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NEW QUESTION # 383
Combating the Financing of Terrorism (CFT)]
Which type of sanctions are most likely to be used in order to avoid escalating violent conflicts and/or proliferation of weapons?
- A. Financial prohibitions
- B. Arms and related materials embargo
- C. Export and import restrictions
- D. Asset freeze
Answer: B
Explanation:
Arms and related materials embargo is a type of sanction that prohibits the supply, sale, transfer, or export of arms and related materials to a targeted country, entity, or individual. This type of sanction is most likely to be used in order to avoid escalating violent conflicts and/or proliferation of weapons, as it aims to reduce the availability and access of weapons and ammunition that could fuel violence and instability. Arms and related materials embargo can also prevent the transfer of weapons of mass destruction and their delivery systems to non-state actors or rogue states. According to the UN, arms and related materials embargo is one of the most common and effective forms of sanctions that the Security Council imposes to address threats to international peace and security12.
:
1: Different types of sanctions - Consilium1
2: UN Sanctions and the Prevention of Conflict - United Nations University2 Reference: https://collections.unu.edu/eserv/UNU:6431/UNSanctionsandPreventionConflict-Aug-2017.pdf (3)
NEW QUESTION # 384
The degree of attraction that a company holds to criminal organizations is influenced by the (Select Two.)
- A. permissibility of bearer shares.
- B. amount of annual fees associated with the jurisdiction.
- C. rules governing the disclosure of beneficial ownership by the jurisdiction.
- D. ease of travel to the jurisdiction.
Answer: A,C
Explanation:
The susceptibility of a company or jurisdiction to ML/TF abuse is significantly increased by:
* Permissibility of bearer shares (B):"Bearer shares make it easy to hide ownership and control, presenting a major risk for misuse by criminals."(CAMS 6th Edition, Beneficial Ownership and Company Transparency)
* Rules governing the disclosure of beneficial ownership by the jurisdiction (C):"Weak requirements or loopholes in beneficial ownership disclosure are frequently exploited to conceal criminal involvement in corporate structures."(CAMS 6th Edition, Chapter: Legal Persons and Arrangements) Incorrect Options:
* A: High or low fees are not a significant ML/TF risk driver.
* D: Ease of travel is unrelated to ML/TF risk related to company structures.
References:
CAMS 6th Edition, Beneficial Ownership and Transparency
FATF Recommendations 24, 25
NEW QUESTION # 385
What is the intentional evasion of a reporting or recordkeeping requirement?
- A. Structuring
- B. Placement
- C. Money laundering
- D. Layering
Answer: A
Explanation:
Structuring is the intentional evasion of a reporting or recordkeeping requirement by breaking down a large transaction into smaller ones, or by using multiple accounts, institutions, or persons to avoid triggering the threshold for reporting or recordkeeping. Structuring is also known as smurfing, and it is a common technique used by money launderers to conceal the source, ownership, or control of illicit funds.
=
ACAMS Study Guide for the CAMS Certification Examination, 6th Edition, Chapter 2, Section 2.1.1, page
511
ACAMS CAMS Certification Video Training Course, Module 2, Lesson 2.1, video time 7:00-8:002 ACAMS CAMS Certification Practice Exam, Question 134, page 2853
NEW QUESTION # 386
Since its last regulatory examination, a financial institution has aggressively grown by adding profitable new products and services. The institution has not historically received regulatory criticism regarding its anti- money laundering compliance program. However, a recent regulatory examination cited significant deficiencies in the anti-money laundering program that were attributed primarily to the lack of oversight by the institution's leadership in implementing adequate controls over the new products and services.
Which area of international control should leadership first address to correct the weaknesses in the program?
- A. Anti-money laundering policy
- B. Money laundering risk assessment
- C. Anti-money laundering compliance staff
- D. Anti-money laundering training
Answer: B
Explanation:
A money laundering risk assessment is a crucial component of an effective anti-money laundering (AML) program. It involves identifying, assessing, and understanding the specific risks related to money laundering and terrorist financing that the institutionmay face. A risk assessment helps the institution to design and implement appropriate controls, policies, procedures, and training to mitigate the risks. A risk assessment should be updated regularly and whenever there are significant changes in the institution's business activities, products, services, customers, or geographic locations. In this scenario, the financial institution has experienced significant deficiencies in its AML program during a recent regulatory examination. The deficiencies were primarily attributed to the lack of oversight by the institution's leadership in implementing adequate controls over the new products and services that were added as part of the institution's aggressive growth strategy. To correct these weaknesses in the AML program, the leadership should first address the area of international control known as "Money laundering risk assessment" (Option C). By conducting a new and comprehensive risk assessment, the leadership can identify the potential vulnerabilities and gaps in the AML program that may arise from the new products and services. The risk assessment can also help the leadership to prioritize the actions and resources needed to address the deficiencies and enhance the AML program.
