General Securities Representative (Series 7) Practice Exam

Which payment method is least suggestive of money laundering?

1. Cash

2. Wire transfer

3. Credit card

4. Personal check

The correct answer is: Personal check

The use of personal checks is the least suggestive of money laundering compared to the other payment methods listed. Personal checks are typically linked to a specific banking account that can be traced back to the individual or entity depositing or cashing the check. This traceability provides a clear record of the transaction, including the identity of the person making the payment. In money laundering schemes, the goal is often to obscure the source of illicit funds and make the transactions difficult to trace. Cash is the most anonymous and easily transferred without a paper trail, making it highly susceptible to money laundering. Wire transfers can also involve significant anonymity, especially if they cross borders, complicating tracing efforts. Credit cards, while providing a record of transactions, can sometimes be used in a way that limits clear identification of the source of funds. The personal check's inherent traceability offers financial institutions and authorities a more straightforward pathway to investigate and understand the transactions, making it less likely to be used for illicit purposes compared to cash, wire transfers, or credit cards.