CAMS Certification questions with
verified answers rated A+
money laundering - correct answer ✔✔ makes dirty money look clean; The process of
concealing or disguising the existence, source, movement, destination or illegal application of
illicitly derived property or funds to make them appear legitimate. It usually involves a three-
part system: placement of funds into a financial system, layering of transactions to disguise the
source, ownership and location of the funds and integration of the funds into society in the
form of holdings that appear legitimate. The definition of money laundering varies in each
country where it is recognized as a crime.
predicate crime - correct answer ✔✔ a crime which is a component of a larger crime that leads
to money laundering; Specified unlawful activities whose proceeds, if involved in the subject
transaction, can give rise to prosecution for money laundering. Most anti-money laundering
laws contain a wide definition or listing of such underlying crimes. Predicate crimes are
sometimes defined as felonies or "all offenses in the criminal code."
FATF - correct answer ✔✔ Financial Action Task Force; FATF was chartered in 1989 by the Group
of Seven industrial nations to foster the establishment of national and global measures to
combat money laundering. It is an international policy making body that sets anti-money
laundering standards and counter-terrorist financing measures worldwide. Its
Recommendations do not have the force of law. Thirty-five countries and two international
organizations are members. In 2012, FATF substantially revised its 40 + 9 Recommendations and
reduced them to 40. FATF develops annual typology reports showcasing current money
laundering and terrorist financing trends and methods.
Palermo Convention - correct answer ✔✔ UN Convention to prevent international crime
willful blindness - correct answer ✔✔ equal to knowledge of crime; turning a blind eye; Legal
principle that operates in money laundering cases in the U.S. and is defined by courts as the
"deliberate avoidance of knowledge of the facts" or "purposeful indifference." Courts have held
,that willful blindness is the equivalent of actual knowledge of the illegal source of funds or of
the intentions of a customer in a money laundering transaction.
3 stages of money laundering - correct answer ✔✔ Placement, Layering, Integration
placement - correct answer ✔✔ physical putting money into financial system; The first phase of
the money laundering process: The physical disposal of proceeds derived from illegal activity.
layering - correct answer ✔✔ convert proceeds into another form; The second phase of the
classic three-step money laundering process between placement and integration, layering
involves distancing illegal proceeds from their source by creating complex levels of financial
transactions designed to disguise the audit trail and to provide anonymity.
integration - correct answer ✔✔ laundered proceeds into seemingly good things; The
integration phase, often referred to as the third and last stage of the classic money laundering
process, places laundered funds back into the economy by re-entering the funds into the
financial system and giving them the appearance of legitimacy.
Hawala - correct answer ✔✔ informal banking system based on trust; four people are involved
in the transaction, one buyer, two hawala brokers, and one seller
hundi - correct answer ✔✔ See Hawala.
fei chien - correct answer ✔✔ informal banking system in China based on trust
Economic and social consequences of ML - correct answer ✔✔ 1. Increased exposure to
organized crime and corruption
2. Undermining the legitimate private sector
3. Weakening financial institutions
,4. Dampening effect on foreign investments
5. Loss of control of, or mistakes in decisions regarding economic policy
6. economic distortion and instability
7. loss of tax revenue
8. risks to privatization efforts
9. reputation risk for the country
10. risk of international sanctions
11. social costs
12. reputational risk
13. operational risk
14. legal risk
15. concentration risk
FinCEN - correct answer ✔✔ Financial Crimes Enforcement Network, the entity that a SAR
would be reported to.
FIU - correct answer ✔✔ Financial Intelligence Unit
FCA - correct answer ✔✔ The Financial Conduct Authority - a financial regulatory body in the
United Kingdom, but operates independently of the UK Government, and is financed by
charging fees to members of the financial services industry. It focuses on the regulation of
conduct by both retail and wholesale financial services firms.
Yates Memo - correct answer ✔✔ reminds prosecutors that criminal and civil investigations into
corporate misconduct should also focus on individual who perpetrated the wrongdoing
MLRO - correct answer ✔✔ money laundering reporting officer; A term used in various
international rules to refer to the person responsible for overseeing a firm's anti-money
, laundering activities and program and for filing reports of suspicious transactions with the
national FIU. The MLRO is the key person in the implementation of antimoney laundering
strategies and policies.
DFS - correct answer ✔✔ Department of Financial Services
Senior Managers Regime - correct answer ✔✔ requires a financial institution to give explicit
responsibility to a senior manager
BSA - correct answer ✔✔ Bank Secrecy Act; The primary U.S. anti-money laundering regulatory
statute (Title 31, U.S. Code Sections 53115355) enacted in 1970 and most notably amended by
the USA PATRIOT Act in 2001. Among other measures, it imposes money laundering controls on
financial institutions and many other businesses, including the requirement to report and to
keep records of various financial transactions.
