CAMS-FCI Advanced CAMS-Financial Crimes Investigations Questions and Answers

The correct answer is A and B because human smuggling/trafficking and terrorist financing are both predicate offenses for money laundering that could be related to the client’s activities. Option C is incorrect because there is no indication of narcotics trafficking in the scenario. Option D is incorrect because there is no indication of antiques smuggling in the scenario. Option E is incorrect because there is no indication of tax evasion in the scenario.

References: Advanced CAMS-FCI Certification Handbook, page 10; Financial Crime Typologies - Intermediate Certificate, Module 2.

The analyst should clarify discrepancies noted in the customer’s declared profile given the downstream impact on the risk assessment. This is because discrepancies between the customer’s nature of business and the information on the business registry may indicate that the customer is not operating a legitimate business or is trying to conceal its true activities. The analyst should verify the customer’s identity, source of funds, and purpose of transactions to ensure that the customer’s risk profile is accurate and consistent with the Fl’s risk appetite.

References: Leading Complex Investigations Certificate, Module 2, page 9.

A product of analysis is a conclusion or inference that is derived from facts or judgments, using analytical techniques or tools. Option B is a product of analysis because it implies that the investigator has used a tool or technique, such as a threshold analysis, to identify a pattern of structured cash deposits that may indicate an attempt to evade reporting requirements. The other options are facts or judgments that can be verified by evidence or observation.

References: Advanced CAMS-FCI Certification Handbook, page 23.

The actions that the investigator should recommend to mitigate risk are conducting enhanced due diligence (D) and re-evaluating the customer risk profile (E). These actions are appropriate and prudent, as they allow the investigator to obtain more information and evidence about the nature and purpose of the transactions, the source and destination of the funds, and the identity and legitimacy of the parties involved. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, “the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries” (p. 24). The FI should also “re-assess the customer risk profile based on any new information obtained during the investigation, and adjust the customer due diligence and monitoring requirements accordingly” (p. 25).

The other options are not as appropriate or effective as options D and E. The investigator should not recommend exiting the relationship with the customer (A), as this could be premature or disproportionate, as well as potentially discriminatory or illegal. The investigator should not recommend documenting and maintaining a file with the investigative findings (B), as this is not an action to mitigate risk, but rather a standard procedure for any investigation. The investigator should not recommend discussing the investigation findings with the customer ©, as this could compromise the integrity and objectivity of the investigation, as well as expose the FI to legal or regulatory risks.

References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide

According to the Certified Anti-Money Laundering Specialist (CAMS) study guide, 6th edition, page 105, the correct answer is C. It can be difficult to determine if there is negative media associated with counterparties solely from the customer's account activity and KYC file.

The study guide explains that negative media can include news articles, government sanctions lists, and other sources of public information that may indicate that a counterparty is involved in illicit activities. However, this information may not be readily available in a customer's account activity or KYC file, and may require additional research or investigation.

The correct answers are B and C because these are the most relevant and reasonable steps for the investigations team to perform enhanced due diligence on the operations of the foreign bank and its customers. Asking for the risk rating, customer profiles, and official licenses would help the team assess the level of risk and compliance of the foreign bank and its customers, who are engaged in a high-risk activity of exporting scrap gold and silver. The other options are not appropriate because they are either premature or ineffective. Rescinding the contract, filing a SAR/STR, or closing the accounts would require more evidence and justification, and they may also damage the relationship with the foreign bank.

References: : Precious Metals & Stones

The statement that most accurately characterizes the methods used by transnational criminal organizations is that they routinely engage in many different types of criminal activities as long as they think it will benefit them ©. This is because transnational criminal organizations are flexible and adaptable, and they exploit opportunities and vulnerabilities in different markets and jurisdictions. According to ACAMS2, “Transnational criminal organizations are involved in a wide range of illicit activities, such as drug trafficking, human trafficking, arms trafficking, money laundering, cybercrime, environmental crime, fraud, corruption, and terrorism” (p. 3). They also “operate across borders and regions, using complex networks and structures to evade detection and prosecution” (p. 3).

The other statements are not as accurate or comprehensive as option C. Transnational criminal organizations are unlikely to associate with known terrorist organizations due to the reputational risks (A) is false, as transnational criminal organizations may collaborate or cooperate with terrorist organizations for mutual benefit or convenience, such as sharing resources, routes, or contacts. Transnational criminal organizations are likely to specialize in one particular method and continue to refine that method to escape detection (B) is false, as transnational criminal organizations may diversify or change their methods depending on the circumstances or opportunities, such as shifting products, markets, or modus operandi. Transnational criminal organizations see each other as competitors and rarely cooperate (D) is false, as transnational criminal organizations may form alliances or partnerships with other criminal groups for strategic or tactical reasons, such as sharing information, expertise, or influence.

