CAMS · Question #240
An auction house dealing in fine art and antiques sells a well-known painting at a price of $12 million to an agent bidding for a group of local investors. The same painting sold ten years prior at…
The correct answer is D. Payment is received from an account in an offshore jurisdiction. E. Lack of beneficial ownership details for the originating account. The payment received from an account in an offshore jurisdiction and the lack of beneficial ownership details for the originating account are two money laundering red flags. Offshore jurisdictions are often used by money launderers to hide the source and destination of their…
Question
An auction house dealing in fine art and antiques sells a well-known painting at a price of $12 million to an agent bidding for a group of local investors. The same painting sold ten years prior at auction for $5 million. The auction house receives payment for the painting via wire transfer from an account maintained in an offshore jurisdiction by the investor group. No beneficial ownership information is available for the account. What are the two money laundering red flags? (Choose two.)
Options
- AThe payment is received via wire transfer.
- BAn agent bids on the painting for a group of investors.
- CThe painting has more than doubled its value in ten years.
- DPayment is received from an account in an offshore jurisdiction.
- ELack of beneficial ownership details for the originating account.
How the community answered
(31 responses)- A3% (1)
- B13% (4)
- C6% (2)
- D77% (24)
Explanation
The payment received from an account in an offshore jurisdiction and the lack of beneficial ownership details for the originating account are two money laundering red flags. Offshore jurisdictions are often used by money launderers to hide the source and destination of their funds, as they typically have low transparency and weak regulatory oversight. The absence of beneficial ownership information makes it difficult to identify the true owners and controllers of the funds, and to assess the legitimacy and risk of the transaction. These factors increase the possibility that the payment is related to money laundering, tax evasion, or other illicit activities.
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