CAMS Money Laundering Typologies and Methods 1 — Questions and Answers
Question 1: What are the three classic stages of the money laundering process?
- Identification, reporting, prosecution
- Placement, layering, integration (Correct answer)
- Detection, prevention, enforcement
- Collection, transfer, withdrawal
Correct answer: Placement, layering, integration
The three universally recognized stages are placement (introducing funds), layering (obscuring the trail), and integration (returning funds as legitimate).
Question 2: Which stage of the money laundering process involves introducing illicit cash into the financial system for the first time?
- Layering
- Integration
- Placement (Correct answer)
- Structuring
Correct answer: Placement
Placement is the first stage, where criminal proceeds are physically deposited or converted into financial instruments to enter the formal financial system.
Question 3: What is 'structuring' (also known as 'smurfing') in the context of money laundering?
- Using shell companies across multiple jurisdictions to hide asset ownership
- Breaking large cash deposits into smaller amounts to avoid Currency Transaction Report thresholds (Correct answer)
- Transferring funds through multiple correspondent banks internationally
- Converting cash proceeds into cryptocurrency assets
Correct answer: Breaking large cash deposits into smaller amounts to avoid Currency Transaction Report thresholds
Structuring involves deliberately breaking up large cash deposits into smaller transactions (under $10,000 in the US) to evade CTR filing requirements.
Question 4: Trade-Based Money Laundering (TBML) most commonly involves which of the following techniques?
- Using real estate sales to integrate funds into the economy
- Manipulating trade invoices and shipping documents to transfer value across borders (Correct answer)
- Placing cash proceeds directly into casino accounts
- Creating fictitious payroll accounts to launder funds
Correct answer: Manipulating trade invoices and shipping documents to transfer value across borders
TBML exploits international trade transactions by over- or under-invoicing goods and services to move value between parties while disguising its illicit origin.
Question 5: In money laundering, a 'shell company' is best defined as:
- A company that manufactures petroleum-based chemical products
- A legitimate business used exclusively for lawful tax minimization strategies
- A legal entity with no genuine business operations used to conceal asset ownership (Correct answer)
- A licensed financial services company providing insurance products
Correct answer: A legal entity with no genuine business operations used to conceal asset ownership
Shell companies lack real operations or employees and are used to add layers of anonymity, making it difficult to trace the true beneficial owner of assets.
Question 6: Real estate money laundering most commonly occurs during which stage of the laundering process?
- Placement
- Reporting
- Layering
- Integration (Correct answer)
Correct answer: Integration
Integration occurs when laundered funds re-enter the legitimate economy; purchasing real estate with clean-appearing funds is a classic integration technique.
Question 7: Which money laundering typology involves converting large amounts of cash into monetary instruments such as money orders, traveler's checks, or cashier's checks?
- Loan-back schemes
- Cuckoo smurfing
- Currency exchange arbitrage
- Monetary instrument purchases (Correct answer)
Correct answer: Monetary instrument purchases
Purchasing monetary instruments with cash is a classic placement technique because such instruments are easier to deposit, transport, and negotiate than bulk cash.
CAMS Money Laundering Typologies and Methods 1
What are the three classic stages of the money laundering process?