[Mar 19, 2026] Advanced-CAMS-Audit Exam Dumps - Try Best Advanced-CAMS-Audit Exam Questions - TestPassKing
Verified Advanced-CAMS-Audit exam dumps Q&As with Correct 90 Questions and Answers
NEW QUESTION # 14
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 6
- C. Scenario 4
- D. Scenario 5
- E. Scenario 1
Answer: A,E
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 # 15
Which are objectives of the issue confirmation step in the audit issue management process? (Select Two.)
- A. Findings ate explained and assigned to the accountable owners.
- B. Compliance Identifies and schedules pre-exam validation as appropriate.
- C. Communication, follow-up. and documentation are tracked on scheduled sustainability validations.
- D. Findings ate clearly written and facts are accurate
- E. Additional remediation is identified and planned.
Answer: A,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 # 16
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. List of politically exposed persons
- B. Log of law enforcement requests
- C. Internal controls including policies and procedures
- D. Management action plan for remediating audit findings
- E. Money laundering risk assessment
Answer: C,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 # 17
While reviewing a sample of trade financing documents in a financial institution, an auditor notes that there were instances of potential overvaluation and undervaluation of goods. The auditor intends to check if these were detected and escalated. Which is a reason for such overvaluation and undervaluation?
- A. To disguise dual-use goods
- B. To trade prohibited goods
- C. To move funds or value across national borders
- D. To defraud shipping companies
Answer: C
Explanation:
Reason for Overvaluation/Undervaluation:
* This technique is often used in trade-based money laundering to transfer funds or value disguised as legitimate trade transactions.
Auditor's Responsibility:
* Auditors must ensure such discrepancies are detected, escalated, and adequately addressed to prevent money laundering.
CAMS-Audit Insight:
* Advanced CAMS-Audit emphasizes vigilance in trade finance as a high-risk area for money laundering activities.
NEW QUESTION # 18
An auditor is writing the scope for an AML review of a financial institution. The objective is to evaluate how effectively existing controls are designed and operating. Which areas should be assessed? (Select Two.)
- A. Client base stability
- B. AML corporate governance
- C. Clients of the institution for more than 10 years
- D. Recent audit findings
- E. Previous correspondent banking relationships
Answer: B,D
Explanation:
Recent Audit Findings:
* Reviewing past findings ensures the institution has addressed previous deficiencies and allows the auditor to assess the effectiveness of implemented corrective actions.
AML Corporate Governance:
* Corporate governance is a critical component of AML compliance, involving oversight structures, policies, and accountability mechanisms to prevent money laundering risks.
Alignment with CAMS-Audit Principles:
* Advanced CAMS-Audit emphasizes evaluating governance structures and learning from recent audits to maintain robust AML controls.
NEW QUESTION # 19
Findings from a financial institution's (Fl's) regulatory examination suggest that several unidentified risks pose a serious threat. The Fl identifies the risks and implements a set of controls to mitigate those risks.
Which type of risk considers the controls' effectiveness?
- A. Residual
- B. Inherent
- C. Aggregate
- D. Consolidated
Answer: A
Explanation:
Definition of Residual Risk:
* Residual risk is the risk that remains after controls are implemented to mitigate inherent risks.
* It reflects the effectiveness of controls and highlights areas requiring further attention.
Relevance in Risk Management:
* Evaluating residual risk helps determine whether existing controls adequately address the identified risks.
CAMS-Audit Best Practices:
* Auditors must assess residual risk as part of the broader risk management framework to ensure regulatory compliance and operational resilience.
NEW QUESTION # 20
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 # 21
Which should the external auditor recommend to ensure that the institution did not facilitate transactions involving a sanctioned person?
- A. Re-screen all transactions over the period of time when the updated sanction lists were not uploaded against the current sanctions lists.
- B. Periodically monitor the sanctions lists uploaded by the screening tool to ensure the most up-to-date lists are in the system.
- C. Perform a security risk and access assessment on the sanction screening tool to ensure more timely sanctions lists are uploaded.
- D. Re-screen all transactions based on the sanctions lists that were active at that time but not uploaded.
Answer: A
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 # 22
What should an auditor verify when auditing areas with previously identified AMI deficiencies?
- A. Senior management agreed that the findings were legitimate.
- B. Management took appropriate and timely action to address any violations and other deficiencies.