OFAC - correct answer ✔✔ Office of Foreign Assets Control
MSB - correct answer ✔✔ Money Services Business; A person (whether a natural or legal
person) engaged in any of the following activities where it exceeds the applicable regulatory
threshold, at which point the person is generally deemed to be a financial institution subject to
AML obligations:
1. Dealing in foreign exchange
2. Check cashing
3. Issuing or selling traveler's checks or money orders
4. Providing or selling prepaid access
5. Money transmission
ACH - correct answer ✔✔ Automatic Clearing House; An electronic banking network that
processes large volumes of both credit and debit transactions that originate in batches. ACH
credit transfers include direct deposit payroll payments and payments to contractors and
verified answers rated A+
money laundering - correct answer ✔✔ makes dirty money look clean; The process of
concealing or disguising the existence, source, movement, destination or illegal application of
illicitly derived property or funds to make them appear legitimate. It usually involves a three-
part system: placement of funds into a financial system, layering of transactions to disguise the
source, ownership and location of the funds and integration of the funds into society in the
form of holdings that appear legitimate. The definition of money laundering varies in each
country where it is recognized as a crime.
predicate crime - correct answer ✔✔ a crime which is a component of a larger crime that leads
to money laundering; Specified unlawful activities whose proceeds, if involved in the subject
transaction, can give rise to prosecution for money laundering. Most anti-money laundering
laws contain a wide definition or listing of such underlying crimes. Predicate crimes are
sometimes defined as felonies or "all offenses in the criminal code."
FATF - correct answer ✔✔ Financial Action Task Force; FATF was chartered in 1989 by the Group
of Seven industrial nations to foster the establishment of national and global measures to
combat money laundering. It is an international policy making body that sets anti-money
laundering standards and counter-terrorist financing measures worldwide. Its
Recommendations do not have the force of law. Thirty-five countries and two international
organizations are members. In 2012, FATF substantially revised its 40 + 9 Recommendations and
reduced them to 40. FATF develops annual typology reports showcasing current money
laundering and terrorist financing trends and methods.
Palermo Convention - correct answer ✔✔ UN Convention to prevent international crime
willful blindness - correct answer ✔✔ equal to knowledge of crime; turning a blind eye; Legal
principle that operates in money laundering cases in the U.S. and is defined by courts as the
"deliberate avoidance of knowledge of the facts" or "purposeful indifference." Courts have held
,that willful blindness is the equivalent of actual knowledge of the illegal source of funds or of
the intentions of a customer in a money laundering transaction.
3 stages of money laundering - correct answer ✔✔ Placement, Layering, Integration
placement - correct answer ✔✔ physical putting money into financial system; The first phase of
the money laundering process: The physical disposal of proceeds derived from illegal activity.
layering - correct answer ✔✔ convert proceeds into another form; The second phase of the
classic three-step money laundering process between placement and integration, layering
involves distancing illegal proceeds from their source by creating complex levels of financial
transactions designed to disguise the audit trail and to provide anonymity.
integration - correct answer ✔✔ laundered proceeds into seemingly good things; The
integration phase, often referred to as the third and last stage of the classic money laundering
process, places laundered funds back into the economy by re-entering the funds into the
financial system and giving them the appearance of legitimacy.
Hawala - correct answer ✔✔ informal banking system based on trust; four people are involved
in the transaction, one buyer, two hawala brokers, and one seller
hundi - correct answer ✔✔ See Hawala.
fei chien - correct answer ✔✔ informal banking system in China based on trust
Economic and social consequences of ML - correct answer ✔✔ 1. Increased exposure to
organized crime and corruption
2. Undermining the legitimate private sector
3. Weakening financial institutions
,4. Dampening effect on foreign investments
5. Loss of control of, or mistakes in decisions regarding economic policy
6. economic distortion and instability
7. loss of tax revenue
8. risks to privatization efforts
9. reputation risk for the country
10. risk of international sanctions
11. social costs
12. reputational risk
13. operational risk
14. legal risk
15. concentration risk
FinCEN - correct answer ✔✔ Financial Crimes Enforcement Network, the entity that a SAR
would be reported to.
FIU - correct answer ✔✔ Financial Intelligence Unit
FCA - correct answer ✔✔ The Financial Conduct Authority - a financial regulatory body in the
United Kingdom, but operates independently of the UK Government, and is financed by
charging fees to members of the financial services industry. It focuses on the regulation of
conduct by both retail and wholesale financial services firms.
Yates Memo - correct answer ✔✔ reminds prosecutors that criminal and civil investigations into
corporate misconduct should also focus on individual who perpetrated the wrongdoing
MLRO - correct answer ✔✔ money laundering reporting officer; A term used in various
international rules to refer to the person responsible for overseeing a firm's anti-money
, laundering activities and program and for filing reports of suspicious transactions with the
national FIU. The MLRO is the key person in the implementation of antimoney laundering
strategies and policies.
DFS - correct answer ✔✔ Department of Financial Services
Senior Managers Regime - correct answer ✔✔ requires a financial institution to give explicit
responsibility to a senior manager
BSA - correct answer ✔✔ Bank Secrecy Act; The primary U.S. anti-money laundering regulatory
statute (Title 31, U.S. Code Sections 53115355) enacted in 1970 and most notably amended by
the USA PATRIOT Act in 2001. Among other measures, it imposes money laundering controls on
financial institutions and many other businesses, including the requirement to report and to
keep records of various financial transactions.
OFAC - correct answer ✔✔ Office of Foreign Assets Control
MSB - correct answer ✔✔ Money Services Business; A person (whether a natural or legal
person) engaged in any of the following activities where it exceeds the applicable regulatory
threshold, at which point the person is generally deemed to be a financial institution subject to
AML obligations:
1. Dealing in foreign exchange
2. Check cashing
3. Issuing or selling traveler's checks or money orders
4. Providing or selling prepaid access
5. Money transmission
ACH - correct answer ✔✔ Automatic Clearing House; An electronic banking network that
processes large volumes of both credit and debit transactions that originate in batches. ACH
credit transfers include direct deposit payroll payments and payments to contractors and
