CAMS Question #618: Real Exam Question with Answer & Explanation

The correct answer is C. Value E. Inconsistency F. Transaction speed. The broker should identify red flags related to the property's inflated value, the buyer's inconsistent financial profile as a student, and the unusual urgency to complete the transaction.

Question

A student contacts a real estate broker to view a home but cancels last minute due to illness. The student wants to quickly buy the 800,000 USD home, which is overvalued, despite the broker's objections to the asking price. Which real estate red flags should the broker identify? (Select Three.)

Options

AAnonymity
BStructuring
CValue
DFlow through
EInconsistency
FTransaction speed

Explanation

The broker should identify red flags related to the property's inflated value, the buyer's inconsistent financial profile as a student, and the unusual urgency to complete the transaction.

Common mistakes.

A. Anonymity as a red flag applies when a buyer attempts to conceal their identity or uses shell companies; there is no indication in the scenario that the student is hiding their identity from the broker.
B. Structuring refers to breaking up financial transactions to avoid currency reporting thresholds and is not applicable to this scenario, which involves a single high-value property purchase.
D. Flow through refers to funds passing rapidly through accounts or intermediary entities and is not a red flag specifically indicated in this scenario involving a direct property purchase.

Concept tested. Real estate money laundering red flags identification

Reference. https://www.fatf-gafi.org/en/publications/Methodsandtrends/Laundering-the-proceeds-of-crime-through-real-estate.html

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