ACAMS Advanced-CAMS-Audit - Advanced CAMS-Audit Certification Exam

A. Ongoing Due Diligence: FATF Recommendations emphasize the need for ongoing monitoring and due diligence of NPOs to detect and prevent misuse for terrorist financing​​.

C. Diversion of Funds: Identifying and mitigating risks of fund diversion to terrorist organizations is a critical component in evaluating NPO vulnerabilities​​.

ï‚·Role of Internal Audit:

Internal audit is tasked with evaluating and improving the effectiveness of governance, risk management, and control processes within the organization.

Periodic evaluations ensure that AML/CFT processes remain robust and effective against emerging risks.

ï‚·Alignment with CAMS-Audit Guidance:

Advanced CAMS-Audit training highlights the need for internal audit to focus on process effectiveness rather than operational responsibilities, such as quality assurance or corrective actions​​.

ï‚·Executive Summary Requirements:

The statement focuses on clear, evidence-based findings, critical for reflecting material deficiencies in enhanced due diligence (EDD) for high-risk clients​​.

ï‚·Guidelines for Reporting:

FATF emphasizes the consistent application of risk rating systems to ensure ML/TF risks are adequately mitigated​​.

A:Regularly updating lists of high- and medium-risk countries ensures that customer risk profiles align with the most current geopolitical and economic risks​​.

E:Periodic updates to customer risk profiles, based on their assigned risk level, are critical for maintaining an accurate and dynamic risk assessment system​​.

ï‚·Recent Audit Findings:

Reviewing past findings ensures the institution has addressed previous deficiencies and allows the auditor to assess the effectiveness of implemented corrective actions.

ï‚·AML Corporate Governance:

Corporate governance is a critical component of AML compliance, involving oversight structures, policies, and accountability mechanisms to prevent money laundering risks.

ï‚·Alignment with CAMS-Audit Principles:

Advanced CAMS-Audit emphasizes evaluating governance structures and learning from recent audits to maintain robust AML controls​​.

Customer Identification Program (CIP) Requirements:

Account opening procedures define the baseline for customer identification, aligning with FATF Recommendation 10 on CDD​​.

ï‚·Testing Operating Effectiveness:

Operating effectiveness testing evaluates whether controls and systems are functioning as intended on a daily basis, including the accuracy and reliability of automated validation processes.

ï‚·Relevance to Data Validation:

The auditor’s role in this scenario ensures that the data flowing into the monitoring software is accurate and aligned with operational requirements, reflecting day-to-day effectiveness.

ï‚·CAMS-Audit Emphasis:

The emphasis on ongoing operational validation is consistent with Advanced CAMS-Audit practices, which stress continuous monitoring of AML system effectiveness​​.

Importance of Statistical Sampling in Transaction Monitoring Testing:

Statistical sampling is the most suitable method when dealing with stratified populations, as it ensures a representative sample is drawn from each distinct category​​.

This method allows auditors to achieve reliable results by applying mathematical and probabilistic models to calculate the required sample size, ensuring unbiased and valid conclusions​.

Relevance to Stratified Populations:

When the transaction monitoring population is divided into distinct categories, statistical sampling ensures that each category is proportionately represented based on its size or risk level within the overall population​​.

Evaluation of Other Options:

Judgmental Sampling:Relies on auditor discretion and may introduce bias, making it unsuitable for ensuring proportional representation in stratified populations.

Proportional Sampling:Focuses only on proportional representation but does not leverage statistical tools to determine the optimal sample size or confidence levels.

Risk-Based Sampling:While effective in certain contexts, it is better suited for focusing on high-risk categories rather than ensuring comprehensive representation of all strata.

Alignment with Advanced CAMS-Audit Standards:

Advanced CAMS-Audit recommends statistical sampling for stratified populations to ensure that all categories are adequately tested and results are statistically valid for compliance and performance assessments​​.

Conclusion:The auditor should usestatistical samplingto identify the sample size when testing a stratified population for transaction monitoring. This ensures a reliable, unbiased, and mathematically sound basis for the audit.

Correspondent banking relationships with banks in high-risk jurisdictions are a key risk indicator, as these relationships often pose greater AML/CFT risks due to regulatory or operational deficiencies in those jurisdictions​​​.