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

What is a primary feature of a Self-Regulatory Organization (SRO)?

1. It promotes public awareness of financial crimes

2. It represents a profession and regulates its members

3. It provides legal representation for investors

4. It enforces government legislation on securities

The correct answer is: It represents a profession and regulates its members

A Self-Regulatory Organization (SRO) primarily serves the function of representing a specific profession and regulating its members in accordance with established standards and practices. SROs are created to oversee their members' conduct, ensuring adherence to ethical and professional guidelines, which can include rules designed to prevent financial crimes and enhance the integrity of the profession. This self-regulation creates a framework where members are accountable for their actions, fostering higher industry standards and improving investor confidence. SROs often develop and enforce rules that are specific to their industry, which complements existing governmental regulations, but they operate outside of direct government oversight. This allows them to address issues within their fields more flexibly and responsively than might otherwise be possible. In contrast, organizations that solely focus on promoting public awareness, providing legal representation, or enforcing government legislation, while also important, do not fit the primary role of a Self-Regulatory Organization. These functions can be handled by different entities or organizations that specialize in public education, legal advocacy, or government oversight.