Once the risk assessment is completed, the leadership can then work on updating the AML policy, providing adequate training, and ensuring sufficient compliance staff to implement and monitor the controls.
1, Chapter 2: Risk Assessments
2, Section 2: Anti-Money Laundering Compliance Program
3, Question 145
NEW QUESTION # 387
A compliance analyst has recently investigated an account where money was deposited in amounts below the reporting limit and almost entirely withdrawn in a foreign country. Which type of money laundering is the compliance analyst potentially identifying?
- A. Check Kiting
- B. Microstructuring
- C. Structuring
- D. Trade-based
Answer: B
Explanation:
Microstructuring refers to breaking up large transactions into multiple, smaller transactions, each below reporting thresholds, to avoid detection ("smurfing"). In this scenario, deposits are consistently below the reporting limit-indicative of microstructuring (B). While "structuring" (C) is the general term, microstructuring specifically describes the use of very small amounts, often over a prolonged period, which matches this case. The CAMS 6th Edition and FinCEN guidance both recognize microstructuring as a prevalent money laundering typology.
References:
CAMS 6th Edition, Chapter 3: "Detection and Reporting of Suspicious Transactions," Section: Structuring and Microstructuring FinCEN, "Advisory on Structuring and Smurfing," 2014
NEW QUESTION # 388
What are two risks to institutions for violating anti-money laundering laws as demonstrated by the 2012 HSBC settlement with United States authorities? (Choose two.)
- A. Loss of bank charter/license
- B. Forfeiture of assets
- C. Imprisonment of bank employees
- D. Civil money penalties
Answer: B,D
Explanation:
Institutions that violate anti-money laundering laws may face various risks and consequences, such as legal, regulatory, reputational, and operational risks. As demonstrated by the 2012 HSBC settlement with United States authorities, two of the most significant risks are:
* Forfeiture of assets. This means that the institution may have to surrender some or all of its assets that are related to the money laundering activities or violations. For example, HSBC agreed to forfeit $1.256 billion as part of its deferred prosecution agreement with the US Department of Justice1.
* Civil money penalties. This means that the institution may have to pay fines or penalties to the government or other regulatory agencies for violating the anti-money laundering laws or regulations. For example, HSBC agreed to pay $665 million in civil money penalties to various US regulators, including the Office of Foreign Assets Control, the Federal Reserve Board, and the Office of the Comptroller of the Currency1.
The other two options, C and D, are not as common or relevant to the 2012 HSBC settlement. Loss of bank charter/license may occur in extreme cases where the institution is deemed unfit to operate or poses a serious threat to the financial system. Imprisonment of bank employees may occur if the employees are found guilty of criminal charges, such as fraud, conspiracy, or wilful violation of anti-money laundering laws. However, these outcomes are usually reserved for individuals, not institutions, and depend on the specific facts and circumstances of each case.
References:
* 1: HSBC announces settlements with authorities, 2012, https://www.hsbc.com/-/files/hsbc/investors
/stock-exchange-announcements/2012/december/2012-12-11-hsbc-announces-settlements-with- authorities.pdf
* 2: Settlement Agreement between the U.S. Department of the Treasury's Office of Foreign Assets Control and HSBC Holdings plc, 2012, https://ofac.treasury.gov/recent-actions/20121211_33
* 3: HSBC settles on record US fee, 2012, https://www.dw.com/en/hsbc-settles-in-us-money-laundering- probe/a-16443391
* 4: HSBC pays record $1.9bn fine to settle US money-laundering accusations, 2012, https://www.
theguardian.com/business/2012/dec/11/hsbc-bank-us-money-laundering
* 5: HSBC to pay $1.9bn in US money laundering penalties, 2012, https://www.bbc.com/news/business-
20673466
NEW QUESTION # 389
Which method is used to launder money via wire remittances sent through a bureau de change or money services business?
- A. A customer in country A makes a weekly small wire transfer to the bank account of an individual in country B.
- B. A customer in country A receives four small wire transfers from four different individuals located in country B on December 21. The aggregate of the wire transfers falls below the legal reporting threshold.
- C. A customer in country A makes frequent wire transfers to a single customer in country B that are slightly under the legal reporting threshold.
