CAMS Exam – Certified Anti-Money Laundering Specialist Study Guide
& Practice Test
What is money laundering? - correct answer ✔✔taking CRIMINAL proceeds and disguising their
illegal sources to USE the funds for LEGAL or ILLEGAL acts.
Give an example of the SECOND stage of money laundering. - correct answer ✔✔Layering -
Electronically moving funds between countries; moving funds between financial institutions;
and converting cash placed into the system into monetary instruments.
Give an example of the THIRD stage of money laundering. - correct answer ✔✔Integration -
Purchasing luxury assets; and investing in business enterprises.
Give an example of the FIRST stage of money laundering. - correct answer ✔✔Placement - Co-
mingling ILLEGITIMATE and LEGITIMATE funds; foreign exchange transactions with illegal funds;
and depositing small amounts of cash into multiple accounts.
What does the (Sally Yates - Then-Deputy Attorney General of the Department of Justice) Yates
memo say? - correct answer ✔✔It reminds prosecutors that criminal and civil corporate
misconduct investigations should also focus on the individuals who perpetrated the
wrongdoing.
What are some indicators of money laundering using electronic funds transfers? - correct
answer ✔✔Funds transfers to or from a financial secrecy haven; large, incoming fund transfers
from a foreign client with little or no explanation or apparent reason; and fund transfers that
have no apparent link to legitimate business.
What is REMOTE DEPOSIT CAPTURE and what risk is associated with it? - correct answer ✔✔A
product offered by banks that allows customers to SCAN A CHECK AND TRANSMIT an electronic
image to the bank FOR DEPOSIT. Associated risks include ENABLING a money launderer to
deposit checks without visiting the bank thus avoiding detection.
,What are some of the money laundering RISKS pertaining to the use of Payable Through
Accounts (PTAs)? - correct answer ✔✔Where foreign institutions licensed in offshore centers,
each bank having its own supervision; where the respondent bank (the foreign bank) fails to
conduct adequate customer due diligence; and where the sub-account
holders have currency deposit and withdrawal privileges.
What is a money laundering RISK pertaining to the use of CONCENTRATION ACCOUNTS? -
correct answer ✔✔The fact that CUSTOMER IDENTIFYING INFORMATION MAY NOT BE
INCLUDED, making the audit trail difficult or impossible to follow.
What is a PEP or Politically Exposed Person, and what is the PRIMARY RISK in dealing with a
PEP? - correct answer ✔✔A person who has or has had a prominent government or quasi-
public position in a country. The PRIMARY RISK is that THEIR SOURCE OF FUNDS MAY BE FROM
CORRUPTION.
What is structuring? - correct answer ✔✔Taking a large cash deposit and breaking it into
smaller amounts deposited into separate banks, accounts or on separate days to avoid currency
transaction reports.
When are CREDIT CARDS most likely used for money laundering and give an example of money
laundering using credit cards? - correct answer ✔✔NOT likely INITIAL PLACEMENT. More LIKELY
in LAYERING or INTEGRATION. For EXAMPLE, OVERPAYING on the BALANCE and THEN ASKING
FOR A REFUND. Receiving a check from a reputable company makes the funds appear
legitimate.
What are some of the risks posed by Third-Party Payment Processors (TPPPs)? - correct answer
✔✔Multiple financial institution relationships whereby their suspicious ACTIVITY CANNOT BE
Entirely SEEN by one institution; engaging in ACH transactions from overseas whereby the
suspicious TRANSACTIONS GET HIDDEN by the large number of other transactions they engage
in; and the possibility of higher than average return rates stemming from unauthorized
transactions.
,What are some ways MONEY SERVICES BUSINESSES can be used for money laundering? -
correct answer ✔✔Cashing checks without obtaining adequate proof of identity; failing to file
Currency Transaction Reports when required; and transmitting funds overseas without sufficient
due diligence.
What are some of the money laundering risks associated with securities broker-dealers? -
correct answer ✔✔Its international nature, speed of transactions, ease of converting holdings
into cash without significant loss of principal; large volume of wires; competitive, commission-
driven environment; practice of maintaining securities accounts in the name of nominees or
trusts; and weak AML programs.
What are some red flags associated with casinos and gambling? - correct answer ✔✔Paying off
associated debts in cash just under the reporting requirements; purchasing chips, but engaging
in minimal gambling and then cashing the chips back in; using the gambling house for banking-
like financial services, including wiring funds overseas; betting on both "red" and "black" spaces
in roulette; and purchasing chips with cash just under the reporting requirements.
What were FATF's KEY findings its report on "Money Laundering/Terrorist Financing Risks and
Vulnerabilities Associated With Gold," issued in July, 2015? - correct answer ✔✔It IS RELATIVELY
COMPACT AND EASY TO TRANSPORT; it is LUCRATIVE AND HOLDS ITS VALUE regardless of form.
List ways in which a TRAVEL AGENCY could be used to launder money. - correct answer
✔✔Making expensive purchases and then ASKING FOR A REFUND; purchases made with
multiple wires just UNDER THE REPORTING THRESHOLD; and CREATING FALSE BOOKINGS
through tour operator networks to justify significant payments from foreign travel groups.
