Table of Contents

Table of Contents

Study and Test-Taking

Tips and Techniques.....................................XIII
Understanding How You Learn................................................................................... xiv

Learning How to Learn................................................................................................. xiv

Establishing a Good Framework for Studying.......................................................... xvi

Ensuring Good Study Habits........................................................................................xx

Taking the Examination.............................................................................................. xxii

Tips for Succeeding in Multiple-Choice Tests......................................................... xxiii

Coping with Test Anxiety............................................................................................ xxv

Chapter 1: Introduction.................................... 1
About the Association of Certified
Anti-Money Laundering Specialists.............................................................................. 1

n The Mission of the Association of Certified

Anti-Money Laundering Specialists.................................................................... 2

n Objectives........................................................................................................... 3

n Membership ....................................................................................................... 3

CAMSA Unique Certification...................................................................................... 4

n Why CAMS......................................................................................................... 4

n Purpose of Certification...................................................................................... 5

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Study Guide for the CAMS Certification Examination

n CAMS Certification Provides Career Benefits.................................................... 6

n Who May Take The CAMS Certification Examination?....................................... 7

n CAMS Recertification.......................................................................................... 8

n How Is The CAMS Examination Developed?..................................................... 9

n Content of the CAMS Examination................................................................... 10

n The CAMS Candidate Handbook and the Process for Applying for the
Certification Examination.................................................................................. 10

Study Guide for the Certification Examination...........................................................11

n Purpose of the Study Guide...............................................................................11

n Organization of The Study Guide.......................................................................11

n Audience........................................................................................................... 12

n Conclusion........................................................................................................ 12

Chapter 2: Risks and Methods of Money

Laundering and Terrorist Financing............. 13
What is Money Laundering?........................................................................................ 13

Three Stages in the Money Laundering Cycle........................................................... 15

The Economic and Social Consequences of Money Laundering............................ 18

Methods of Money Laundering................................................................................... 25

n Banks and Other Depository Institutions.......................................................... 25

q Electronic Transfers of Funds............................................................... 26

q Correspondent Banking........................................................................ 27

q Payable-Through Accounts ................................................................. 32

q Concentration Accounts........................................................................ 34

q Private Banking.................................................................................... 35

q Structuring............................................................................................ 39

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q Bank Complicity.................................................................................... 45

q Credit Unions or Building Societies...................................................... 46

n Non-Bank Financial Institutions ....................................................................... 47

q Credit Card Industry............................................................................. 47

q Money Remitters and Money Exchange Houses................................. 48

q Insurance Companies........................................................................... 51

q Securities Broker-Dealers..................................................................... 55

n Non-Financial Businesses and Professions .................................................... 58

q Casinos and Other Businesses Associated with Gambling.................. 58

q Dealers in High-Value Items (Precious Metals, Jewelry, Art, etc.)............ 60

q Travel Agencies.................................................................................... 64

q Vehicle Sellers...................................................................................... 65

q Gatekeepers: Notaries, Accountants, Auditors, Lawyers...................... 66

q Investment and Commodity Advisors................................................... 69

q Trust and Company Service Providers................................................. 72

q Real Estate Industry ............................................................................ 74

q Manipulation of Prices in Import and Export Transactions .................. 76

q Black Market Peso Exchange............................................................... 78

Money Laundering Risks Associated

with New Technologies................................................................................................ 80

n Online or Internet Banking................................................................................ 81

n Internet Casinos................................................................................................ 83

n Prepaid Cards and E-Cash............................................................................... 86

Money Laundering Risks of Structures

Designed to Hide Beneficial Ownership..................................................................... 88

n Shell Companies............................................................................................... 88

n Trusts................................................................................................................ 95

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Study Guide for the CAMS Certification Examination

n Bearer Bonds and Securities............................................................................ 96

Terrorist Financing....................................................................................................... 97

n Differences and Similarities Between Terrorist

Financing and Money Laundering.................................................................... 97

n Detecting Terrorist Financing............................................................................ 98

n Hawala and Other Informal Value Transfer Systems ..................................... 103

n Charities or Non-Profit Organizations............................................................. 106

Summary..................................................................................................................... 107

Review Questions....................................................................................................... 109

Chapter 3: Compliance Standards for

Anti-Money Laundering and Combating the
Financing of Terrorism..................................111
Financial Action Task Force....................................................................................... 111

n Members and Observers.................................................................................112

n Objectives........................................................................................................114

n Financial Action Task Force 40 Recommendations.........................................117

n Non-Cooperative Countries............................................................................ 127

The Basel Committee on Banking Supervision....................................................... 130

European Union Directives on Money Laundering................................................. 137

q First Directive ..................................................................................... 137

q Second Directive................................................................................ 138

q Third Directive.................................................................................... 139

Regional and Other International Initiatives............................................................ 142

n Regional FATF-Style Bodies and FATF Associate Members ......................... 142

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q Asia/Pacific Group on Money Laundering ......................................... 143

q Caribbean Financial Action Task Force.............................................. 145

q Financial Action Task Force on Money Laundering in

South America (GAFISUD) Grupo de Accin Financiera
de Sudamrica................................................................................... 147

q Middle East and North Africa Financial Action Task Force................. 148

q Eurasian Group on Combating Money

Laundering and Terrorist Financing.................................................... 150

q Eastern and South African Anti-Money Laundering Group ................ 150

n Other Anti-Money Laundering Initiatives......................................................... 151

q Organization of American States Inter-American

Drug Abuse Control Commission (CICAD)......................................... 151

q Egmont Group of Financial Intelligence Units ................................... 154

q The Wolfsberg Group ........................................................................ 155

q The World Bank and International Monetary Fund............................. 161

n Other International Organizations................................................................... 163

