ACAMS QUESTIONS AND ANSWERS
What is money laundering? - Answers - - Taking criminal proceeds, disguising illegal
sources to use the funds to perform legal or illegal activities.
- Process of making dirty money look clean
Give an example of the second stage of money laundering: - Answers - - Electronically
moving funds from one country to another and dividing them into advanced financial
options
- Moving funds from one financial institution to another or within multiple accounts at the
same institution
- Converting cash into monetary instruments
- Using shell companies to obscure beneficial owner and assets
Give an example of the third stage of money laundering: - Answers - Purchasing luxury
assets like property, jewelry, high end automobiles, investments.
Give an example of the first stage of money laundering: - Answers - - Blending funds,
purchasing stored value cards with currency, foreign exchange, currency smuggling,
loans
What does the Yates Memo say? - Answers - - Criminal and civil investigations into
corporate misconduct should also focus on the individuals who perpetrated the
wrongdoing.
What are some indicators of money laundering using ETF? - Answers - - Funds
transfers to or from a financial secrecy haven or high risk geographic location without
apparent business reason, or when activity is inconsistent with customer
- Lafarge funds transfers from foreign clients without reason
- Checks and money orders to receive many small incoming transfers of funds or to
make deposits
- Unexplained funds activity
- Payments or receipts without link to legitimate contracts
- Funds transfers from the same person to or from different accounts
What is remote deposit capture and what risk is associated with it? - Answers - - Bank
product that allows customers to check and transmit an electronic image of a check to
the bank for deposit.
- Decreases ability to identify fraud indicators
What are some of the money laundering risks pertaining to the use of payable through
accounts (PTAs)? - Answers - - Foreign institutions licensed in offshore centers with
weak supervision and licensing laws
- Correspondent bank fails to apply CDD
- Subaccount holders have currency deposit and withdrawal privileges
,- Used in conjunction with a subsidiary, representative, or other office of the respondent
bank
What is a money laundering risk pertaining to the use of concentration accounts? -
Answers - - Customer-identifying information is separated from the financial transaction.
- Results in a lost audit trail.
Define a politically exposed person - Answers - - Person who is or has been entrusted
with a prominent public function domestically or by a foreign country or organization.
What is structuring? - Answers - - Designing a transaction to evade triggering a
reporting or record keeping requirement
- Breaking a cash deposit into smaller ones
Which money laundering stages are credit cards most likely to be used, and what is an
example of money laundering through the use of credit cards? - Answers - - Most likely
used in second (layering) and third (integration) stages.
- Overpaying a credit card balance and asking for a refund.
What are some risks posed by third party payment processors: - Answers - - Multiple
financial organization relationships that a TPPP cannot see inits entirety
High return rates from unauthorized transactions
What are some ways money services businesses (MSBs) can be used for money
laundering? - Answers - - Make funds available to criminal organizations at a destination
country in the local currency. Launderer or broker then sells the criminal dollars to
foreign businesspeople wishing to make legitimate purchases of goods for exports.
Cash intensive and transactional nature of MSBs facilitate ML
What are some of the aspects associated with the securities industry that increase its
exposure to money laundering? - Answers - - International nature, speed of
transactions, conduct free-of-payment transfers, converting holdings to cash without
loss of principal, wire transfers to from or through multiple jurisdictions, competitive
commission driven environment
What are some red flags of money laundering associated with casinos and gambling? -
Answers - - Converting funds to be laundered from cash to checks and using casino
credit to layer transactions before transferring out funds
- Buying chips with illicit funds and requesting repayment via check drawn on casino
account
- Using illegal funds to repay casino lines of credit
- Junket operators moving funds across borders and through multiple casines
- Unusual gaming patterns
Why is gold vulnerable to money laundering and terrorist financing risks? - Answers -
High intrinsic value in compact, easy to transport form. Holds value regardless of form.
, List ways in which travel agencies can be used to launder money: - Answers - -
Purchasing expensive airline ticket for another person who asks for a refund, structuring
wire transfers in small amounts to avoid recordkeeping requirements, establishing tour
operator networks with false bookings to justify significant payments from foreign travel
groups.
List various functions of gatekeepers - attorneys, notaries, accountants, and auditors -
that can be useful to money launderers: - Answers - - Creating corporate vehicles and
complex legal arrangements
- Buying or selling property as a cover for illegal fund transfers
- Performing financial transactions and providing advice
- Setting up and managing charities
Why is the issue of requiring attorneys to be gatekeepers in the AML/CFT area
controversial? - Answers - - Attorneys have confidential relationships with their clients
What makes real estate an attractive channel for laundering illicit funds? - Answers - - It
can be purchased with cash
- Ultimate beneficial owner can be disguised
- Stable and reliable investment
- Value able to be increased.
What are some common money laundering techniques involved with trade=based
money laundering? - Answers - - Over Invoicing and under invoicing, overshipping and
short shipping, ghost shipping, shell companies, multiple invoicing and black market
trades.
What is the Black Market Peso Exchange? - Answers - - Money in the US derived from
illegal activity is purchased by peso brokers and deposited in US bank accounts
established by the brokers.
- The brokers sell checks and wire transfers drawn on those accounts to legitimate
businesses which use them to purchase goods and services in the US.
What are the potential risk factors commonly associated with prepaid bank cards? -
Answers - - Anonymous cardholders, funding, access to funds
- High value limits and no limits on the number of cards individuals can acquire
- Global access to cash through ATMs
What are some specific controls that e-money institutions can implement to mitigate the
money laundering risk of prepaid cards, mobile payments, and internet-based payment
services? - Answers - - Robust oversight of outsourced functions
- Limits on storage value transactions
- Identifying customers with multiple purses, accounts, and cards
- Geolocation services
- Geographic restrictions on the use and function of e money products
What is money laundering? - Answers - - Taking criminal proceeds, disguising illegal
sources to use the funds to perform legal or illegal activities.