Name various ways that a GATEKEEPER - an attorney, notary, accountant or auditor could assist
in a money laundering scheme. - correct answer ✔✔CREATING and MANAGING corporate
vehicles or other COMPLEX LEGAL ARRANGEMENTS; buying or selling property as a COVER for
transfers of illegal funds; PERFORMING financial TRANSACTIONS, including making deposits,
withdrawing funds, engaging in foreign exchange operations, buying or selling stock and sending
international wires; and SETTING UP or MANAGING a charity.
, What is the primary concern with regard to the use of GATEKEEPERS? - correct answer
✔✔Attorneys, notaries, accountants and auditors CAN BE USED TO ENHANCE SECRECY and
keep the beneficial account owner or transaction hidden.
List reasons why REAL ESTATE can be an attractive method of money laundering, according to
the 2015 report by the Australian Transaction Reports and Analysis Centre (AUSTRAC). - correct
answer ✔✔It can be purchased with CASH; the owner can be DISGUISED; it is a relatively
STABLE AND RELIABLE investment; and VALUE CAN BE INCREASED through renovations and
improvements.
What are TWO of the most COMMON money laundering techniques involved
with Trade-Based Money Laundering (TBML)? - correct answer ✔✔Over and under invoicing
In summary form, how does the Black Market Peso Exchange (BMPE) work in
laundering money? - correct answer ✔✔A trafficker SELLS DRUGS FOR DOLLARS in the US and -
to avoid smuggling dollars back to Mexico - the trafficker GIVES THE PROCEEDS TO A "PESO
BROKER." The broker finds businesses in Mexico that want to buy goods in the US. Then the
broker buys the US goods with US dollars and has them shipped to Mexico. The Mexcican
business pays the broker in Mexico in pesos and the broker gives the pesos - minus a fee - to the
traffickers.
What are some of the money laundering risks of pre-paid BANK CARDS? - correct answer
✔✔ANONYMOUS holders and funding; HIGH value limits; GLOBAL access to cash through ATMs;
LAXED offshore jurisdictions issuing the cards; and they are a SUBSTITUTE for bulk-cash
smuggling.
What are some of the risks listed by FATF in its 2010 report titled "Guidance For A Risk-Based
Approach to Prepaid Cards, Mobile Payments And Internet-Based Payment Services"? - correct
answer ✔✔ANONYMITY; GEOGRAPHIC reach; ALTERNATIVE to physical cross-transportation;
EASY access to CASH; several entities are required to issue prepaid cards - the program manager,
& Practice Test
What is money laundering? - correct answer ✔✔taking CRIMINAL proceeds and disguising their
illegal sources to USE the funds for LEGAL or ILLEGAL acts.
Give an example of the SECOND stage of money laundering. - correct answer ✔✔Layering -
Electronically moving funds between countries; moving funds between financial institutions;
and converting cash placed into the system into monetary instruments.
Give an example of the THIRD stage of money laundering. - correct answer ✔✔Integration -
Purchasing luxury assets; and investing in business enterprises.
Give an example of the FIRST stage of money laundering. - correct answer ✔✔Placement - Co-
mingling ILLEGITIMATE and LEGITIMATE funds; foreign exchange transactions with illegal funds;
and depositing small amounts of cash into multiple accounts.
What does the (Sally Yates - Then-Deputy Attorney General of the Department of Justice) Yates
memo say? - correct answer ✔✔It reminds prosecutors that criminal and civil corporate
misconduct investigations should also focus on the individuals who perpetrated the
wrongdoing.
What are some indicators of money laundering using electronic funds transfers? - correct
answer ✔✔Funds transfers to or from a financial secrecy haven; large, incoming fund transfers
from a foreign client with little or no explanation or apparent reason; and fund transfers that
have no apparent link to legitimate business.
What is REMOTE DEPOSIT CAPTURE and what risk is associated with it? - correct answer ✔✔A
product offered by banks that allows customers to SCAN A CHECK AND TRANSMIT an electronic
image to the bank FOR DEPOSIT. Associated risks include ENABLING a money launderer to
deposit checks without visiting the bank thus avoiding detection.
,What are some of the money laundering RISKS pertaining to the use of Payable Through
Accounts (PTAs)? - correct answer ✔✔Where foreign institutions licensed in offshore centers,
each bank having its own supervision; where the respondent bank (the foreign bank) fails to
conduct adequate customer due diligence; and where the sub-account
holders have currency deposit and withdrawal privileges.
What is a money laundering RISK pertaining to the use of CONCENTRATION ACCOUNTS? -
correct answer ✔✔The fact that CUSTOMER IDENTIFYING INFORMATION MAY NOT BE
INCLUDED, making the audit trail difficult or impossible to follow.
What is a PEP or Politically Exposed Person, and what is the PRIMARY RISK in dealing with a
PEP? - correct answer ✔✔A person who has or has had a prominent government or quasi-
public position in a country. The PRIMARY RISK is that THEIR SOURCE OF FUNDS MAY BE FROM
CORRUPTION.
