ACAMS CAMS - Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition)

Policies, controls, and procedures must be proportionate to the size and nature of the firm, approved by senior management, and regularly reviewed to ensure they remain effective in preventing and mitigating financial crime risk while aligning with regulatory expectations.

A: The first step in any suspicious activity investigation is to review the transaction history and other relevant account information to establish context, identify patterns, and determine if the behavior is consistent with known typologies of money laundering.

“The initial phase of an AML investigation is to review relevant account information and transaction activity to assess whether a SAR filing is warranted.”

This approach ensures that any subsequent decisions, such as escalation, SAR filing, or customer outreach, are based on a comprehensive understanding of the facts.

Fuzzy logic in customer screening systems is used to handle uncertainty and variability in data by producing outputs that include a range of intermediate possibilities between "Yes" and "No." This enables the system to identify potential matches that are not exact but still relevant, improving the detection of name variations and misspellings.

AMutual Legal Assistance Treaty (MLAT)is aformal agreement between two or more countriesthat facilitatescooperation in legal and law enforcement matters, includingAML investigations.

Option D (Correct):MLATs allow governments to share financial intelligence, request legal assistance, and conduct joint investigations.

Option A (Incorrect):A Memorandum of Agreement (MOA) is typically a non-binding contract used for general business or governmental cooperation.

Option B (Incorrect):A Declaration of Understanding is an informal agreement and does not provide a legal framework for law enforcement cooperation.

Option C (Incorrect):A Memorandum of Understanding (MOU) is often used for informal cooperation but lacks the legal enforceability of an MLAT.

Option E (Incorrect):A Request for Urgent Information is not a recognized international legal instrument.

Best Practices for Cross-Border AML Cooperation:

Use MLATs to request access to financial records in foreign jurisdictions.

Collaborate with Financial Intelligence Units (FIUs) via the Egmont Group.

Leverage FATF’s International Cooperation Review Group (ICRG) for guidance.

The documentation should include evidence that the residual risk remains within the bank’s risk appetite, analysis of resources spent and costs associated with the current lower threshold, and historical data showing the high false positive rate to justify altering the threshold while maintaining effective risk management.

The Office of Foreign Assets Control (OFAC), part of the U.S. Department of the Treasury, is responsible for theadministration and enforcement of economic and trade sanctions. These sanctions are based on U.S. foreign policy and national security objectives and target:

Foreign countries and regimes

Terrorist organizations

Narcotics traffickers

Individuals and entities engaged in activities related to the proliferation of weapons of mass destruction

OFAC acts under various authorities, including national emergency powers granted by the President and specific legislation. One of its primary tools is theSpecially Designated Nationals(SDN) List, which identifies individuals and entities whose assets are blocked and with whom U.S. persons are generally prohibited from dealing.

It is important to note that OFAC is not responsible for designating jurisdictions as primary money laundering concerns (a task handled by FinCEN under Section 311 of the USA PATRIOT Act), nor does it manage trade agreements.

A national risk assessment can identify high-risk sectors requiring enhanced due diligence and guide resource allocation to mitigate financial crime risks effectively, helping organizations align their risk-based approach with national priorities and threats.

The relationship manager is in the best position to identify and report money laundering risks due to their direct and ongoing interaction with clients. They have detailed knowledge of clients’ profiles, financial behaviors, and any unusual activities that may raise red flags.

Global organizations must ensure their policies and procedures comply with local laws and regulations in each country where they operate, even when maintaining group-wide consistency. Relying solely on international or U.S. standards does not ensure compliance with all local requirements, which may be more stringent or specific.

“A global group-wide program should ensure adherence to local AML and sanctions laws and regulations in every jurisdiction in which it operates. Local adaptation of policies is essential to address jurisdiction-specific risks and legal requirements.”

(CAMS 6th Edition, International AML/CFT Standards; FATF Recommendations 18, 35; EU & US Sanctions Regulations)