10 free ACAMS CAMS practice questions with the correct answer and a full explanation for each, taken from the CertStash pack of 637 questions. Work through them, then open each answer to check your reasoning.
Get all 637 questions (US$39) · Download these 10 as a PDF
Question 1
A bank account is established for a new business customer. The business was established five years ago with an address in another state. The business website contains few details other than stating it is a real estate business.
One principal has an international telephone number and appears to be living in another country. The other principal works out of a recreational vehicle.
What warrants enhanced due diligence in this scenario?
Show answer and explanation
Correct answer: A. Shell company
A shell company presents multiple risk indicators in this scenario: the business was established five years ago but has minimal web presence beyond claiming to be real estate, one principal operates internationally from abroad, the other works from a recreational vehicle (no fixed business address), and the vague business description combined with unstable principals are classic shell company characteristics. These factors collectively suggest the entity may lack legitimate operational substance and exist primarily to facilitate financial transactions, warranting enhanced due diligence for potential money laundering or other illicit activities.
Why the other options are wrong
- B. Human trafficking indicators would involve movement of people and exploitation rather than the business structure and operational concerns presented.
- C. A politically exposed person designation requires a government official role, which is not indicated for either principal in this scenario.
- D. While real estate can be used for money laundering, the specific red flags here, shell company characteristics, minimal business details, and unstable principals, point more directly to shell company status rather than established real estate laundering activity.
Question 2
A branch manager for a small community bank has a new customer who deposits four EUR 50,000 checks into one account. Shortly thereafter, the customer goes to another branch and asks to transfer all but EUR 1,500 to three accounts in different foreign jurisdictions.
Which suspicious activity should be the focus of the suspicious transaction report?
Show answer and explanation
Correct answer: D. The customer asks to transfer funds to accounts in three different foreign jurisdictions
Moving the money onward to accounts in three different foreign jurisdictions is the activity the report should highlight. Sending nearly the entire balance abroad through several routes immediately after the checks were deposited is classic layering, intended to break the audit trail and place the funds beyond the reach of the home jurisdiction. That cross-border dispersal, done at another branch by a brand new customer, is the element that most clearly signals illicit intent and gives investigators the leads they need.
Why the other options are wrong
- A. Large checks as account opening deposits are common in legitimate business and are not inherently suspicious without additional context.
- B. Using a different branch is normal customer behavior and on its own does not indicate suspicious activity.
- C. Emptying the account is part of the picture, but the report should focus on where the money was sent, the multiple foreign destinations.
Question 3
A government has instituted new anti-money laundering laws which require all financial institutions to obtain certain information from its customers.
Which step should an institution located in this jurisdiction take to ensure compliance?
Show answer and explanation
Correct answer: B. Change procedures and systems as necessary and provide employee training
Ensuring compliance with new anti-money laundering laws requires a comprehensive approach that includes changing procedures to collect required information, updating systems to accommodate new requirements, and training employees on the new procedures. This three-pronged implementation ensures the institution can operationally meet the new legal requirements, staff understand their roles, and systems are capable of supporting compliance. Procedures and training alone are insufficient without system changes, and system changes alone fail without staff understanding.
Why the other options are wrong
- A. Changing procedures alone does not address the need for system updates and employee training required for full compliance.
- C. Asking existing customers to voluntarily provide information is passive and unreliable; institutions must actively obtain required information through updated procedures and systems.
- D. Automatic information collection from all customers is impractical and does not account for the need to establish procedures and ensure staff training on how to implement and maintain compliance.
Question 4
An anti-money laundering audit identifies a significant weakness in how transaction monitoring alerts are cleared. Audit sampling identified potentially suspicious activity that was cleared as not suspicious. Management accepts the audit finding and develops a remediation plan.
What is the role of the auditor during the correction phase?
Show answer and explanation
Correct answer: D. Validating the successful remediation of the issue once management indicates the issue is resolved
The auditor's role during the correction phase is to validate that management has successfully remediated the identified deficiency. The auditor maintains independence by overseeing and verifying the remediation rather than directing it or developing corrective procedures. Validation occurs after management has indicated resolution and involves testing to confirm the deficiency has been effectively corrected and controls are functioning as intended.
Why the other options are wrong
- A. Directing remediation violates audit independence; management is responsible for correcting deficiencies identified in audits.
- B. Developing procedures is a management responsibility, not an auditor function; auditors assess existing procedures but do not create them.
- C. Providing training to operational departments is a management function; auditors may provide feedback on findings but should not be directing training programs.
Question 5
Which method to launder money through deposit-taking institutions is closely associated with international trade?
Show answer and explanation
Correct answer: B. Using Black Market Peso Exchange
The Black Market Peso Exchange is closely associated with international trade-based money laundering, particularly in cross-border commerce between countries with currency restrictions. This method involves the use of international trade transactions, such as ove-r under-invoicing of goods and services, to move value across borders while creating a veneer of legitimacy through trade documentation. It is specifically designed to exploit international trade flows and currency markets.
Why the other options are wrong
- A. Shell companies are general-purpose laundering vehicles not specifically tied to international trade mechanisms.
- C. Structuring cash deposits is a domestic banking technique unrelated to international trade infrastructure.
