CAMS Conducting and Supporting AML Investigations — Questions and Answers
Question 1: A bank receives a grand jury subpoena for records on one of its customers. Which response is generally most appropriate?
- Tell the customer about the subpoena so they can get legal counsel
- Close the account right away and send the customer a closure letter explaining why
- Produce the records as required, keep the subpoena confidential, and review the relationship to decide whether a SAR is warranted (Correct answer)
- Ignore the subpoena unless a SAR has already been filed on the customer
Correct answer: Produce the records as required, keep the subpoena confidential, and review the relationship to decide whether a SAR is warranted
A subpoena shows law enforcement interest. Best practice is to comply, avoid tipping off the customer, and treat the subpoena as a trigger to review the customer's activity and decide whether a SAR is needed. A subpoena does not automatically require closing the account or filing a SAR.
Question 2: Under Section 314(a) of the USA PATRIOT Act, what are financial institutions required to do?
- Search their records for accounts or transactions matching subjects named in FinCEN requests and report any matches (Correct answer)
- Voluntarily share information with other financial institutions under a safe harbor
- File currency transaction reports for cash transactions over $10,000
- Apply enhanced due diligence to foreign private banking accounts
Correct answer: Search their records for accounts or transactions matching subjects named in FinCEN requests and report any matches
Section 314(a) lets FinCEN, on behalf of law enforcement, ask financial institutions to search their records for subjects of significant money laundering or terrorist financing investigations and report positive matches, normally within 14 days.
Question 3: What must a U.S. financial institution do to receive safe-harbor protection when sharing information with other financial institutions under Section 314(b)?
- Get a court order before every disclosure
- Register with FinCEN, renewing annually, and share only for purposes allowed under the rule (Correct answer)
- Notify the customer before sharing their information
- File a SAR before any information can be shared
Correct answer: Register with FinCEN, renewing annually, and share only for purposes allowed under the rule
Section 314(b) is a voluntary program. Participants must register with FinCEN, renew that registration annually, and share information only to identify and report possible money laundering or terrorist activity. Doing so gives them a safe harbor from liability.
Question 4: What is the main purpose of a Mutual Legal Assistance Treaty (MLAT) in AML investigations?
- Allowing banks in different countries to share customer data directly without government involvement
- Setting minimum capital requirements for correspondent banks
- Creating a global sanctions list that all member countries must enforce
- Giving governments a formal channel to obtain evidence and assistance from each other in criminal matters (Correct answer)
Correct answer: Giving governments a formal channel to obtain evidence and assistance from each other in criminal matters
MLATs are agreements between countries for gathering and exchanging evidence in criminal investigations and prosecutions, such as bank records, witness testimony and asset freezes. They are government-to-government tools, not channels for banks to share data with each other.
Question 5: What is the Egmont Group's primary role?
- It issues the 40 Recommendations on AML/CFT
- It is an international network of Financial Intelligence Units that makes secure information exchange between FIUs easier (Correct answer)
- It publishes AML principles for private banking and correspondent banking
- It sets capital adequacy standards for banks
Correct answer: It is an international network of Financial Intelligence Units that makes secure information exchange between FIUs easier
The Egmont Group connects national FIUs and provides a secure channel (the Egmont Secure Web) for sharing financial intelligence across borders. FATF issues the 40 Recommendations, the Wolfsberg Group publishes private-sector AML principles, and the Basel Committee sets capital standards.
Question 6: An investigator reviews an alert and decides not to file a SAR. Why is it important to document that decision thoroughly?
- It shows examiners and auditors that the decision was reasonable and properly supported (Correct answer)
- Regulators require the closed-case file to be sent to the customer
- Documentation is only needed when a SAR is filed
- It allows the institution to file the SAR later without a deadline
Correct answer: It shows examiners and auditors that the decision was reasonable and properly supported
Examiners review decisions not to file as closely as filings. A clear written rationale, including the facts reviewed, the analysis and the conclusion, shows the investigation was adequate and defends the institution's judgment.
