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NEW QUESTION # 95
Criminals may misuse financial statements prepared by accountants to hide illicit assets.
Which of the following scenarios poses the greatest risk of financial statement manipulation by criminals?
- A. Incomplete records being provided during bookkeeping, making them difficult to audit
- B. Accountants being used as intermediaries to introduce criminals to financial institutions
- C. A lack of professional body oversight or required use of accounting and auditing standards in the country of incorporation of the entity
- D. Criminals posing as individuals seeking financial advice to place assets out of reach to avoid future liabilities
Answer: C
Explanation:
* A: The absence of professional oversight or accounting/auditing standards creates a high-risk environment for financial statement manipulation. Without external checks or mandated standards, criminals can more easily falsify statements to hide illicit assets.
* "The lack of regulatory oversight and professional standards in accounting and auditing significantly increases the risk of manipulation and fraud in financial reporting."(CAMS 6th Edition, Professional Service Providers; FATF Guidance on the Risk-Based Approach for Accountants) References:
CAMS 6th Edition, Professional Service Providers
FATF, Risk-Based Approach for Accountants
NEW QUESTION # 96
Which of the following businesses require enhanced or additional scenarios for identifying anomalous transactions? (Select Two.)
- A. Companies operating in cash intense businesses subject to licensing requirement
- B. Companies producing pharmaceutical products and medical devices, companies active in the mining industry
- C. Companies operating retail shops countrywide
- D. Companies operating in cash intense businesses not subject to licensing requirement
- E. Companies operating hospitals and health-care services
Answer: A,D
NEW QUESTION # 97
Ateam overseeing the governance and effectiveness of a bank's transaction monitoring approachshould implement which strategies? (Select Two.)
- A. Periodic review of client profiles to ensure that the most up-to-date information is on file for high-risk clients in line with the bank's internal policies and procedures.
- B. Periodic and ad hoc cooperation with the legal team to appropriately investigate and monitor the transactions of subjects of subpoenas or government inquiries.
- C. Periodic review of the transaction monitoring scenarios and their productivity to ensure that appropriate AML typologies are reflected.
- D. Periodic review of suspicious activity reports (SARs) filed with FinCEN to determine whether any should be withdrawn.
Answer: B,C
Explanation:
Transaction monitoring governanceinvolves ensuring thatAML detection systems are effective, aligned with regulatory standards, and capable of identifying evolving threats.
Option B (Correct):Legal cooperation is essential for responding to subpoenas and law enforcement inquiries.
Option D (Correct):Regularly updating transaction monitoring scenarios ensures that the system adapts to emerging financial crime trends.
Why Other Options Are Incorrect:
Option A (Incorrect):SARs cannot be withdrawn unless an error was made-once filed, SARs remain confidential and must be retained.
Option C (Incorrect):Client profile updates are a CDD/KYC function, not directly related to transaction monitoring governance.
Best Practices for Transaction Monitoring Governance:
Regularly review system effectiveness through validation tests.
Collaborate with legal and compliance teams for risk mitigation.
Use AI and data analytics to refine detection accuracy.
Reference:
FATF Recommendation 10 (Customer Due Diligence & Ongoing Monitoring)
Wolfsberg Group Guidance on Transaction Monitoring Effectiveness
Basel Committee's Guidelines on AML Technology and Data Analytics
NEW QUESTION # 98
Which activities are part of adverse media screening for negative news and reputational risks? (Select Three.)
- A. Identifying individuals or entities linked to criminal activities or sanctions
- B. Analyzing customer sentiment through feedback and surveys
- C. Monitoring changes in credit scores of individuals or entities
- D. Scanning publicly available news articles and regulatory alerts
- E. Periodically monitoring regulatory updates and enforcement actions for associated entities
Answer: A,D,E
Explanation:
Adverse media screening seeks to identify reputational or financial crime risk by:
* B: Identifying links to criminal activity or sanctions.
* C: Monitoring regulatory actions and updates for risk associations.
