CAMS ACAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Free Practice Exam Questions (2026 Updated)

Cryptocurrencies and convertible virtual currencies present several well-documented money laundering and terrorist financing risks, as identified in FATF guidance and national AML frameworks. These risks largely stem from the pseudonymous nature, speed, and borderless design of virtual asset transactions.

One key risk is the ability to obscure the source of illicit funds. Criminals can move value through wallets and exchanges in ways that make tracing the origin of funds more difficult, particularly when using privacy-enhancing technologies or poorly regulated platforms.

Another significant risk is the facilitation of payments for illicit goods and activities, including drugs, cybercrime services, ransomware, and sanctions evasion. Virtual currencies can be used to settle transactions outside the traditional financial system.

Additionally, criminals frequently engage in layering transactions, rapidly transferring funds across multiple wallets, platforms, or blockchains to hide the origin of illicit proceeds.

Difficulty converting into physical currency is not a recognized AML risk, as most convertible virtual currencies can be exchanged through regulated platforms. Theft of funds is a cybersecurity concern but is not itself a core AML risk indicator.

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.

One of the core components of a strong AFC (Anti-Financial Crimes) compliance program is establishingclear roles, responsibilities, and lines of accountability, especially forescalating and addressing AFC risks and compliance issues. This governance clarity ensures effective implementation, transparency in decision-making, and timely resolution of compliance concerns.

While external audits (option A) and internal controls (option B) are important,defining governance structure and escalation responsibilities (option D)is a foundational element. Additionally, the board of directors (option C) provides oversight—not day-to-day compliance monitoring.

Real estate transactions are vulnerable to ML/TF risks, particularly when there is limited transparency or unusual payment methods:

Cross-border purchases (A):“Purchases by foreign buyers, especially from high-risk jurisdictions, are a red flag for money laundering in the real estate sector.”(CAMS 6th Edition, Real Estate Money Laundering Risks; FATF, Money Laundering and Terrorist Financing through the Real Estate Sector, 2007)

Non-financed purchases (D):“Non-financed (all-cash) purchases can indicate the introduction of illicit funds into the financial system, bypassing the controls of mortgage lenders.”(CAMS 6th Edition, Real Estate ML/TF Risks)

Incorrect Options:

B: Purchasing in the name of a natural person is standard and not inherently risky.

C: Paying the true market price does not raise ML/TF risk.

Cross-border money laundering investigations frequently encounter obstacles arising from differences in legal systems, data protection laws, and investigative procedures. International AML/CFT guidance, including FATF recommendations, emphasizes the importance of formal legal cooperation mechanisms to overcome these challenges.

A Mutual Legal Assistance Treaty (MLAT) provides a structured and legally recognized framework for cooperation between jurisdictions. MLATs allow competent authorities to lawfully exchange information, obtain evidence, and coordinate investigative actions while respecting domestic legal requirements and data privacy obligations. This formal mechanism ensures that information shared is admissible and enforceable across jurisdictions.

Relying solely on informal communication channels is insufficient for complex investigations involving sensitive data and legal constraints. Engaging third-party consultants does not address legal barriers and may introduce confidentiality risks. Centralizing an investigation under a single jurisdiction would undermine sovereignty and is not consistent with international cooperation principles.

Therefore, establishing or utilizing an MLAT is the most effective and regulator-aligned approach to enhance cross-border cooperation in complex money laundering investigations.

Specialized AML training must be relevant to the specific risks the corporate banking team faces, including legal/regulatory expectations and the ML/TF typologies applicable to their products and customer base.

Applicable AML laws and regulations (B):“Staff must be aware of the applicable AML/CFT laws and regulatory requirements relevant to their business area.”(CAMS 6th Edition, Chapter: AML Training and Awareness)

Money laundering typologies applicable to corporate loans (D):“Training should include typologies and red flags that are most relevant to the risks present in the specific business line, such as corporate lending.”(CAMS 6th Edition, AML Training for High-Risk Departments)

Incorrect Options:

A: Monetary instrument reporting is more relevant to retail/branch banking.

C: Regulatory exam best practices are for compliance teams, not business-line relationship managers.

Receiving funds from a decentralized mixer and using multiple incoming wires from different sources to purchase virtual currency are red flags, as they can indicate attempts to obscure the origin of funds and facilitate money laundering through virtual asset transactions.

In a mutual evaluation, a country must demonstrate to the FATF that it has an effective framework to protect its financial system from abuse. This process assesses both technical compliance with FATF Recommendations and the effectiveness of the country's AML/CFT measures.

Effective AML programs promote aculture of compliance, which includes an environment where staff are empowered to raise concerns, challenge decisions, and continuously improve through cross-functional learning.Providing effective challengeis a supervisory expectation and best practice in institutions that value AML governance integrity.

While AML officer authority (option B) supports oversight, it is not as impactful on daily operational effectiveness as fostering a challenging and adaptive compliance culture.

Red flags include using personal accounts for business transactions (which can obscure fund tracing), preferring minimal direct interaction (potentially avoiding scrutiny), and unclear ultimate beneficial ownership (which can conceal the true controllers of the entity and facilitate illicit activity).

BSA/AML compliance staff should report to the compliance function or another second line of defense internal control function to maintain independence from business line management, ensuring objective oversight and effective compliance controls.

A key benefit of machine learning in identifying suspicious transactions is its adaptability to new anti-financial crime typologies through continuous model training, enabling the system to evolve with emerging threats and patterns.

Transitioning to AI and machine learning in transaction monitoring offers benefits such as long-term reduction in false positives, improved adaptability to evolving financial crime risks, and enhanced detection of complex or emerging patterns and anomalies that rules-based systems may miss.

A: Selling assets at a significant loss, especially shortly after purchase, is a classic red flag for asset laundering and value manipulation, which can be used to disguise the true nature of proceeds.

C: Transactions involving individuals from high-risk jurisdictions, as identified by the EU and FATF, warrant heightened scrutiny due to increased ML/TF risk.(CAMS 6th Edition, Red Flags for Complex Asset Transactions; EU List of High-Risk Third Countries)

B and D may contribute to complexity but are not the primary red flags in this scenario.

Modern KYC solutions help reduce identity theft, provide reliable customer authentication to build trust, and shorten authentication times, enhancing both security and efficiency in customer onboarding and ongoing due diligence processes.