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 one strategy to mitigate the risk of money laundering in financial institutions?

Restricting customer access to information
Implementing comprehensive due diligence procedures
Reducing staff training on AML measures
Limiting customer transactions

The correct answer is: Implementing comprehensive due diligence procedures

Implementing comprehensive due diligence procedures is a vital strategy to mitigate the risk of money laundering within financial institutions. This involves understanding the customer's identity and the nature of their business activities, assessing the risks associated with them, and monitoring their transactions for any suspicious activity. Comprehensive due diligence ensures that institutions have a clear picture of their customers and can effectively identify any inconsistencies or potential risks early in the relationship. This thorough approach also supports compliance with legal and regulatory requirements, helping financial institutions to build robust anti-money laundering frameworks. It enables proactive monitoring of transactions, assesses the legitimacy of customer activities, and ultimately helps prevent illicit activities before they can escalate. By adhering to comprehensive due diligence practices, institutions can significantly reduce their vulnerability to money laundering schemes.