Money laundering negatively affects economic stability by discouraging investment, distorting markets, and eroding public trust.
* Option A (Correct):A financial system tainted by money laundering loses credibility, leading to reduced investor and consumer confidence.
* Option D (Correct):Foreign investors avoid jurisdictions with weak AML controls due to the risk of sanctions and reputational damage.
* Option B (Incorrect):While tax evasion is linked to money laundering, it does not directly affect the decision to implement tax incentives.
* Option C (Incorrect):Unemployment may result from economic instability, but money laundering does not directly cause job losses.
* Option E (Incorrect):Money laundering often increases volatility in financial markets, not reduces it.
Reference:FATF Report on the Consequences of Money Laundering (2011); World Bank Report on Financial Integrity (2020).

Effective AML programs promote aculture of compliance, which includes an environment where staff are empowered to raise concerns, challenge decisions, and continuously improve through cross-functional learning.Providing effective challengeis a supervisory expectation and best practice in institutions that value AML governance integrity.
While AML officer authority (option B) supports oversight, it is not as impactful on daily operational effectiveness as fostering a challenging and adaptive compliance culture.
Reference: ACAMS CAMS Study Guide - 6th Edition, Chapter: AML Program Components - Section:
Culture of Compliance

A large cash deposit is a red flag for money laundering when it is inconsistent with the customer's profile, behavior, or business activity. A customer who has never conducted a transaction in cash before may be trying to avoid detection or conceal the source of the funds. A customer who transacts in segments smaller than the reporting thresholds at various times during the day may be engaging in structuring or smurfing, which are techniques to evade currency transaction reporting requirements. A customer who follows a large cash deposit with an immediate wire transfer to an offshore secrecy haven may be attempting to layer or move the funds to a jurisdiction with weak anti-money laundering controls or high confidentiality. These scenarios indicate a high risk of money laundering and warrant further investigation and reporting.
A customer who operates a cash-based business may have a legitimate reason to make a large cash deposit, depending on the nature and scale of the business. However, this does not mean that the customer is exempt from scrutiny or monitoring, as cash-based businesses are also vulnerable to money laundering abuse. The bank should verify the source and purpose of the funds, and compare the deposit with the customer's expected activity and turnover.
CAMS Certification Package - 6th Edition, Chapter 4: Conducting and Supporting the Investigation Process, pp. 97-98.
Warning signs of money laundering | The Law Society, Section: Cash deposits and withdrawals.

The primary purposes of Financial Action Task Force (FATF)-Style Regional Bodies are to promote effective implementation of FATF recommendations and to provide expertise and input in FATF policy-making.
(CAMS Manual, 6th Edition, Page 180)