ACAMS Exam 203 Questions with Verified Answers
Structuring - CORRECT ANSWER Designing a transaction to evade triggering a reporting or record-keeping
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Smurfing - CORRECT ANSWER Multiple individuals making multiple cash deposits and/or buying multiple monetary instruments or bank drafts in amounts under the reporting threshold in an attempt to evade detection
Microstructuring - CORRECT ANSWER Structuring done at a much smaller level
Wash-trading or "offsetting" accounts - CORRECT ANSWER The entry of matching buys and sells in particular securities; which provides the illusion of trading. It generates offsetting profits and losses through multiple accounts.
Free Trade Zone (FTZ) - CORRECT ANSWER Designated geographic areas with special regulatory and tax treatments
for certain trade-related goods and services.
Trade-Based Money Laundering - CORRECT ANSWER The process of disguising the proceeds of crime and moving value through
the use of trade transactions in an attempt to legitimize their illicit origins.
Over Invoicing - CORRECT ANSWER Invoicing goods or services at a price above the fair market price.
Under Invoicing - CORRECT ANSWER Invoicing goods or services at a price below the fair market price.
Over-shipping or Short-shipping - CORRECT ANSWER The difference in the invoiced quantity of goods and the quantity of goods that are shipped whereby the buyer or seller gains excess value based on the payment made.
Ghost-shipping - CORRECT ANSWER Fictitious trades where a buyer and seller collude to prepare all the documentation indicating goods were sold, shipped and payments were made, but no goods were actually shipped.
Shell companies - CORRECT ANSWER Corporate entities created with a view to to reduce the transparency of ownership in a transaction.
Multiple Invoicing - CORRECT ANSWER A form of trade-based money laundering whcih involved the use of numerous invoices issued for the same shipment of goods, thus allowing the money launderer the opportunity to make numerous payments and justify them with the invoices.
Black Market Trades - CORRECT ANSWER Commonly referred to as the Black Market Peso Exchange whereby a domestic transfer of funds is used to pay for goods by a foreign importer
Letters of Credit - CORRECT ANSWER A credit instrument issued by a bank that guarantees payments on behalf of its customer to a third party when certain conditions are met
Funnel Accounts - CORRECT ANSWER an individual or business account in one geographic area that receives multiple cash deposits, often in amounts below the cash reporting threshold, and from which the funds are withdrawn in a different geographic area with little time elapsing between the deposits and withdrawals.
Black Market Peso Exchange - CORRECT ANSWER A process by which money in the United States derived from illegal activity is purchased by Colombian peso brokers and deposited in US bank accounts that the brokers have established.
Electronic Purses - CORRECT ANSWER Cards that electronically store value on integrated circuit chips. Unlike pre-paid credit cards with magnetic stripes that store account information, funds are stored on memory chips.
Virtual Currency (Digital Currency) - CORRECT ANSWER A medium of exchange that operates in the digital space. It can be converted into either a fiat (e.g., a government-issued currency) or it can be a substitute for real currency.
International Business Company (IBC) - CORRECT ANSWER Entities formed outside of a person or businesses'
country of residence, typically in offshore jurisdictions, for confidentially or asset protection purposes.
Shelf Company - CORRECT ANSWER A corporation that has had no activity. It has been created and put on the shelf. This corporation is then later sold to someone who prefers a previously registered corporation over a new one.
Shell Company - CORRECT ANSWER A company that at the time of incorporation has no significant assets or operations.
Asset Protection Trusts - CORRECT ANSWER A special form of irrevocable trust usually created offshore for the principle purpose of preserving one's wealth from creditors.
The Hawala System - CORRECT ANSWER An informal value transfer system involving the international transfer of value outside the legitimate banking system and based on a trusted network of individuals.
Numbered Account - CORRECT ANSWER A bank account where the identity of the account holder is not disclosed in the title of an account, and identification to effect transactions takes place using a code word or number known only by the account holder and a restricted number of bank employees, thus providing the account holder with a degree of bank privacy in their financial transactions.
