Certified Anti-Money Laundering Specialist (CAMS) — Questions and Answers

Question 1: Which of the following is a defining characteristic of Professional Money Laundering Networks (PMLNs)?

They focus solely on cryptocurrency-based laundering methods to avoid traditional banking detection
They operate exclusively within a single domestic jurisdiction to minimize legal exposure
They work exclusively with drug trafficking organizations and no other criminal groups
They provide specialized money laundering services to multiple criminal organizations in exchange for a fee (Correct answer)

Correct answer: They provide specialized money laundering services to multiple criminal organizations in exchange for a fee

PMLNs are sophisticated criminal enterprises that offer laundering services as a business model to various criminal clients, treating money laundering as a professional service for hire.

Question 2: What is a 'shell company' in the context of money laundering?

A company that manufactures oil and gas equipment
A startup company with limited revenue in its early stages
A legal entity with no significant assets or operations used primarily to obscure the true beneficial ownership of assets (Correct answer)
A subsidiary of a multinational corporation

Correct answer: A legal entity with no significant assets or operations used primarily to obscure the true beneficial ownership of assets

Shell companies are legal entities that typically have no real business operations or assets and are used to hold assets or conduct transactions while concealing the true owner's identity.

Question 3: Regultech solutions in AML compliance primarily leverage which technology to reduce false positives in transaction monitoring?

Blockchain distributed ledgers
Machine learning and artificial intelligence (Correct answer)
Quantum encryption
Biometric authentication

Correct answer: Machine learning and artificial intelligence

AI/ML-based RegTech tools analyze behavioral patterns and context to distinguish suspicious activity from legitimate transactions more accurately.

Question 4: Karla is employed by the Technical Compliance Assessment department as an assessor. One of her responsibilities is to determine if a nation complies with the FATF standard. Which of the following ratings are possible?

Generally in compliance
All mentioned (Correct answer)
Not relevant
Only partially adhering
Incompliance
Obedient

Correct answer: All mentioned

The FATF employs a comprehensive rating system to assess a country's compliance with its 40 Recommendations. These ratings include 'Compliant,' 'Largely Compliant,' 'Partially Compliant,' and 'Non-Compliant,' reflecting varying degrees of adherence to the standards. Additionally, 'Not Relevant' can be used if a specific recommendation does not apply to a country's particular legal or institutional framework.

Question 5: What is the difference between 'primary sanctions' and 'secondary sanctions'?

Primary sanctions apply to the most dangerous sanctioned parties; secondary sanctions apply to lesser threats
Primary sanctions are enforced by OFAC; secondary sanctions are enforced by the FBI
Primary sanctions prohibit U.S. persons from transacting with sanctioned parties; secondary sanctions target non-U.S. persons who facilitate transactions with sanctioned parties (Correct answer)
Primary sanctions apply to individuals; secondary sanctions apply to corporate entities

Correct answer: Primary sanctions prohibit U.S. persons from transacting with sanctioned parties; secondary sanctions target non-U.S. persons who facilitate transactions with sanctioned parties

Primary sanctions apply directly to U.S. persons and entities, while secondary sanctions extend U.S. penalties to non-U.S. persons who engage in significant transactions with sanctioned parties, effectively giving sanctions extraterritorial reach.

Question 6: What is 'chain-hopping' in the context of cryptocurrency-based money laundering?

Mining cryptocurrency using compromised computer networks
Converting funds between different blockchain networks to obscure their trail (Correct answer)
Rapidly switching between different cryptocurrency exchanges
Using blockchain forks to duplicate and hide assets

Correct answer: Converting funds between different blockchain networks to obscure their trail

Chain-hopping involves converting assets from one cryptocurrency to another across different blockchains, complicating tracing efforts.

Question 7: Under the FinCEN CDD Rule, financial institutions must identify and verify beneficial owners of legal entity customers. What is the minimum ownership threshold that triggers this requirement?

51%
15%
25% (Correct answer)
10%

Correct answer: 25%

FinCEN's CDD Rule requires identifying individuals who own 25% or more of a legal entity customer, meaning up to four individuals must be identified under the ownership prong.

Question 8: What is 'de-risking' and why has FATF raised concerns about it?

A risk reduction technique FATF recommends for all financial institutions
A technique for reducing AML risk by automating transaction monitoring
The practice of banks exiting entire customer segments or correspondent relationships due to perceived AML risk, which FATF warns undermines financial inclusion and can push transactions to less regulated channels (Correct answer)
A FATF-endorsed process for removing countries from the grey list

Correct answer: The practice of banks exiting entire customer segments or correspondent relationships due to perceived AML risk, which FATF warns undermines financial inclusion and can push transactions to less regulated channels

FATF has expressed concern that wholesale de-risking (exiting entire geographies or customer categories) is not consistent with a risk-based approach, reduces financial inclusion, and can drive transactions to less-regulated and less-monitored channels.

