CHATPER 1: RISKS AND METHODS OF MONEY LAUNDERING AND TERRORIST FINANCING

First of all, congratulations to all of you who have decided to opt for CAMS certification. As you all know that it is internationally renowned and globally sought course in Anti-Money Laundering. As the saying goes, beautiful things are harder to get. Therefore, this certification is not easy, it needs a lot of hard work and patience. But with the right method, one can easily pass this certification.

Our aim here is to help candidates like to easily secure good marks in the CAMS exam without putting a lot of effort. So, welcome to our 4-part series of an overview of four different chapters of the CAMS study guide. We will tell you what is contained in these chapters and what should you focus on while studying the CAMS study guide. This article is not exhaustive in itself, but you may want to read this article before starting studying chapters of the CAMS study guide or at the time of review.

If you have landed to this page directly, then we suggest you go through this article first, which provides you guidance regarding how to prepare for the CAMS exam.

Let’s Dive IN:

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Chapter 1: Risk and Methods of Money Laundering and Terrorist Financing

This chapter introduces you to the general concept of money laundering and terrorist financing. Further, it also explains different financial medium that is susceptible to money laundering and terrorist financing.

  1. Concept of Money Laundering and its stages

As the name suggests you will be studying about the definition of money laundering and stages of money laundering

Points To Remember:

You may know the definition of money laundering but are you sure about its’ meaning. E.g., money laundering is not simply converting illegal money to legal money but it deals with hiding sources of income since the source of money can never be altered. Similarly, you may have studied investing in real estate is in the integration phase but it may happen also done in the placement phase. So you should be able to distinguish between this phase because the question asked regarding this will be very confusing.

2. Money Laundering consequences in Economy and Society in general

This part will provide you information regarding the what are negative impact that money laundering brings in the economic-social-political situation of the country and  in the extreme situation leading to failure of the economy of a country as a whole like Zimbabwe

Points To Remember:

This section is straight forward, just read through it

 

3. Methods of Money Laundering

This most important section of this chapter, most of the questions will be directed towards this portion. It contains explanations of different products/services provided by Banking Institutions that are vulnerable to money laundering as well as Non-Banking Institutions like Money Service Business, Insurance Companies, Non-Financial Business Professions like Casinos, dealers in precious stones, vehicle sellers, gatekeepers which can be easily converted to a vehicle for money laundering.

Points To Remember:

It may be a lot to take in. But you need to focus on part how this channel can be exploited for money laundering purpose, after all, you are going to be Anti-Money Laundering Expert

You may find difficulty understand some of the topics. So our suggestion is that you go for other reference materials. The best material would be Wolfsberg Principles which provide guides on how the monetary institutions should operate Private Banking, Prepaid Cards, Credit card and so on. 

 

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4. Trade-Based Money Laundering Techniques:

This part mainly focused on money laundering via trade finance or a Letter of Credit(LC).

Points To Remember:

This part may be difficult to grasp if you don’t have quite a deal idea of LC. Our suggestion to understand the basic concept of LC and then go through this part. Also, take care of the Black Market Peso example, you need to understand how this system works because the scenario-based question may become from this.

5. New Payment Product and Services

This portion mainly talks about money laundering threats that have been risen from the proliferation of instruments like a digital wallet, prepaid card, virtual currency leading to an increase in the number of anonymous transactions.

Points To Remember:

This might be confusing for some of you, who have never experience or heard about these alien products. But, don’t let your imagination run wild, you can again take the help of Wolfsburg principle here which explains comprehensively on how these products work and what are anti-money laundering mechanisms and so on.

6. Misuse of Corporate Vehicles

This will familiarize you with how different types of legal entities like public limited, private ownership, trusts are being used to as instruments to hide the beneficial owners and to perpetrate money laundering activities.

Points To Remember:

You should have a clear understanding of how complex legal ownership is created to hide beneficial owners and what is distinguishing features of these companies. E.g. shell and shelf companies, private investment companies, and limited liability companies. Also, there are important concepts like bearer shares that you need to be aware of.

7. Misuse of Corporate Vehicles

The chapter finishes with the clarification of terrorism financing that is what is the idea behind it, how are the financing being done, and finally how to identify them.

Points To Remember:

You need to understand the difference between Money Laundering and Terrorism Financing. We have to tell you, terrorism financing does not receive much focus in the overall CAMS study guide. You are going to read about terrorism financing in a great deal in this chapter only. However, it is really interesting to go through it. Like how charities organization and hawala systems are used to channel funds to finance terrorism.

A final note to our readers, we have introduced the CAMS Forum section where you can put any question relating CAMS exam, CAMS study guide, general money laundering issues. We invite you all to participate here to gain and share knowledge. You can go to this forum by clicking this link. Just register to spread your word:

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WE ARE PLEASE TO INFORM YOU THAT, WE HAVE COMPLETED ARTICLE SERIES AND YOUTUBE SERIES OF OVERVIEW OF ALL CHAPTERS OF CAMS STUDY GUIDE. THEY CAN BE ACCESSED BY CLICKING FOLLOWING LINKS.

Chapter 1: Risks and Methods of Money Laundering and Terrorist Financing

Chapter 2 : International AML/CFT Standards

Chapter 3: Anti-Money Laundering/Counter-Terrorist Financing Compliance Programs

Chapter 4: Conducting and Responding to Investigations

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