* D: Regularly scanning news and public records for negative information.
"Adverse media screening involves collecting and reviewing publicly available information, news, and regulatory actions to detect links to criminal activity or reputational risks." (CAMS 6th Edition, Adverse Media Screening; FATF Guidance) Incorrect:
* A and E: Customer sentiment and credit scores are not core to adverse media screening.
References:
CAMS 6th Edition, Customer Due Diligence and Screening
FATF Guidance on Customer Due Diligence
NEW QUESTION # 99
The recently appointed senior money laundering reporting officer (MLRO) at a newly opened small digital bank has been instructed by the group chief compliance officer to implement an effective AML transaction monitoring system that can identify unusual and suspicious transactions.
What are important considerations for the project to select and implement the AML transaction monitoring system at the digital bank? (Select Two.)
- A. Whether the monitoring system is adequate with respect to the bank's size, activities, complexity, and risks
- B. Whether the permissions and user access settings for reviewing, investigating, and reporting details of alerts generated by the system are commensurate with those in use at other banks
- C. Whether the vendor has documented appropriate internal controls for designing system and data integration schema
- D. Whether the monitoring system can be configured to enable the bank to execute trend analysis of transaction activity and to identify unusual business relationships and transactions
Answer: A,D
Explanation:
* C: "The system must be adequate and proportionate to the bank's size, activities, complexity, and risk profile. A one-size-fits-all solution is not appropriate."
* D: "Effective monitoring systems should support the detection of unusual trends and business relationships, facilitating meaningful analysis and alerts."(CAMS 6th Edition, Transaction Monitoring System Requirements) Incorrect:
* A: Vendor internal controls are important, but not a top selection criterion for AML system effectiveness.
* B: Permissions should be appropriate for the bank's structure, not just compared to other banks.
References:
CAMS 6th Edition, Selecting and Implementing Monitoring Systems
NEW QUESTION # 100
Which of the following is a primary objective of public sector groups in the fight against money laundering?
- A. Establishing and enforcing legal frameworks to detect, prevent, and punish money laundering and related financial crimes
- B. Acting as intermediaries between private sector firms and non-governmental organizations (NGOs) to streamline AML compliance programs
- C. Advising private financial institutions on how to enhance their profitability through AML efforts
- D. Providing funding to private and non-governmental organizations (NGOs) for the development of advanced compliance technologies
Answer: A
Explanation:
A primary objective of public sector groups in combating money laundering is to establish and enforce legal and regulatory frameworks that enable the detection, prevention, and punishment of money laundering and related financial crimes, ensuring the integrity of the financial system.
NEW QUESTION # 101
Which principles of the Egmont Group of Financial Intelligence Units (FIUs) are aimed at maximizing cooperation between FIUs to more effectively combat money laundering? (Select Two.)
- A. FIU cooperation should always be channeled through designated intermediaries
- B. Eliminating spontaneous information sharing between FIUs to reduce the burden of excess investigative work
- C. Information exchange should take place informally, without too many formal prerequisites
- D. It is within an FIU's authority to sign Memorandums of Understanding independently
- E. Formal Egmont Group membership requirements ensure a high commitment of the eligible FIUs
Answer: C,D
NEW QUESTION # 102
It is essential to identify any "family members" or "close associates" of politically exposed persons (PEPs) as part of the KYC/CDD process because they could be:
- A. in a position to provide more information regarding the PEP's whereabouts and hidden properties.
- B. travelling to offshore jurisdictions often on holiday which exposes them to higher risks for AML.
- C. used as intermediaries to facilitate bribery or corruption or to conceal the illicit wealth of the PEP.
- D. executing cross-border transactions for their own business which is not commensurate to the PEP's wealth.
Answer: C
Explanation:
* D: "Family members and close associates of PEPs are often used as intermediaries to launder the proceeds of corruption or conceal illicit assets."(CAMS 6th Edition, Enhanced Due Diligence for PEPs; FATF Guidance on PEPs) References:
CAMS 6th Edition, PEP Risk and EDD
FATF Guidance: PEPs
NEW QUESTION # 103
How does the Financial Action Task Force (FATF) measure the effectiveness of a country's efforts to combat money laundering and terrorist financing?
