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ACAMS TEST REVIEW WITH COMPLETE QUESTIONS AND CORRECT ANSWERS RATED A+
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ACAMS TEST REVIEW WITH COMPLETE QUESTIONS AND CORRECT ANSWERS RATED A+
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ACAMS TEST REVIEW WITH COMPLETEQUESTIONS AND CORRECT ANSWERS
RATED A+
Describe 4 types of risk associated with money laundering faced
by a financial institution? Correct Answer Reputational Risk, is
the potential that adverse publicity regarding an organizations
business practices and associations, weather accurate or not, will
cause a loss of public confidence in the integrity of the
organization. Operational Risk is potential for loss resulting from
inadequate internal processes, personnel or systems or from
external events.
Legal Risk is the potential for lawsuits, adverse judgments,
unenforceable contracts, fines and penalties generating losses
increased expenses for an organization or even the closure of the
organization.
Concentration Risk is the potential for loss resulting from too
much credit or loan exposure to one borrower or group of
borrowers.
Describe the elements that should be addressed in a global
approach to KYC identified in the Basel Committee's October
2004 paper called "Consolidated KYC Risk Management? Correct
Answer Risk Management.
Customer acceptance & identification policies.
Ongoing monitoring of higher risk accounts.
Identify, in general, who should approve policies and procedure?
Correct Answer In writing, & must be approved by appropriate
levels of management. In general, institution-level policies should
be approved by the board, while business unit procedures can be
approved by business unit management.
,Where does the ultimate responsibility for the AML compliance
program rest with? Correct Answer The board of directors.
Members must set the tone from the top by openly voicing their
commitment to the program, ensuring that their commitment flows
through all service areas and lines of business, and holding
responsible parties accountable for compliance.
Why is the Risk-Based approach more preferable then a
prescriptive approach in the area of Anti-Money Laundering and
Counter-Terrorism Financing? Correct Answer Flexible, as
Money Laundering & terrorist financing risk vary across
jurisdictions, customers, products & delivery channels, & over
time.
Effective, as companies are better equipped than legislators to
effectively assess & mitigate the particular Money Laundering &
terrorist financing risks they face.
Proportionate, because a risk=based approach promotes
common sense & intelligent approach to fighting Money
Laundering & terrorist financing as opposed to a "check the box"
approach. It also allows firms to minimize the adverse impact of
Anti-Money Laundering procedures on their Low-Risk customers.
What are the basic elements of financial institution's Anti-Money
Laundering program? Correct Answer A system of internal
policies, procedures & controls.
A designated Compliance Officer with day-t0-day oversight over
the AML Program.
An ongoing employee training program.
An independent audit function to test the AML Program.
How does the scope of the European Union's 3rd Money
Laundering Directive differ from the 2nd Money Laundering
Directive? Correct Answer It specifically includes the category of
trust and company service providers.
,It covers all dealers trading in good trade in cash over 15,000
Euros.
The definition of financial institution includes certain insurance
intermediaries.
How did the European Union's 2nd Directive on Prevention on the
Use of the Financial System for the purpose of Money Laundering
2001 expand the scope of the 1st Directive? Correct Answer
Beyond Drug-Related crime. The definition of "Criminal Activity"
was expanded to cover not just drug trafficking, but all serious
crimes, including corruption & fraud against the financial interest
of the European Community.
Identify and describe the three sections of the USA Patriot Act
concerning due diligence U.S. financial institutions need to
perform for relationships with foreign Correspondent Banking
Customers? Correct Answer Section 312- Requires institutions
must set up risk based due diligence to mitigate the Money
Laundering Risks posed by foreign financial institutions.
Section 313- Which prohibits U.S. Financial Institutions from
opening or maintaining Correspondent Accounts for foreign Shell
Banks.
Section 319- Which requires U.S. Financial institutions to maintain
records with the names & address of the owners of foreign banks
for which they maintain Correspondent Accounts.
According to the Basel Committee on Banking Supervision's
paper entitled "Compliance and the Compliance Function in
banks," What are the responsibilities of the Board Of Directors for
Compliance? Correct Answer Approve the Bank's Compliance
Policy, including a formal document establishing a permanent &
effective compliance function. At least once a year, the board or a
committee of the board should assess the extent to which the
bank is managing it's compliance risk effectively.
, According to the Egmont Group's "Principle for information
Exchange Between Financial Intelligence Units for Money
Laundering and Terrorism Financing Cases," What are the
permitted uses of information? Correct Answer May be used only
for the specific purpose for which the information was sought or
provided. The requesting FIU may not transfer information shared
by a disclosing FIU to a 3rd party, nor make use of the information
in an administrative, investigative, prosecutorial, or judicial
purpose without the prior consent of the FIU that disclosed the
information.
According to the Wolfsberg Statement on AML Screening,
Monitoring, ad Searching (2009), what are the most appropriate
and effective overall monitoring frameworks? Correct Answer A
dedicated automated transaction monitoring system. System,
generated exception reports. Manual "line of business" incident
reports. Scheduled periodic reviews/sampling. Event, driven
reviews (e.g., following issuance of new typologies)
According to the Basel Committee on Banking Supervision's
paper entitled "Customer Due Diligence for Banks." How are
sound KYC procedures relevant to the safely and soundness of
banks? Correct Answer They help to protect banks' reputation
and the integrity of banking systems by reducing the likelihood of
banks becoming a vehicle for a victim of financial crime and
suffering consequential reputational damage. They constitute an
essential part of Sound Risk Management. (e.g. by providing the
basis for identifying, limiting and controlling risk exposures in
assets and liabilities, including assets under management)
What is a country's extraterritorial reach? Correct Answer The
extension of one country's policies and laws to the citizens &
institutions of another. U.S. Money Laundering laws contain
several provisions that extend its prohibitions & sanctions into
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