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

What is the role of home country supervisors when verifying compliance with KYC policies?

1. Conducting interviews with all customers

2. Reviewing customer files and sampling accounts

3. Creating new KYC policies and procedures

4. Monitoring only transactions above a certain limit

The correct answer is: Reviewing customer files and sampling accounts

The role of home country supervisors in verifying compliance with Know Your Customer (KYC) policies primarily involves reviewing customer files and sampling accounts. This is because regulators aim to ensure that financial institutions adhere to KYC requirements designed to mitigate the risks of money laundering and terrorist financing. By reviewing customer files, supervisors assess whether institutions are implementing the necessary customer due diligence procedures effectively and maintaining accurate records. Sampling accounts allows them to evaluate the adequacy of KYC practices without needing to examine every single account, making oversight more efficient while still providing a reliable view of compliance levels. The other choices emphasize activities that either fall outside the typical responsibilities of home country supervisors, such as conducting interviews with every customer, creating new policies (which is more a function of the institutions themselves or regulatory bodies), or limiting monitoring solely to high-transaction levels, which undermines the comprehensive approach necessary for effective KYC compliance.