The bank is out of compliance with CIP regulations because it did not obtain the minimum identifying information from the customer prior to opening the account, as required by 31 CFR § 1020.220(a)(2)(i)(A). The bank should have obtained the name, date of birth, address, and identification number of the customer, as well as verified the identity of the customer to the extent reasonable and practicable. The lack of ownership data may also indicate a violation of beneficial ownership regulations, but that is not the primary issue in this case.

An investigator should avoid escalating a suspicious event to the chief compliance officer if there is a potential conflict of interest, such as when a close family member of the officer is involved in the transaction. In such a case, the investigator should pursue other channels, such as reporting to a higher authority or an independent committee. The other options do not present a conflict of interest and should be escalated to the chief compliance officer as part of the normal procedure.

References: Advanced CAMS-FCI Certification Handbook, page 18.

The sources of funds that Bank A should conduct additional scrutiny on are the third-party transfer and the transfer from Bank B. This is because these sources may pose higher risks of money laundering, terrorist financing, fraud, or other illicit activities. Some of the reasons why these sources require more scrutiny are23:

Third-party transfers may involve unknown or unrelated parties that may have ulterior motives or hidden agendas. They may also be used to obscure the origin or destination of funds, or to circumvent sanctions or other regulatory restrictions.

Transfers from Bank B may involve jurisdictions that have weak anti-money laundering and counter-terrorist financing (AML/CFT) regimes, high levels of corruption, or significant criminal activity. They may also involve banks that have poor reputation, compliance, or transparency standards.

References:

• Third Party Payments - Wolfsberg Group
• Guidance on Correspondent Banking Services - FATF

This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 595, which states: “Potential indicators of money laundering associated with Trust and Company Service Providers include the use of legal persons in jurisdictions with strict secrecy laws, structuring cash deposits into third party accounts, multi-jurisdictional wire transfers with no legal purpose, and frequent deposits to or withdrawals from bank accounts.”

The reason why it is important for the casino to maintain control of the output from the provider is that the casino maintains ultimate responsibility for this activity and should maintain control to avoid non-compliance ©. This is because the casino is accountable for its own AML/CFT obligations and cannot delegate or outsource them to a third-party provider. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, “the FI should ensure that it has adequate oversight and control over any third-party providers that it engages for AML/CFT purposes, such as conducting due diligence, verifying information, or monitoring transactions” (p. 25). The FI should also “review and evaluate the performance and quality of the third-party providers on a regular basis, and address any issues or gaps that may arise” (p. 25).

The other options are not as relevant or accurate as option C. The clients of the casino prefer to know that the casino is keeping their information secure when being held by a third-party (A) is not a reason why the casino should maintain control of the output from the provider, but rather a customer expectation or preference. As with all third-party relationships, proper control must be maintained to ensure profitability (B) is not a reason why the casino should maintain control of the output from the provider, but rather a general business principle or objective. Other casinos are frequently looking to reduce costs and share ideas, so if this relationship is successful, the model can be used by other businesses (D) is not a reason why the casino should maintain control of the output from the provider, but rather a potential benefit or outcome.

The pattern of activity that most strongly indicates an individual is a foreign terrorist fighter is a large cash advance on a credit card and purchases at travel and sporting goods websites. This is because this pattern may suggest that the individual is preparing to travel to a conflict zone and purchase equipment or supplies for terrorist activities. According to the United Nations Office on Drugs and Crime, some of the indicators of foreign terrorist fighters include1:

• Sudden or increased financial activity, such as cash withdrawals, transfers, or deposits, especially in large amounts or involving foreign currency or locations.
• Purchases of travel-related items, such as airline tickets, passports, visas, luggage, or clothing, especially to or from high-risk destinations or transit hubs.
• Purchases of items that could be used for terrorist purposes, such as weapons, explosives, chemicals, communication devices, or survival gear.
• Changes in behavior, such as expressing radical views, cutting ties with family or friends, joining extremist groups, or displaying signs of emotional distress.