Comitology - CORRECT ANSWER The EU system that oversees the implementation of acts proposed by the European Commission.
Third Country Citizen - CORRECT ANSWER Individuals who are in transit and/or applying for visas in countries that are not their country of origin (i.e. country of transit)
The Wolfsberg Group - CORRECT ANSWER An association of 13 global banks that aims to develop financial services industry standards and guidance related to Know Your Customer, Anti-Money Laundering and Counter-Terrorist Financing policies.
Egmont Group - CORRECT ANSWER An informal networking group of
financial intelligence units
CICAD - CORRECT ANSWER Commission within the Organization of American
States that deals with drug related issues, including money laundering
World Bank and International Monetary Fund - CORRECT ANSWER These organizations work together and in conjunction with FATF to encourage countries
to have adequate anti- money laundering laws and to review anti-money laundering laws and procedures of FATF member countries.
Money Laundering Control Act of 1986 - CORRECT ANSWER The world's first law to criminalize money laundering.
Section 311: US Patriot Act - CORRECT ANSWER Section of the US Patriot Act that provides the US Treasury Department with the authority to apply graduated, proportionate measures against a foreign jurisdiction, a foreign financial institution, a type of international transaction or a type of account that the Treasury Secretary determines to be a "primary money laundering concern."
Section 312: US Patriot Act - CORRECT ANSWER Section of the US Patriot Act which requires
due diligence and, in certain situations, enhanced due diligence for foreign correspondent accounts
(which includes virtually all account relationships that institutions can have with a foreign financial
institution) and private banking for non-US persons.
Section 313: US Patriot Act - CORRECT ANSWER Section of the US Patriot Act which prohibits US banks and securities brokers and dealers from maintaining correspondent accounts for foreign, unregulated shell banks that have no physical presence anywhere.
Section 314 (A): US Patriot Act - CORRECT ANSWER Section of the US Patriot Act that enables US federal, state, local, and foreign (European Union) law enforcement agencies, through FinCEN, to reach out to more than 43,000 points of contact at more than 22,000 financial institutions to locate accounts and transactions of persons that may be involved in terrorism or money laundering.
Section 314 (B): US Patriot Act - CORRECT ANSWER Section of the US Patriot Act which provides financial institutions with the ability to share information with one another, under a safe harbor that offers protections from liability, in order to better identify and report potential money laundering or terrorist activities.
Section 319 (A): US Patriot Act - CORRECT ANSWER In situations where funds have been deposited with a foreign bank, this section permits the US government to seize funds in the same amount from a correspondent bank account in the US that has been opened and maintained for the foreign bank.
Section 319 (B): US Patriot Act - CORRECT ANSWER This section of the US Patriot Act allows the appropriate federal banking agency to require a financial institution to produce within 120 hours (five days) records or information related to the institution's AML compliance or related to a customer of the institution or any account opened, maintained, administered or managed in the US by the financial institution.
Specified Unlawful Activity - CORRECT ANSWER Virtually every US crime that produces economic advantage, including aircraft piracy, wire fraud, bank fraud, copyright infringement, embezzlement, export violations, illegal gambling, narcotics offenses, racketeering and even some environmental crimes.
Willful Blindness - CORRECT ANSWER The deliberate avoidance of knowledge of the facts.
Office of Foreign Assets Control - CORRECT ANSWER A unit of the US Treasury Department which administers and enforces economic and trade sanctions based on US foreign policy and
national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction.
The Compliance Function - CORRECT ANSWER Commonly referred to as a second line of defense.
The Control Function - CORRECT ANSWER Commonly referred to as a first line of defense.
Targeted Sanctions - CORRECT ANSWER Sanctions aimed at specifically named individuals, such as key leaders in a country or territory, named terrorists, significant narcotics traffickers and proliferators of weapons of mass destruction. These sanctions often include the freezing of assets and travel bans where possible.