Question 9: Synthetic identity fraud most directly impacts AML programs because it:

Uses stolen business registration documents to open corporate accounts
Involves theft of existing customer identities for account takeover
Creates accounts that pass initial KYC checks using fabricated but plausible identities (Correct answer)
Exploits weak encryption in banking systems to access real accounts

Correct answer: Creates accounts that pass initial KYC checks using fabricated but plausible identities

Synthetic identities combine real and fictitious information to create credible personas that evade standard ID verification, allowing illicit accounts to pass KYC.

Question 10: Which typology involves moving illicit funds through a series of foreign correspondent banking relationships to obscure their origin?

Real estate layering through nominee purchasers
Structuring deposits across multiple domestic retail banks
Casino chip laundering and cash-out schemes
Correspondent banking layering through nested accounts (Correct answer)

Correct answer: Correspondent banking layering through nested accounts

Correspondent banking layering exploits nested or downstream respondent relationships to move funds through multiple jurisdictions, each hop adding complexity and obscuring the original source.

Question 11: When is a financial institution NOT required to file a SAR even if it suspects illegal activity?

When the activity relates to securities violations rather than banking fraud
When the institution has already filed a CTR for the same transaction
There are no exemptions — SARs must always be filed if there is any suspicion
When the transaction is below $5,000 and involves an unknown customer (Correct answer)

Correct answer: When the transaction is below $5,000 and involves an unknown customer

For most financial institutions, SAR filing is only required when transactions meet or exceed minimum dollar thresholds ($5,000 for banks), so transactions below this threshold involving unknown suspects may not trigger a mandatory filing obligation.

Question 12: What is a key difference between AML compliance and sanctions compliance at a financial institution?

There is no meaningful difference — they are the same compliance function
AML applies only to domestic transactions; sanctions apply only to international transactions
AML compliance focuses on detecting and reporting suspicious transactions; sanctions compliance requires blocking or rejecting transactions with prohibited parties in real time (Correct answer)
AML compliance has no monetary penalties; sanctions compliance does

Correct answer: AML compliance focuses on detecting and reporting suspicious transactions; sanctions compliance requires blocking or rejecting transactions with prohibited parties in real time

AML focuses on identifying and reporting suspicious activity to law enforcement; sanctions compliance requires real-time screening and immediate action (blocking/rejecting) when prohibited parties are identified, leaving no discretion.

Question 13: A U.S. bank receives a wire transfer from a foreign bank in which 51% is owned by a sanctioned entity. Under OFAC's '50 percent rule,' should this transaction be blocked?

No, because the foreign bank itself is not on the SDN list
Yes, because any entity 50% or more owned (directly or indirectly) by an SDN is itself treated as sanctioned, even if not explicitly listed (Correct answer)
No, because the sanctioned entity does not directly own the wire transfer
Yes, but only if the wire transfer amount exceeds $10,000

Correct answer: Yes, because any entity 50% or more owned (directly or indirectly) by an SDN is itself treated as sanctioned, even if not explicitly listed

OFAC's 50 Percent Rule provides that any entity owned 50% or more (directly or indirectly) by a sanctioned party is treated as sanctioned itself, even if not explicitly named on the SDN list.

Question 14: How many FATF Recommendations form the current international AML/CFT standard?

40 (Correct answer)
30
50
20

Correct answer: 40

The FATF 40 Recommendations (last revised in 2012 with subsequent updates) constitute the international standard for AML, counter-terrorist financing (CFT), and counter-proliferation financing.

Question 15: Which of the following is the clearest example of the 'placement' stage of money laundering?

Investing clean money into publicly traded stock market securities
Creating multiple layers of nominee-owned shell companies in offshore jurisdictions
Depositing cash proceeds from narcotics sales at multiple bank branches below CTR thresholds (Correct answer)
Purchasing luxury goods and art with previously laundered funds

Correct answer: Depositing cash proceeds from narcotics sales at multiple bank branches below CTR thresholds

Depositing drug sales proceeds at banks constitutes placement — the first, most risky stage where cash enters the formal financial system.

Question 16: Which of the following is/are the FATF member's objective(s) that they do not have?

Establish guidelines for the efficient application of legislative, regulatory, and operational measures aimed at preventing the funding of terrorism and money laundering.
Tracks how well each nation is doing in putting the FATF recommendations into practice.
Encourage the FATF Recommendations to be adopted and implemented worldwide.
When it is thought necessary, collaborate with JFIU to conduct an investigation and exchange STR information. (Correct answer)
Examines methods and countermeasures for money laundering and financing of terrorism.