- A. Series of internal audits followed by reporting to FATF
- B. FATF Evaluation Committee
- C. Mutual evaluation
- D. Basel Committee
Answer: B
NEW QUESTION # 104
Which changes at a financial institution (FI) should trigger an enterprise-wide reassessment of its inherent AML risk exposure? (Select Three.)
- A. Introduction of new products or services
- B. Use of new technologies for delivering existing products
- C. Restructuring of the FI's risk and compliance functions
- D. Mergers or acquisitions
- E. Changes in the individuals overseeing the FI's product lines and sales strategies
Answer: A,B,D
NEW QUESTION # 105
The first line of defense is responsible for:
- A. collecting complete customer information.
- B. evaluating the effectiveness of compliance controls.
- C. ongoing screening of customers.
- D. suspicious activity and sanctions reporting.
Answer: A
Explanation:
The First Line of Defense (1LoD) consists of customer-facing business units (e.g., relationship managers, front-office staff, and operational teams). Their primary responsibility in financial crime risk management is to implement AML/CFT controls as part of daily operations. This includes Collecting complete customer information.
The First Line of Defense is responsible for conducting Know Your Customer (KYC) and Customer Due Diligence (CDD) during onboarding and throughout the customer relationship. Ensuring that all relevant customer details (e.g., identity, business purpose, ownership structure) are accurately collected and documented is crucial for mitigating financial crime risks.
NEW QUESTION # 106
A key advantage of privacy enhancing technologies (PETs) in anti-money laundering is that they offer:
- A. full access to underlying data with full and uninterrupted calculations made on the data.
- B. simultaneous encryption and decryption for underlying data.
- C. transfer, decryption and storage of data by the data processor.
- D. secure processing of data while it remains encrypted.
Answer: D
Explanation:
A key advantage of privacy enhancing technologies (PETs) in anti-money laundering is their ability to securely process data while it remains encrypted. This enables data analysis and collaboration without exposing sensitive information, helping to maintain privacy while still supporting financial crime detection.
NEW QUESTION # 107
An international bank is headquartered in Madrid, Spain with an office in New York City (NYC), US. The Madrid office is investigating a transaction originating from a customer of the NYC office and inquires whether the NYC office can share any relevant further information on the individual. Upon further research, the NYC office finds that they have filed a suspicious activity report (SAR) on the individual in the previous year.
Which factors need to be considered before sharing the requested information? (Select Two.)
- A. The bank should report this to the Financial Crimes Enforcement Network (FinCEN) and receive formal guidance before sharing the information.
- B. The bank should consider jurisdictional privacy requirements and its own policies and procedures to determine what information to share.
- C. The information should only be shared on a need-to-know basis.
- D. The foreign bank must always request approval by its national anti-financial crime authority to share any information cross-border.
Answer: B,C
NEW QUESTION # 108
Which non-governmental bodies typically issue information and guidance related to AML/CFT issues?
(Choose two.)
- A. Wolfsberg Group
- B. Financial Action Task Force (FATF)
- C. Tax Justice Network
- D. Transparency International
Answer: A,D
Explanation:
The Wolfsberg Group and Transparency International are non-governmental organizations that provide information and guidance on AML/CFT matters, helping institutions and policymakers strengthen financial crime prevention practices.
NEW QUESTION # 109
When applying new technologies to AML, application programming interfaces (APIs) allow for:
- A. Authentication via artificial intelligence (AI) and biometrics
- B. Different applications to connect and communicate
- C. Digital identification on mobile devices
- D. Quick CDD and client traits analysis during onboarding
Answer: B
Explanation:
Application Programming Interfaces (APIs)are tools that enableinterconnectivity and data exchangebetween different software applications. In AML contexts, APIs are commonly used tointegrate third-party systems, such as screening tools, customer databases, and transaction monitoring platforms, ensuring real-time and accurate flow of information.