- D. A large number of wire transfers are sent from a large number of senders in country A to a large number of recipients in country B during the period of December 1 to December 15.
Answer: C
Explanation:
The correct answer is B, because it describes a method of money laundering known as structuring or smurfing. This is when a customer or a group of customers break down large amounts of illicit funds into smaller transactions that are below the reporting threshold, and then send them to another customer or entity, often in another country. This way, they avoid triggering any suspicion or regulatory reporting by the bureau de change or money services business (MSB) that processes the wire transfers. Structuring or smurfing is a common technique used by money launderers to move funds across borders and disguise their origin and destination.
The other options are not necessarily indicative of money laundering, although they may require further investigation depending on the circumstances and the risk profile of the customers and countries involved. Option A describes a regular and small wire transfer that may be legitimate, such as a remittance to a family member or a friend. Option C describes a large volume of wire transfers that may be related to a seasonal or business activity, such as a holiday or a trade event. Option D describes a series of small wire transfers that may be coincidental or random, and do not necessarily add up to a significant amount.
Reference:
ACAMS CAMS Certification Video Training Course - 6th Edition1
Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)2 ACAMS CAMS Study Guide - 6th Edition, Chapter 2, pages 36-37
: https://www.acams.org/wp-content/uploads/2019/09/ACAMS-CAMS-Study-Guide-6th-Edition-Chapter-2.pdf
NEW QUESTION # 390
A bank's transaction surveillance system triggers an alert for a deposit of 250.000 USO into a client's account. According to the bank's KYC information, the client works for a financial advisory firm, and earns approximately 100,000 USD per year. Which actions should be taken? (Select Three.) File the suspicious transaction immediately to the financial intelligence unit.
- A. Discard the alert as a false positive hit
- B. Request information and documentation from the client on the background of the transaction.
- C. Contact the client advisor to learn if he has any insight on the transaction background.
- D. Review the transaction background in the bank's transaction platform.
- E. Review the alert if the deposit is made in cash.
Answer: B,C,D
Explanation:
According to the Certified Anti-Money Laundering Specialist (CAMS) Manual , 6th edition, if a bank's transaction surveillance system triggers an alert for a deposit of 250.000 USD into a client's account, the bank should take the following actions:
Request information and documentation from the client on the background of the transaction (CAMS Manual, 6th edition, page 46).
Contact the client advisor to learn if he has any insight on the transaction background (CAMS Manual, 6th edition, page 47).
Review the transaction background in the bank's transaction platform (CAMS Manual, 6th edition, page 47).
Discarding the alert as a false positive hit and reviewing the alert if the deposit is made in cash should not be done.
The bank should request additional information and documentation from the client to better understand the nature of the transaction. Additionally, the bank should reach out to the client advisor to learn if they have any insight on the transaction background. Finally, the bank should review the transaction background in the bank's transaction platform to determine if any additional alerts or anomalies are present. (CAMS Manual, 6th Edition, Pages 117-118)
NEW QUESTION # 391
Which two methods have terrorist groups used to diversify their revenue stream and to fund their operations?
(Choose two.)
- A. Human trafficking
- B. Smuggling cultural artifacts
- C. Engaging in wire transfer activity
- D. Engaging in civil conflict
Answer: A,D
NEW QUESTION # 392
A compliance manager at a virtual asset service provider (VASP) is evaluating its business and its impact on AML policies. Which of the following features of the VASP's business would be of greatest concern? (Select Four.)
- A. Onboardlng of clients who are residents abroad. Including those with politically exposed person (PEP) status
- B. Lack of adequate IP address tracking capabilities
- C. Allowing clients lo transact anonymity-enhanced tokens
- D. Offering services to VASPs established in jurisdictions that are not FATF compliant
- E. Operating a network of crypto ATMs charging high fees
- F. Enabling transfer of tokens from one blockchain to another
Answer: A,B,C,D
NEW QUESTION # 393
the Financing of Terrorism (CFT)]
AFinancial Intelligence Unit (FIU)in a countryhas received a SARinvolving significantsuspicious fund transfers, not only within its jurisdiction but also in aforeign country. Furtherinformation is requiredfrom the foreign country to determine whether the matter needs to be referred for prosecution locally.
Which of the following statements istruein this scenario?
- A. Sovereignty of nations means thatinformation cannot be accessed from foreign countries.
- B. Any information related to money laundering can bereceived from any organization at anytime, regardless of jurisdiction.
- C. It isagainst international lawson data protection to access information from foreign countries.
