In the summer, an institution identifies anti-money laundering concerns regarding a customer's account activity. The customer, an ice cream, has deposited a lot of checks drawn on banks in foreign countries, sent large number of high dollar international wires to different countries, made cash deposits of a few hundred dollars every few days and written multiple checks for a few hundred dollars to the same dozen payees every two weeks. Which two transaction types warrant investigation? (Choose two.)
Correct Answer: C,D
Question 263
What do Financial Action Task Force (FATF)-style regional bodies do for their members to help combat money laundering and terrorist financing?
Which unusual or suspicious activity by a financial institution's (FI's) employee requires additional investigation and scrutiny?
Correct Answer: A
an employee who avoids taking periodic vacations despite having accrued vacation time may be trying to conceal fraudulent or illegal activities that would be exposed in their absence. This is a common red flag for internal fraud and money laundering, as it indicates a lack of segregation of duties, internal controls, and oversight. Employees who engage in such behavior may also exhibit other signs of stress, defensiveness, or secrecy. References: * Learn about red flags for internal fraud, section "An employee may be a higher internal fraud risk when a combination of the following red flags are present", bullet point 1: "Unwilling to share duties or take leave." * Money Laundering Red Flags | Key Behaviours and Indicators, section "Employee Red Flags", bullet * point 1: "Avoiding taking holidays or time off work." * Top 10 AML Red Flags: Warning Signs and Financial Risks, section "AML Red Flags Categories", sub-section "Employee Red Flags", bullet point 1: "Avoiding taking vacations or sick leaves."
Question 265
Which insurance product is particularly vulnerable to money laundering?
Correct Answer: A
According to the ACAMS study guide, one of the insurance products that is particularly vulnerable to money laundering is annuity, which is "a contract that provides a series of payments over a specified period of time, usually for the life of the annuitant" (p. 223). Annuities can be used by money launderers to deposit large sums of illicit funds in a single transaction, or to receive regular payments from a legitimate source after paying the premiums with dirty money. Annuities can also be surrendered or transferred to third parties, making it difficult to trace the origin and destination of funds. References: ACAMS. (2020). Study Guide for the Certification Examination for Anti-Money Laundering Specialists (6th ed.). Miami, FL: ACAMS. ComplyAdvantage. (2023)AML in Insurance: How to Detect & Combat Money Laundering 1. Retrieved from https://complyadvantage.com Financial Crime Academy. (2023)Anti Money Laundering (AML) In Insurance Industry In 2021 2. Retrieved from https://financialcrimeacademy.org
Question 266
A new accounts representative recently opened an account for individual whose stated employment is tutoring students. Which customer action indicates possible money laundering?
Correct Answer: C
This customer action indicates possible money laundering because it could be a sign of layering, which is the second stage of the money laundering process. Layering involves moving the illicit funds around to create distance and confusion between the source and the destination of the money. Transferring all funds to another bank on the same day of large cash deposits could be an attempt to avoid detection by the bank's transaction monitoring system or by the authorities. It could also be a way to break the audit trail and obscure the origin of the funds. The other customer actions are not necessarily indicative of money laundering, although they could raise some red flags depending on the context and the customer profile. Continually making weekly small cash deposits could be a sign of structuring, which is a technique to avoid reporting requirements by depositing amounts below the threshold. However, this could also be a legitimate behavior for a tutor who receives cash payments from students. Periodically initiating wire transfers to another account owned by a relative could be a sign of funneling, which is a technique to move funds between accounts that are not related to the business or personal activities of the customer. However, this could also be a legitimate behavior for a tutor who supports their family members financially. Opening a savings account and making frequent transfers from the checking account could be a sign of commingling, which is a technique to mix illicit funds with legitimate funds from a legal source. However, this could also be a legitimate behavior for a tutor who wants to save money for future expenses. References: CAMS Certification Package - 6th Edition | ACAMS, Chapter 2: Money Laundering Risks and Methods, pp. 35-40 CAMS Certifications: How to Get CAMS Certified | ACAMS, CAMS Study Guide, pp. 28-32 ACAMS CAMS Certification Video Training Course - Exam-Labs, Module 2: Money Laundering Risks and Methods, Video 2.2: The Three Stages of Money Laundering Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition), Question 311, Answer C
