Transaction Monitoring Flashcards
7 cards from real CAMS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Transaction Monitoring flashcards as text
Which of the following is a key limitation of purely rules-based transaction monitoring systems?
Answer: They cannot adapt to new or evolving money laundering typologies without manual updates
Rules-based systems are static and can only detect patterns explicitly coded into them, making them ineffective against novel schemes until rules are manually updated.
A compliance officer notices that transaction monitoring alerts for trade finance products are disproportionately low compared to the volume processed. This MOST likely indicates:
Answer: Inadequate monitoring scenarios or thresholds for trade finance typologies
Abnormally low alert volumes in a high-risk product area suggest the monitoring system lacks adequate scenarios or appropriately calibrated thresholds for those products.
Under US BSA requirements, how long must a financial institution retain records related to a SAR filing?
Answer: 5 years from the date of filing
31 CFR 1020.320 requires financial institutions to retain SARs and supporting documentation for five years from the date of filing.
Which of the following best describes a 'nested account' risk in correspondent banking transaction monitoring?
Answer: When a foreign bank's customers transact through the correspondent account without the correspondent bank knowing their identities
Nested accounts occur when a foreign bank's clients use the correspondent relationship to access the US financial system, obscuring the true beneficial owners from the correspondent bank.
Which transaction monitoring scenario is MOST effective at detecting money laundering through real estate?
Answer: Monitoring for large cash payments or wire transfers associated with property purchases by shell companies
Real estate money laundering commonly involves cash or wires from shell companies to purchase properties, so monitoring for this combination targets the primary typology.
A financial institution operates in a jurisdiction with a high volume of cash-intensive businesses. How should this affect its transaction monitoring thresholds?
Answer: Thresholds should be calibrated to reflect the expected higher cash volumes of that customer segment
Monitoring thresholds must be calibrated to the institution's specific customer base and geography to avoid excessive false positives from legitimate business activity.
What is 'look-back' analysis in the context of transaction monitoring?
Answer: Reviewing historical transaction data to identify suspicious activity that may have been missed by current monitoring systems
Look-back analysis involves retroactively applying new or improved detection scenarios to historical data to identify previously undetected suspicious activity.