath Well was acting as an intermediary to purchase both 3-ply surgical masks and face shields from Chin

a. Bank A decided not to complete the transaction due to concerns with the involved supplier in China. Moreover, the customer is attempting to send a third wire in the amount of 350,000 USD for the purchase of these items, this time using a different vendor in China. The investigator must determine next steps in the investigation and what actions, if any. should be taken against relevant parties.

Upon further investigation. Bank As investigator learns that both the Mexico- and Singapore-based companies are linked to the alleged suppliers in China. Which additional indicators would the investigator need to identify to determine if this fits a fentanyl (drug) trafficking typology? (Select Two.)

AReview of the invoices and transportation documents, provided by the customer, reveal significant discrepancies between the description of goods.
Internet research reveals that suppliers are newly established companies with no history of sales of medical equipment.

BReview of the account activity reveals that wires were mainly funded by multiple
cash deposits, conducted in amounts of 10.000 USD or below.

CReview of the Food and Drug Administration (FDA) product certifications provided by the customer reveals that documents were falsified.

DReview of the account activity reveals that account is inconsistent with the expected business activity as it shows multiple charges at various hotels, transportation tickets for unrelated 3rd parties, etc.

Answer : A, C

Question 4

Each month the automated transaction monitoring system generates alerts based on predetermined scenarios. An alert was generated in relation to the account activity of ABC Foundation. Below is the transaction history for ABC Foundation (dates are in DD/MM/YYYY format).

The relationship manager for ABC Foundation contacts the client to request more information on the beneficiary of the transfer in Turkey. ABC Foundation advises that this is a not-for-profit charity group called 'Forever Free." Which is the best next step in the investigation?

AContact the financial institution in Turkey that has a relationship with Forever Free and advise them of the investigation.

BUpdate the customer profile to include Forever Free as the recipient of the funds.

CCheck the junsdiction's list of known chanties with connections to terrorist activity.

DFile a SAR/STR with the new information learned about the beneficiary.

Answer : C

The best next step in the investigation is to check the jurisdiction's list of known charities with connections to terrorist activity . This is because the FI has a responsibility to verify the legitimacy and reputation of the beneficiary of the funds, especially if it is a charity or non-profit organization that operates in a high-risk jurisdiction or sector. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, ''the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries'' (p. 24). The FI should also check if the beneficiary is consistent with the customer's profile and expected activity.

The other options are not as appropriate or effective as option C. Contacting the financial institution in Turkey that has a relationship with Forever Free and advising them of the investigation (A) could violate confidentiality or data protection laws, as well as compromise the investigation or alert the customer or beneficiary of the suspicion. Updating the customer profile to include Forever Free as the recipient of the funds (B) could be premature or inaccurate, as it does not verify the nature and purpose of the transfer or the identity and legitimacy of the beneficiary. Filing a SAR/STR with the new information learned about the beneficiary (D) could also be premature or incomplete, as it does not confirm if there is any suspicious or criminal activity involved in the transfer or if there are any other red flags or indicators.

Question 5

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.)

ARecommend a SAR/STR be filed regarding the second client's use of a questionable trust to open an account.

BReview all accounts being reviewed by AML investigators over the past year that have opened trust accounts.

CInform Fl management of deficiencies in their AML program because the second client's activities were not detected.

DMonitor all accounts and entities related to the second client

DInform Fl management of the start of a serious risk-based investigation that could result in losses and reputation risk.

Answer : A, D, D

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.

Question 6

Which payment method for purchasing luxury items is a red flag for potential money laundering?

APersonal loan

BCash

CWire transfer

DCredit card

Answer : B

According to the Financial Action Task Force (FATF), the use of large amounts of cash is a common method for money launderers to move illicit funds [1]. Purchasing luxury items with cash can indicate an attempt to convert illegal funds into tangible assets that can be easily resold or moved across borders. As a result, businesses that deal with luxury items are required to implement enhanced due diligence measures, including monitoring transactions involving large amounts of cash [1].

Question 7

A KYC specialist from the first line of defense at a bank initiates an internal escalation based on a letter of credit received by the bank.

MEMO

To: Jane Doe. Compliance Manager, Bank B From: Jack Brown, KYC Specialist, Bank B RE: Concerning letter of credit

A letter of credit (LC) was received from a correspondent bank. Bank

Ain Country A. in Asia with strict capital controls, providing guarantee of payment to Bank B's client for the export of 10 luxury cars located in Country B. located in Europe. Bank A's customer is a general in the army where Bank A is headquartered.
The information contained in the LC is as follows:
* Advising amount per unit 30.000.00 EU *10 units of BMW
* Model IX3
* Year of registration: 2020
Upon checks on Bank B's client, the exporter mentioned that the transactions were particularly important, and a fast process would be much appreciated in order to avoid reputational damage to the firm and the banks involved in the trade finance process. The exporter has a longstanding relationship with Bank B and was clearly a good income generator. The exporter indicated that, as a general, the importer was trustworthy.
The relationship manager <RM) was contacted to conduct a full review of the exporter and to conduct a site visit.
Feedback from the RM:
The RM contacted the exporter for a client courtesy visit, but it was rearranged four times as the exporter kept cancelling the appointments. When the exporter was finally pinned down for an interview, employees were reluctant to provide clear answers about the basis of the transaction. The employees were evasive when asked about the wider business and trade activity in the country.
Findings from the investigation from various internal and external sources of information:
* There were no negative news or sanctions hits on the exporter company, directors, and shareholders.
* The registered address of the exporting business was a residential address.
* The price of the cats was checked and confirmed to be significantly below the market price of approximately 70,000 EU, based on manufacturer's new price guide.
* The key controllers behind the exporting company, that is the directors and
During the investigation, the investigator determines that a nephew of the general.....

Ashould be treated well to avoid reputational damage to the bank

Bis a high-net-worth individual

Cshould be flagged as a senior PEP.

Dis a trustworthy source.

Answer : C

The investigator should determine that a nephew of the general (Bank A's customer) should be flagged as a senior PEP . This is because the nephew is related to a senior military official who is a customer of Bank A, which is a high-risk jurisdiction with strict capital controls. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, ''the FI should identify and flag any customers who are PEPs or have close associations with PEPs, such as family members or business partners'' (p. 24). The FI should also conduct enhanced due diligence on these customers and monitor their transactions for any suspicious or unusual activity.

The other options are not correct. The investigator should not determine that a nephew of the general should be treated well to avoid reputational damage to the bank (A), as this could compromise the integrity and objectivity of the investigation, as well as expose the bank to legal or regulatory risks. The investigator should not determine that a nephew of the general is a high-net-worth individual (B), as this is not relevant or material to the investigation, as the nephew's wealth does not affect his potential PEP status or risk level. The investigator should not determine that a nephew of the general is a trustworthy source (D), as this could be biased or inaccurate, as the nephew's trustworthiness does not depend on his relation to the general or his involvement in the transaction.