Correct answer: When it is thought necessary, collaborate with JFIU to conduct an investigation and exchange STR information.

The Financial Action Task Force (FATF) is an intergovernmental body that sets international standards and promotes the effective implementation of legal, regulatory, and operational measures for combating money laundering and terrorist financing. While FATF tracks national compliance and examines methods, it does not directly conduct investigations or exchange specific Suspicious Transaction Report (STR) information with individual Financial Intelligence Units (FIUs) like JFIU; that is the role of national authorities.

Question 17: Which money laundering typology involves converting large amounts of cash into monetary instruments such as money orders, traveler's checks, or cashier's checks?

Currency exchange arbitrage
Loan-back schemes
Cuckoo smurfing
Monetary instrument purchases (Correct answer)

Correct answer: Monetary instrument purchases

Purchasing monetary instruments with cash is a classic placement technique because such instruments are easier to deposit, transport, and negotiate than bulk cash.

Question 18: Which of the following best describes 'willful blindness' in AML compliance?

Intentionally avoiding knowledge of suspicious circumstances that a reasonable person would investigate (Correct answer)
Refusing to implement AML policies due to cost concerns
Neglecting to update AML software for known vulnerabilities
Deliberately failing to report known criminal activity

Correct answer: Intentionally avoiding knowledge of suspicious circumstances that a reasonable person would investigate

Willful blindness (also called conscious avoidance) occurs when a person deliberately avoids learning facts that would confirm suspicious activity, and courts treat this as equivalent to actual knowledge.

Question 19: Which FATF recommendation was updated to specifically address virtual asset service providers (VASPs)?

Recommendation 10
Recommendation 20
Recommendation 26
Recommendation 15 (Correct answer)

Correct answer: Recommendation 15

FATF Recommendation 15 was updated to bring VASPs under AML/CFT obligations equivalent to those applied to financial institutions.

Question 20: Which of the following services does Credit Union Central handle and perform?

Settlement of Special Drawing Rights (SDR)
Capital liquidity (Correct answer)
Processing of electronic funds transfers (EFT) (Correct answer)
Verify the clearance
Investigation, instruction, and promotion of regulatory responsibilities (Correct answer)

Correct answer: Capital liquidity

Credit Union Centrals typically serve as central service providers for their member credit unions. Among their key functions, they handle and perform the processing of electronic funds transfers (EFT). This service enables individual credit unions to efficiently and securely manage digital transactions for their members, supporting modern banking operations.

Question 21: The FATF Recommendations require countries to criminalize which two underlying offenses to money laundering?

All serious offenses generating proceeds AND terrorist financing (Correct answer)
Corruption and drug trafficking
Cybercrime and organized crime specifically
Tax evasion and fraud

Correct answer: All serious offenses generating proceeds AND terrorist financing

FATF Recommendation 3 requires countries to criminalize money laundering based on all serious offenses (using either an all-crimes or designated categories approach) and Recommendation 5 requires criminalizing terrorist financing.

Question 22: What is 'correspondent banking' under FATF standards, and what specific Recommendation addresses it?

Recommendation 10, requiring basic CDD for all correspondent relationships
Recommendation 16, requiring Travel Rule compliance for correspondent transfers
Recommendation 20, requiring SARs to be filed for all correspondent transactions
Recommendation 13, requiring financial institutions to apply specific EDD measures for cross-border correspondent banking relationships, including assessing the respondent's AML controls (Correct answer)

Correct answer: Recommendation 13, requiring financial institutions to apply specific EDD measures for cross-border correspondent banking relationships, including assessing the respondent's AML controls

FATF Recommendation 13 specifically addresses correspondent banking, requiring institutions to gather information about the respondent institution's AML/CFT controls, assess its regulatory status, and obtain senior management approval before establishing high-risk correspondent relationships.

Question 23: Under the USA PATRIOT Act, which section requires financial institutions to establish a Customer Identification Program (CIP)?

Section 352
Section 314
Section 312
Section 326 (Correct answer)

Correct answer: Section 326

Section 326 of the USA PATRIOT Act requires financial institutions to establish a Customer Identification Program to verify customer identities at account opening.

Question 24: What is a 'loan-back' scheme in money laundering?

A scheme where criminals 'lend' themselves their own illicit funds and repay the loan with seemingly legitimate funds (Correct answer)
A government program designed to compensate money laundering victims
A scheme where criminals obtain bank loans using stolen identities
A method of transferring funds through international syndicated banking facilities

Correct answer: A scheme where criminals 'lend' themselves their own illicit funds and repay the loan with seemingly legitimate funds

In a loan-back scheme, the launderer deposits illicit funds offshore, then borrows against those funds, creating a paper trail that makes repayments appear to be legitimate loan obligations.

