BEST Verified ACAMS Advanced-CAMS-Audit Exam Questions (2025)
The Best Practice Test Preparation for the Advanced-CAMS-Audit Certification Exam
NEW QUESTION # 44
Which products/services increase the risk level for money laundering for XYZ Bank?
- A. Foreign exchange services
- B. Payable through accounts
- C. International fund transfers
- D. Letters of credit
Answer: B,C
Explanation:
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.
NEW QUESTION # 45
Audits are designed to provide assurance that what key aspect of risk management framework is adequately designed and functioning effectively?
- A. Procedures
- B. Controls
- C. Reporting
- D. Risks
Answer: B
Explanation:
Audits are primarily designed to evaluate the adequacy and effectiveness of controls within a risk management framework. This includes assessing whether the controls are properly designed and functioning to mitigate identified risks effectively.
CAMS-Audit guidance highlights the critical role of controls in ensuring compliance with AML/CFT regulations and managing operational risks.
NEW QUESTION # 46
Which is considered a minimum requirement in a customer identification program?
- A. Customer enhanced due diligence procedures used to identify unusual transactions
- B. Transaction monitoring procedures that specify the information that will be retained in each transaction
- C. Account opening procedures that specify the information that will be obtained from each customer
- D. Transaction reporting procedures used to report suspicious transactions to the regulator
Answer: C
Explanation:
A customer identification program (CIP) mandates that financial institutions obtain specific information from customers during account opening. This includes verifying identity through reliable documents, understanding the purpose of the account, and assessing associated risks.
Advanced CAMS-Audit and FATF recommendations highlight the necessity of robust account opening procedures as the foundation for AML compliance.
NEW QUESTION # 47
Which are methods to test internal controls related to the CDD and KYC process? (Select Two.)
- A. Ask the account officers whether the CDD and KYC information provided is correct.
- B. Evaluate the results of the sample testing of new and existing customer relationships for adherence to the CDD and KYC process.
- C. Confirm if suspicious activity reports were filed following escalation for non-compliance with the CDD and KYC process.
- D. Confirm with client onboarding teams whether or not high-risk customers exist.
- E. Review the accuracy of the gap analysis of the CDD and KYC policies and procedures against local regulations.
Answer: B,E
Explanation:
Testing Internal Controls:
* C. Gap Analysis: Ensures policies are compliant with local regulations and address identified risks.
* D. Sample Testing: Verifies that processes are effectively implemented in practice for both new and existing customers.
NEW QUESTION # 48
When reviewing an AML policy, an auditor should expect to find that the policy.
- A. has been approved by regulators.
- B. was reviewed and approved by the money laundering reporting officer.
- C. is aligned with investment strategy.
- D. contains items related to staff training.
Answer: D
Explanation:
AML Policy Expectations:
* Staff training is a fundamental component of an effective AML program. FATF Recommendations and Basel Committee guidelines require AML policies to address staff training to ensure compliance with AML/CFT laws
NEW QUESTION # 49
During the interview, the local director informs the audit manager that no internal or regulatory audits have occurred since the local director's appointment The local director relies on a locally-approved independent external review of Company A performed 12 months ago by a local firm How should the audit manager respond?
- A. Review the independent external review report to determine the extent to which reliance can be placed on it and identify matters requiring further review by internal audit.
- B. Validate the accuracy of content of the independent external review report by recommending an audit and assess if the findings of both the independent review and audit are similar.
- C. Advise the group board that the group should set aside the external review reports as the use of the third party independent reviewer was not authorized at group board level.
- D. Rely upon the independent external review report as the base to formulate conclusions of the current onsite visit by internal audit.
Answer: A
Explanation:
Steps to Assess the External Review Report:
* Validate the scope, methodology, and findings of the external review to determine its adequacy and reliability.
* Identify any gaps or areas that require additional scrutiny by internal audit.
Rationale for Review Instead of Reliance:
* Relying solely on external reviews without validation risks overlooking key compliance deficiencies.
Internal audit must establish an independent assessment to corroborate findings.
