Advanced-CAMS-Audit Advanced Certified Anti-Money Laundering Specialist - Audit Practice Questions
Prepare for Advanced-CAMS-Audit with more than an answer.
- Level
- Advanced
- Valid for
- 3 years
Domains covered on the exam 4
- Corporate Governance and the Audit Function20%
- Planning and Scoping25%
- Fieldwork and Evaluation40%
- Reporting, Recommendations, and Follow-up15%
- 1
When defining the scope for an AML audit, you decide to use a 'bottom-up' risk assessment approach. Which of the following activities best describes this methodology?
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Correct answer: C
A Bottom-Up approach starts at the operational level—analyzing specific processes, data flows, and product features—to identify detailed risks, which are then aggregated to form a view of the total risk exposure. This is often more effective for identifying specific control gaps.
- 2
You are determining the sample size for testing Suspicious Activity Reports (SARs). The population consists of 5,000 SARs filed in the last year. You determine that 'Statistical Sampling' is the most appropriate method. What is the primary advantage of this method over 'Judgmental Sampling'?
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Correct answer: B
Statistical sampling provides a mathematically valid basis to project the test results onto the whole population (e.g., 'we are 95% confident that the error rate is less than 2%'). Judgmental sampling cannot be validly extrapolated to the whole population.
- 3
In the context of audit planning, what is the correct definition of 'Residual Risk'?
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Correct answer: D
Residual Risk is the risk that remains after controls (like policies, screening, monitoring) are applied to Inherent Risk. Auditors assess whether this remaining risk is within the institution's risk appetite.
- 4
During an AML audit of a mid-sized regional bank, the lead auditor discovers that the Compliance Department (Second Line of Defense) is actively performing daily alert adjudication for the Transaction Monitoring system due to recent staff shortages in the Financial Intelligence Unit (First Line). Which of the following observations represents the MOST critical governance concern the auditor should raise?
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Correct answer: B
The Three Lines of Defense model relies on the separation of duties. The First Line owns and manages risk (operations), while the Second Line oversees and monitors risk (compliance). If Compliance performs operational tasks (alert adjudication), they cannot objectively monitor or test those same tasks, creating a fundamental governance failure.
- 5
An external auditor is reviewing the AML governance structure of a multinational fintech company. The auditor notes that the Chief Audit Executive (CAE) reports administratively to the CEO but functionally to the Chief Financial Officer (CFO). Why is this reporting structure a finding in the audit report?
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Correct answer: C
To ensure independence, the internal audit function (Third Line) must report functionally to the Board of Directors or its Audit Committee. Reporting functionally to the CFO (management) creates a conflict of interest and impairs the auditor's ability to report on management's performance without fear of retaliation or constraint.
- 6
According to the Wolfsberg Group's Principles on a Risk Based Approach for Managing Money Laundering Risks, which TWO of the following are primary indicators that should trigger an independent audit or review of the AML program? (Select TWO)
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Correct answer: B, C
The Wolfsberg Principles highlight that material changes in the risk profile (new products, services, geographies) are key triggers for reviewing the adequacy of the AML program.
Triggers for audit/review include identified weaknesses or external factors like regulatory actions against peers that suggest a need to verify the institution's own controls.
