Acams Exam CAMS Topic 3 Question 96 Discussion

Financial institutions must conduct thorough background checks on employees in sensitive roles (e.g., private banking) to mitigate fraud, insider trading, and money laundering risks.

Option A (Correct): Past employment records help verify work history and identify any red flags related to prior financial misconduct.

Option D (Correct): Internet and media searches reveal any negative press, regulatory issues, or connections to illicit activity.

Option E (Correct): Criminal history searches help screen for prior convictions related to financial crimes.

Why Other Options Are Incorrect:

Option B (Incorrect): Personal references are less reliable and may not uncover objective risk factors.

Option C (Incorrect): A resume is self-reported and should be verified using independent sources.

Best Practices for Employee Background Screening:

Conduct enhanced due diligence for high-risk roles (e.g., private bankers, compliance officers).

Use reliable background screening tools and legal databases.

Verify employment history and check against regulatory blacklists.

FATF Recommendation 18 (Internal Controls & Employee Screening)

Wolfsberg Group Guidance on AML Employee Background Checks

6th EU AML Directive (6AMLD) on Employee Due Diligence