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

What is a characteristic of a bank defined under the USA Patriot Act Section 312?

1. A bank that conducts unrestricted banking activities

2. A bank that engages in international transactions without restrictions

3. A bank that cannot conduct banking activities with local citizens

4. A bank that only operates in the domestic currency

The correct answer is: A bank that cannot conduct banking activities with local citizens

The characteristic of a bank defined under the USA Patriot Act Section 312 focuses on measures to prevent money laundering and terrorist financing, particularly regarding foreign banks and their operations. The correct answer is that a bank cannot conduct banking activities with local citizens. This reflects the compliance requirements and risk assessment protocols that financial institutions must follow, particularly in jurisdictions that may present higher risks for money laundering or terrorist financing. Section 312 specifically mandates enhanced due diligence (EDD) for foreign financial institutions, particularly those that have a significant presence in countries with a high risk of such activities. The other options describe scenarios that do not align with the intent of Section 312: - The notion of a bank conducting unrestricted banking activities would imply a lack of regulation or oversight, which runs counter to the provisions established to ensure that banks are scrutinizing their transactions and client relationships closely. - Similarly, a bank engaging in international transactions without restrictions would not comply with the heightened risk measures mandated for certain foreign banks under the Act, which requires financial institutions to assess the risks associated with non-cooperative jurisdictions. - A bank operating only in the domestic currency does not reflect any unique characteristics that would necessitate the specific prohibitions or precautions outlined in Section 312. Understanding these nuances is critical for compliance