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

What does 'kiting' through a credit card typically involve?

1. A merchant submitting a sale transaction on their business account

2. A customer cashing checks without sufficient funds

3. A lottery scheme to obtain unlawful gains

4. A transaction to acquire multiple credit cards under false names

The correct answer is: A merchant submitting a sale transaction on their business account

Kiting through a credit card typically involves the act of a merchant submitting a sale transaction on their business account to manipulate financial records. This practice can create the illusion of legitimate sales, potentially allowing the merchant to gain access to funds or credit that they would not normally qualify for, thus misleading banks or financial institutions about the actual financial health of the business. The focus on the merchant's actions highlights the intent to exploit the system for financial advantage, which is a core aspect of kiting. In contrast, other options relate to different types of fraudulent behavior, such as cashing checks without sufficient funds or using deceptive practices to acquire credit cards falsely, which do not align with the specific mechanics of kiting in the context of credit card transactions.