CAMS: Risks and methods of money laundering and terrorism financing Welcome to your CAMS: Risks and methods of money laundering and terrorism financing 1. CAMS: Risks and methods of money laundering and terrorism financing In the context of money laundering, what is "smurfing"? A. The use of complex financial instruments to obscure the origin of funds B. The structuring of large transactions into smaller ones to evade reporting thresholds C. Transferring money through multiple countries to complicate tracing D. Investing illicit funds in real estate to legitimize their origin None 2. CAMS: Risks and methods of money laundering and terrorism financing Which of the following best describes the "layering" phase in money laundering? A. Introducing illicit funds into the financial system through a legitimate source B. Engaging in complex financial transactions to obscure the origin of the funds C. Integrating laundered funds into the economy through legitimate transactions D. Withdrawing cash from structured deposits in different geographic locations None 3. CAMS: Risks and methods of money laundering and terrorism financing Which activity is an indicator of potential trade-based money laundering? A. Transactions that align with the customer's known legitimate business B. Frequent small transfers between a parent company and its subsidiary C. Over or under-invoicing of goods and services D. Regular salary payments to offshore accounts None 4. CAMS: Risks and methods of money laundering and terrorism financing What is the primary risk associated with private banking in the context of money laundering? A. High volume of transactions makes detection of illicit funds easier B. Lower thresholds for reporting suspicious activities C. Enhanced due diligence procedures for high-net-worth individuals D. The potential for closer, more confidential relationships between bankers and clients None 5. CAMS: Risks and methods of money laundering and terrorism financing In the context of virtual currencies, what mechanism can obfuscate the source of funds, complicating the tracking of money flows? A. Public ledgers B. Centralized exchange models C. Tumbler or mixer services D. Real-time gross settlement systems None 6. CAMS: Risks and methods of money laundering and terrorism financing What is a "nesting service" in the context of correspondent banking? A. A service allowing smaller banks to use the international network of a larger bank B. Providing account services to high-risk geographic regions C. Offering enhanced due diligence services to correspondent banks D. Structuring payments to avoid crossing international borders None 7. CAMS: Risks and methods of money laundering and terrorism financing Which of the following is an example of a red flag for money laundering in the insurance sector? A. Regular premium payments in line with the policyholder's income B. Early redemption of policies with no apparent reason or at a loss C. Use of insurance products with a low-risk profile D. Payment of premiums through a bank account in the policyholder's country of residence None 8. CAMS: Risks and methods of money laundering and terrorism financing How can shell companies be used in money laundering? A. To provide legitimate services and products to disguise illicit funds B. To facilitate complex financial transactions without revealing beneficial ownership C. To report accurate financial transactions for tax purposes D. To establish a physical presence and hire employees in foreign countries None 9. CAMS: Risks and methods of money laundering and terrorism financing What makes the use of prepaid cards a concern in money laundering? A. They are only usable in the country of issuance B. They require extensive documentation to obtain C. They can be loaded with funds anonymously D. They have a high transaction cost, deterring frequent use None 10. CAMS: Risks and methods of money laundering and terrorism financing What is the primary risk associated with "correspondent banking" in money laundering? A. The inability to process international transactions B. The direct exposure to high-risk customers C. The difficulty in identifying the ultimate beneficial owner of the funds D. Strict regulatory oversight limiting transaction speed None 11. CAMS: Risks and methods of money laundering and terrorism financing In the context of terrorism financing, why is the misuse of non-profit organizations a concern? A. They are often exempt from tax and reporting requirements. B. They cannot legally transfer funds across borders. C. They only operate in low-risk jurisdictions. D. They are required to publicly disclose all donors. None 12. CAMS: Risks and methods of money laundering and terrorism financing What is a key challenge in identifying money laundering activities associated with "gatekeepers" such as lawyers, accountants, and notaries? A. They are not allowed to hold client funds. B. They often lack knowledge of their clients' business activities. C. They are not subject to anti-money laundering regulations. D. Their duty of client confidentiality can conflict with reporting requirements. None 13. CAMS: Risks and methods of money laundering and terrorism financing Which of the following best describes the concept of "beneficial ownership" in the context of money laundering risk? A. The legal owner of an account or asset B. The individual or entity that ultimately owns or controls an asset or account C. The bank or financial institution holding the funds D. The signatories authorized to operate an account None 14. CAMS: Risks and methods of money laundering and terrorism financing What is the primary challenge associated with "politically exposed persons" (PEPs) in the context of anti-money laundering (AML) efforts? A. They are typically immune to the law and cannot be investigated. B. They do not have access to significant amounts of funds. C. They have a higher risk of involvement in corruption and illicit activities. D. They are only domestic figures without international influence. None 15. CAMS: Risks and methods of money laundering and terrorism financing In the context of AML, what does the "Wolfsberg Principles" refer to? A. A set of global guidelines for real estate transactions to prevent money laundering B. A specific legal framework for prosecuting money launderers in the European Union C. A set of guidelines for multinational banks on how to counter money laundering D. An international treaty for sharing financial intelligence among countries None 16. CAMS: Risks and methods of money laundering and terrorism financing Which