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

What is the Reverse Flip scheme in money laundering?

1. A center for smuggling drugs

2. A marketing strategy for real estate

3. An underreported sale of property for laundering proceeds

4. An investment in high-risk securities

The correct answer is: An underreported sale of property for laundering proceeds

The Reverse Flip scheme in money laundering involves an underreported sale of property to facilitate the laundering of illicit proceeds. In this context, the scheme typically works by selling a property at a price that is lower than its market value. This allows the launderer to disguise the true source of the funds by indicating that the funds were acquired from a legitimate real estate transaction. By underreporting the sale price, the launderer creates a façade that the money used in the transaction is derived from legitimate means, effectively obscuring the origins of the funds. This technique serves to integrate illegal funds back into the financial system while appearing to comply with real estate laws and regulations. The other options do not accurately describe the Reverse Flip scheme. For instance, while a center for smuggling drugs may be involved in other forms of crime, it does not specifically relate to property transactions. Similarly, a marketing strategy for real estate and an investment in high-risk securities do not pertain to the manipulation of property values for the purpose of money laundering, which is at the core of what the Reverse Flip scheme entails.