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

What type of financial account is used to manage the processing of transactions between banks?

1. Checking account

2. Investment account

3. Clearing account

4. Savings account

The correct answer is: Clearing account

A clearing account is specifically designed for the purpose of managing and processing the transactions between banks. These accounts serve as a temporary holding space during the settlement of transactions, allowing for the effective reconciliation of financial transfers. When transactions occur between different financial institutions, funds do not always move instantly; instead, they often go through a clearing process. Clearing accounts facilitate this process by consolidating debits and credits from various transactions and ensuring that they can be settled efficiently. This is essential for maintaining accurate records and ensuring that the financial system functions smoothly. In contrast, checking accounts are primarily used for everyday banking transactions by individuals and businesses but do not specifically address the needs of banking institutions in clearing transactions. Investment accounts are focused on holding and managing assets for growth, while savings accounts are intended for saving money and earning interest. Both checking and savings accounts involve customer transactions rather than inter-bank processing, and investment accounts do not directly relate to the clearing and settlement of transactions between financial institutions.