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

Which of the following is a method of money laundering using credit cards?

1. Requesting a loan for cash

2. Paying amounts owed with criminal money

3. Purchasing gift cards

4. Exchanging currency

The correct answer is: Paying amounts owed with criminal money

The method of money laundering using credit cards that is most relevant is paying amounts owed with criminal money. This technique involves using stolen or illicit funds to pay off credit card debts or to make purchases, which effectively integrates the tainted funds into the financial system. Once the criminal funds are used to settle obligations or buy goods, they appear legitimate and can be used without raising suspicion. Using criminal proceeds to pay off credit cards allows the launderer to convert illegal money into seemingly legitimate transactions, obscuring the origin of the funds. This process is part of the layering stage of money laundering, where the objective is to distance the illicit funds from their source. This approach differs from the other options. Requesting a loan for cash typically does not directly involve credit card transactions and may involve more scrutiny from financial institutions. Purchasing gift cards may be a method of laundering money, but it is not specifically tied to credit card transactions in the same way. Exchanging currency is also a broader method not limited to credit card use and often happens outside the context of credit transactions.