CAMS Practice Questions

When developing and maintaining AML policies, standards, and procedures, banks should rely on the National Risk Assessment, regulatory guidance or publications, and guidance issued by international bodies to ensure their frameworks align with both domestic and global best practices and risk considerations.

When selecting an anti-financial crime (AFC) tool, regulators and industry best practices emphasize effectiveness, sustainability, and integration over cost or automation alone.

Compatibility with existing IT infrastructure is critical to ensure seamless data integration, system stability, and governance. Poor integration can lead to data gaps, operational risk, and ineffective monitoring.

Scalability is equally important, as transaction volumes, customer bases, and regulatory requirements grow over time. An AFC tool must be able to handle increased workloads without degradation in performance or effectiveness.

While real-time analytics may be beneficial, they must align with the organization’s overall risk strategy and system capabilities. Lowest cost and full elimination of manual processes are not regulatory priorities; human oversight remains essential in AML/CFT programs.

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)

It is essential to ensure that anti-financial crime (AFC) tools are compatible and can be integrated with existing systems to avoid operational disruptions. Additionally, evaluating both implementation and ongoing maintenance costs is crucial for long-term sustainability and effective budget planning.