ACAMS CERTIFICATION LATEST 2023-2024 ACTUAL
EXAM 350 QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES (VERIFIED ANSWERS)
|ALREADY GRADED A+
Describe the three phases of money laundering. –
ANSWER-• Placement is the physical disposal of cash or other assets derived
from criminal activity.
• Layering is the separation of illicit proceeds from their source
by layers of financial transactions intended to conceal the origin of
the proceeds.
• Integration is supplying apparent legitimacy to illicit wealth
through the re‐entry of the funds into the economy in what appears
to be normal business or personal transactions.
What are the two main reasons correspondent banking
is vulnerable to money laundering? –
ANSWER-• By their nature, correspondent banking relationships create a
situation in which a financial institution carries out financial transactions
on behalf of customers of another institution. This indirect relationship
means that the correspondent bank provides services for individuals or
entities for which it has neither verified the identities nor obtained any
first‐hand knowledge, and
• The amount of money that flows through correspondent
accounts can pose a significant threat to financial institutions, as they
process large volumes of transactions for their customers' customers.
This makes it more difficult to identify the suspect transactions, as the
financial institution generally does not have the information on the
,actual parties conducting the transaction to know whether they are
unusual.
Describe four types of risk associated with money
laundering faced by a financial institution. –
ANSWER-• Reputational risk is described as the potential that adverse publicity
regarding an organization's business practices and associations, whether accurate
or not, will cause a loss of public confidence in the integrity of the organization.
• Operational risk is described as the potential for loss resulting
from inadequate internal processes, personnel or systems or from
external events.
• Legal risk is the potential for lawsuits, adverse judgments,
unenforceable contracts, fines and penalties generating losses,
increased expenses for an organization, or even the closure of the
organization.
• Concentration risk is the potential for loss resulting from too
much credit or loan exposure to one borrower or group of borrowers.
Identify and describe the three sections of the USA Patriot Act concerning due diligence
U.S. financial institutions need to perform for relationships with foreign correspondent
banking customers. - ANSWER-Section 312 requires institutions must set up risk based due
diligence to mitigate the money laundering risks posed by foreign financial institutions.
Section 313, which prohibits U.S. financial institutions from opening or
maintaining correspondent accounts for foreign shell banks and
requires them to take "reasonable steps" to ensure that a
correspondent account of a foreign bank is not being used indirectly
to provide banking services to a shell bank.
,Section 319, which requires U.S. financial institutions to maintain
records with the names and address of the owners of foreign banks
for which they maintain correspondent accounts.
What are the economic effects of money laundering? - ANSWER-• Loss of control of, or mistakes in,
decisions regarding economic
policy,
• Economic distortion and instability,
• Loss of tax revenue,
• Risks to privatization efforts, • Reputation risk for the country, and
• Social costs.
What is a concentration account? - ANSWER-Concentration accounts are internal accounts established
to facilitate the processing and settlement of multiple or individual customer transactions within the
bank, usually on the same day. These accounts are also known as special‐use, omnibus, settlement,
suspense, intraday, sweep or collection accounts. Concentration accounts are frequently used to
facilitate transactions for private banking, trust and custody accounts, funds transfers and
international affiliates.
What is one of the most important aspects of due diligence for a bank when establishing a
relationship with a money remitter? - ANSWER-Ensuring the money remitter is properly licensed.
What factors may contribute to the vulnerabilities of private
banking with regard to money laundering? –
ANSWER-• Perceived high profitability,
• Intense competition,
• Powerful clientele,
, • The high level of confidentiality associated with private banking, • The close
relationship of trust developed between relationship managers and their
clients,
• Commission‐based compensation for relationship managers, • A culture of
secrecy and discretion developed by the relationship managers for their
clients, and
• The relationship managers becoming client advocates to protect their clients.
How can the free‐look period be used to launder money? - ANSWER-A free‐look period is a feature that
allows investors, for a short period of time after the policy is signed and the premium paid, to back out
of a policy without penalty. This process allows the money launderer to get an insurance check, which
represents cleaned funds. However, as more insurance companies are subject to AML program
requirements, this type of money laundering is more readily detected and reported.
Describe microstructuring. - ANSWER-Designing a transaction to evade triggering a reporting or
recordkeeping requirement is called "structuring."
Microstructuring is essentially the same as structuring, except that it
is done at a much smaller level. Instead of taking $18,000 and
breaking it into two deposits, the microstructurer might break it into
20 deposits of approximately $900 each. This level of structuring
makes it extremely difficult to detect.
How can the early redemption method on insurance policies be used to launder money? - ANSWER-
One indicator of possible money laundering is when a potential policyholder is more interested in the
cancellation terms of a policy than the benefits of the policy. The launderer buys a policy with illicit
money and then tells the insurance company that he has changed his mind and does not need the
policy. After paying a penalty, the launderer redeems the policy and receives a clean check from a
respected insurer.