CAMS-Audit Recommendations:
* CAMS-Audit stresses the importance of critical evaluation of third-party reports and ensuring internal audit findings align with organizational compliance priorities
NEW QUESTION # 50
An audit finding can be closed when:
- A. all necessary evidence is collected and analyzed.
- B. the underlying risk is reassessed and mitigated.
- C. the final audit report is ready for delivery.
- D. the follow-up actions are completed.
Answer: D
Explanation:
Conditions for Closing Audit Findings:
* Findings can only be closed when the corrective actions identified in response to the audit findings are implemented and verified as effective.
* This includes addressing underlying risks and documenting the resolution process.
CAMS-Audit Best Practices:
* The audit process must ensure that all follow-up actions mitigate the identified risks, aligning with regulatory and operational standards.
NEW QUESTION # 51
Which task should an auditor complete first when preparing to audit the client risk scoring methodology?
- A. Discuss the client risk scoring process with the head of AML.
- B. Review the financial institution's AML risk assessment to understand the institution's client base.
- C. Query the completeness of the customer data to be provided.
- D. Review a list of high-risk customers provided by compliance.
Answer: B
Explanation:
Understanding Client Risk Scoring Methodology:
* Reviewing the AML risk assessment offers a comprehensive view of the institution's client base, risk appetite, and segmentation strategies.
Preparation Steps:
* Assessing the AML risk assessment ensures that auditors understand the institution's framework for categorizing and managing client risks.
Importance in CAMS-Audit Framework:
* CAMS-Audit highlights the necessity of linking client risk scoring to the broader institutional AML risk assessment.
NEW QUESTION # 52
If a final audit communication contains a significant error, the chief audit executive must:
- A. recall the audit report assess the error and resubmit the correct one.
- B. tell those who received the communication of the error and corrections.
- C. report the error to the local AML regulator.
- D. reevaluate the item(s) and resubmit findings for discussion on factualaccuracy.
Answer: A
Explanation:
A significant error in an audit report undermines the credibility of the findings. The appropriate action is to recall the report, reassess the error, and submit an accurate report to stakeholders. This ensures integrity and compliance with audit standards.
NEW QUESTION # 53
An auditor is asked to select a judgmental sample from a population of 1 000 clients onboarded during the previous 12 months. Which step should the auditor take first?
- A. Review the CDD onboarding policies and procedures to determine the criteria for selection.
- B. Request a list of high-risk clients onboarded from management.
- C. Initially sample 10% of new clients onboarded.
- D. Evaluate quality assurance processes tor onboarding new clients.
Answer: A
Explanation:
First Steps for Sampling:
* Reviewing onboarding policies ensures the sampling aligns with established risk criteria, improving the relevance and accuracy of the audit findings.
Regulatory Emphasis:
* FATF guidance stresses aligning audit sampling with organizational risk assessments and onboarding standards.
NEW QUESTION # 54
A financial institution utilizes an automated daily validation report to validate the accuracy of the data flowing into its monitoring software. An auditor is responsible for testing the data used to create the report. This is an example of testing which type of effectiveness?
- A. Operating
- B. Software
- C. Program
- D. Design
Answer: A
Explanation:
Testing Operating Effectiveness:
* Operating effectiveness testing evaluates whether controls and systems are functioning as intended on a daily basis, including the accuracy and reliability of automated validation processes.
Relevance to Data Validation:
* The auditor's role in this scenario ensures that the data flowing into the monitoring software is accurate and aligned with operational requirements, reflecting day-to-day effectiveness.
CAMS-Audit Emphasis:
* The emphasis on ongoing operational validation is consistent with Advanced CAMS-Audit practices, which stress continuous monitoring of AML system effectiveness.
NEW QUESTION # 55
When assessing the KYC process which should an auditor observe from the customer risk assessment? (Select Two)
- A. Overseas shareholders not involved in the customer's dally operations are not beneficial owners.
- B. Self-declaration or Beneficial ownership should not be accepted as it is not adequate.
- C. If this was a face-to-face customer, the overall customer risk rating should be changed to low.
- D. The purpose and intended nature of the business relationship were not reviewed m the assessment.
- E. The ultimate beneficial owners of the customer need to be Identified and verified.