This technological capability supports enhancedautomation, agility, and efficiencyin AML processes.
Reference: ACAMS CAMS Study Guide - 6th Edition, Chapter:Technology and AML- Section:Emerging Technologies and APIs in Compliance
NEW QUESTION # 110
Financial crime risk related to the use of "hawalas" can stem from: (Select Two.)
- A. difficulty in tracking the originator, recipient, and source of transactions.
- B. remote verification of identity by third-party program managers.
- C. heightened risks of returned transactions.
- D. informal networks used for cross-border transactions outside of the formal banking system.
- E. heavy usage by senior political figures.
Answer: A,D
Explanation:
* 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) References:
CAMS 6th Edition, Money Transfer and Informal Value Transfer Systems
FATF, Alternative Remittance Systems Guidance
NEW QUESTION # 111
A bank organized under foreign law and located outside of the US maintains a correspondent banking relationship with a US-based bank to handle financial transactions in US dollars for its clients. In compliance with the USA PATRIOT Act of 2001, all US banks and broker-dealers in securities must obtain a signed certification from all non-US foreign bank clients conducting business with them.
What information does the USA PATRIOT Act of 2001 require the foreign bank to certify to the US bank?
(Select Three.)
- A. The foreign bank will not allow indirect use of the correspondent bank accounts by Politically Exposed Persons (PEPs)
- B. The foreign bank will not allow indirect use of the correspondent bank accounts by shell banks
- C. The ownership details of the foreign bank
- D. The jurisdictions in which the foreign bank maintains a physical presence
- E. The foreign bank's operations will be limited to the country of incorporation
Answer: B,C,D
NEW QUESTION # 112
The new KYC lead at a bank is particularly focused on enhancing the risk management component of its KYC program and refers to the Basel Committee's customer due diligence (CDD) principles.
Which of the following describe key improvements to a KYC program established in the Basel Committee's CDD principles? (Select Two.)
- A. Enhancement of customer identification procedures to appropriately identify trust, nominee, and fiduciary accounts
- B. Increased frequency of training provided to front office employees
- C. Implementation of a blacklist of correspondent customers with previously detected and investigated suspicious activity
- D. Enhancement of a customer acceptance policy to more clearly identify high-risk customers
Answer: A,D
NEW QUESTION # 113
A multinational corporation is considering expanding into a new market with a history of political instability and corruption.
Which strategy would be most effective in mitigating reputational risk from a financial crime perspective associated with such an expansion?
- A. Committing to open communication, ethical practices, and community engagement to build trust with stakeholders
- B. Ensure the jurisdiction risks and other relevant factors have been taken into consideration in the EWRA and the residual risks are within the corporation's risk appetite
- C. Partnering with established local businesses to leverage their knowledge and connections while sharing risks
- D. Ensuring the company has strong ties with local government officials to influence policy and avoid negative scrutiny
- E. Minimizing the company's direct presence in the country to reduce exposure to potential risks
Answer: B
Explanation:
The most effective strategy is to ensure that jurisdictional and other relevant risks are assessed through the Enterprise-Wide Risk Assessment (EWRA), and that any residual risks fall within the corporation's defined risk appetite. This structured, risk-based approach supports informed decision-making and protects against reputational damage related to financial crime.
NEW QUESTION # 114
Which of the following are considered best practices for effective AML/CFT training programs? (Select Three.)
- A. Training should cover practical examples, use case studies, and provide information on how to comply with policies.
- B. Training should be broad, high level, and not role-specific in order to reach the largest audience.
- C. Up-to-date records including logs of training and completion dates should be maintained.
- D. Training should always be provided by an independent third party.
- E. Training should cover the consequences of not complying with policies and procedures.
Answer: A,C,E
Explanation:
* 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.
References:
CAMS 6th Edition, Training and Awareness Programs
NEW QUESTION # 115
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