CAMS ACAMS Certified Anti-Money Laundering Specialist (CAMS7 the 7th edition) Free Practice Exam Questions (2025 Updated)

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.

Unusual wire transfer transactions may include transfers in different currencies between accounts at different banks for the same client, which can be used to obscure fund flows, and incoming third-party transfers followed by real estate purchases, which may indicate layering and integration stages of money laundering. These patterns deviate from typical financial behavior and warrant closer scrutiny.

A: “Effective training includes practical examples and use cases tailored to the business.”

B: “Firms must keep accurate records of all AML/CFT training, including completion logs.”

D: “Staff should be aware of the consequences of non-compliance with AML/CFT obligations.”(CAMS 6th Edition, AML/CFT Training and Awareness)

Incorrect:

C: Training should be tailored and role-specific.

E: Third-party trainers are not required for effective training.

Independent testing is critical for the third line of defense to provide unbiased and effective oversight, ensuring that reviews and audits are objective and free from influence by the first or second lines of defense.

A: “Hawala and similar informal value transfer systems are difficult to monitor, making it challenging to identify the originator, recipient, and source of funds.”

D: “Hawala operates through informal networks for cross-border transfers, often outside the formal banking system, increasing AML/CFT risk.”(CAMS 6th Edition, Alternative Remittance Systems; FATF, Guidance on Money Transfer Services)

Cryptoassets, such as cryptocurrencies, pose specific ML/TF risks due to their technological characteristics and usage patterns:

Potential for anonymity (C): Cryptoassets allow users to make transactions without revealing their true identities, which hinders law enforcement from tracking illicit activity. The CAMS 6th Edition states:“Cryptoassets can be transferred or exchanged between users without the need for identification, presenting a significant risk due to the potential for anonymity.”(CAMS 6th Edition, Chapter: Risks and Methods of Money Laundering and Terrorist Financing, Virtual Assets section)

Global reach (D): Cryptoassets operate on a global scale, enabling rapid cross-border transfers without the limitations of traditional financial systems. This increases the complexity of monitoring and controlling illicit transactions.“The global nature of virtual assets makes it easy for criminals to move value across borders quickly, evading jurisdictional controls.”(CAMS 6th Edition; FATF Guidance on Virtual Assets 2019)

Use to layer illicit funds (F): The ability to move cryptoassets between numerous wallets and exchanges allows criminals to obscure the source of funds through layering, a key stage of money laundering.“Layering can be achieved by rapidly moving cryptoassets between wallets, exchanges, and across different jurisdictions, making tracing more difficult.”(CAMS 6th Edition, Chapter: Risks and Methods of Money Laundering and Terrorist Financing)

After identifying and rating inherent risks, the next key step in the risk assessment process is to evaluate the effectiveness of existing controls. This allows the organization to calculate the residual risk - i.e., the level of risk remaining after controls are applied.

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.

The combination of frequent address changes and a recent change in the ultimate beneficial owner raises potential red flags that warrant immediate investigation. To mitigate risk, the insurance company should investigate these changes and temporarily decline any payment or withdrawal instructions until the review is complete and appropriate steps are agreed upon. This ensures both regulatory compliance and protection against potential misuse of the policy.

USA PATRIOT Act Section 314(b)allows financial institutions tovoluntarily share information with one another, after notifying the U.S. Treasury, toidentify and report possible money laundering or terrorist financing activities.

Key elements include:

Voluntary participation

Prior notice to FinCEN (part of the U.S. Treasury)

Protection from liability when acting in good faith

Enhanced collaborative detection across institutions

Section 314(a)refers toinformation sharing between law enforcement and financial institutions, not peer-to-peer sharing.

COSMICis an initiative in certain jurisdictions like Singapore, not U.S. regulation.

Regulation (EU) 2024/1624is part of the EU AML framework, not relevant to U.S. institutions.

Trust and Company Service Providers (TCSPs) pose the greatest financial crime risks when they use trusts to obscure beneficial ownership, promote complex corporate structures that make tracing ownership difficult, and establish shell companies that can be used to hold and move illicit funds. These activities can facilitate money laundering, tax evasion, and other financial crimes by concealing the true origin and control of assets.

Proliferation financingrefers to the act of providing financial services or funds for thedevelopment, acquisition, or delivery of nuclear, chemical, or biological weapons. The core threat involvesnetworks of individuals and entities using the financial systemto obtain sensitive technologies, materials, or knowledge forweapons of mass destruction (WMDs).

TheFinancial Action Task Force (FATF)identifies this as a major international security threat and requires institutions to assess and mitigate such risks.

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.

Appointing individuals to serve in official capacities poses a higher money laundering risk because it can be used to obscure the true beneficial ownership and control of the company, making it easier to conceal illicit activities or the identity of those directing the business.