What is structuring? - correct answer ✔✔Taking a large cash deposit and breaking it into
smaller amounts deposited into separate banks, accounts or on separate days to avoid currency
transaction reports.
When are CREDIT CARDS most likely used for money laundering and give an example of money
laundering using credit cards? - correct answer ✔✔NOT likely INITIAL PLACEMENT. More LIKELY
in LAYERING or INTEGRATION. For EXAMPLE, OVERPAYING on the BALANCE and THEN ASKING
FOR A REFUND. Receiving a check from a reputable company makes the funds appear
legitimate.
What are some of the risks posed by Third-Party Payment Processors (TPPPs)? - correct answer
✔✔Multiple financial institution relationships whereby their suspicious ACTIVITY CANNOT BE
Entirely SEEN by one institution; engaging in ACH transactions from overseas whereby the
suspicious TRANSACTIONS GET HIDDEN by the large number of other transactions they engage
in; and the possibility of higher than average return rates stemming from unauthorized
transactions.
,What are some ways MONEY SERVICES BUSINESSES can be used for money laundering? -
correct answer ✔✔Cashing checks without obtaining adequate proof of identity; failing to file
Currency Transaction Reports when required; and transmitting funds overseas without sufficient
due diligence.
What are some of the money laundering risks associated with securities broker-dealers? -
correct answer ✔✔Its international nature, speed of transactions, ease of converting holdings
into cash without significant loss of principal; large volume of wires; competitive, commission-
driven environment; practice of maintaining securities accounts in the name of nominees or
trusts; and weak AML programs.
What are some red flags associated with casinos and gambling? - correct answer ✔✔Paying off
associated debts in cash just under the reporting requirements; purchasing chips, but engaging
in minimal gambling and then cashing the chips back in; using the gambling house for banking-
like financial services, including wiring funds overseas; betting on both "red" and "black" spaces
in roulette; and purchasing chips with cash just under the reporting requirements.
What were FATF's KEY findings its report on "Money Laundering/Terrorist Financing Risks and
Vulnerabilities Associated With Gold," issued in July, 2015? - correct answer ✔✔It IS RELATIVELY
COMPACT AND EASY TO TRANSPORT; it is LUCRATIVE AND HOLDS ITS VALUE regardless of form.
List ways in which a TRAVEL AGENCY could be used to launder money. - correct answer
✔✔Making expensive purchases and then ASKING FOR A REFUND; purchases made with
multiple wires just UNDER THE REPORTING THRESHOLD; and CREATING FALSE BOOKINGS
through tour operator networks to justify significant payments from foreign travel groups.
Name various ways that a GATEKEEPER - an attorney, notary, accountant or auditor could assist
in a money laundering scheme. - correct answer ✔✔CREATING and MANAGING corporate
vehicles or other COMPLEX LEGAL ARRANGEMENTS; buying or selling property as a COVER for
transfers of illegal funds; PERFORMING financial TRANSACTIONS, including making deposits,
withdrawing funds, engaging in foreign exchange operations, buying or selling stock and sending
international wires; and SETTING UP or MANAGING a charity.
, What is the primary concern with regard to the use of GATEKEEPERS? - correct answer
✔✔Attorneys, notaries, accountants and auditors CAN BE USED TO ENHANCE SECRECY and
keep the beneficial account owner or transaction hidden.
List reasons why REAL ESTATE can be an attractive method of money laundering, according to
the 2015 report by the Australian Transaction Reports and Analysis Centre (AUSTRAC). - correct
answer ✔✔It can be purchased with CASH; the owner can be DISGUISED; it is a relatively
STABLE AND RELIABLE investment; and VALUE CAN BE INCREASED through renovations and
improvements.
What are TWO of the most COMMON money laundering techniques involved
with Trade-Based Money Laundering (TBML)? - correct answer ✔✔Over and under invoicing
In summary form, how does the Black Market Peso Exchange (BMPE) work in
laundering money? - correct answer ✔✔A trafficker SELLS DRUGS FOR DOLLARS in the US and -
to avoid smuggling dollars back to Mexico - the trafficker GIVES THE PROCEEDS TO A "PESO
BROKER." The broker finds businesses in Mexico that want to buy goods in the US. Then the
broker buys the US goods with US dollars and has them shipped to Mexico. The Mexcican
business pays the broker in Mexico in pesos and the broker gives the pesos - minus a fee - to the
traffickers.
What are some of the money laundering risks of pre-paid BANK CARDS? - correct answer
✔✔ANONYMOUS holders and funding; HIGH value limits; GLOBAL access to cash through ATMs;
LAXED offshore jurisdictions issuing the cards; and they are a SUBSTITUTE for bulk-cash
smuggling.
What are some of the risks listed by FATF in its 2010 report titled "Guidance For A Risk-Based
Approach to Prepaid Cards, Mobile Payments And Internet-Based Payment Services"? - correct
answer ✔✔ANONYMITY; GEOGRAPHIC reach; ALTERNATIVE to physical cross-transportation;
EASY access to CASH; several entities are required to issue prepaid cards - the program manager,
