ACAMS Updated CAMS Exam Questions and Answers by hettie

A Penza scheme, also known as a Ponzi scheme, is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors1 The scheme relies on attracting new investors with unrealistic promises of high returns and low risk, while using their money to pay off the previous investors2 An unlicensed investment advisor who offers profits other investments cannot guarantee is likely to be involved in a Penza scheme, as this is a common way to entice unsuspecting victims3 The other options are not necessarily indicative of a Penza scheme, as they could be legitimate or involve other types of fraud.

 1 Ponzi scheme - Wikipedia; 2 Ponzi Schemes: Definition, Examples, and Origins - Investopedia; 3 What is Ponzi Scheme? - Sanction Scanner

In theEuropean Union (EU), data protection laws (GDPR) and AML regulations (AMLDs) must be balancedwhen sharing customer data.

Option D (Correct):Data sharing must be"necessary, reasonable, and proportionate,"followingAML regulations and data protection requirements.

Option A (Incorrect):While data protection laws apply,AML/CFT regulations provide exemptionsfor legitimate investigations.

Option B (Incorrect):Aformal production orderis not always required if information sharing islegally permitted under AML regulations.

Option C (Incorrect):Privacy laws still apply, even in financial crime investigations. AML/CFT obligations donot override GDPRbut must be balanced appropriately.

Key Considerations in Cross-Border AML Data Sharing in the EU:

GDPR & AML Regulations Must Align:TheGeneral Data Protection Regulation (GDPR)protects customer privacy, but theEU Anti-Money Laundering Directives (AMLDs) require data sharing for AML purposes.

Proportionality Principle:Anydata shared must be strictly limited to what is necessaryfor AML purposes (e.g., transaction details but not unnecessary personal data).

Regulatory Guidance:Banks must comply withArticle 23 of GDPR, which allowsexceptions for AML compliance.

Why This Matters:

Failure toproperly balance AML compliance and data privacycan lead to:

Regulatory fines under GDPRfor data breaches.

AML penaltiesfor failing to cooperate in financial crime investigations.

When an FI is being investigated for possible money laundering, it is important that it cooperates with the law enforcement agencies (LEAs) in a professional and transparent manner. This means that the FI should take the following steps:

Maintain centralized control over all requests and responses to ensure completeness and timely responses. This will help the FI to avoid duplication, inconsistency, or omission of information, as well as to track the status and progress of the requests and responses. It will also facilitate the communication and coordination between the FI and the LEAs, and demonstrate the FI’s willingness to cooperate12.

Review subpoenas and other information requests by senior management and an investigations group or counsel. This will help the FI to assess the scope, relevance, and legality of the requests, as well as to identify any potential risks, conflicts, or sensitivities. It will also enable the FI to prepare and provide the requested information in an accurate and timely manner, and to seek clarification or negotiation if necessary13.

The other options are not advisable, as they may indicate a lack of cooperation, obstruct the investigation, or damage the FI’s reputation. For example:

Making employees, including corporate officers, unavailable for interviews and refusing documents upon receipt of a subpoena may be considered as non-compliance, evasion, or contempt of court, and may result in legal sanctions or penalties4.

Addressing the document destruction policy to ensure the relevant documents are destroyed may be seen as tampering with evidence, destroying records, or concealing information, and may constitute a criminal offence or a breach of regulatory obligations5.

Not answering inquiries from the media directly, but rather replying, “No comment” may create a negative impression, fuel speculation, or invite criticism, and may harm the FI’s image, credibility, or trustworthiness.

Cooperation between FIUs, Law Enforcement Authorities, and Prosecutors

AML and Financial crimes investigation

Mechanisms for interaction of law enforcement agencies in the field of counteracting and combating money laundering

Recommendation 30: Responsibilities of law enforcement and investigative authorities

Money laundering and illicit finance

The bank’s current anti-money laundering program is inadequate because it does not include a process for monitoring customer account activity, which is a key component of detecting and reporting suspicious transactions. The fact that the consultant and the bank have mutual clients does not affect the risk rating of those customers, nor does it justify a lower level of scrutiny. The bank should revise its procedures to ensure that it has a comprehensive and risk-based approach to customer due diligence, transaction monitoring, and reporting.

CAMS Certification Package - 6th Edition, Chapter 3: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), pp. 67-69.

FATF Guidance for a Risk-Based Approach: Legal Professionals, pp. 10-11, 19-20.

BSA/AML Internal Audit: PwC, pp. 1-2.