Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

According to FATF Recommendation 24, what should designated non-financial businesses do?

1. Be exempt from regulatory measures.

2. Prevent criminal ownership and management.

3. Self-regulate without oversight.

4. Limit their operations to domestic markets.

The correct answer is: Prevent criminal ownership and management.

FATF Recommendation 24 addresses the need for designated non-financial businesses and professions (DNFBPs) to implement measures aimed at preventing the involvement of criminals in the ownership and management of these entities. This recommendation is crucial as it recognizes that money laundering and terrorist financing risks are not limited to the financial sector, and that DNFBPs can be exploited for these illegal activities. By requiring DNFBPs to take steps against criminal ownership and management, the recommendation fosters a more comprehensive approach to combating financial crimes. This includes conducting thorough due diligence on owners and managers and ensuring ongoing monitoring of their activities to mitigate risks. The other options do not align with the intent of the recommendation. Being exempt from regulatory measures undermines the broader efforts to maintain integrity within financial systems. Self-regulation without oversight can lead to significant gaps in compliance and enforcement, while limiting operations to domestic markets does not inherently address the risks posed by criminal elements or the necessity for diligence in ownership structures. Therefore, the focus on preventing criminal ownership and management highlights a proactive approach that is essential in protecting the integrity of DNFBPs in the fight against money laundering and associated financial crimes.