Free ACAMS Advanced-CAMS-Audit Practice Exam with Questions & Answers

Review Frequency:

The frequency of MSB reviews depends on regulatory requirements, which vary by jurisdiction but are guided by FATF Recommendations that mandate risk-based supervision for money services businesses​​.

Risk-Based Approach:

Regulators often require more frequent reviews for high-risk MSBs to ensure compliance with AML/CFT standards​​.

Characteristics of Effective AML Program Testing:

Tailored:Custom-designed to address specific organizational risks.

Risk-Based:Prioritizes high-risk areas to ensure optimal resource allocation and compliance.

Alignment with CAMS-Audit and FATF Principles:

Both emphasize the importance of a risk-based approach to AML program evaluation to mitigate the most significant threats​​.

Importance of AML Training for All Levels of an Institution:

Advanced CAMS-Audit and FATF emphasize that AML training programs should be inclusive of all stakeholders, including senior management and board members, as they are integral to establishing an effective AML/CFT compliance culture​​.

Board-Level Training Specifics:

Directors require tailored AML training to address strategic oversight responsibilities rather than operational controls. Periodic training is mandatory to keep the board updated on regulatory changes and institutional risk profile adjustments.

Audit Observation:

Exclusion of the board from AML training reflects a gap in the institution’s AML framework, potentially exposing it to regulatory scrutiny.

Reference to AML/CFT Standards:

FATF Recommendations mandate training for all levels of an institution, explicitly highlighting senior management and governance roles in compliance efforts​​.

Product Risk: Certain products (e.g., high-value transfers, anonymous payment systems) inherently carry higher AML risks and require tailored risk mitigation measures.

Customer Risk: Understanding the risk profile of customers, including PEPs and high-net-worth individuals, is critical to assessing exposure and implementing risk-based approaches.

Both factors are core components in AML risk assessments, as highlighted in CAMS-Audit materials and FATF standards​​​.

A. Documentation Requirements: Proper documentation ensures transparency and traceability of the testing process and outcomes.

B. Sampling Method: Establishing the sampling methodology ensures that the test results are representative of the population and risks being assessed.

D. Test Objectives and Population Selection: These elements help align the testing approach with the identified risks and objectives, ensuring the focus is on mitigating the most critical issues.

CAMS-Audit emphasizes robust documentation and sampling techniques to maintain the integrity and reliability of audit findings​​.

Exemptions from OFAC Regulations:

Non-US citizens residing in the US are typically subject to OFAC regulations unless explicitly exempted. However, understanding exemptions is vital for sanctions compliance.

Auditor's Role in Sanctions Compliance:

Auditors must review whether the entity’s compliance program correctly identifies and exempts individuals or entities as per OFAC guidelines.

CAMS-Audit Reference:

CAMS-Audit recommends thorough reviews of sanctions compliance programs, focusing on adherence to OFAC requirements and exemptions​​.

Explanation:Scenarios 7 and 8 align with elder abuse detection by focusing on unusual account behaviors, like abrupt large withdrawals or transactions inconsistent with the elder's profile. Patterns like these often indicate exploitation​​.

Importance of Coverage Assessment:

Coverage assessment ensures that the TM scenarios address the full spectrum of identified money laundering (ML) and terrorist financing (TF) risks relevant to the organization.

This aligns with FATF Recommendations on risk-based approaches and the effectiveness of transaction monitoring systems​​.

Key Reference Justification:

Basel Committee guidelines stress that financial institutions must regularly review their transaction monitoring coverage to ensure alignment with the risk landscape​​.

Transaction Monitoring Effectiveness:

A. Data Quality: Accurate data mapping ensures scenarios detect relevant risks, reducing errors in monitoring​​.

D. False Positives: Monitoring false positive ratios improves system efficiency and minimizes unnecessary alerts​​.

Importance of Business-Level Risk Assessments:

Aggregating client-level risk assessments does not replace a comprehensive business-level risk assessment, which is required for holistic risk management.

Audit Manager’s Responsibility:

The absence of a business-level risk assessment constitutes a policy violation and must be formally addressed through a finding.

CAMS-Audit Guidelines:

CAMS-Audit emphasizes the need for layered risk assessments, including enterprise-wide evaluations, to comply with regulatory standards​​.