ACAMS AML/CFT Risk Assessment 2

Question 1

In the FATF risk-based approach, what are the three primary risk categories that institutions must assess?

Accepted Answer

Country/geographic risk, customer risk, and product/service/transaction risk

Answer

The FATF risk-based approach requires financial institutions to assess three primary AML risk categories: country/geographic risk (jurisdictions with higher ML/TF risk), customer risk (types of customers and their risk profiles), and product/service/transaction risk (financial services that may be more vulnerable to abuse).

Question 2

Which document provides the most authoritative assessment of a country's AML/CFT regime for use in geographic risk assessments?

Accepted Answer

FATF Mutual Evaluation Reports (MERs)

Answer

FATF Mutual Evaluation Reports provide the most comprehensive, authoritative assessment of a country's AML/CFT legal framework, institutional effectiveness, and compliance with FATF standards.

Question 3

What is 'residual risk' in the context of an AML risk assessment?

Accepted Answer

The risk that remains after applying AML controls

Answer

Residual risk is the level of risk that remains after the institution's AML controls and mitigating measures have been applied to the inherent risk. It represents the actual exposure the institution faces.

Question 4

Which of the following customer types typically carries the HIGHEST inherent AML risk?

Accepted Answer

A non-resident alien operating a cash-intensive business with no explained source of wealth

Answer

Non-resident aliens operating cash-intensive businesses with unexplained wealth combine multiple high-risk indicators: foreign status, cash-intensive industry, and lack of transparent financial history — all of which elevate inherent AML risk significantly.

Question 5

In a risk-based approach, when is Enhanced Due Diligence (EDD) required?

Accepted Answer

For customers identified as high-risk, such as PEPs, correspondent banks, or those from high-risk jurisdictions

Answer

EDD is required for high-risk customers identified through the risk assessment process, including politically exposed persons, correspondent banking relationships, customers from high-risk jurisdictions, and others presenting elevated money laundering risk.

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

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

ACAMS AML/CFT Risk Assessment 2