[2026] Use Valid Advanced-CAMS-Audit Exam - Actual Exam Question & Answer
Test Engine to Practice Advanced-CAMS-Audit Test Questions
NEW QUESTION # 11
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. Management action plan for remediating audit findings
- B. List of politically exposed persons
- C. Log of law enforcement requests
- D. Internal controls including policies and procedures
- E. Money laundering risk assessment
Answer: D,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 # 12
During the ongoing due diligence process the company becomes aware that the customer is holding personal assets for a politically exposed person (PEP). What should the auditor recommend to enhance the control environment for this customer relationship? (Select Three.)
- A. Review the customer risk profile every two years as with any other customers.
- B. Conduct enhanced due diligence and enhanced ongoing monitoring of the customer relationship.
- C. File a suspicious activity report as the previous riskrating was not correct.
- D. Review and document the details of the customer s asset-holding arrangement.
- E. Deploy automated monitoring toots to efficiently peruse the customer's KYC information and assure that the customer's KYC risk rating is correct.
- F. Designate the account as a PEP-account.
Answer: B,D,F
Explanation:
C:Designating the account as a PEP-account triggers additional monitoring and controls as PEPs inherently pose higher risks.
D:Enhanced due diligence (EDD) and ongoing monitoring are essential for PEPs to track their financial activities closely and address any anomalies.
E:Documenting the details of the asset-holding arrangement provides clarity on the customer's profile and any associated risks.
NEW QUESTION # 13
An auditor plans to examine a sample targeting newly onboarded, high net-worth clients to assess adherence to their onboarding policies. What sampling methods should the auditor use? (Select Three.)
- A. Systematic sampling
- B. Snowball sampling
- C. Judgment sampling
- D. Stratified sampling
- E. Discovery sampling
- F. Simple random sampling
Answer: A,C,D
Explanation:
Sampling Methods Justification:
* A. Judgment Sampling: Enables the auditor to target high net-worth clients specifically based on their judgment of risk factors.
* B. Stratified Sampling: Allows for dividing the population into groups (e.g., high net-worth clients) and selecting samples from each group.
* F. Systematic Sampling: Ensures a structured and unbiased selection process, suitable for large datasets.
NEW QUESTION # 14
Which statements demonstrate an effective use of risk appetite in an organization? (Select Two.)
- A. Risk appetite statements do not need specific indicators to alert management when the level of acceptable risk is exceeded.
- B. When discussing and managing risk, "risk appetite" and "risk tolerance" can be used interchangeably.
- C. Risk appetite statements should remain stable and consistent, even in changing business conditions.
- D. Analyzing risk appetite statements is important to reaching a meaningful articulation of risk appetite.
- E. Determining risk appetite should include a discussion about an organization becoming overly risk- averse.
Answer: D,E
NEW QUESTION # 15
A financial institution is auditing its correspondent banking relationships and their respective sanctions compliance programs. Which condition will merit a higher sample size assuming the correspondent banks have a moderate level of risk mitigation?
- A. A fluctuating customer base in an international environment
- B. A well-known customer base m a localized environment
- C. A customer base changing due to a merger in the domestic market
- D. A stable customer base in an international environment
Answer: A
Explanation:
Higher Sample Size Justification:
* A fluctuating international customer base increases the complexity of correspondent banking relationships and sanctions compliance, necessitating a larger sample to assess risks effectively.
Irrelevant Options:
* B and D:Stable or localized environments reduce complexity, lowering sample size needs.
* C:Domestic mergers affect customer risk profiles but are less volatile than fluctuating international markets.
NEW QUESTION # 16
Following completion of testing and tuning of the parameters and thresholds of the transaction monitoring model which final step should the team recommend as necessary to verify effective model functioning?
- A. Data validation
- B. Regulatory approvals
- C. Model validation
- D. Audit continuous monitoring
Answer: C
Explanation:
Purpose of Model Validation:
* Model validation ensures that the transaction monitoring model is functioning as intended, effectively identifying suspicious transactions and mitigating AML/CFT risks.
* It encompasses testing data accuracy, parameter relevance, threshold efficacy, and compliance with regulatory requirements.
Process:
* Validation includes end-to-end reviews, statistical evaluations, and expert assessments of model outputs.
* According to FATF and Basel Committee standards, model validation is a critical component of the AML framework.
Irrelevance of Other Options:
* Audit continuous monitoringfocuses on ongoing oversight, not the specific confirmation of initial model functionality.
* Data validationaddresses data quality but does not verify operational model performance.
* Regulatory approvalsare necessary for compliance but are not a step in verifying model functioning.
NEW QUESTION # 17
Which products/services increase the risk level for money laundering for XYZ Bank?
- A. Foreign exchange services
- B. Letters of credit
- C. International fund transfers
- D. Payable through accounts
Answer: C,D
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 # 18
The auditor determines that the population for transaction monitoring testing can be stratified into five distinct categories. To complete testing which sampling method should the auditor use to identify the sample size?
- A. Judgmental
- B. Statistical
- C. Proportional
- D. Risk-based
Answer: B
Explanation:
* Importance of Statistical Sampling in Transaction Monitoring Testing:
* Statistical sampling is the most suitable method when dealing with stratified populations, as it ensures a representative sample is drawn from each distinct category.
* This method allows auditors to achieve reliable results by applying mathematical and probabilistic models to calculate the required sample size, ensuring unbiased and valid conclusions.
* Relevance to Stratified Populations:
* When the transaction monitoring population is divided into distinct categories, statistical sampling ensures that each category is proportionately represented based on its size or risk level within the overall population.
