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

What is the definition of currency smuggling in AML context?

1. The legal transfer of currency for business purposes

2. The transportation of currency to avoid detection and reporting

3. The exchange of currency across international borders

4. The use of cryptocurrency in financial transactions

The correct answer is: The transportation of currency to avoid detection and reporting

In the context of anti-money laundering (AML), currency smuggling is defined as the transportation of currency to avoid detection and reporting. This activity typically involves concealing large amounts of cash while moving it across borders or within a country in a manner designed to evade law enforcement and regulatory scrutiny. Individuals or organizations engaged in currency smuggling seek to bypass reporting requirements that are established to monitor and prevent illicit financial activities, such as money laundering or financing of terrorism. This definition aligns with the overarching goals of AML regulations, which aim to enhance the transparency of financial transactions and promote compliance with reporting obligations. By engaging in currency smuggling, individuals work to move money secretly, often to hide the source of funds, which is a fundamental concern in the fight against financial crime. The other options describe practices that do not align with the essence of currency smuggling. For example, the legal transfer of currency for business purposes represents a compliant action that adheres to regulations rather than a clandestine operation. The exchange of currency across international borders typically involves formal procedures and may be subject to reporting requirements, rather than being an attempt to avoid detection. Lastly, while the use of cryptocurrency in financial transactions raises its own set of AML concerns, it is not classified as currency smuggling in