AML, CFT, Sanctions, Fraud, ABC, and Tax Evasion

The Six Financial-Crime Families

The Certified Anti-Money Laundering Specialist (CAMS) 6th-edition exam, administered by the Association of Certified Anti-Money Laundering Specialists (ACAMS), groups financial crime into six interlocking abuses. Money laundering (ML) disguises the illicit origin of criminal proceeds. Counter-financing of terrorism (CFT) addresses funding violence, which may use clean money. Sanctions enforce restrictions against designated persons, entities, and countries. Fraud is deception for unlawful gain. Anti-bribery and corruption (ABC) covers improper payments to officials. Tax evasion is the illegal nonpayment of tax.

The exam tests your ability to recognize which family a fact pattern presents, because the obligations differ.

Money Laundering: The Three Stages

The Financial Action Task Force (FATF), the global standard-setter, frames laundering as a three-stage cycle you must be able to identify on sight:

A single transaction can sit in any stage; the exam often gives a scenario and asks which stage it represents. Placement is generally the most detectable because cash physically touches the institution.

CFT, Sanctions, Fraud, ABC, and Tax Evasion

Terrorist financing differs from laundering in a key way: the source of funds may be entirely legal (salaries, charity donations), and the amounts are often small. So an analyst watches destination, end use, and links to high-risk regions, not just origin. Sanctions are administered by bodies such as the U.S. Office of Foreign Assets Control (OFAC), the United Nations, and the European Union; screening against the Specially Designated Nationals (SDN) list is mandatory and strict-liability in many regimes. Fraud (including identity theft, account takeover, and elder fraud) frequently generates the proceeds that are later laundered.

Bribery and corruption are policed under instruments such as the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act 2010. Tax evasion became a predicate offense in many jurisdictions after FATF's 2012 Recommendations, linking AML obligations directly to tax crime.

Worked Example

A customer who deposits $9,200 in cash on three consecutive days at three branches is structuring (placement) to stay under the $10,000 U.S. Currency Transaction Report (CTR) threshold. The institution still files a Suspicious Activity Report (SAR); aggregation defeats the structuring. Compare that to a charity that wires modest, recurring amounts to a conflict zone, which signals CFT rather than ML.

Exam Logistics and Common Traps

The CAMS exam contains 120 multiple-choice and multiple-select questions, allows 3 hours 30 minutes, and requires a scaled passing score of 75; there is no penalty for guessing, and results are pass/fail at the test's conclusion. This domain, Understanding the Risks and Methods of Financial Crime, carries 30% of the blueprint — the heaviest single weight, tied with Building an AFC Compliance Program.

Common traps the exam exploits:

• Treating terrorist financing as always involving illicit-source funds — it need not.
• Assuming a sanctions hit requires intent — most regimes impose strict liability.
• Confusing tax avoidance (legal planning) with tax evasion (illegal concealment).
• Forgetting that filing a CTR does not satisfy the separate SAR obligation.

How the Six Families Interconnect

The exam rarely presents a crime in isolation, because real fact patterns blend families. Fraud generates proceeds that demand laundering; corruption proceeds are laundered through shell companies and frequently involve PEPs; sanctions evasion often piggybacks on the same layering techniques as money laundering, using front companies and trade misinvoicing. Recognizing the dominant family tells you which reporting obligation fires.

A SAR/STR (Suspicious Activity Report or Suspicious Transaction Report) covers most suspicious activity; a sanctions match instead triggers an immediate freeze and blocking report to the relevant authority such as OFAC, with no advance notice to the customer.

The distinction between anti-money laundering (AML) and counter-financing of terrorism (CFT) is worth memorizing precisely. AML works backward from dirty money to its criminal origin. CFT works forward from a funding source — which may be clean — to a violent end use. This is why CFT controls weigh destination, charity diversion, and links to designated groups, while AML controls weigh source of funds, unexplained wealth, and structuring.

Anti-Bribery, Corruption, and Tax Crime Mechanics

Bribery is offering or giving something of value to improperly influence an official; corruption is the broader abuse of entrusted power. Under the U.S. Foreign Corrupt Practices Act, even facilitation payments are tightly limited and books-and-records provisions apply, while the U.K. Bribery Act 2010 has no facilitation-payment exception and creates a strict corporate offense of failing to prevent bribery.

The exam expects you to know that ABC obligations sit alongside AML obligations: a corruption red flag (unexplained third-party consultants, round-sum payments to high-risk jurisdictions) can drive both an internal escalation and a SAR.

Tax evasion as a predicate means an institution can be exposed for handling proceeds of foreign tax crimes. Frameworks such as the U.K. Criminal Finances Act 2017 created a corporate offense of failing to prevent the facilitation of tax evasion, and the Common Reporting Standard (CRS) and U.S. Foreign Account Tax Compliance Act (FATCA) increased transparency that AML teams now leverage. Distinguish evasion (illegal concealment of taxable income) from avoidance (lawful structuring) — only the former is a predicate offense.