Key U.S. Legislative and Regulatory Initiatives

Applied to Transactions Internationally................................................................... 164

n USA Patriot Act............................................................................................... 164

n The Reach of the U.S. Criminal Money Laundering

and Civil Forfeiture Laws................................................................................ 171

n Office of Foreign Assets Control..................................................................... 172

Summary..................................................................................................................... 173

Review Questions....................................................................................................... 179

Chapter 4: Anti-Money Laundering

Compliance Program................................... 181
Introduction................................................................................................................. 181

Assessing Risk and Developing a Risk Scoring Model.......................................... 182

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Study Guide for the CAMS Certification Examination

n Introduction..................................................................................................... 182

q Factors to Determine Risk.................................................................. 184

n What Risks Do Your Customers Pose?.......................................................... 184

q Levels of Risk..................................................................................... 184

q Geographical Location........................................................................ 186

q Customer Type................................................................................... 188

n What Risks Do Your Products or Services Pose? ......................................... 189

The Elements of an AML Program............................................................................ 191

n Internal Policies, Procedures and Controls..................................................... 191

n Compliance Officer......................................................................................... 195

n Training........................................................................................................... 197

q Who to Train....................................................................................... 197

q What to Train On................................................................................ 199

q How to Train....................................................................................... 200

q When to Train..................................................................................... 201

q Where to Train ................................................................................... 202

n Audit................................................................................................................ 202

Compliance Culture and Senior Managements Role............................................. 205

Customer Due Diligence............................................................................................ 209

n Main Elements of a CDD Program................................................................. 209

n Account Opening, Customer Identification and Verification............................ 210

q Name Checking Lists.......................................................................... 216

q Consolidated CDD.............................................................................. 218

Know Your Employee................................................................................................. 219

Suspicious or Unusual Transaction Monitoring and Reporting............................ 222

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Red Flags or Indicators of Money Laundering........................................................ 224

n Suspicious Customer Behavior....................................................................... 227

n Suspicious Customer Identification Circumstances........................................ 228

n Suspicious Cash Transactions........................................................................ 229

n Suspicious Non-Cash Deposits...................................................................... 231

n Suspicious Wire Transfer Transactions.......................................................... 231

n Suspicious Safe Deposit Box Activity............................................................. 232

n Suspicious Activity in Credit Transactions...................................................... 232

n Suspicious Commercial Account Activity ....................................................... 233

n Suspicious Trade Financing Transactions...................................................... 234

n Suspicious Investment Activity........................................................................ 235

n Suspicious Employee Activity......................................................................... 235

n Suspicious Activity in a Money Remitter/Currency

Exchange House Setting................................................................................ 236

n Suspicious Activity in an Insurance Company Setting.................................... 236

n Suspicious Activity in a Broker-Dealer Setting................................................ 237

n Suspicious Activity Indicators of Black Market Peso

Exchange Money Laundering Method............................................................ 238

Electronic Anti-Money Laundering Solutions.......................................................... 239

Summary..................................................................................................................... 244

Review Questions....................................................................................................... 245

Chapter 5: Conducting or Supporting the

Investigation Process.................................. 247
Introduction................................................................................................................. 247

Law Enforcement Investigations.............................................................................. 247

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Study Guide for the CAMS Certification Examination

n Decision to Prosecute..................................................................................... 249

Responding to Law Enforcement Investigations.................................................... 250

n Summonses and Subpoenas.......................................................................... 251

n Search Warrants............................................................................................. 252

n Orders to Restrain or Freeze Accounts or Assets........................................... 253

n Monitoring the Institutions Response to Law Enforcement Investigations..... 253

n Dealing with Investigators and Prosecutors.................................................... 254

n Obtaining Counsel for the Investigation.......................................................... 254

n Notices to Employees..................................................................................... 255

n Media Relations.............................................................................................. 256

Internal Investigations............................................................................................... 256

n Closing the Account........................................................................................ 258

n Filing an STR.................................................................................................. 258

Conducting the Investigation.................................................................................... 258

n Documents...................................................................................................... 259

q The Importance of Gathering and Producing Documents.................. 259

q Finding and Reviewing the Documents.............................................. 261

q Organization of Documents................................................................ 261

n Interviewing Employees.................................................................................. 262

n Attorney-Client Issues..................................................................................... 262

q Attorney-Client Privilege, Applied to Entities and Individuals............. 262

q Dissemination of a Written Report by Counsel................................... 263

Exploiting the Internet for Money Laundering Investigations................................ 263

n Too Much Money............................................................................................ 264

n Unknown Business......................................................................................... 264

n Weird Wires.................................................................................................... 266

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n The Final Word............................................................................................... 268

AML Cooperation Between Countries...................................................................... 268

n Mutual Legal Assistance Treaties................................................................... 269

n Financial Intelligence Units............................................................................. 270

n The Supervisory Channel............................................................................... 276

n FATF Recommendations on Cooperation Between Countries....................... 277

n Summary........................................................................................................ 277

Review Questions....................................................................................................... 278

Chapter 6: Glossary of
Anti-Money Laundering Terms.................... 279

Chapter 7: Practice Questions

for Certification Examination...................... 345

Chapter 8: Guidance Documents and

Reference Materials...................................... 399
Guidance Documents and Reference Materials..........................................400

Other Websites with Helpful AML Material...................................................405

AML-Related Periodicals...............................................................................406

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