factor makes Free Trade Zones (FTZs) particularly vulnerable to money laundering activities? A. High tariffs and strict customs regulations B. Limited types of goods that can be traded C. Relaxed oversight and regulatory controls D. Requirement for detailed transaction records None 17. CAMS: Risks and methods of money laundering and terrorism financing What is the main purpose of implementing "Know Your Customer" KYC procedures in financial institutions? A. To ensure the fastest service for customers B. To offer competitive interest rates to clients C. To accurately identify and verify the identity of clients D. To promote various financial products to potential clients None 18. CAMS: Risks and methods of money laundering and terrorism financing What is the significance of the "Basel Committee on Banking Supervision" in combatting money laundering? A. It provides a forum for cryptocurrency regulation. B. It sets international standards for banking regulation and supervision. C. It prosecutes banks involved in money laundering globally. D. It offers insurance coverage for losses due to money laundering. None 19. CAMS: Risks and methods of money laundering and terrorism financing How does "layering" in money laundering differ from "integration"? A. Layering involves the initial placement of funds, while integration involves their final distribution. B. Layering involves generating complex layers of financial transactions to obscure the source of funds, while integration involves reintroducing the funds into the economy as legitimate. C. Layering is only used in drug trafficking, while integration is used in all types of crimes. D. Layering is a legal method of tax avoidance, while integration is always illegal. None 20. CAMS: Risks and methods of money laundering and terrorism financing Which of the following scenarios is indicative of "round-tripping" in money laundering? A. Money is moved through multiple countries before returning to the origin country. B. Cash is exchanged for high-value goods which are then sold. C. Funds are deposited in a bank and immediately withdrawn. D. Illegal funds are invested in legitimate businesses and then proceeds are received. None 21. CAMS: Risks and methods of money laundering and terrorism financing In anti-money laundering, what role does "enhanced due diligence" EDD play? A. To provide a standard level of scrutiny for all customers B. To offer a reduced level of scrutiny for low-risk customers C. To apply additional scrutiny to high-risk customers or complex transactions D. To replace the need for initial customer due diligence None 22. CAMS: Risks and methods of money laundering and terrorism financing What is a major risk factor in mobile banking that can potentially facilitate money laundering? A. The physical presence required for transactions B. The transparency of digital transaction records C. The low speed of transactions D. The potential for anonymity and rapid fund transfers None 23. CAMS: Risks and methods of money laundering and terrorism financing Why are offshore financial centers considered attractive for money laundering? A. They offer high tax rates to discourage illegal funds. B. They provide strict regulatory reporting that deters criminals. C. They maintain high levels of financial transparency. D. They often have stringent secrecy laws and lax regulatory structures. None 24. CAMS: Risks and methods of money laundering and terrorism financing What is the primary risk associated with the use of "bearer shares" in the context of money laundering? A. They are only issued by governments. B. They reveal the identity of the shareholder publicly. C. Ownership is easily traceable through stock exchanges. D. Ownership is transferred simply by possession, complicating the identification of beneficial owners. None 25. CAMS: Risks and methods of money laundering and terrorism financing In the context of anti-money laundering, what is a "Red Flag Indicator"? A. A confirmed activity that guarantees the presence of money laundering B. A warning sign that may suggest the possibility of money laundering C. A legal documentation required for all international transactions D. A regulatory clearance indicating a business is free from money laundering risks None 26. CAMS: Risks and methods of money laundering and terrorism financing What is the primary concern with using "hawala" or other similar informal value transfer systems in the context of money laundering? A. The high fees associated with these transfers B. The formal record-keeping that can easily trace the source of funds C. The lack of a paper trail and regulatory oversight D. The slow speed of transactions None 27. CAMS: Risks and methods of money laundering and terrorism financing In anti-money laundering terminology, what does "structuring" refer to? A. Organizing business operations to maximize profit B. Designing financial statements to reflect financial stability C. Breaking down large transactions into smaller ones to avoid reporting thresholds D. Developing a complex corporate structure to optimize tax liabilities None 28. CAMS: Risks and methods of money laundering and terrorism financing How does the "risk-based approach" in anti-money laundering efforts function? A. It applies the same level of scrutiny and controls to all customers and transactions. B. It prioritizes resources and controls based on the level of risk associated with different customers, products, and transactions. C. It ignores low-risk transactions to focus exclusively on high-value transactions. D. It is a legally mandated control measure applied uniformly across all sectors. None 29. CAMS: Risks and methods of money laundering and terrorism financing What role do "correspondent banks" play in the process of money laundering? A. They are the primary source of illegal funds. B. They provide physical storage for cash before it is laundered. C. They facilitate international wire transfers that can be used to move illicit funds. D. They exclusively handle government-related transactions, keeping them free from laundering risks. None 30. CAMS: Risks and methods of money laundering and terrorism financing What makes the real estate sector particularly vulnerable to money laundering? A. The high volume of transactions makes individual transactions less noticeable. B. It only deals in cash transactions, which are harder to trace. C. The sector is completely unregulated. D. It involves high-value transactions and can be used to legitimize large amounts of money through property purchases. None 1 out of 30 Time is Up! Time's up
