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

What does the term 'cross border' in AML refer to?

1. Activities between companies or individuals within the same country

2. Movement of money or value between two countries

3. Local transactions made in foreign currency

4. Transactions that evade regulatory oversight

The correct answer is: Movement of money or value between two countries

The term 'cross border' in the context of Anti-Money Laundering (AML) specifically refers to the movement of money or value between two countries. This is significant within AML frameworks because cross-border transactions can pose increased risks, including the potential for money laundering activities that exploit differences in regulations and enforcement among different jurisdictions. When money is transferred internationally, it often involves various legal and financial systems, which can complicate the monitoring and tracing of funds. Regulatory bodies pay close attention to these transactions because they can be used to obscure the origins of illicit funds and make it more challenging to enforce AML laws. In contrast, activities that occur within the same country do not fall under the 'cross border' designation, nor do local transactions made in a foreign currency, which while involving different currencies, do not involve the movement of value across national boundaries. Additionally, transactions that evade regulatory oversight could happen within a single country's jurisdiction and do not specifically refer to the international aspect implied by 'cross border'. Thus, the correct understanding of 'cross border' pertains directly to the transnational movement of money or value.