Sectoral Sanctions - CORRECT ANSWER Sanctions aimed at key sectors of an economy to prohibit a very specific subset of financial dealings within those sectors to impede future growth.
Comprehensive Sanctions - CORRECT ANSWER Sanctions that generally prohibit all direct or indirect import/export, trade brokering, financing or facilitating against most goods, technology and services. These are often aimed at regimes responsible for gross human rights violations, and nuclear proliferation.
UN Security Council Meetings - CORRECT ANSWER Bodies that are responsible for managing UN Sanctions.
Article 215 - CORRECT ANSWER Section of the Treaty on the Functioning of the European Union (TFEU) that provides a legal basis for the interruption or reduction, in part or completely, of the Union's economic and financial relations with one or more third countries (i.e., countries outside the EU), where such restrictive measures are necessary to achieve the objectives of the Common Foreign and Security Policy(CFSP).
Specially Designated Nationals and Blocked Persons (SDN) list - CORRECT ANSWER A comprehensive list issued by the U.S. Office of Foreign Assets Control (OFAC) which contains thousands of names of individuals and businesses, as well as aircraft and ships ("vessels") from more
150 countries that the US government considers to be terrorists, international narcotics traffickers,
or others covered by US foreign policy and trade sanctions.
Sanctions Screening - CORRECT ANSWER The process of reviewing the various country sanction program requirements, as well as published lists of known or suspected terrorists, narcotics traffickers, and other criminal actors for potential matches.
Tipping Off - CORRECT ANSWER Disclosing the filing of a suspicious transaction report to the subject of the report.
Inernational Money Laundering Information Network (IMoLin) - CORRECT ANSWER A clearinghouse of money laundering information for the benefit of national and international anti-money laundering agencies.
Affidavit - CORRECT ANSWER A written statement given under oath before an officer of the court, notary public, or other
authorized person. It is commonly used as the factual basis for an application for a search,
arrest or seizure warrant.
Alternative Remittance System (ARS) - CORRECT ANSWER Underground banking or Informal Value Transfer Systems (IVTS). Often associated with ethnic
groups from the Middle East, Africa or Asia, and commonly involves the transfer of values among countries outside of the formal banking system. The remittance entity can be an ordinary shop selling goods that has an arrangement with a correspondent business in another country. There is usually no physical movement of currency and a lack of formality with regard to verification and record- keeping. The money transfer takes place by coded information that is passed through chits, couriers, letters, faxes, emails, text messages, or online chat systems, followed by some form of telecommunications confirmations.
Anti-Money Laundering International Database (AMLID) - CORRECT ANSWER A compendium of analyses of anti-money laundering laws and regulations, including two
general classes of money laundering control measures—domestic laws and international
cooperation—as well as information on national contacts and authorities. A secure, multilingual
database, AMLID is an important reference tool for law enforcement officers involved in
cross-jurisdictional work.
Anti-Money Laundering Program - CORRECT ANSWER The system designed to assist institutions in their fight against money laundering and terrorist
financing. In many jurisdictions, government regulations require financial institutions, including
banks, securities dealers and money services businesses, to establish such programs. At a
minimum, the anti-money laundering program should include:
1. Written internal policies, procedures and controls;
2. A designated AML compliance officer;
3. On-going employee training; and
4. Independent review to test the program
Arrest Warrant - CORRECT ANSWER A court order directing a law enforcement officer to seize and detain a particular person and require them to provide an answer to a complaint or otherwise appear in court.
Asia/Pacific Group on Money Laundering (APG) - CORRECT ANSWER A Financial Action Task Force (FATF)-style regional body consisting of jurisdictions in the Asia/Pacific Region.
Asset Protection - CORRECT ANSWER A process that includes reorganizing how assets are held so as to make them less vulnerable should a claim be made against a person. Asset protection is also a term used by tax planners for measures taken to protect assets from taxation in other jurisdictions.
