CAMS Exam All Possible Questions and Correct
Answers with complete solution
1.What is money laundering?: taking CRIMINAL proceeds and disguising
their illegal sources to USE the funds for LEGAL or ILLEGAL acts.
2.Give an example of the SECOND stage of money laundering.: Layering - Electronically moving funds between countries; moving funds between financial institutions; and converting cash placed into the system into monetary instruments.
3.Give an example of the THIRD stage of money laundering.: Integration - Purchasing luxury assets; and investing in business enterprises.
4.Give an example of the FIRST stage of money laundering.: Placement -
Co-mingling ILLEGITIMATE and LEGITIMATE funds; foreign exchange transactions with illegal funds; and depositing small amounts of cash into multiple accounts.
5.What does the (Sally Yates - Then-Deputy Attorney General of the Depart-
ment of Justice) Yates memo say?: It reminds prosecutors that criminal and civil corporate misconduct investigations should also focus on the individuals who perpetrated the wrongdoing.
6.What are some indicators of money laundering using electronic funds transfers?: 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.
7.What is REMOTE DEPOSIT CAPTURE and what risk is associated with it?: 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.
8.What are some of the money laundering RISKS pertaining to the use of Payable Through Accounts (PTAs)?: Where foreign institutions licensed in off- shore 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.
9.What is a money laundering RISK pertaining to the use of
CONCENTRATION ACCOUNTS?: The fact that CUSTOMER IDENTIFYING
INFORMATION MAY NOT BE INCLUDED, making the audit trail difficult or
impossible to follow.
10.What is a PEP or Politically Exposed Person, and what is the PRIMARY
RISK in dealing with a PEP?: A person who has or has had a prominent gov- ernment or quasi-public position in a country. The PRIMARY RISK is that THEIR SOURCE OF FUNDS MAY BE FROM CORRUPTION. .What is structuring?: 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.
Answers with complete solution
1.What is money laundering?: taking CRIMINAL proceeds and disguising
their illegal sources to USE the funds for LEGAL or ILLEGAL acts.
2.Give an example of the SECOND stage of money laundering.: Layering - Electronically moving funds between countries; moving funds between financial institutions; and converting cash placed into the system into monetary instruments.
3.Give an example of the THIRD stage of money laundering.: Integration - Purchasing luxury assets; and investing in business enterprises.
4.Give an example of the FIRST stage of money laundering.: Placement -
Co-mingling ILLEGITIMATE and LEGITIMATE funds; foreign exchange transactions with illegal funds; and depositing small amounts of cash into multiple accounts.
5.What does the (Sally Yates - Then-Deputy Attorney General of the Depart-
ment of Justice) Yates memo say?: It reminds prosecutors that criminal and civil corporate misconduct investigations should also focus on the individuals who perpetrated the wrongdoing.
6.What are some indicators of money laundering using electronic funds transfers?: 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.
7.What is REMOTE DEPOSIT CAPTURE and what risk is associated with it?: 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.
8.What are some of the money laundering RISKS pertaining to the use of Payable Through Accounts (PTAs)?: Where foreign institutions licensed in off- shore 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.
9.What is a money laundering RISK pertaining to the use of
CONCENTRATION ACCOUNTS?: The fact that CUSTOMER IDENTIFYING
INFORMATION MAY NOT BE INCLUDED, making the audit trail difficult or
impossible to follow.
10.What is a PEP or Politically Exposed Person, and what is the PRIMARY
RISK in dealing with a PEP?: A person who has or has had a prominent gov- ernment or quasi-public position in a country. The PRIMARY RISK is that THEIR SOURCE OF FUNDS MAY BE FROM CORRUPTION. .What is structuring?: 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.
