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

What specific characteristics of transactions should financial institutions document as per FATF Recommendation 11?

1. All transactions below a certain threshold

2. Only high-value transactions

3. Complex, unusual transactions without lawful purposes

4. Daily operational transactions

The correct answer is: Complex, unusual transactions without lawful purposes

FATF Recommendation 11 emphasizes the importance of monitoring and documenting specific characteristics of transactions to detect and prevent money laundering and terrorist financing. One of the key elements is the identification and examination of complex, unusual transactions that lack an evident lawful purpose. This focus helps institutions recognize potentially suspicious behavior that may indicate illicit activities. Complex and unusual transactions often do not fit within a customer's typical banking behavior or profile, making them ripe for further scrutiny. By documenting these characteristics, financial institutions can better assess risks and compile the necessary information to support investigations, should suspicious activity arise. Transactions below a certain threshold, high-value transactions, or daily operational transactions may not present the same level of risk or unusual patterns as the transactions that lack a lawful purpose. Therefore, while those may be relevant in certain contexts, they do not align with the targeted approach outlined in FATF Recommendation 11, which aims to prioritize the identification of transactions that could indicate money laundering or terrorist financing.