CAMS Terrorist Financing and Proliferation Financing

Question 1

Which feature most clearly separates terrorist financing from traditional money laundering?

Accepted Answer

Terrorist financing funds can come from legitimate sources, and the focus is on where the money goes rather than where it came from

Answer

Money laundering hides the criminal origin of funds. Terrorist financing can use clean money, such as salaries, donations or business income, to support a criminal purpose. This is why it is sometimes called 'reverse money laundering.' TF transactions are often small.

Question 2

Which FATF Recommendation specifically addresses the risk of non-profit organizations being misused for terrorist financing?

Accepted Answer

Recommendation 8

Answer

FATF Recommendation 8 requires countries to apply focused, risk-based measures to NPOs at risk of terrorist financing abuse without disrupting legitimate charitable activity. R10 covers CDD, R16 covers wire transfers and R20 covers suspicious transaction reporting.

Question 3

Which FATF Recommendation requires countries to implement targeted financial sanctions related to the proliferation of weapons of mass destruction?

Accepted Answer

Recommendation 7

Answer

Recommendation 7 covers targeted financial sanctions for proliferation financing under UN Security Council resolutions. R5 criminalizes terrorist financing, R6 covers terrorism-related targeted financial sanctions and R12 covers PEPs.

Question 4

Why is terrorist financing often harder to detect with traditional transaction monitoring than large-scale money laundering?

Accepted Answer

Terrorist financing transactions are often small and can look like ordinary personal or charitable activity

Answer

Attacks can be cheap, and funds are often moved in small amounts through ordinary-looking transfers, donations or personal accounts. These rarely trip value-based thresholds, so detection depends on behavioral red flags, geography and intelligence.

Question 5

Which description best fits hawala as a value transfer method that can be abused for terrorist financing?

Accepted Answer

An informal, trust-based network where value moves between brokers, often without money physically crossing borders

Answer

Hawala is an informal value transfer system. A broker in one country tells a counterpart elsewhere to pay the beneficiary, and the brokers settle balances later, often through trade or other offsetting transactions. Its limited records make it attractive for illicit transfers.

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS Terrorist Financing and Proliferation Financing