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

Which feature characterizes a Downstream Correspondent Clearer?

1. Independence from financial oversight

2. Provision of services to other financial institutions

3. Limiting transactions to domestic clients

4. Offering only cryptocurrency exchanges

The correct answer is: Provision of services to other financial institutions

A Downstream Correspondent Clearer is primarily characterized by its role in providing essential services to other financial institutions, often in the handling of transactions, settlement processes, and currency exchanges. This setup facilitates connections between banks and other clients, especially in international transactions, ensuring that smaller institutions have access to the broader financial market. The primary function of a Downstream Correspondent Clearer is to act as an intermediary in the financial system, enabling other institutions to execute transactions that they may not be equipped to handle on their own. By doing this, they enhance liquidity and offer a wider range of financial services to their clients. The other options do not accurately reflect the essence of a Downstream Correspondent Clearer. While independence from financial oversight and limiting transactions to domestic clients may pertain to certain types of financial institutions, they do not specifically define the role or the functionalities of a correspondent clearer. Similarly, the mention of cryptocurrency exchanges is too narrow and does not encompass the broader scope of services that a Downstream Correspondent Clearer typically provides. Thus, the characteristic feature aligns with the provision of services to other financial institutions, which is central to their operational model.