Answer: D,E
Explanation:
C:The purpose and intended nature of the business relationship are fundamental elements of customer due diligence (CDD) and should be reviewed in the risk assessment process to understand the rationale behind the customer's activities and their alignment with expected patterns.
D:Identifying and verifying the ultimate beneficial owners (UBOs) is a core principle of the KYC process to ensure transparency and mitigate risks related to hidden ownership or illicit activities.
NEW QUESTION # 56
A retail banking small and medium-sized enterprise (SME) customer launches a charity and requests a Corporate-SME account to receive donations and make disbursements. Which scenarios would most likely identify activity related to a charity account?(Select Two.)
- A. Scenario 7
- B. Scenario 1
- C. Scenario 4
- D. Scenario 5
- E. Scenario 6
Answer: A,B
Explanation:
Scenario 1: Evaluates unusual activity, such as large, unexplained deposits or withdrawals, which are red flags in charity-related accounts .
Scenario 7: Exads to detect inconsistencies with the stated purpose, ensuring adherence to AML standards for NPOs.
NEW QUESTION # 57
Which requirement of a financial institution's compliance program should an auditor review first to understand key roles and responsibilities?
- A. List of suspicious transactions reported to the regulator
- B. Names of politically exposed persons that are subject to ongoing monitoring
- C. Designation of an individual or individuals responsible for coordinating and monitoring day-to-day compliance
- D. List of high-risk customers subject to enhanced due diligence and the measures taken to mitigate the risks
Answer: C
Explanation:
Key Roles and Responsibilities:
* Identifying compliance coordinators helps auditors understand the operational framework and ensure clear accountability in managing day-to-day AML compliance activities.
Initial Review Focus:
* This step provides a foundational understanding of the institution's compliance structure, enabling targeted assessments of other program components.
Advanced CAMS-Audit Reference:
* CAMS-Audit emphasizes that the effectiveness of an AML program hinges on having designated individuals who oversee compliance processes.
NEW QUESTION # 58
Which should the external auditor recommend to ensure that the institution did not facilitate transactions involving a sanctioned person?
- A. Periodically monitor the sanctions lists uploaded by the screening tool to ensure the most up-to-date lists are in the system.
- B. Perform a security risk and access assessment on the sanction screening tool to ensure more timely sanctions lists are uploaded.
- C. Re-screen all transactions over the period of time when the updated sanction lists were not uploaded against the current sanctions lists.
- D. Re-screen all transactions based on the sanctions lists that were active at that time but not uploaded.
Answer: C
Explanation:
Recommended Action:
* Re-screening ensures compliance with sanctions and identifies potential violations retrospectively. This is a critical regulatory requirement for addressing gaps in screening coverage.
FATF and Basel Guidelines:
* Emphasize retrospective reviews in cases of system lapses to maintain the integrity of the sanctions compliance program.
NEW QUESTION # 59
During a sample review, the auditor notices that an alert was generated for a large deposit that was inconsistent with the customer profile. The customer has had no other incidents in the past 10 years and has provided documents to confirm the deposit as a property sale. What should the auditor do?
- A. Increase the sample size.
- B. Document the conclusion within the audit work papers.
- C. Consult with the compliance officer.
- D. Carry out further investigation of this alert.
Answer: B
Explanation:
Rationale for Documenting Conclusions:
* Documenting findings ensures transparency and provides an audit trail. This is critical when the incident is consistent with provided evidence and no further investigation is warranted.
Audit Work Paper Standards:
* CAMS-Audit recommends that all conclusions be adequately documented, especially when deviations from normal patterns are justified with valid explanations.
NEW QUESTION # 60
Review of client files reveals that staff members have been performing negative media searches for clients only when they recognize the client name. When an interesting story is identified a print of the results is inserted in the client file. There are no clear procedures on adverse media screening. Which should the auditor recommend? {Select Two.)
- A. All staff members should be provided with additional training to ensure they adhere to standard procedures.
- B. Evidence of negative media screening retained in client files must comprise negative reports only.
- C. Identification of relevant reports via adverse media searches must be escalated for an assessment for materiality.
