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

What distinguishes a cardholder from other users?

1. A cardholder can authorize transactions

2. A cardholder is typically the account owner

3. A cardholder does not need permission to use their card

4. A cardholder has a higher credit limit

The correct answer is: A cardholder can authorize transactions

The distinction of a cardholder primarily lies in their ability to authorize transactions. This means that a cardholder has the legal authority to use the payment card, making financial decisions such as approving purchases and managing the card's associated benefits or liabilities. This function is important in various contexts, such as personal liability for debts incurred while using the card and the relationship with the card issuer. While other users of a card, such as authorized users, may be permitted to use the card for purchases, they typically do not possess the same level of authority to manage the account or make overriding financial decisions. Therefore, the ability to authorize transactions is a key characteristic that sets a cardholder apart from other users, highlighting their primary role in the ownership and management of the account. The other options describe attributes or situations that may not universally apply to all cardholders or may be shared with authorized users, but do not define the exclusive qualities that a cardholder possesses. For instance, account ownership may involve different responsibilities or levels of access depending on the arrangement with the issuing bank, and a higher credit limit is not an inherent trait of being a cardholder, as limits can vary based on creditworthiness and issuer policies.