- D. Countries that are members of the Egmont Group can request assistancefor information from each other.
Answer: D
Explanation:
International cooperation is essentialinAML investigations, and theEgmont GroupfacilitatesFIU-to-FIU information sharing.
* Option D (Correct):Egmont Group memberscan request and share information forAML/CFT investigations.
* Option A (Incorrect):Sovereigntydoes not preventcooperationunder proper agreements.
* Option B (Incorrect):AML laws allowdata sharing under legal frameworkslikeMutual Legal Assistance Treaties (MLATs).
* Option C (Incorrect):Information sharing isrestricted to FIUs and authorized agencies, notall organizations.
Reference:FATF Recommendation 40 (International Cooperation), Egmont Group FIU Guidelines, Mutual Legal Assistance Treaties (MLATs).
NEW QUESTION # 394
What is true regarding disclosure to a law enforcement agency by a financial institution of the supporting documentation for a suspicious transaction report?
- A. A copy of all the documentation released must also be provided to the account holder's attorney
- B. The financial institution may notify the account holder of the request
- C. Confirm that the request originated from a representative of the law enforcement agency
- D. Documentation must be provided as quickly as possible using email
Answer: C
Explanation:
Before disclosing any supporting documentation for a suspicious transaction report (STR) to a law enforcement agency, the financial institution should confirm that the request is legitimate and authorized by verifying the identity and credentials of the requester1. This is to prevent unauthorized access or misuse of the confidential information by impostors or fraudsters. The other options are not true, as they may either compromise the security, integrity, or timeliness of the disclosure, or violate the confidentiality or privacy rights of the customer.
References:
* ACAMS, CAMS Examination Study Guide, 6th Edition, Chapter 4, p. 117
* FATF Guidance: The Role of Hawala and Other Similar Service Providers in Money Laundering and
* Terrorist Financing, October 20132, p. 20
* Basel Committee on Banking Supervision, Sound management of risks related to money laundering and financing of terrorism, June 20173, p. 11 Reference: https://www.sec.gov/about/offices/ocie/aml2007/fin-2007-g003.pdf
NEW QUESTION # 395
Combating the Financing of Terrorism (CFT)]
Whichsituation involving a vendorpresentsincreased AML and/or sanctions riskto an organization?
- A. The vendor hasno individuals that own or control more than 10% of the company.
- B. The vendor isorganized as a privately held company.
- C. The vendor's sales representative was a refugee from asanctioned jurisdictionas a child.
- D. The vendor provides services toend users located in an area subject to economic sanctions.
Answer: D
Explanation:
Businessesmust not engage with entities in sanctioned jurisdictionswithout proper licensing.
* Option D (Correct):Providing services to sanctioned areasexposes an organization toOFAC or EU penalties.
* Option A (Incorrect):Personal historydoes not necessarily indicateAML risk.
* Option B (Incorrect):Lack of individual ownership above 10%does not inherently indicate risk.
* Option C (Incorrect):Private ownership alonedoes not pose an AML concern.
Reference:OFAC Sanctions Compliance, EU Sanctions Regulations, Wolfsberg Group Vendor Risk Management Guidance.
NEW QUESTION # 396
Which safeguard is in place for Financial Intelligence Units (FIUs) to share information securely according to Egmont?
- A. Investigators are allowed to request information from a foreign FIU directly.
- B. Intelligence is shared via messaging applications.
- C. Information sharing is conducted according to processes contained in Memoranda of Understanding.
- D. A computer with access to the Egmont Secure Web is accessible to all members of the FIU.
Answer: D
Explanation:
According to the Egmont Group of Financial Intelligence Units Principles for Information Exchange Between Financial Intelligence Units, one of the channels for the exchange of information between FIUs is the Egmont Secure Web (ESW), which is a secure and encrypted communication system that allows FIUs to share information and expertise1. The ESW is accessible to all members of the FIU who have been authorized by the FIU head or his/her delegate1. The other options are not correct because:
* B. Information sharing is not always conducted according to processes contained in Memoranda of Understanding (MOUs). The Egmont Group encourages FIUs to exchange information regardless of the existence of an MOU1.
* C. Intelligence is not shared via messaging applications. This would not be a secure or reliable way of exchanging sensitive information.
* D. Investigators are not allowed to request information from a foreign FIU directly. Requests for information must be made through the FIU of the requesting country1.
