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

What type of transaction is often associated with shell corporations in money laundering schemes?

1. Inter-company loans

2. Funds transfers

3. Public offering shares

4. Derivative trading

The correct answer is: Funds transfers

Funds transfers are often associated with shell corporations in money laundering schemes due to the secrecy and complexity these entities provide. Shell corporations typically exist only on paper and do not carry out any real business activities. This lack of a legitimate business purpose allows illicit funds to be moved through the financial system without attracting appropriate scrutiny. Funds transfers can occur across various jurisdictions, enabling criminals to obscure the origins of the money as it is routed through multiple accounts or entities, making it difficult for law enforcement and regulatory bodies to trace back to the original source. The other options, while potentially relevant in certain contexts, do not align as closely with the activities of shell corporations in money laundering. Inter-company loans may suggest legitimate business activities that could be used to justify transfers but are not as commonly linked to the illicit movement of funds. Public offering shares and derivative trading involve financial markets and tangible assets which are generally more regulated and visible to authorities. Thus, funds transfers distinctly signify the layering and integration stages of money laundering, which are central to the operability of shell corporations in such schemes.