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

What is a common technique used in jurisdictions with compulsory currency reporting requirements?

1. High-value transactions

2. Structuring

3. Electronic payment systems

4. Cash reserve requirements

The correct answer is: Structuring

Structuring, also known as smurfing, is a common technique employed to evade detection in jurisdictions with compulsory currency reporting requirements. In these regions, large cash transactions often prompt mandatory reporting to authorities in order to monitor potential money laundering activities. Individuals or entities engaging in illicit financial activities may therefore tend to break down large sums of money into smaller, less conspicuous amounts that fall below the reporting threshold. This tactic helps them avoid triggering the mandatory reporting requirements, thus allowing the funds to be moved without drawing attention from regulatory authorities. As a result, structuring effectively facilitates the concealment of illicit gains by manipulating the reporting obligations imposed by financial regulations. In contrast, while high-value transactions, electronic payment systems, and cash reserve requirements are significant in the context of financial regulation, they do not specifically pertain to the method of evasion that structuring employs under compulsory currency reporting requirements. High-value transactions might trigger reporting rather than avoid it, and electronic payment systems can often have their own sets of monitoring protocols. Cash reserve requirements pertain more to banking practices than to individual transaction structuring to evade reporting obligations.