Egmont Group of Financial Intelligence Units Principles for Information Exchange Between Financial Intelligence Units The Egmont Group of Financial Intelligence Units | FinCEN.gov The Egmont Group of The Egmont Group of Financial Intelligence Units Reference: https://www.elibrary.imf.org/view/books/069/02365-9781589063495-en/ap01.xml
NEW QUESTION # 397
Combating the Financing of Terrorism (CFT)]
What does the Basel Committee's Customer Due Diligence for Banks paper suggest that a bank needs to have in place when establishing an account for a corporate business entity?
- A. A policy requiring all identified beneficial owners to undergo a national police check
- B. A process to ensure that the approval of senior management is obtained prior to opening the account
- C. An understanding of the structure of the company
- D. A fee structure that reflects the banks' costs in monitoring the risks associated with entity's business activities
Answer: C
Explanation:
According to the Basel Committee's Customer Due Diligence for Banks paper, one of the essential elements of a sound KYC programme is customer identification. This includes obtaining sufficient information to understand the nature and purpose of thecustomer relationship, the source of funds, and the beneficial ownership and control structure of the customer1. For corporate business entities, this means that a bank needs to have an understanding of the structure of the company, such as its legal form, its ownership, its directors, its line of business, and its geographical locations2. This will help the bank to assess the risk profile of the customer, to verify its identity and legitimacy, and to monitor its transactions for any suspicious activities.
:
1: Customer due diligence for banks, Basel Committee on Banking Supervision, October 2001, Section III.
2 2: General Guide to Account Opening and Customer Identification, Basel Committee on Banking Supervision, February 2003, Section 2.2.1 Reference: https://www.bis.org/publ/bcbs77.pdf
NEW QUESTION # 398
Which practices should be considered when investigating unusual transactions and activities? (Select Three.)
- A. Evaluating the transactions by cross-referencing with known external factors, such as market trends or recent news events.
- B. Discussing with the responsible relationship manager, who may have insights into the customer's behavior or the nature of the transactions.
- C. Focusing primarily on quantitative metrics, such as transaction amounts.
- D. Prioritizing automated alerts over manual reviews to streamline the investigation process.
- E. Utilizing a risk-based approach to determine the level of scrutiny required for different types of transactions.
Answer: A,B,E
Explanation:
A proper investigation of unusual transactions requires a mix of data analysis, contextual review, and expert judgment to assess potential risks.
Option B (Correct): Cross-referencing transactions with external factors (e.g., political events, commodity price fluctuations, news reports) helps identify potential links to illicit activities.
Option C (Correct): The relationship manager may provide insights into whether a transaction aligns with the customer's known profile and business activity.
Option D (Correct): A risk-based approach ensures that higher-risk transactions receive enhanced scrutiny, while lower-risk ones undergo standard monitoring.
Why Other Options Are Incorrect:
Option A (Incorrect): Focusing only on transaction amounts ignores contextual factors, such as unusual behavior in low-value transactions.
Option E (Incorrect): Automated alerts are valuable but cannot replace human analysis and judgment. Manual reviews remain necessary for complex cases.
Red Flags in Unusual Transactions:
Large or frequent transactions inconsistent with a customer's normal profile.
Payments from/to high-risk jurisdictions without a clear purpose.
Use of intermediaries or shell companies to move funds.
Best Practices for AML Investigations:
Use both qualitative and quantitative factors to assess transaction risks.
Collaborate with business units (e.g., relationship managers) to understand client behavior.
Apply a risk-based approach to allocate investigation resources efficiently.
Reference:
FATF Recommendation 10 (Customer Due Diligence)
Wolfsberg Group Guidance on AML Investigations
FinCEN Transaction Monitoring Guidelines
NEW QUESTION # 399
Which two aspects of precious metals pose the highest risk of money laundering? (Choose two.)
- A. Precious metals can be readily used in many high-tech commercial applications, making them all the more valuable
- B. Precious metals have high intrinsic value in a relatively compact form and are easy to convert into currency
- C. Some precious metals can be formed into other objects, making easier to transport
- D. The value of precious metals can be inflated easily, making it easy to increase the amount of money laundered
Answer: B,C
Explanation:
Precious metals, such as gold and silver, pose a high risk of money laundering because they have some features that make them attractive to criminals. According to the FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones1, these features include:
* Some precious metals can be formed into other objects, making easier to transport. For example, gold can be melted and shaped into jewellery, coins, bars, or other items that can be easily concealed and moved across borders. This makes it difficult for law enforcement and customs authorities to detect and seize the illicit proceeds of crime.
