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

What is a cash letter?

1. A form used for individual bank account opening

2. An interbank transmittal form accompanying cash items

3. A statement of cash flow for financial institutions

4. A verification document for loan transactions

The correct answer is: An interbank transmittal form accompanying cash items

A cash letter serves as an interbank transmittal form that accompanies cash items. This document is essential for facilitating the transfer of checks and other cash-related items between financial institutions. The cash letter lists the items being sent, detailing their amounts and any relevant information that helps the receiving bank to process these cash items quickly and accurately. Understanding the role of a cash letter is vital in the banking and finance industry, particularly for operations related to check processing and clearing. It ensures that transactions are recorded properly and helps in reconciling accounts between banks. The other choices presented do not accurately describe a cash letter; they refer to different banking documents that serve separate functions. For instance, a form for bank account opening pertains to establishing customer accounts, a statement of cash flow provides insights into the liquidity of financial institutions, and a verification document for loan transactions relates to loan processing and approvals, all of which are distinct from the purpose of a cash letter.