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

Which requirement does FATF Recommendation 2 emphasize?

1. Encouraging financial institutions to promote their services

2. Ensuring knowledge related to money laundering can be inferred

3. Requiring annual reviews of all banking procedures

4. Redefining the role of legal persons in banking

The correct answer is: Ensuring knowledge related to money laundering can be inferred

FATF Recommendation 2 emphasizes the importance of understanding and assessing money laundering and terrorist financing risks. The focus is on ensuring that countries develop and implement measures to identify and assess the risks associated with these activities. This includes a requirement for financial institutions to have a deep understanding of potential risks within their operations, which influences their policies and procedures for combating money laundering. The emphasis here is on knowledge and awareness as fundamental components in the development of effective anti-money laundering regime. By ensuring that there is a robust comprehension of money laundering risks, institutions are better positioned to tailor their compliance frameworks to address specific vulnerabilities and minimize opportunities for crime. The other options do not align with the core focus of Recommendation 2. For instance, promoting services, annual banking procedures reviews, or redefining the role of legal entities are not central themes outlined in this recommendation. Thus, the selective focus on understanding and assessing money laundering risks directly aligns with the intent of FATF Recommendation 2.