References:

Foreign Terrorist Fighters - United Nations Office on Drugs and Crime

A country that does not have strong predicate offenses and is lax in prosecuting AML cases could suffer increased organized crime and corruption as a social/economic consequence. "Weaknesses in the AML/CFT regime can lead to a range of economic and social consequences, including...increased crime and corruption." (CAMS Manual, 6th Edition, page 32)

The investigator should review how the wire transfers were initiated first, because this could indicate the level of involvement and knowledge of the LLC account holders. If the wire transfers were initiated online or by phone, it could suggest that the account holders were trying to avoid face-to-face contact with the bank staff and reduce the chances of being questioned or identified. If the wire transfers were initiated in person at a branch, it could indicate that the account holders were confident or careless about their activities, or that they had some relationship with the bank staff. The method of initiation could also affect the quality and quantity of information collected by the bank about the wire transfers, such as the purpose, source, and destination of the funds. References: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, page 65.

The initial focus of the investigation should be to review the customer due diligence documents of each entity and examine the year of incorporation and onboarding channel, as this would help identify the beneficial owners, the source of funds, and the purpose of the business relationship. This would also help determine if the entities are shell companies or have any red flags that indicate potential misuse of legal persons. Using data analytics to extract and analyze the linkages between the different entities would be a subsequent step, not the initial one. Conducting a network link analysis on all customers of the bank would be too broad and time-consuming. Finding out whether customer A has relationships with other financial institutions would be relevant, but not the initial focus. References: [Advanced CAMS-FCI Study Guide], page 44-45; [FATF Guidance on Transparency and Beneficial Ownership], page 12-13.

The condition that should be met to satisfy the regulator is that the program is drafted using a risk-based approach to avoid the FI being used as a conduit for criminal activities. A risk-based approach means that the FI identifies, assesses, and understands its exposure to financial crime risks and applies appropriate measures to mitigate them. This is consistent with the international standards and best practices for anti-financial crime compliance. The program being aligned with the financial industry’s anti-financial crime priorities, meeting the minimum requirements of anti-financial crime standards published by a financial industry association, or having no high-severity issues in internal auditing results are not sufficient to satisfy the regulator, as they do not necessarily reflect the specific risks faced by the FI or demonstrate its effectiveness in preventing and detecting financial crimes.

References: [Advanced CAMS-FCI Study Guide], page 14-15; [FATF Guidance on Risk-Based Approach for Effective Supervision], page 7-8.

The correct answer is D because it is a suspicious activity that Y, who is the authorized signatory of the customer, also signed on behalf of the lenders. This indicates a possible conflict of interest, collusion, or fraud. The other options are not suspicious activities based on the information given.

References: [Advanced CAMS-FCI Study Guide], page 17-18

The threat of US sanctions against foreign individuals and entities continues to exist despite the absence of a US nexus. This is stated in the Certified Anti-Money Laundering Specialist (the 6th edition) manual on page 591, which states: “It is important to note that the threat of US sanctions against foreign individuals and entities continues to exist even when there is no direct US nexus (i.e., no US persons or assets involved).”

The OFAC sanctions screening audit program should include the requirement that all clients with foreign identification are subject to enhanced due diligence, as this provides an extra layer of protection against potential violations of OFAC sanctions.

The investigator should proceed in this situation by conducting the investigation as usual, since the activity in question is not directly connected to the PEP (A) and sending a referral to Sanctions/List Screening, or similar department/responsible individual, to ensure that the customer due diligence information is up to date (D). These actions are appropriate and prudent, as they allow the investigator to continue their analysis of the suspicious activity without being biased by the potential PEP status of the customer’s relative, and they ensure that the FI has accurate and current information about its customers and their associates. According to the ACAMS Advanced Financial Crimes Investigations Certification Study Guide1, “the FI should conduct enhanced due diligence on all parties involved in the investigation, including checking various sources of information, such as watch lists, sanctions lists, negative news, and official registries” (p. 24). The FI should also “update the customer profile with any new information obtained during the investigation” (p. 25).

The other options are not correct. The investigator should not refer the newly identified customer’s account for closure due to the high risk associated with the potential PEP (B), as this could be premature or disproportionate, as well as potentially discriminatory or illegal. The investigator should not file a SAR/STR due to the potential involvement of a PEP (E), as this could also be premature or unnecessary, as well as potentially misleading or inaccurate. The investigator should not use this case as an example to train employees to recognize potential PEPs during their investigation process ©, as this could violate confidentiality or data protection laws, as well as compromise the investigation or alert the customer or their relative of the suspicion.