- D. Investing in legitimate businesses is a general placement technique not specifically associated with international trade.
Question 6
What should countries do to help prevent non-profit organizations from being abused for the financing of terrorism according to the Financial Action Task Force 40 Recommendations?
Show answer and explanation
Correct answer: C. Ensure non-profit organizations cannot be used to conceal or obscure the diversion of funds intended for legitimate purposes to terrorists' organizations
The Financial Action Task Force 40 Recommendations focus on ensuring that non-profit organizations have adequate transparency, governance, and controls to prevent funds intended for legitimate charitable purposes from being diverted to terrorist organizations. Countries should implement oversight mechanisms that enable detection and prevention of fund diversion while preserving legitimate non-profit operations. This approach balances national security with the preservation of civil society organizations.
Why the other options are wrong
- A. Blanket asset freezing of all non-profits is overly broad and would impair legitimate charitable work without specifically addressing terrorist financing risks.
- B. Registration requirements alone do not prevent abuse; oversight and controls are more important than mere registration.
- D. Forbidding cross-border transactions would eliminate legitimate international humanitarian work and is more restrictive than necessary; the focus should be on transparency and monitoring rather than blanket prohibitions.
Question 7
An employee hears a colleague on the telephone with a customer giving advice on how to ensure that a suspicious transaction report will not be filed as a result of a future transaction.
What action should the employee take?
Show answer and explanation
Correct answer: B. Report the conversation to the compliance officer
The employee should report this conversation to the compliance officer because the colleague's conduct appears to constitute potential tipping off or advising a customer on how to avoid regulatory reporting obligations, which violates anti-money laundering laws and institutional policy. The compliance officer is the appropriate internal authority responsible for investigating and addressing potential AML violations by employees. This is an internal compliance matter that must be escalated through proper channels.
Why the other options are wrong
- A. Local police are not the appropriate channel for internal compliance violations; law enforcement involvement would be determined by the compliance officer and institution after investigation.
- C. Simply telling the colleague it violates policy does not address the potential violation or ensure it is properly investigated and documented.
- D. Ignoring the situation permits potential regulatory violations to continue and breaches the employee's own compliance responsibilities.
Question 8
What is an example of the integration stage of money laundering involving a bank or another deposit-taking institution?
Show answer and explanation
Correct answer: D. Using illicit funds that had previously been deposited to purchase a luxury vehicle
The integration stage is the final phase, in which laundered funds are returned to the legitimate economy as apparently clean wealth. Using money already deposited in the banking system to buy a luxury vehicle converts it into a tangible asset that can be used, insured, and later resold with a seemingly lawful origin, completing the laundering cycle. The other choices describe placement or layering activity that occurs earlier, before the funds take on the appearance of legitimate wealth.
Why the other options are wrong
- A. Depositing illicit funds into a front company account represents the placement stage, the first phase of money laundering.
- B. Directing third parties to exchange cash for negotiable instruments is a layering technique used to obscure the source of funds.
- C. Wiring funds between bank accounts is layering activity designed to distance the money from its criminal source.
Question 9
Which aspect of the USA PATRIOT Act impacts foreign financial institutions?
Show answer and explanation
Correct answer: D. Providing authority to impose special measures on institutions that are of primary money-laundering concern
Section 311 of the USA PATRIOT Act authorizes the Secretary of the Treasury, acting through FinCEN, to impose special measures on a foreign jurisdiction, foreign financial institution, class of transactions, or type of account found to be of primary money laundering concern. The measures range from additional recordkeeping and reporting to prohibiting U.S. banks from opening or maintaining correspondent accounts for the named institution, which is the provision that reaches foreign financial institutions most directly.
Why the other options are wrong
- A. Due diligence and correspondent account rules aimed at shell banks are part of the Act but are narrower than the special measures authority.
- B. Sanctions obligations covering foreign branches of U.S. banks come from OFAC rules, not from this Act.
- C. The Act does not extend U.S. anti-money laundering program requirements to all foreign financial institutions.
Question 10
The compliance officer at a crowdfunding website is in charge of monitoring new crowdfunding projects. Recently, the number of crowdfunding projects has significantly increased.
Which red flag indicates the highest anti-money laundering risk?
Show answer and explanation
Correct answer: D. Projects that start and close and are fully funded within a very short period
In crowdfunding platforms, projects that start, close, and become fully funded within a very short timeframe present the highest anti-money laundering risk because this pattern is characteristic of money laundering schemes. Rapid funding from multiple small donors makes it difficult to trace illicit sources and creates the appearance of legitimate crowdfunding activity while actually integrating criminal proceeds. This compressed timeline is suspicious and inconsistent with typical crowdfunding dynamics, indicating potential use of the platform for layering illicit funds.
Why the other options are wrong
- A. A large number of donors does not necessarily indicate money laundering risk; high donor volume is common in legitimate successful campaigns.
- B. Quick funding after project launch can occur with legitimate viral campaigns and popular causes.
- C. The monetary success threshold alone has no correlation with anti-money laundering risk.
That was 10 of 637.
The full ACAMS CAMS pack has all 637 questions, each with the answer, the explanation and why the other options are wrong, plus a questions-only copy for timed runs. US$39, paid once, with free monthly updates and a pass-or-your-money-back guarantee.