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

What are the primary characteristics of Private Banking transactions?

1. High transparency and disclosure

2. Confidentiality and offshore investment vehicles

3. Low risk and simplified ownership

4. Direct government oversight

The correct answer is: Confidentiality and offshore investment vehicles

Private banking transactions are primarily characterized by a focus on confidentiality and the use of offshore investment vehicles. This type of banking caters to high-net-worth individuals who often prefer to keep their financial information private for various reasons, including personal security and the desire for privacy in managing their wealth. The use of offshore investment vehicles is another significant aspect, as these structures provide clients with opportunities for asset protection, tax benefits, and diversification of investments. Clients engaged in private banking typically require personalized services that can include investment management, estate planning, and tax advisory services, often provided in a discreet manner. In contrast, high transparency and disclosure, low risk and simplified ownership, and direct government oversight are not defining traits of private banking. The emphasis on confidentiality and the sophisticated nature of offshore investments are key components that distinguish private banking transactions from standard banking practices.