* Evaluation of Other Options:
* Judgmental Sampling:Relies on auditor discretion and may introduce bias, making it unsuitable for ensuring proportional representation in stratified populations.
* Proportional Sampling:Focuses only on proportional representation but does not leverage statistical tools to determine the optimal sample size or confidence levels.
* Risk-Based Sampling:While effective in certain contexts, it is better suited for focusing on high- risk categories rather than ensuring comprehensive representation of all strata.
* Alignment with Advanced CAMS-Audit Standards:
* Advanced CAMS-Audit recommends statistical sampling for stratified populations to ensure that all categories are adequately tested and results are statistically valid for compliance and performance assessments.
Conclusion:The auditor should usestatistical samplingto identify the sample size when testing a stratified population for transaction monitoring. This ensures a reliable, unbiased, and mathematically sound basis for the audit.
NEW QUESTION # 19
During the auditing process the auditor finds that the entity never updates the customers risk assessment.
Which remediation actions should the auditor suggest? (Select Two.)
- A. Audit designates an audit manager to review customer profiles annually.
- B. Management engages an independent third party to update all the customer risk profiles.
- C. Delete non-active customer profiles to reduce the workload of ongoing surveillance.
- D. Compliance regularly updates the lists of high- and medium-risk countries to ensure updated customer risk profiles.
- E. The business updates the customer risk profiles periodically in accordance with the customer risk level.
Answer: D,E
Explanation:
A:Regularly updating lists of high- and medium-risk countries ensures that customer risk profiles align with the most current geopolitical and economic risks.
E:Periodic updates to customer risk profiles, based on their assigned risk level, are critical for maintaining an accurate and dynamic risk assessment system.
NEW QUESTION # 20
Which should be evaluated when analyzing components of risk mitigation in an AML risk assessment?
(Select Two.)
- A. Product risk
- B. Liquidity risk
- C. Customer risk
- D. Overall customer volume
- E. Office of Foreign Assets Control filtering
Answer: A,C
Explanation:
Product Risk: Certain products (e.g., high-value transfers, anonymous payment systems) inherently carry higher AML risks and require tailored risk mitigation measures.
Customer Risk: Understanding the risk profile of customers, including PEPs and high-net-worth individuals, is critical to assessing exposure and implementing risk-based approaches.
Both factors are core components in AML risk assessments, as highlighted in CAMS-Audit materials and FATF standards.
NEW QUESTION # 21
Which KYC-related finding poses the most risk to the organization?
- A. KYC requirements being considered a low priority not designed into business processes and implemented after product launch
- B. KYC processes not being integrated into the business and associated application systems
- C. Sanctions fists that are updated on a periodic basis following an annual risk assessment
- D. Backlogs and delays in maintaining client files in accordance with the organization's policy
Answer: A
Explanation:
KYC integration is fundamental to ensuring that anti-money laundering controls are effective from the outset of client onboarding. Delayed implementation of KYC increases the risk of onboarding high-risk customers without adequate due diligence.
Advanced CAMS-Audit documentation stresses the importance of embedding KYC into business processes during product design and rollout phases to mitigate risks.
Neglecting this requirement can expose the organization to severe regulatory penalties and reputational damage.
NEW QUESTION # 22
Which is the most significant risk associated with KYC requirements being considered a low priority not designed into processes and subsequently implemented after the products are already launched?
- A. Product launches will motivate frontline to get more customers.
- B. Frontline will not complete adequate CDD.
- C. Product launches may not be adequately prepared.
- D. Client experience improves as accounts can be opened more quickly.
Answer: B
Explanation:
* Critical Impact:
* Absence of CDD processes during product launch leaves the institution exposed to onboarding high-risk customers without proper risk assessment.
* Guidelines and Compliance:
* FATF standards emphasize embedding CDD in all stages of customer interaction to mitigate ML
/TF risks.
NEW QUESTION # 23
An auditor should verify that an institution has ensured its AML systems and controls include:
- A. measures to ensure that money laundering risk is taken into account in its monthly operations.
- B. daily reports by the institution's money laundering reporting officer on the operation and effectiveness of those systems and controls.
- C. training for senior management and the governing body only.
- D. supporting documents of its risk management policies and risk profile in relation to money laundering.
Answer: D
Explanation:
Core Components of AML Systems and Controls:
* Supporting documentation ensures alignment with regulatory expectations and helps auditors verify that the institution's policies and controls reflect its assessed risks.
Other Options:
* B:Monthly operations are operational concerns, not control documentation.
* C:Daily reports are excessive for governance purposes.
* D:Training must include all staff, not only senior management.
NEW QUESTION # 24
A recent regulatory examination identified serious deficiencies in the AML program. Which action should the organization take first?
- A. Change the designated head of AML compliance and request the newly appointed head of AML compliance produce a remediation plan.
- B. Enhance the ongoing employee training program so that employees are aware of their respective AML roles and responsibilities.
- C. Initiate a request for proposals for new AML systems and solutions.
- D. Engage a qualified third party to review the deficiencies and assist in developing a remediation plan.
Answer: D
Explanation:
Response to Deficiencies:
* Engaging a third party ensures an independent, expert evaluation of deficiencies and the creation of a robust remediation plan.
* This aligns with regulatory expectations for addressing material AML program weaknesses effectively.
NEW QUESTION # 25
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. Request a list of high-risk clients onboarded from management.
- B. Evaluate quality assurance processes tor onboarding new clients.
- C. Review the CDD onboarding policies and procedures to determine the criteria for selection.
- D. Initially sample 10% of new clients onboarded.
Answer: C
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 # 26
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