Asset Protection Trusts (APTs) - CORRECT ANSWER A special form of irrevocable trust usually created (i.e., settled) offshore for the principal purposes of preserving and protecting part of one's wealth from creditors. Title to the asset is
transferred to a person named the trustee. APTs are generally used for asset protection and are usually tax neutral. Their ultimate function is to provide for the beneficiaries. Some proponents advertise APTs as allowing foreign trustees to ignore U.S. court orders and to simply transfer the trust to another jurisdiction in response to legal action threatening the trust's assets.
Automated Clearing House (ACH) - CORRECT ANSWER An electronic banking network that processes large volumes of both credit and debit transactions that originate in batches. ACH credit transfers include direct deposit payroll payments and payments to contractors and vendors. ACH debit transfers include consumer payments
on insurance premiums, mortgage loans and other kinds of expenses.
Automated Teller Machine (ATM) - CORRECT ANSWER An electronic banking outlet that allows customers to complete basic transactions without the assistance of a bank employee. ATMs generally dispense cash, allow check and cash deposits and transfers to be made, as well as balance inquiries.
Bank Draft - CORRECT ANSWER Vulnerable to money laundering because it represents a reputable international monetary
instrument drawn on a reputable institution, and is often made payable—in cash— upon presentation
and at the issuing institution's account in another country.
Bank Secrecy - CORRECT ANSWER Refers to laws and regulations in countries that prohibit banks from disclosing information about an account—or even revealing its existence—without the consent of the account holder.Impedes the flow of information across national borders among financial institutions and their supervisors.
Bank Secrecy Act (BSA) - CORRECT ANSWER The primary U.S. anti-money laundering regulatory statute (Title 31, U.S. Code Sections 5311-5355) enacted in 1970 and most notably amended by the USA PATRIOT Act in 2001. Among other measures, it imposes money laundering controls on financial institutions and many
other businesses, including the requirement to report and to keep records of various financial transactions.
Bank Secrecy Act (BSA) Compliance Program - CORRECT ANSWER A program that U.S.-based financial institutions—as defined by the Bank Secrecy Act—are required to establish and implement in order to control money laundering and related financial crimes. The program's components include at a minimum: the development of internal policies, procedures and controls; the designation of a compliance officer; ongoing employee training; and an independent audit function to test the program.
Basel Committee on Banking Supervision (Basel Committee) - CORRECT ANSWER Established by the G-10's central bank of governors in 1974 to promote sound supervisory standards worldwide. Its secretariat is appointed by the Bank
for International Settlements in Basel, Switzerland. It has issued, among others, papers on customer due diligence for banks, consolidated KYC risk management, transparency in payment
messages, due diligence and transparency regarding cover payment messages related to
cross-border wire transfers, and sharing of financial records among jurisdictions in connection with the fight against terrorist financing.
Batch Processing - CORRECT ANSWER A type of data processing and data communications transmission in which related transactions are grouped together and transmitted for processing, usually by the same computer and under
the same application.
Bearer Form - CORRECT ANSWER Enables a designated
investment or deposit to be sold, transferred, surrendered or addressed to a bearer without the need to obtain further written instructions.
Bearer Negotiable Instruments - CORRECT ANSWER Includes monetary instruments in bearer form such as: negotiable instruments (including
checks, promissory notes and money orders) that are either in bearer form, are endorsed
without restriction, are made out to a payee, or are otherwise in such form that title thereto passes upon delivery.
Bearer Share - CORRECT ANSWER Negotiable instruments that accord ownership in a corporation to the person who is in physical possession of the bearer share certificate, a certificate made out to "Bearer" and not in the name of an individual or organization.
Benami Account - CORRECT ANSWER Also called a nominee account. Held by one person or entity on behalf of another or others. They are associated with the hawala underground banking system of the Indian
subcontinent. A person in one jurisdiction seeking to move funds through a hawaladar to
another jurisdiction may use a this type of account to disguise his/her true identity or the identity of the recipient of the funds.
