CAMS Question #662: Real Exam Question with Answer & Explanation

The correct answer is A. Reduce confidence in the country's financial sector. D. Dissuade foreign investment.. Money laundering negatively affects economic stability by discouraging investment, distorting markets, and eroding public trust. A financial system tainted by money laundering loses credibility, leading to reduced investor and consumer confidence. Foreign investors avoid jurisdic

Question

Money laundering has social and economic impacts, especially within developing countries. A high volume of money laundering in a country may: (Select Two.)

Options

AReduce confidence in the country's financial sector.
BDissuade government tax incentive programs.
CLower the employment rate.
DDissuade foreign investment.
EReduce volatility in exchange and interest rates.

Explanation

Money laundering negatively affects economic stability by discouraging investment, distorting markets, and eroding public trust. A financial system tainted by money laundering loses credibility, leading to reduced investor and consumer confidence. Foreign investors avoid jurisdictions with weak AML controls due to the risk of sanctions and reputational damage.

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