AML/CFT Risk Assessment Flashcards
6 cards from real ACAMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 AML/CFT Risk Assessment flashcards as text
Which FATF-designated category of countries requires financial institutions to apply enhanced scrutiny to all transactions involving those countries?
Answer: FATF High-Risk Jurisdictions Subject to a Call for Action (blacklist)
FATF's 'High-Risk Jurisdictions Subject to a Call for Action' (commonly called the blacklist) identifies countries with significant strategic AML/CFT deficiencies, for which FATF calls on members to apply enhanced due diligence or countermeasures.
What does a 'risk-based approach' to AML allow financial institutions to do that a purely rule-based approach does not?
Answer: Allocate compliance resources proportional to the level of money laundering risk, applying more scrutiny where risk is higher
The risk-based approach allows institutions to concentrate their AML resources where money laundering risk is highest, rather than applying identical controls to all customers and transactions regardless of risk level.
What is a 'National Risk Assessment' (NRA) and who typically conducts it?
Answer: A country-level evaluation of ML/TF risks conducted by the government, assessing threats, vulnerabilities, and consequences
A National Risk Assessment is a government-led evaluation of the money laundering and terrorist financing risks facing an entire country, examining threats, vulnerabilities across sectors, and potential consequences.
Which of the following best describes 'de-risking' and what is the primary concern with this practice?
Answer: Financial institutions exiting entire categories of customers or correspondent relationships rather than managing risk; it may exclude legitimate customers from the financial system
De-risking occurs when banks terminate or restrict services to entire categories of customers (e.g., money service businesses, non-profit organizations, correspondent banks in developing countries) rather than managing individual risk. The concern is that it can exclude legitimate users and push transactions outside the regulated system.
What role does 'transaction monitoring' play in an institution's AML risk assessment?
Answer: It is one of the key controls used to detect suspicious activity that may indicate money laundering, and its effectiveness is factored into residual risk calculations
Transaction monitoring systems are a critical AML control that identifies unusual patterns or activity potentially indicative of money laundering. The effectiveness of monitoring is a key factor in determining whether an institution's residual risk is appropriately managed.
How should a financial institution adjust its risk assessment when onboarding a new product line involving cryptocurrency?
Answer: The risk assessment should be updated to reflect the new risks associated with cryptocurrency, including anonymity, transaction speed, and cross-border movement
Adding cryptocurrency services introduces new and unique AML risks — including enhanced anonymity through mixing services, rapid cross-border value transfer, and the complexity of blockchain forensics — requiring an updated risk assessment.