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

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Prepare for the Certified Anti-Money Laundering Specialist Certification (CAMS) exam. Study with multiple choice questions, each with hints and explanations. Boost your chances of success!

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What is a key requirement of FATF Recommendation 5 for financial institutions?

To maintain a high level of customer anonymity
To keep anonymous or fictionally named accounts
To undertake customer due diligence measures
To focus on international client profiles exclusively

The correct answer is: To undertake customer due diligence measures

FATF (Financial Action Task Force) Recommendation 5 emphasizes the importance of customer due diligence (CDD) measures for financial institutions. These measures are essential to prevent money laundering and terrorist financing by enabling institutions to identify their customers, understand the nature of their business, and assess the risks involved. CDD helps financial institutions gather and verify information about their clients, assess risk levels, and ensure that they are not facilitating illicit activities inadvertently. By implementing effective CDD processes, financial institutions can not only comply with legal obligations but also contribute to the integrity of the financial system and mitigate risks associated with financial crimes. This recommendation is part of a broader strategy to enhance measures against money laundering and terrorist financing globally, ultimately supporting better transparency and trust in financial transactions.