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

What is the purpose of a cash log as required by financial institutions?

1. To maintain records of all transactions under $3,000

2. To record each cash sale of specific financial instruments between $3,000 and $10,000

3. To document customer account information for auditing

4. To track loan agreements and associated repayments

The correct answer is: To record each cash sale of specific financial instruments between $3,000 and $10,000

The purpose of a cash log in financial institutions is primarily to record each cash sale of specific financial instruments between $3,000 and $10,000. This requirement is rooted in regulatory obligations, specifically related to the reporting of cash transactions that fall within that range. Financial institutions must monitor these transactions to comply with anti-money laundering (AML) laws, which aim to prevent illicit activities such as money laundering and terrorist financing. By specifically documenting these transactions, institutions can provide a clear audit trail that authorities may need for investigations and compliance checks. Maintaining a record of these cash transactions allows financial institutions to identify patterns indicative of suspicious behavior, and ensure they are properly reporting significant cash transactions to the appropriate regulatory bodies. This is particularly important as transactions between certain thresholds are often scrutinized more closely to ensure compliance with AML regulations. In contrast, the other options do not align with the primary purpose of a cash log as defined by regulatory standards and practices. For example, maintaining records of all transactions under $3,000 is not typically a requirement. Additionally, documenting customer account information for auditing is more related to overall banking compliance rather than specifically capturing cash transaction details. Tracking loan agreements and associated repayments generally falls under loan management processes, separate from the cash logs