Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

What characterizes a boiler room operation?

1. Low pressure sales tactics

2. High-pressure sales strategies using cold calls

3. Direct face-to-face investment advice

4. Community-based investment opportunities

The correct answer is: High-pressure sales strategies using cold calls

A boiler room operation is characterized by high-pressure sales strategies using cold calls, which often involves aggressive tactics to persuade individuals to invest in dubious or fraudulent securities. These operations typically function from a remote location and rely heavily on telemarketing techniques to reach potential investors who may have little to no knowledge of the legitimacy of the investment opportunities being offered. The focus on high-pressure sales tactics is integral to boiler rooms, as the goal is to create a sense of urgency and fear of missing out among potential investors. This leads to quick, uninformed purchasing decisions, which is a hallmark of such illegal schemes. Unlike other options that suggest lower pressure sales tactics or community-based investment, boiler room operations thrive in an environment where the sales approach is confrontational and manipulative, often disregarding ethical practices in favor of immediate financial gain.