- D. Procedures should be enhanced to require that all clients are subject to regular negative media screening.
- E. Privacy regulation requires that clients who have a print copy of the adverse media m their files should be notified.
Answer: A,D
Explanation:
Adverse Media Screening Requirements:
* Negative media screening is a critical part of customer due diligence (CDD) as highlighted in FATF Recommendation 10. Proper training ensures staff apply consistent procedures.
* Regular screening of all clients ensures ongoing monitoring of risks, aligning with the risk-based approach mandated by AML standards.
Key Compliance Justification:
* Staff training and procedural updates mitigate the risk of inconsistent adverse media identification, a key finding in compliance audits.
NEW QUESTION # 61
Which are objectives of the issue confirmation step in the audit issue management process? (Select Two.)
- A. Compliance Identifies and schedules pre-exam validation as appropriate.
- B. Findings ate clearly written and facts are accurate
- C. Communication, follow-up. and documentation are tracked on scheduled sustainability validations.
- D. Findings ate explained and assigned to the accountable owners.
- E. Additional remediation is identified and planned.
Answer: B,D
Explanation:
Key Objectives of Issue Confirmation:
* Findings need to be clearly articulated and assigned to ensure accountability and actionable remediation.
* Accurate documentation ensures that facts are not disputed and remediation can proceed efficiently.
Irrelevant Options:
* B:Additional remediation is a later step in the issue resolution process.
* D and E:Tracking and pre-exam validation relate to follow-up stages, not the initial confirmation step.
NEW QUESTION # 62
What model test verifies that alerts indicative of potentially suspicious activity are not missed due to threshold settings?
- A. Below-the-line
- B. Gap analysis
- C. Above-the-line
- D. Black-box configuration
Answer: A
Explanation:
Understanding Below-the-Line Testing:
* Below-the-line testing evaluates scenarios where alerts were not generated but could have been if the thresholds were set differently.
* This testing method focuses on identifying potential gaps in the detection model that might lead to missed alerts for suspicious activities.
Significance in AML/CFT Compliance:
* This type of test ensures the system's thresholds are not too restrictive, which could result in legitimate suspicious activities being overlooked.
* It provides insight into whether the system needs re-calibration to balance false positives and missed detections.
Process of Below-the-Line Testing:
* Data Sampling: Analyze transactions that fall just below the alert generation threshold.
* Scenario Analysis: Identify whether these transactions exhibit patterns consistent with suspicious activities.
* Model Adjustment: Adjust thresholds to optimize the trade-off between sensitivity and specificity.
Advanced CAMS-Audit Reference:
* CAMS-Audit guidelines detail below-the-line testing as an integral part of tuning and validating monitoring models. It ensures that monitoring systems align with risk appetite and operational realities.
* FATF guidance on dynamic model validation highlights the importance of continuous review and adaptation of thresholds to evolving typologies and risks.
Case Example and Regulatory Perspective:
* Advanced CAMS-Audit recommends below-the-line tests especially in high-risk sectors, ensuring robust detection mechanisms.
* Regulatory expectations, as per FATF and Basel guidelines, require proactive measures to address model gaps that below-the-line testing can identify.
NEW QUESTION # 63
Which are the most important documents for an auditor to verify that a financial institution has proper controls in place for mitigating its money laundering risk exposure? (Select Two.)
- A. Internal controls including policies and procedures
- B. Management action plan for remediating audit findings
- C. List of politically exposed persons
- D. Log of law enforcement requests
- E. Money laundering risk assessment
Answer: A,E
Explanation:
Importance of Risk Assessment and Controls:
* A money laundering risk assessment identifies inherent risks and vulnerabilities the institution faces, forming the foundation for mitigation efforts.
* Internal controls, including policies and procedures, are critical to operationalize the risk assessment and ensure compliance with AML requirements.
Irrelevant Options:
* C:A management action plan is remedial, not preventive.
* D:The list of PEPs is specific to high-risk individuals, not the institution's overall risk framework.
* E:Law enforcement logs provide insight into reactive measures but not ongoing control adequacy.
NEW QUESTION # 64
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