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

What is a bust-out scheme?

1. Making legitimate payments to improve credit score.

2. Making payments on an account with bad checks before they clear.

3. Depositing cash into an account to disguise funds.

4. Establishing an account without any identification.

The correct answer is: Making payments on an account with bad checks before they clear.

A bust-out scheme refers to a fraudulent activity where an individual or group opens an account with the intention of making purchases or accessing credit without the ability to cover those costs, ultimately leading to default. When examining this definition closely, making payments on an account with bad checks before they clear is a characteristic of bust-out schemes. In this scenario, the individual takes advantage of the time it takes for checks to clear, which allows them to deplete the account funds and disappear before the bank realizes the checks were not valid. This effectively creates a financial scam where the perpetrator benefits from the credit or goods received without any intention of repayment. The other options do not accurately represent the nature of a bust-out scheme. Making legitimate payments to improve credit scores does not involve deception or fraud. Depositing cash into an account to disguise funds relates more to money laundering techniques than to a bust-out scheme. Establishing an account without identification also does not capture the essence of a bust-out scheme, as it focuses more on the account opening process rather than the fraudulent utilization of that account for personal gain.