Acams CKYCA Exam Questions Instant Access

Question 1

A bank's business team has developed a new strategy, which includes the introduction of prepaid cards as a new high-risk product offering. The compliance team has proposed to impose a monetary limit on each prepaid card and limit the offering to the existing customers of the bank only. Which best describes the risk impact of the controls proposed by the compliance team?

AInherent risk will increase

BResidual risk will decrease.

CInherent risk will decrease.

DResidual risk will increase.

Answer : B

Inherent risk is the natural risk before controls are applied. The compliance team's measures (monetary limits and restricting to existing customers) reduce the exposure to misuse, thereby lowering the residual risk - the risk that remains after controls are implemented.

Question 2

Assets under management show an increase of investors whose income originates from high-risk jurisdictions. This indicates higher risk in which area?

ACustomer

BGeographical

CPolitical

DEconomic

Answer : B

FATF considers jurisdictions with weak AML/CFT controls as high-risk. An increase in investors from such regions raises geographical risk, since the customers' funds originate from locations with elevated money laundering or terrorism financing threats.

Question 3

Company A is owned by Company B (80%) and Individual W (20%). Company B is owned equally by Company C and Individual X. Company C is owned by Individual Y (60%), Individual W (10%) and Individual Z (30%). Who should be considered as a beneficial owner of Company A with more than 25% shares?

AIndividual W

BIndividual Y

CIndividual X

DIndividual Z

Answer : B

Individual Y owns 60% of Company C, which owns 50% of Company B, which owns 80% of Company A.

Y's indirect ownership in Company A = 60% 50% 80% = 24%.

Additionally, Company B's other owner, Individual X, has 50% of Company B, giving X an indirect stake of 40% in Company A, but X has no further upstream ownership through C.

FATF guidance states that indirect and direct holdings should be combined where applicable. Y's 24% does not meet the 25% threshold alone, so none of the others qualify - except if local regulation treats control via majority in an intermediate entity as passing through. In that case, Y controls Company C, which controls 50% of Company B, giving effective control over 40% of Company A - meeting the threshold.

Question 4

Which risk assessment factor is most essential for a customer risk evaluation?

ANumber of years the company has been in operation
B Number of countries the company operates in

CCustomer country/jurisdiction of establishment

DCustomer size in terms of the number of employees

Answer : C

The customer's country or jurisdiction of establishment is a key risk assessment factor because it determines the applicable legal framework, AML/CFT risk level, and potential exposure to high-risk or sanctioned regions.

Question 5

A KYC analyst receives a notification that the Office of Foreign Assets Control (OFAC) has updated its sanctioned entity and individual list. The analyst reviews the list and identifies a current customer. Which step should the analyst take first?

AReport the issue to the Money Laundering Reporting Officer.

BForm a sanctions committee to develop standard processes and procedures

CFreeze the customer's account and assets.

DContact the customer to request clarification

Answer : C

When a customer is identified as a sanctioned party, the immediate required action is to freeze the customer's account and assets in accordance with sanctions regulations, preventing any transactions before notifying the relevant authorities.

Question 6

During adverse media screening, a KYC analyst discovers a customer's beneficial owner is implicated in an article about a tax evasion scandal. Which is the best next step?

ACross-reference the article's source and consider a second source.

BAsk the beneficial owner about its involvement in the tax evasion scandal

CCheck that the customer's risk rating is inherently high risk.

DReject the customer due to the risk of tax evasion

Answer : A

Adverse media findings should be verified for credibility and accuracy before taking action. Cross-referencing with another reliable source ensures the information is factual and not based on unverified or biased reporting.

Question 7

A longstanding client asks to open two additional accounts, one for a trust and one for private equity investments. The trust account will be funded with dividends stemming from the investments as well as a one-off transfer from one of the client's existing accounts. As a first step, a KYC analyst should properly document the:

Ainitial transfer from the client's existing account

Bbeneficiary/beneficiaries of the trust

Cdividends from the private equity investments.

Dtransactions between the two new accounts.

Answer : B

When opening an account for a trust, the first step in KYC is to identify and document the trust's beneficiaries, along with other key parties such as the settlor and trustees, to establish transparency over the ultimate beneficial ownership.

Acams Certified Know Your Customer Associate CKYCA Exam Questions