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

How are 'Predicate Crimes' classified in terms of legal terminology?

1. As misdemeanors

2. As felonies

3. As civil offenses

4. They do not have a legal classification

The correct answer is: As felonies

'Predicate crimes' are classified as felonies within the context of anti-money laundering (AML) legislation. These crimes serve as the underlying offenses from which the proceeds of crime are derived. The importance of classifying these crimes as felonies lies in their severity and the potential for significant financial gain associated with them. Felony offenses generally involve more serious violations of law than misdemeanors or civil offenses, and they typically carry harsher penalties. In the AML framework, predicate crimes include serious offenses such as drug trafficking, fraud, and organized crime, which are critical to identify and target in order to disrupt the flow of illicit finances. This classification is crucial for financial institutions and regulatory bodies in assessing risks and implementing appropriate compliance measures. Other classifications, such as misdemeanors or civil offenses, do not capture the gravity of these crimes when it comes to money laundering, which is why they are not considered predicate crimes. Additionally, because all predicate crimes fall under a legal classification, the notion that they do not have a classification is not accurate. Hence, recognizing predicate crimes as felonies is essential for effective enforcement and compliance in preventing money laundering activities.