ACAMS CAMS7 Certified Anti-Money Laundering Specialist (the 7th edition) Free Practice Test - 10 Questions
This practice bank exercises foundational knowledge of the money laundering stages, the risk-based approach, suspicious activity reporting triggers, beneficial ownership identification, FATF standards, sanctions screening, and the distinction between money laundering and terrorist financing. Questions test practical decisions such as when to file a SAR, how to apply simplified due diligence, and how to resolve false positive sanctions alerts. Learners should understand the sequence of ML stages (placement, layering, integration), the importance of suspicion over thresholds, and the requirement to identify natural persons owning 25% or more. The bank also reinforces record-keeping minimums and international cooperation bodies like the Egmont Group.
What this CAMS7 practice set measures
This is an analysis of the practice bank, not a claim about the vendor's live exam blueprint. Use it to identify the knowledge, judgment, and recall patterns exercised here, then verify your coverage against the current official exam guide.
Core Money Laundering Stages and Detection
The practice bank begins with a foundational question on the money laundering stages, specifically placement—the initial introduction of illicit funds into the financial system. This stage is often detected through structuring or other red flags. Question 2 builds on this by presenting a scenario of repeated deposits just below the reporting threshold followed by wires to a high-risk jurisdiction. The correct action is to conduct enhanced due diligence and consider filing a SAR, emphasizing that suspicion, not amount, triggers reporting obligations. Question 6 further reinforces that even small total amounts ($8,000) require escalation if suspicion exists, correcting a common misconception that only large transactions are reportable.
- Placement is the first stage where cash enters the financial system.
- Structuring (multiple deposits just under thresholds) is a red flag requiring EDD and possible SAR.
- Suspicion triggers reporting obligations regardless of transaction amount.
- Tellers must escalate suspicious activity; ignoring or advising on structuring is illegal.
Risk-Based Approach and Customer Due Diligence
Question 3 tests the risk-based approach by asking which scenario qualifies for simplified due diligence (SDD). A publicly traded company with transparent ownership is low risk and qualifies for SDD, while PEPs, large cross-border wires, and cash-intensive businesses require standard or enhanced due diligence. Question 4 addresses beneficial ownership for shell companies in secrecy jurisdictions: the most critical measure is obtaining a list of shareholders with 25% or more ownership, as this reveals the natural persons who ultimately control the entity. Question 5 covers when CDD is required per FATF Recommendation 10: at relationship establishment, for occasional transactions above thresholds, upon suspicion of ML/TF, or when doubts about customer data arise.
- SDD is for low-risk customers like publicly traded companies with transparent ownership.
- Beneficial ownership identification requires obtaining individuals with 25% or more ownership.
- CDD is required at onboarding, occasional transactions above thresholds, suspicion, or data doubts.
- PEPs, large cross-border wires, and cash-intensive businesses are higher risk.
International Standards and Cooperation
The practice bank includes questions on global AML frameworks. Question 7 asks which organization is a global network of FIUs—the Egmont Group. Understanding the roles of FATF, Egmont, IMF, and World Bank is important. Question 10 tests record-keeping per FATF standards: transaction records must be retained for at least 5 years after the business relationship ends. This is a minimum, though national laws may require longer. Question 9 distinguishes money laundering from terrorist financing: ML requires funds from criminal activity, while TF may use legitimate funds. Both are illegal and use financial systems, but the source of funds differs.
- The Egmont Group connects FIUs for international information sharing.
- FATF sets standards; record keeping requires at least 5 years after relationship ends.
- Money laundering presupposes a predicate offense generating illicit funds.
- Terrorist financing can involve clean funds intended for illegal acts.
Sanctions Compliance and Alert Resolution
Question 8 presents a sanctions screening scenario where a name closely matches a sanctions list but is determined with high confidence to be a false positive. The appropriate action is to document the false positive determination and allow normal processing to continue. Freezing assets without suspicion, filing a SAR for false positives, or contacting the customer (which could tip off a true match) are not correct. This highlights the importance of documented review processes and clearing alerts appropriately. Sanctions compliance requires efficient handling of false positives to avoid unnecessary operational friction while maintaining vigilance.
- False positive determinations must be documented and cleared without freezing or filing SAR.
- Contacting the customer may tip off true matches; freeze only if suspicion remains.
- Efficient false positive handling reduces operational impact while maintaining compliance.
Practice ACAMS CAMS7 Certified Anti-Money Laundering Specialist (the 7th edition) with real flashcards
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Static practice bank
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In the money laundering process, which stage involves the initial introduction of illicit funds into the financial system?
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Money Laundering Stages
Study workflow
Turn one CAMS7 attempt into a study plan
- 1
Identify Money Laundering Stage Red Flags
When analyzing transactions, first determine the stage: placement (cash entry), layering (complex transfers to obscure source), or integration (apparently legitimate investments). Focus on unusual cash deposits, structuring, or rapid movement to high-risk jurisdictions. These indicate placement or layering.
- 2
Apply Suspicion-Based Reporting Protocol
If you suspect money laundering or terrorist financing, escalate immediately to the compliance officer regardless of transaction amount. Do not ignore activity because it falls below thresholds. Document all red flags. The compliance officer will decide whether to file a SAR.
- 3
Conduct Beneficial Ownership Verification
For legal entities, especially shell companies or those in secrecy jurisdictions, request documentation showing individuals with 25% or more ownership or control. Verify through independent sources. If ownership is opaque, apply enhanced due diligence and consider declining the relationship.
- 4
Handle Sanctions Screening False Positives
When a screening alert occurs, perform a thorough review comparing name, date of birth, address, and other identifiers. If you conclude with high confidence it is a false positive, document the review and reasoning, then clear the alert. Do not freeze assets or file SARs for confirmed false positives.
- 5
Determine Appropriate Due Diligence Level
Assess customer risk based on type, geography, products, and channel. For low-risk customers (e.g., publicly traded companies), apply simplified due diligence. For higher risk (PEPs, cash-intensive businesses, large cross-border wires), apply enhanced due diligence including source of funds and beneficial ownership checks.
FAQ
Questions about this CAMS7 practice page
Clear boundaries on what the bank covers, how to use it, and where official vendor information still matters.
What is the primary difference between money laundering and terrorist financing?+
Money laundering involves funds derived from criminal activity (predicate offense), while terrorist financing may use legitimate funds intended for illegal acts. Both are illegal and use the financial system, but the source of funds differs.
Under FATF standards, how long must transaction records be kept after a business relationship ends?+
At least five years. Some national laws may require longer, but five years is the FATF minimum. This applies to all transaction records, including those related to occasional transactions.
What is the role of the Egmont Group in AML/CFT?+
The Egmont Group is a global network of financial intelligence units (FIUs) that facilitates information sharing on suspicious transactions and other financial intelligence. It complements FATF standard-setting by enabling operational cooperation.
When is customer due diligence required according to FATF Recommendation 10?+
CDD is required when establishing a business relationship, conducting an occasional transaction above a designated threshold (typically $15,000), when there is suspicion of money laundering or terrorist financing, or when there are doubts about previously obtained customer data.
What should a bank do if a sanctions screening alert is confidently deemed a false positive?+
Document the false positive determination, including the review methodology and reasoning, then clear the alert and allow normal processing. Do not freeze assets, file a SAR, or contact the customer, as these actions could be inappropriate or tip off a true match.
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