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

What is required of financial institutions concerning 'Exempt Accounts'?

1. They must ignore all transactions

2. They must document and monitor transactions

3. They should close all exempt accounts

4. They are exempt from reporting to authorities

The correct answer is: They must document and monitor transactions

Financial institutions are required to document and monitor transactions associated with exempt accounts to ensure compliance with anti-money laundering (AML) regulations. Exempt accounts, which may include certain government or financial institution accounts, still represent a risk for potential illicit activities. Therefore, monitoring these transactions helps to identify any suspicious behavior while maintaining records to demonstrate adherence to regulatory standards. Adequate documentation provides a clear audit trail, which is essential not just for regulatory compliance but also for risk management and internal controls. This monitoring process is crucial because even though these accounts are classified as exempt from certain AML requirements, financial institutions must remain vigilant to prevent exploitation of these exemptions for money laundering or other illegal activities. This proactive approach fosters a culture of compliance within the institution and helps combat financial crime effectively.