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 metric is most commonly used to measure the effectiveness of a transaction monitoring system?
Answer: False positive rate
The false positive rate measures how often legitimate transactions are incorrectly flagged, directly indicating system efficiency and analyst workload.
A transaction monitoring system generates an alert for a wire transfer that matches a known money laundering typology. What is the analyst's FIRST step?
Answer: Gather all available information about the customer and transaction
Before making any filing or action decision, analysts must collect and review all relevant customer and transaction data to properly assess the alert.
Which of the following best describes 'alert batching' in transaction monitoring?
Answer: Grouping related alerts for a single customer to review together
Alert batching consolidates multiple related alerts on one customer so analysts can see the full pattern rather than isolated incidents.
What is the primary purpose of segmenting customers into peer groups within a transaction monitoring system?
Answer: To compare a customer's behavior against similar customers and detect anomalies
Peer group segmentation allows the system to flag unusual behavior relative to comparable customers, reducing false positives from legitimate industry-specific activity.
A bank's transaction monitoring system is not tuned for its specific customer base and produces 95% false positives. This situation is BEST described as:
Answer: A model risk management failure
Excessively high false positive rates indicate the monitoring model is poorly calibrated, which is a model risk management issue requiring tuning and validation.
Which scenario would MOST likely trigger a structuring alert in a transaction monitoring system?
Answer: Multiple cash deposits of $9,800 made by the same customer over two weeks
Repeated deposits just below the $10,000 CTR threshold is the classic indicator of structuring, which is illegal under 31 U.S.C. § 5324.
When a financial institution decides to close a customer's account due to suspicious activity, what should happen to any pending SAR related to that customer?
Answer: The SAR should still be filed regardless of account closure
SAR filing obligations are based on the suspicious activity itself, not on whether the account remains open; account closure does not eliminate the filing requirement.