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

What is an alternative term for a cash letter?

1. Interbank communication

2. Pouch activity

3. Deposit notification

4. Credit statement

The correct answer is: Pouch activity

A cash letter refers to a communication method that primarily serves as a means for banks to submit checks to a correspondent bank for collection and to provide details about the checks that are included. The term "pouch activity" specifically connects to the process whereby banks bundle checks and send them in a physical pouch or electronic format to other banks. This makes it synonymous with the way cash letters function, as both involve the conveyance of money-related documents between banks, primarily focusing on items for clearing and collection purposes. The other terms, while relevant to banking processes, do not accurately reflect the specific function or nature of cash letters. For instance, interbank communication is a broader term that encompasses various forms of communication between banks, but it doesn’t capture the essence of cash letters as documents dedicated to check collection. Deposit notification pertains to informing parties about deposits made, while credit statement refers to summarizing transactions on an account, neither of which aligns with the cash letter's specific role in item processing. Thus, "pouch activity" stands out as the most fitting alternative term for a cash letter.