Beneficial Owner - CORRECT ANSWER The natural person who ultimately owns or controls an account through which a transaction is being conducted. Alternatively, these individuals are also known as the natural persons who have significant ownership of, as well as those who exercise
ultimate effective control over, a legal person or arrangement.
Beneficiary - CORRECT ANSWER The person (natural or legal) who benefits from a transaction, such as the party receiving the proceeds of a wire, a payout on an insurance policy. In the trust context, all trusts must have at least one of these, which may include the settlor.
Bill Stuffing - CORRECT ANSWER A casino customer goes to various slot machines putting cash in the bill acceptors and collects cash-out tickets with nominal gaming activity, then cashes out at the casino cage or asks for a check.
Black Market Peso Exchange (BMPE) - CORRECT ANSWER An example of a complex method of trade-based
money laundering. It originally was driven by Colombia's restrictive policies on currency exchange. To circumvent those policies, Colombian businesses bypassed the government
levies by dealing with peso brokers that dealt in the black market or parallel financial market. Colombian drug traffickers took advantage of this method to receive Colombian pesos in Colombia in exchange for U.S. drug dollars located in the U.S.
Cardholder - CORRECT ANSWER Person to whom a financial transaction card is issued, or an additional person authorized to use the card.
Caribbean Financial Action Task Force (CFATF) - CORRECT ANSWER A FATF-style regional body comprising Caribbean nations, including Aruba, the Bahamas, the British Virgin Islands, the Cayman Islands and Jamaica.
Casa de Cambio - CORRECT ANSWER Also called a "bureau de change" or an "exchange office," a casa de cambio offers a range of services that are attractive to money launderers: currency exchange and consolidation of small denomination bank notes into larger ones; exchange of financial instruments such as travelers
checks, money orders and personal checks; and telegraphic transfer facilities.
Cash-Intensive Business - CORRECT ANSWER Any business in which customers usually pay with cash for the products or services provided, such as restaurants, pizza delivery services, taxi firms, coin-operated machines or car washes. Some money launderers run or use cash-based businesses to commingle illegally obtained
funds with cash actually generated by the business.
Cash Collateralized Loans - CORRECT ANSWER A cash collateralized loan has cash deposits as the loan's collateral. The cash deposits can sometimes reside in another jurisdiction.
Cash Deposits - CORRECT ANSWER Sums of currency deposited in one or more accounts at a financial institution.Vulnerable to money laundering in the "placement phase," as criminals move their cash into the non-cash economy by making deposits into accounts at financial institutions.
Cashier's Check - CORRECT ANSWER Common monetary instrument often purchased with cash. Can be used for laundering purposes, cashier's checks provide an instrument drawn on a financial institution.
Collection Accounts - CORRECT ANSWER Immigrants from foreign countries deposit many small amounts of currency into one account where they reside, and the collected sum is transferred to an account in their home country without documentation of the sources of the funds. Certain ethnic groups from Asia or Africa
may use these to launder money.
Commission Rogatoire - CORRECT ANSWER Also known as letters rogatory, a commission rogatoire is a written request for legal or judicial assistance sent by the central authority of one country to the central authority of another when
seeking evidence from the foreign jurisdiction. The letter typically specifies the nature of the request, the relevant criminal charges in the requesting country, the legal provision under which the request is made, and the information sought.
Concentration Account - CORRECT ANSWER Also called an "omnibus account." Held by a financial institution in its name, a clearing account is used primarily for internal administrative or bank-to-bank transactions in which funds are transmitted and commingled without personally identifying the originators.
Concentration Risk - CORRECT ANSWER Primarily applies to the asset side of the balance sheet. As a common practice, supervisory authorities not only require financial institutions to have information systems to identify credit concentrations, but also set limits to restrict bank exposure to single
borrowers or groups of related borrowers. On the liability side, it is associated with funding risk, especially the risk of early and sudden withdrawal of funds by large depositors that could harm an institution's liquidity. [Show Less]