CAMS Prep Exam Questions With
Solved Solutions.
What is money laundering? - 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. - 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. - Answer Integration - Purchasing luxury
assets; and investing in business enterprises.
Give an example of the FIRST stage of money laundering. - 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? - 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? - 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? - 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)? - 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? - 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? -
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? - 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? - 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)? - 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? - 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? - 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? - 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? - 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. - 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. - 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? - 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). - 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)? - Answer Over and under invoicing
In summary form, how does the Black Market Peso Exchange (BMPE) work in
Solved Solutions.
What is money laundering? - 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. - 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. - Answer Integration - Purchasing luxury
assets; and investing in business enterprises.
Give an example of the FIRST stage of money laundering. - 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? - 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? - 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? - 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)? - 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? - 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? -
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? - 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? - 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)? - 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? - 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? - 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? - 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? - 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. - 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. - 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? - 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). - 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)? - Answer Over and under invoicing
In summary form, how does the Black Market Peso Exchange (BMPE) work in
