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

Which term best describes a scenario where products are shipped with the intent to reach a foreign market but are redirected?

1. Product oversupply

2. Product diversion

3. Product distortion

4. Product valuation

The correct answer is: Product diversion

The term that best describes the scenario where products are shipped with the intent to reach a foreign market but are redirected is product diversion. This concept refers to the illicit practice of redirecting goods intended for sale in one market to an unauthorized market where they may be sold at a higher price or without regulatory oversight. Product diversion is particularly relevant in discussions around trade compliance and anti-money laundering, as it can be associated with fraudulent activities, including the evasion of tariffs or taxes. Businesses must adhere to the laws concerning the distribution of their goods; when diversion occurs, it poses risks for companies, including legal ramifications and potential reputational damage. In contrast, the other options describe different issues that do not specifically align with the act of redirecting products. For example, product oversupply relates to excess inventory in the market, product distortion refers to misrepresentation or manipulation of products, and product valuation pertains to determining the correct value of a product in a financial context. These terms do not capture the essence of goods being diverted to an unintended market.