- Process of making dirty money look clean
Give an example of the second stage of money laundering: - Answers - - Electronically
moving funds from one country to another and dividing them into advanced financial
options
- Moving funds from one financial institution to another or within multiple accounts at the
same institution
- Converting cash into monetary instruments
- Using shell companies to obscure beneficial owner and assets
Give an example of the third stage of money laundering: - Answers - Purchasing luxury
assets like property, jewelry, high end automobiles, investments.
Give an example of the first stage of money laundering: - Answers - - Blending funds,
purchasing stored value cards with currency, foreign exchange, currency smuggling,
loans
What does the Yates Memo say? - Answers - - Criminal and civil investigations into
corporate misconduct should also focus on the individuals who perpetrated the
wrongdoing.
What are some indicators of money laundering using ETF? - Answers - - Funds
transfers to or from a financial secrecy haven or high risk geographic location without
apparent business reason, or when activity is inconsistent with customer
- Lafarge funds transfers from foreign clients without reason
- Checks and money orders to receive many small incoming transfers of funds or to
make deposits
- Unexplained funds activity
- Payments or receipts without link to legitimate contracts
- Funds transfers from the same person to or from different accounts
What is remote deposit capture and what risk is associated with it? - Answers - - Bank
product that allows customers to check and transmit an electronic image of a check to
the bank for deposit.
- Decreases ability to identify fraud indicators
What are some of the money laundering risks pertaining to the use of payable through
accounts (PTAs)? - Answers - - Foreign institutions licensed in offshore centers with
weak supervision and licensing laws
- Correspondent bank fails to apply CDD
- Subaccount holders have currency deposit and withdrawal privileges
,- Used in conjunction with a subsidiary, representative, or other office of the respondent
bank
What is a money laundering risk pertaining to the use of concentration accounts? -
Answers - - Customer-identifying information is separated from the financial transaction.
- Results in a lost audit trail.
Define a politically exposed person - Answers - - Person who is or has been entrusted
with a prominent public function domestically or by a foreign country or organization.
What is structuring? - Answers - - Designing a transaction to evade triggering a
reporting or record keeping requirement
- Breaking a cash deposit into smaller ones
Which money laundering stages are credit cards most likely to be used, and what is an
example of money laundering through the use of credit cards? - Answers - - Most likely
used in second (layering) and third (integration) stages.
- Overpaying a credit card balance and asking for a refund.
What are some risks posed by third party payment processors: - Answers - - Multiple
financial organization relationships that a TPPP cannot see inits entirety
High return rates from unauthorized transactions
What are some ways money services businesses (MSBs) can be used for money
laundering? - Answers - - Make funds available to criminal organizations at a destination
country in the local currency. Launderer or broker then sells the criminal dollars to
foreign businesspeople wishing to make legitimate purchases of goods for exports.
Cash intensive and transactional nature of MSBs facilitate ML
What are some of the aspects associated with the securities industry that increase its
exposure to money laundering? - Answers - - International nature, speed of
transactions, conduct free-of-payment transfers, converting holdings to cash without
loss of principal, wire transfers to from or through multiple jurisdictions, competitive
commission driven environment
What are some red flags of money laundering associated with casinos and gambling? -
Answers - - Converting funds to be laundered from cash to checks and using casino
credit to layer transactions before transferring out funds
- Buying chips with illicit funds and requesting repayment via check drawn on casino
account
- Using illegal funds to repay casino lines of credit
- Junket operators moving funds across borders and through multiple casines
- Unusual gaming patterns
Why is gold vulnerable to money laundering and terrorist financing risks? - Answers -
High intrinsic value in compact, easy to transport form. Holds value regardless of form.
, List ways in which travel agencies can be used to launder money: - Answers - -
Purchasing expensive airline ticket for another person who asks for a refund, structuring
wire transfers in small amounts to avoid recordkeeping requirements, establishing tour
operator networks with false bookings to justify significant payments from foreign travel
groups.
List various functions of gatekeepers - attorneys, notaries, accountants, and auditors -
that can be useful to money launderers: - Answers - - Creating corporate vehicles and
complex legal arrangements
- Buying or selling property as a cover for illegal fund transfers
- Performing financial transactions and providing advice
- Setting up and managing charities
Why is the issue of requiring attorneys to be gatekeepers in the AML/CFT area
controversial? - Answers - - Attorneys have confidential relationships with their clients
What makes real estate an attractive channel for laundering illicit funds? - Answers - - It
can be purchased with cash
- Ultimate beneficial owner can be disguised
- Stable and reliable investment
- Value able to be increased.
What are some common money laundering techniques involved with trade=based
money laundering? - Answers - - Over Invoicing and under invoicing, overshipping and
short shipping, ghost shipping, shell companies, multiple invoicing and black market
trades.
What is the Black Market Peso Exchange? - Answers - - Money in the US derived from
illegal activity is purchased by peso brokers and deposited in US bank accounts
established by the brokers.
- The brokers sell checks and wire transfers drawn on those accounts to legitimate
businesses which use them to purchase goods and services in the US.
What are the potential risk factors commonly associated with prepaid bank cards? -
Answers - - Anonymous cardholders, funding, access to funds
- High value limits and no limits on the number of cards individuals can acquire
- Global access to cash through ATMs
What are some specific controls that e-money institutions can implement to mitigate the
money laundering risk of prepaid cards, mobile payments, and internet-based payment
services? - Answers - - Robust oversight of outsourced functions
- Limits on storage value transactions
- Identifying customers with multiple purses, accounts, and cards
- Geolocation services
- Geographic restrictions on the use and function of e money products
