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

Who is required to report suspicious activities according to FATF Recommendation 16?

1. Only banks and financial institutions

2. Dealers in precious metals/stones and specific service providers

3. Only governmental officials

4. All businesses regardless of their field

The correct answer is: Dealers in precious metals/stones and specific service providers

FATF Recommendation 16 specifically identifies that certain non-financial businesses and professions are obligated to report suspicious activities. This includes dealers in precious metals and stones, as well as specific service providers such as lawyers and accountants when they engage in activities that might involve money laundering or terrorist financing. The rationale for this requirement is rooted in the understanding that money laundering can occur across various sectors beyond just the banking and financial systems. By extending the reporting obligation to these specific sectors, FATF aims to capture a broader spectrum of potential illicit activities that might not be evident within traditional financial institutions. In contrast, while banks and financial institutions have their own significant reporting obligations, they are not the only entities required to report suspicious activities. The recommendation does not apply solely to governmental officials, nor does it extend to all businesses indiscriminately across different fields, as not every business may engage in activities that would warrant such reporting. This targeted approach is crucial for effectively combating money laundering and enhancing the overall integrity of the financial system.