References: 1: ACAMS Advanced Financial Crimes Investigations Certification Study Guide, available at ACAMS

The data points that the compliance team should include in its data analytics program to detect shell or front company red flags are entities whose principal place of business is a non-residential address and entities transacting with or having relation to tax haven or high-risk countries. These data points may indicate that the entities are not conducting legitimate business activities, but rather are used to conceal the identity or location of the true beneficiaries or owners, or to facilitate money laundering, tax evasion, or other illicit activities. Some of the sources that support these data points as red flags are4567:

• Entities whose principal place of business is a non-residential address may indicate that they have no physical presence, operations, assets, or employees. They may use addresses such as post office boxes, mail forwarding services, registered agents, or virtual offices to avoid detection or scrutiny.
• Entities transacting with or having relation to tax haven or high-risk countries may indicate that they are involved in offshore financial activities that are designed to evade taxes, regulations, or sanctions. They may also be exposed to higher risks of money laundering, terrorist financing, corruption, or fraud.

References:

• How to Identify a Shell Company and the Associated Red Flags
• Difference between Shell, Shelf & Front Company | Sigma Ratings
• Shell Companies and Money Laundering | ComplyAdvantage
• General Comments Incorporation of shell companies - Singapore Police Force

The best step for the investigator to take next is to request information about the beneficiaries related to the company. This will help to identify the ultimate beneficial owners of the funds and the purpose of the transactions. Requesting information from the company or filing a SAR/STR to the FIU where the company is located may not be feasible or effective, as the company may not cooperate or the FIU may not have jurisdiction over the offshore entity. Conducting an open-source search may provide some information about the ownership and registration of the company, but it may not be sufficient or reliable to determine the nature and legitimacy of the transactions.

References:

• SAR Narrative Guidance Package
• Best Practices for Drafting an STR or SAR

The illegal activity that the investigator has reasonable grounds to suspect Richard Aston of is aftermarket sales of entertainment admission tickets. This is because aftermarket sales of entertainment admission tickets involve reselling tickets for events, concerts, festivals, etc. at a higher price than their face value, often through online platforms or scalpers. This practice can be illegal or unethical, depending on the jurisdiction and the terms and conditions of the original ticket seller. The investigator should look for indicators of aftermarket sales of entertainment admission tickets, such as high volume or frequency of incoming payments from various individuals, correlation between incoming payments and major events or conferences, and discrepancy between the customer’s profile and the nature of the transactions. The other options are incorrect because:

A. Embezzling from the hotel is not likely, as it would involve stealing money or property from the hotel by an employee or a person in a position of trust. There is no evidence that Richard Aston works for or has access to the hotel’s assets.

C. Human trafficking is not probable, as it would involve exploiting people for forced labor or commercial sexual exploitation. There is no indication that Richard Aston is involved in any form of human trafficking or has any connection to victims or perpetrators.

D. Sports betting is not plausible, as it would involve wagering money on the outcome of sporting events or games. There is no sign that Richard Aston is engaged in any sports betting activity or has any association with bookmakers or gamblers.

References:

Advanced CAMS-FCI Certification | ACAMS, Section 2: Investigating Financial Crimes, page 10

TicketSwap: The safest way to buy and sell tickets

Ticketing 101 | Ticketmaster

10 Types of Tickets For Events (+ Why & When To Use Them) - Eventbrite

Verified Answer: D The recommendation that the AMLO should make is to conduct an in-depth investigation into accumulated remittance information in the past year to find the trend of such transactions. This is because the regular and increasing remittances from a country with high piracy activity may indicate a possible link to illicit funds derived from piracy or other criminal activities. According to the World Bank, remittances are often used as a channel for money laundering and terrorist financing, especially when they originate from or are destined to high-risk jurisdictions1. Therefore, the AMLO should analyze the remittance data to identify the sources, destinations, amounts, frequencies, and purposes of the transactions, and compare them with the customer profiles, expected activities, and risk ratings. The AMLO should also review any relevant information from external sources, such as media reports, sanctions lists, or law enforcement alerts, to determine if there are any red flags or indicators of suspicious activity. If the investigation reveals any evidence or suspicion of money laundering or terrorist financing, the AMLO should file a SAR/STR to the appropriate AML authority.

References:

Remittances data - Migration data portal

The additional information that the investigator should request is the source of the incoming funds to the group-related companies. This is because the customer declared that the ongoing source of funds to this account comes from group-related companies, but the transaction journal shows that the customer received funds from different third parties, not from group-related companies. Therefore, the investigator should verify the relationship and legitimacy of these third parties and their funds with the customer and the group-related companies. The other options are not relevant or necessary for this investigation.

References: Advanced CAMS-FCI Certification | ACAMS