Pass the ACAMS AML Certifications Advanced-CAMS-Audit Questions and answers with CertsForce

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​​.

In follow-up strategies, the focus should be on ensuring accountability and tracking progress. Establishing a target completion date and regularly updating the status of remedial actions ensures timely and effective resolution of deficiencies.

CAMS-Audit emphasizes tracking timelines and milestones for corrective actions to align with regulatory expectations and internal compliance frameworks​​.

Nature of Discussion:

Root cause analysis is required to identify underlying reasons for the failure to perform the control, particularly resource constraints​.

Key Compliance Justification:

Addressing the root cause aligns with Basel Committee guidelines on improving control environments and addressing systemic issues in AML compliance​​.

Payable through accounts allow foreign banks' customers direct access to the correspondent account, which can increase the risk of money laundering due to less direct oversight.

Comparison Against Past Suspicious Activity Reported:

This evaluates whether the new thresholds are identifying similar or improved patterns of suspicious activity compared to prior thresholds.

Helps validate that the updated thresholds align with the institution's AML risk profile and regulatory expectations.

Above-the-Line and Below-the-Line Testing:

Above-the-line tests verify that alerts generated by the thresholds include expected suspicious transactions.

Below-the-line tests assess transactions below the threshold to ensure no significant suspicious activities are missed.

CAMS-Audit Reference:

Advanced CAMS-Audit frameworks emphasize the importance of both historical comparison and robust testing methodologies to validate transaction monitoring system updates​​.

M1.1 - Risk Identification and AssessmentTrade finance introduces new types of risks such as exposure to cross-bordertransactions, multiple parties, and complex financial instruments. These elements necessitate a reassessment of existing risk frameworks to identify new vulnerabilities, including trade-based money laundering (TBML). As detailed in the CAMS-Audit guidance, financial institutions must periodically update their risk assessments to reflect changes in products and services​​​.

M2.1 - Enhanced Due Diligence (EDD) on High-Risk CustomersTrade finance clients often involve politically exposed persons (PEPs), entities in high-risk jurisdictions, or complex supply chains. According to FATF Recommendation 10 and CAMS standards, banks must enhance customer due diligence measures, including obtaining additional information on the customer's source of funds, beneficial ownership, and the nature of the business​​.

M4.2 - Transaction Monitoring SystemsThe complexity of trade finance transactions requires robust monitoring systems capable of identifying unusual patterns indicative of money laundering or terrorist financing. These systems must be calibrated to flag discrepancies in trade documentation, over- or under-invoicing, and deviations from expected trade flows, as emphasized in the FATF Recommendations and CAMS-Audit references​​.

References from Advanced CAMS-Audit Documents:

AML/CFT-document references specify the need for updated risk assessments and transaction monitoring systems aligned with international AML standards for new services​​​.

FATF Recommendations provide a framework for enhanced due diligence and risk-based approaches for trade finance​​.

Customer Identification Program (CIP) Requirements:

Account opening procedures define the baseline for customer identification, aligning with FATF Recommendation 10 on CDD​​.

Filing an SAR based on reasonable grounds for suspicion ensures compliance with AML obligations and demonstrates the effectiveness of the investigative process.

Dynamic Nature of Customer Risk Assessment (CRA):

A comprehensive CRA should incorporate jurisdictional risks, as customer location changes could introduce new risks, such as exposure to high-risk or non-compliant jurisdictions​​.

FATF Recommendations on Risk-Based Approach:

Periodic updates to the CRA, including changes in customer location, align with FATF’s risk-based approach and Recommendation 10​​.

Audit Observation Implications:

Omission of jurisdictional assessments could result in undetected risks, undermining the integrity of the AML program.

B. Periodic Checks: Regular monitoring ensures that implemented rules align with updated specifications and are functioning as intended, reducing the risk of deviation from compliance standardsints Before Release**: Establishing validation checkpoints ensures that all releases comply with documented specifications, mitigating risks of errors in the risk rating model