* Precious metals have high intrinsic value in a relatively compact form and are easy to convert into currency. For example, gold has a stable and universal value that can be exchanged for cash or other assets in any market. This makes it easy for criminals to store, transfer, and launder their illicit funds without leaving a trace in the formal financial system.
The other two options, C and D, are not as relevant to the risk of money laundering. The value of precious metals is determined by the market forces of supply and demand, and it is not easy to inflate or manipulate it.
Precious metals can be used in many high-tech commercial applications, but this does not necessarily make them more valuable or more prone to money laundering.
References:
* 1: FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones, 2008,
https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatfguidanceontherisk- basedapproachfordealersinpreciousmetalsandstones.html
* 2: Money laundering and terrorist financing risks and vulnerabilities associated with gold, 2015,
https://www.fatf-gafi.org/en/publications/Methodsandtrends/Ml-tf-risks-and-vulnerabilities-gold.html
* 3: The anti-money laundering framework for precious stones and metals dealers in Singapore, 2021,
https://www.emerald.com/insight/content/doi/10.1108/JMLC-07-2021-0074/full/html
* 4: Gold and Money Laundering, 2019, https://www.moneylaunderingnews.com/2019/04/gold-and- money-laundering/
NEW QUESTION # 400
An existing customer at a bank has recently expanded its services to provide check cashing for its customers.
Which factor indicates the bank should terminate this relationship?
- A. The bank has not updated its automated monitoring system.
- B. The business has no previous experience with this service.
- C. The business is now a Money Service Business and has not registered with FinCEN.
- D. The business has not updated its anticipated activity with the bank.
Answer: A
NEW QUESTION # 401
Which scenario is closest to the definition of money laundering the United Nations Convention against Transnational Organized Crime and Other Protocols provided?
- A. Filing a suspicious transaction report when you know or suspect money laundering is taking place
- B. Assisting a client in a property conveyance by effecting the transfer of ownership from the seller to the purchaser when you don't know the purchaser
- C. Knowingly financing a resort development with the proceeds of arms trafficking
- D. Discussing your suspicions with a client, thus giving the client the opportunity to switch service providers and to cover his tracks in future transactions
Answer: C
Explanation:
Option B is closest to the definition of money laundering provided by the United Nations Convention against Transnational Organized Crime and Other Protocols, which states that money laundering is "the conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action". In this scenario, the person is knowingly financing a resort development with the proceeds of arms trafficking, which is a crime, and thus concealing or disguising the illicit origin of the property.: = CAMS Certification Package - 6th Edition | ACAMS1 CAMS Certifications: How to Get CAMS Certified | ACAMS2 ACAMS CAMS Certification Video Training Course - Exam-Labs3 Exam CAMS: Certified Anti-Money Laundering Specialist (the 6th edition)4 United Nations Convention against Transnational Organized Crime and the Protocols Thereto
NEW QUESTION # 402
An agent of a wealthy individual residing in Country A, which is on the EU list of high-risk third jurisdictions, approaches a notary in Country B, which is in the EU. The agent wants to complete a disposal of assets recently acquired at auction by the wealthy individual through an offshore company. The agent also has a power of attorney to act on behalf of the offshore company issued by a respectable law firm from Country C, which is also in the EU. The agent asks the notary to proceed with the disposal as quickly as possible without paying any specific attention to related costs or taxes to be paid as a result of this transaction. The notary notices the intended transfer price is significantly lower than the one recorded at auction, but the agent does not want to discuss this matter and claims that it is not covered by the power of attorney.
Which red flags should the notary consider? (Select Two)
- A. The agent requested a disposal of assets at a lower price than recently acquired.
- B. The agent acted on behalf of an individual residing in a country which is on the EU's list of high-risk jurisdictions
- C. The assets acquired through an auction were put in the name of an offshore company
- D. The power of attorney was issued by a law firm in a different EU country from where the transaction took place.
Answer: A,B
Explanation:
* A: Selling assets at a significant loss, especially shortly after purchase, is a classic red flag for asset laundering and value manipulation, which can be used to disguise the true nature of proceeds.
* C: Transactions involving individuals from high-risk jurisdictions, as identified by the EU and FATF, warrant heightened scrutiny due to increased ML/TF risk.(CAMS 6th Edition, Red Flags for Complex Asset Transactions; EU List of High-Risk Third Countries)
* B and D may contribute to complexity but are not the primary red flags in this scenario.
References:
CAMS 6th Edition, Red Flags in Notarial and Legal Transactions
EU AML Directives and High-Risk Country Lists
NEW QUESTION # 403
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