EXAM 350 QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES (VERIFIED ANSWERS)
|ALREADY GRADED A+
Describe the three phases of money laundering. –
ANSWER-• Placement is the physical disposal of cash or other assets derived
from criminal activity.
• Layering is the separation of illicit proceeds from their source
by layers of financial transactions intended to conceal the origin of
the proceeds.
• Integration is supplying apparent legitimacy to illicit wealth
through the re‐entry of the funds into the economy in what appears
to be normal business or personal transactions.
What are the two main reasons correspondent banking
is vulnerable to money laundering? –
ANSWER-• By their nature, correspondent banking relationships create a
situation in which a financial institution carries out financial transactions
on behalf of customers of another institution. This indirect relationship
means that the correspondent bank provides services for individuals or
entities for which it has neither verified the identities nor obtained any
first‐hand knowledge, and
• The amount of money that flows through correspondent
accounts can pose a significant threat to financial institutions, as they
process large volumes of transactions for their customers' customers.
This makes it more difficult to identify the suspect transactions, as the
financial institution generally does not have the information on the
,actual parties conducting the transaction to know whether they are
unusual.
Describe four types of risk associated with money
laundering faced by a financial institution. –
ANSWER-• Reputational risk is described as the potential that adverse publicity
regarding an organization's business practices and associations, whether accurate
or not, will cause a loss of public confidence in the integrity of the organization.
• Operational risk is described as the potential for loss resulting
from inadequate internal processes, personnel or systems or from
external events.
• Legal risk is the potential for lawsuits, adverse judgments,
unenforceable contracts, fines and penalties generating losses,
increased expenses for an organization, or even the closure of the
organization.
• Concentration risk is the potential for loss resulting from too
much credit or loan exposure to one borrower or group of borrowers.
Identify and describe the three sections of the USA Patriot Act concerning due diligence
U.S. financial institutions need to perform for relationships with foreign correspondent
banking customers. - ANSWER-Section 312 requires institutions must set up risk based due
diligence to mitigate the money laundering risks posed by foreign financial institutions.
Section 313, which prohibits U.S. financial institutions from opening or
maintaining correspondent accounts for foreign shell banks and
requires them to take "reasonable steps" to ensure that a
correspondent account of a foreign bank is not being used indirectly
to provide banking services to a shell bank.
,Section 319, which requires U.S. financial institutions to maintain
records with the names and address of the owners of foreign banks
for which they maintain correspondent accounts.
What are the economic effects of money laundering? - ANSWER-• Loss of control of, or mistakes in,
decisions regarding economic
policy,
• Economic distortion and instability,
• Loss of tax revenue,
• Risks to privatization efforts, • Reputation risk for the country, and
• Social costs.
What is a concentration account? - ANSWER-Concentration accounts are internal accounts established
to facilitate the processing and settlement of multiple or individual customer transactions within the
bank, usually on the same day. These accounts are also known as special‐use, omnibus, settlement,
suspense, intraday, sweep or collection accounts. Concentration accounts are frequently used to
facilitate transactions for private banking, trust and custody accounts, funds transfers and
international affiliates.
What is one of the most important aspects of due diligence for a bank when establishing a
relationship with a money remitter? - ANSWER-Ensuring the money remitter is properly licensed.
What factors may contribute to the vulnerabilities of private
banking with regard to money laundering? –
ANSWER-• Perceived high profitability,
• Intense competition,
• Powerful clientele,
, • The high level of confidentiality associated with private banking, • The close
relationship of trust developed between relationship managers and their
clients,
• Commission‐based compensation for relationship managers, • A culture of
secrecy and discretion developed by the relationship managers for their
clients, and
• The relationship managers becoming client advocates to protect their clients.
How can the free‐look period be used to launder money? - ANSWER-A free‐look period is a feature that
allows investors, for a short period of time after the policy is signed and the premium paid, to back out
of a policy without penalty. This process allows the money launderer to get an insurance check, which
represents cleaned funds. However, as more insurance companies are subject to AML program
requirements, this type of money laundering is more readily detected and reported.
Describe microstructuring. - ANSWER-Designing a transaction to evade triggering a reporting or
recordkeeping requirement is called "structuring."
Microstructuring is essentially the same as structuring, except that it
is done at a much smaller level. Instead of taking $18,000 and
breaking it into two deposits, the microstructurer might break it into
20 deposits of approximately $900 each. This level of structuring
makes it extremely difficult to detect.
How can the early redemption method on insurance policies be used to launder money? - ANSWER-
One indicator of possible money laundering is when a potential policyholder is more interested in the
cancellation terms of a policy than the benefits of the policy. The launderer buys a policy with illicit
money and then tells the insurance company that he has changed his mind and does not need the
policy. After paying a penalty, the launderer redeems the policy and receives a clean check from a
respected insurer.
