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

What is one of the primary risks of businesses that deal primarily in cash?

1. High levels of customer trust

2. Increased oversight by regulatory agencies

3. Easier money laundering opportunities

4. Low demand for financial services

The correct answer is: Easier money laundering opportunities

One of the primary risks of businesses that deal primarily in cash is the increased opportunity for money laundering. Cash-intensive businesses often operate with limited transaction records compared to those that utilize electronic payment methods. This lack of a clear paper trail makes it easier for illicit activities to go unnoticed, as cash transactions can be structured to obscure the origin of the funds. For example, a business may report inflated sales figures while actually conducting much of its business off the books. This discrepancy allows for the introduction of illicit funds into the legitimate economy, a core aspect of money laundering. Businesses that handle substantial amounts of cash may also attract criminal activities, with launderers seeking out environments where their actions can remain under the radar. Consequently, this scenario heightens the vulnerability of these businesses to being exploited for money laundering purposes, making it critical for them to implement robust anti-money laundering measures and practices. Other options such as high levels of customer trust or low demand for financial services do not align with the inherent risks associated with cash operations, as they do not directly contribute to or indicate an elevated risk of money laundering activities. Increased oversight by regulatory agencies may occur, but it is a reaction to the risk rather than a consequence for cash-based operations, and it does not inherently