CAMS KYC and Customer Due Diligence 2

Question 1

What is a 'beneficial owner' in the context of AML due diligence?

Accepted Answer

The natural person(s) who ultimately owns or controls a legal entity or on whose behalf a transaction is conducted

Answer

A beneficial owner is the natural (human) person who ultimately owns or exercises control over a legal entity, as opposed to the nominee or front person who may appear on legal documents.

Question 2

When should Enhanced Due Diligence (EDD) be applied to a customer?

Accepted Answer

When a customer is identified as high-risk due to factors such as PEP status, high-risk geography, or unusual activity

Answer

EDD should be applied whenever a risk assessment identifies elevated AML risk, such as PEP status, high-risk country connections, complex ownership structures, or transactions inconsistent with stated purpose.

Question 3

What is a 'shell company' in the context of money laundering?

Accepted Answer

A legal entity with no significant assets or operations used primarily to obscure the true beneficial ownership of assets

Answer

Shell companies are legal entities that typically have no real business operations or assets and are used to hold assets or conduct transactions while concealing the true owner's identity.

Question 4

Under the FinCEN CDD Rule, financial institutions must identify and verify beneficial owners of legal entity customers. What is the minimum ownership threshold that triggers this requirement?

Accepted Answer

25%

Answer

FinCEN's CDD Rule requires identifying individuals who own 25% or more of a legal entity customer, meaning up to four individuals must be identified under the ownership prong.

Question 5

What is 'source of funds' verification in the context of EDD?

Accepted Answer

Identifying and documenting the origin of the money being deposited or used in a specific transaction

Answer

Source of funds verification documents where the specific money in a particular transaction came from (e.g., salary, sale of property, inheritance), helping confirm the funds are legitimate.

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS - Certified Anti-Money Laundering Specialist Certification Practice Test

CAMS KYC and Customer Due Diligence 2