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

What does a wire transfer involve?

1. Manual delivery of cash

2. Electronic transmission of funds

3. Trading physical commodities

4. Exchange of crypto-assets

The correct answer is: Electronic transmission of funds

A wire transfer involves the electronic transmission of funds from one bank or financial institution to another. This method allows for the rapid and secure transfer of money across different locations, often instantly or within a few hours, depending on the institutions involved. Wire transfers are typically used for legitimate transactions such as payment for goods and services, sending money to family or friends, or transferring funds between accounts. The process is initiated by the sender providing their bank with details of the recipient's account and the amount to be transferred. The banks then communicate electronically to facilitate this transaction, ensuring that the funds are moved directly from one account to another without the need for physical cash movement or lengthy processing times. Alternative options, such as manual delivery of cash, trading physical commodities, or the exchange of crypto-assets, do not characterize a wire transfer. Manual delivery of cash entails physically transporting money, which is not relevant to an electronic process. Trading physical commodities involves the exchange of goods rather than monetary funds. Exchange of crypto-assets refers to digital transactions, which while similar in electronic nature, are distinct from traditional wire transfers which are tied to traditional banking systems.