Question 25: What is 'concentration risk' in AML and why does it matter?

The risk that an institution has an unusually high concentration of high-risk customers, products, or geographic exposures that could create systemic AML vulnerabilities (Correct answer)
The risk that AML staff are concentrated in one geographic location
The risk of concentrating all transaction monitoring in a single system
The legal risk concentration in the compliance department

Correct answer: The risk that an institution has an unusually high concentration of high-risk customers, products, or geographic exposures that could create systemic AML vulnerabilities

Concentration risk occurs when too large a portion of the institution's customer base, transaction volume, or revenue is tied to high-risk categories — if something goes wrong (enforcement action, reputational harm), the impact is amplified.

Question 26: How has FATF addressed the AML risks associated with Designated Non-Financial Businesses and Professions (DNFBPs)?

FATF recommended that banks refuse to serve DNFBPs due to their elevated risk
FATF extended its AML Recommendations to DNFBPs including lawyers, accountants, real estate agents, and dealers in precious metals, requiring them to implement AML controls similar to financial institutions (Correct answer)
FATF excluded DNFBPs from its Recommendations, leaving their regulation entirely to domestic law
FATF created a separate, simplified set of Recommendations exclusively for DNFBPs

Correct answer: FATF extended its AML Recommendations to DNFBPs including lawyers, accountants, real estate agents, and dealers in precious metals, requiring them to implement AML controls similar to financial institutions

FATF Recommendations 22-23 extend key AML requirements (CDD, record-keeping, suspicious transaction reporting) to DNFBPs because criminals exploit these sectors to launder money outside the traditional financial system.

Question 27: What is the role of the U.S. Financial Intelligence Unit (FIU), FinCEN, in the international FATF framework?

FinCEN serves as the U.S. FIU and FATF member, administering the BSA reporting system, exchanging intelligence through the Egmont Group, and representing U.S. AML interests in international standard-setting (Correct answer)
FinCEN coordinates global investigations but does not participate in FATF standard-setting
FinCEN implements FATF standards but is supervised by FATF, which can override its decisions
FinCEN is not part of any international framework and operates exclusively under domestic U.S. law

Correct answer: FinCEN serves as the U.S. FIU and FATF member, administering the BSA reporting system, exchanging intelligence through the Egmont Group, and representing U.S. AML interests in international standard-setting

FinCEN is both the U.S. FIU (a member of the Egmont Group) and the U.S. representative to FATF, playing a dual role in operational intelligence sharing internationally and in shaping the global AML standards framework.

Question 28: How do 'secondary sanctions' on Iran affect non-U.S. financial institutions?

They have no effect on non-U.S. institutions operating entirely outside the United States
Non-U.S. institutions that engage in significant transactions with Iran may be denied access to the U.S. financial system and face other U.S. penalties (Correct answer)
They apply only to institutions that have a U.S. correspondent banking relationship
They require non-U.S. institutions to file reports directly with OFAC

Correct answer: Non-U.S. institutions that engage in significant transactions with Iran may be denied access to the U.S. financial system and face other U.S. penalties

U.S. secondary sanctions on Iran can cut off non-U.S. financial institutions from the U.S. financial system if they engage in significant Iran-related transactions, giving these sanctions significant extraterritorial reach and deterrence effect.

Question 29: Which federal agency is primarily responsible for enforcing the Bank Secrecy Act and AML regulations for banks in the U.S.?

FDIC
FinCEN (Correct answer)
SEC
CFTC

Correct answer: FinCEN

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, is the primary administrator and enforcer of the Bank Secrecy Act and related AML regulations.

Question 30: What is a 'general license' under OFAC sanctions programs?

A license that all financial institutions must obtain to conduct international transactions
A license for AML officers to access OFAC enforcement databases
A license issued to specific companies to trade with sanctioned countries
A pre-authorized permission for broad categories of transactions that would otherwise be prohibited, applicable to all eligible parties without individual application (Correct answer)

Correct answer: A pre-authorized permission for broad categories of transactions that would otherwise be prohibited, applicable to all eligible parties without individual application

General licenses authorize certain categories of transactions for all eligible persons without requiring individual application to OFAC, such as allowing U.S. persons to receive salary payments from sanctioned governments for work performed prior to sanctions.

Certified Anti-Money Laundering Specialist (CAMS)

The CAMS certification, administered by ACAMS, validates expertise in anti-financial crime compliance including money laundering detection, regulatory frameworks, KYC/CDD programs, and financial crime investigation tools. It is the global gold standard for AML professionals.

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53 min

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