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

Which characteristic best describes the role of the Financial Services Authority in the UK?

1. It enforces criminal law in money laundering cases.

2. It provides financial assistance to banks.

3. It establishes regulations for money laundering controls.

4. It manages international banking relationships.

The correct answer is: It establishes regulations for money laundering controls.

The role of the Financial Services Authority (FSA), now part of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), is fundamentally centered on the establishment of regulations that govern financial services, including those related to money laundering controls. This characteristic is crucial because regulatory authorities have the responsibility of creating a framework within which financial institutions operate. They develop rules and standards to protect the integrity of the financial system, ensuring that entities implement effective anti-money laundering (AML) measures. The establishment of regulations aids in fostering a stable and transparent financial environment, where money laundering risks can be mitigated through proper compliance practices. This includes requiring financial institutions to conduct customer due diligence, reporting suspicious activities, and maintaining adequate records. The other options do not accurately reflect the FSA’s primary responsibilities. For instance, while the authority might provide guidance and oversight, it does not enforce criminal law, as that is under the purview of law enforcement agencies. Additionally, providing financial assistance to banks is not a primary function of regulatory bodies; instead, they focus on oversight and regulation. Managing international banking relationships is generally the domain of central banks and governments rather than the regulatory agency tasked with enforcing compliance and regulatory standards.