- C. Management discussed an action plan to address any violations and other deficiencies.
- D. The business attested to remediating the control gaps.
Answer: B
Explanation:
* A: Management took appropriate and timely action to address any violations and other deficiencies.
NEW QUESTION # 23
What model test verifies that alerts indicative of potentially suspicious activity are not missed due to threshold settings?
- A. Gap analysis
- B. Black-box configuration
- C. Below-the-line
- D. Above-the-line
Answer: C
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 # 24
An auditor should verify that an institution has ensured its AML systems and controls include:
- A. supporting documents of its risk management policies and risk profile in relation to money laundering.
- 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. measures to ensure that money laundering risk is taken into account in its monthly operations.
Answer: A
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 # 25
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. Frontline will not complete adequate CDD.
- B. Product launches may not be adequately prepared.
- C. Client experience improves as accounts can be opened more quickly.
- D. Product launches will motivate frontline to get more customers.
Answer: A
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 # 26
Which KYC-related finding poses the most risk to the organization?
- A. Backlogs and delays in maintaining client files in accordance with the organization's policy
- B. KYC requirements being considered a low priority not designed into business processes and implemented after product launch
- C. Sanctions fists that are updated on a periodic basis following an annual risk assessment
- D. KYC processes not being integrated into the business and associated application systems
Answer: B
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 # 27
The scoping and planning process of an AML audit of a bank is best guided by review of which document?
- A. Information technology security risk assessment of the bank's COD risk rating solution
- B. Independent model validation and testing report of the bank's transaction surveillance systems
- C. Report of independent audit conducted the previous year
- D. A document prepared to identify the inherent risk associated with a bank's products and services
Answer: D
Explanation:
* Identifying inherent risks linked to the bank's products and services is critical to tailor the audit scope and address high-risk areas comprehensively.
NEW QUESTION # 28
Suspicious activity report testing in the last three audits did not identify any metrics to indicate that volume vanes dramatically each month. Which step should the auditor take next?
- A. Include the lack of metrics as a deficiency in the reporting.
- B. Escalate the finding regarding the lack of metrics to the board of directors.
- C. Review within the IT audit.
- D. Assign to continuous monitoring.
Answer: A
Explanation:
Deficiency in Reporting Metrics:
* AML compliance frameworks require metrics to track trends and unusual patterns in suspicious activity reports (SARs). A lack of such metrics is a deficiency that undermines monitoring and oversight.
Why This is the Appropriate Step:
* Identifying and documenting deficiencies ensures accountability and facilitates corrective action, aligning with AML audit standards.
NEW QUESTION # 29
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. 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.
- 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. Rely upon the independent external review report as the base to formulate conclusions of the current onsite visit by internal audit.
- D. 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.
Answer: D
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 # 30
Which action would an auditor take to evaluate design effectiveness?
- A. Check whether the policies and procedures are consistent with the authorities' regulations.
- B. Confirm that alerts in transaction monitoring have been properly escalated or waived.
- C. Confirm that customer records are being kept in accordance with policies and procedures.
- D. Carry out a sample check of suspicious activity reports and make sure they are in line with policies and procedures.
Answer: A
Explanation:
* Explanation:Evaluating design effectiveness involves determining whether policies and procedures align with regulatory standards, which sets the foundation for a compliant AML/CFT program. This is a design-level assessment rather than testing implementation or outcomes, which would pertain to operational effectiveness.
NEW QUESTION # 31
Which does a financial institution (FI) need to do when outsourcing an independent audit?
- A. Investigate whether the audit firm has conducted prior audits with the Fl.
- B. Select an audit firm based on recommendations from the AMI compliance officer.
- C. Ensure that the scope of the audit and the experience of the auditors match the needs of the Fl.
- D. Choose an audit firm based on price consideration and geographic location.
Answer: C
Explanation:
Selecting an Audit Firm:
* The scope and expertise of the audit firm must align with the institution's risk profile and regulatory requirements to ensure the audit's effectiveness.
Best Practices in Outsourced Audits:
* Properly scoping and selecting auditors with relevant AML/CFT experience ensures compliance and minimizes operational risks.
CAMS-Audit Guidance:
* Advanced CAMS-Audit emphasizes the importance of tailoring audit scopes and selecting experienced auditors for outsourced engagements.
NEW QUESTION # 32
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