ACAMS Basic 1

Question 1

A compliance officer at an insurance business is monitoring many clients' transaction behavior. Which transaction is considered a red signal for possible money laundering?

Accepted Answer

A customer arranged a $100,000 charitable annuity with a non-profit organization that offers health and safety help across the world.

Answer

Charitable annuities, especially those involving international non-profit organizations, can be a red flag for money laundering. Large, round-sum payments, particularly when directed to entities in high-risk jurisdictions or those with less transparency, can be used to obscure the true source of funds and legitimize illicit proceeds through seemingly philanthropic activities.

Question 2

A law enforcement officer phones a bank to inquire about a customer who is currently under investigation. The law enforcement officer demands information about the consumer. How should the bank respond?

Accepted Answer

Request that a formal letter be sent to confirm the authenticity of the request

Answer

Banks have a legal and ethical obligation to protect customer privacy and must follow strict protocols when releasing customer information. A verbal request from a law enforcement officer, even if legitimate, should always be followed by a request for formal documentation, such as a subpoena or warrant. This ensures the authenticity and legal basis of the request before any sensitive data is disclosed.

Question 3

A bank compliance officer established additional monitoring procedures, which revealed some strange activities that might be suggestive of human trafficking. Which red flags should demand further transactional review?

Accepted Answer

Cash deposits made in cities where the consumer does not live or do business.

Answer

Cash deposits made in cities where a customer does not live or conduct business are a significant red flag for human trafficking. Victims are often moved across various locations, and their illicit earnings may be deposited in different cities where they are forced to work, rather than in their actual place of residence. This pattern suggests control by traffickers and a lack of financial autonomy for the victim.

Question 4

Which insurance product is most prone to money laundering?

Accepted Answer

Annuity

Answer

Annuities are highly susceptible to money laundering due to their ability to convert large lump-sum payments into legitimate-looking income streams or to be surrendered for cash value. Their complex structure and long-term nature can obscure the true source of funds, making them an attractive vehicle for criminals to clean illicit proceeds.

Question 5

What is a critical component of Know Your Customer (KYC) requirements, according to the Basel Committee's Customer Due Diligence for Banks paper?

Accepted Answer

A policy on customer acceptance

Answer

According to the Basel Committee's Customer Due Diligence for Banks paper, a policy on customer acceptance is a critical component of KYC. This policy establishes clear criteria for deciding which customers a bank will accept, ensuring that the institution understands and manages the risks associated with its client base from the outset. It helps prevent high-risk individuals or entities from entering the financial system.

(ACAMS) Association of Certified Anti-Money Laundering Specialists Practice Test

(ACAMS) Association of Certified Anti-Money Laundering Specialists Practice Test

ACAMS Basic 1