ACAMS General Practice 2 — Questions and Answers
Question 1: A bank receives a large cash deposit from a business customer that is inconsistent with the business's stated purpose. Which type of report is the bank most likely required to file?
- Currency Transaction Report (CTR)
- Suspicious Activity Report (SAR) (Correct answer)
- Foreign Bank Account Report (FBAR)
- FinCEN Form 105
Correct answer: Suspicious Activity Report (SAR)
A SAR is filed when a transaction is unusual or suspicious, even if it meets CTR thresholds, because it may indicate money laundering.
Question 2: Under FATF Recommendation 10, what is the minimum standard for customer due diligence when a business relationship is established?
- Simplified due diligence for all customers
- Identifying and verifying the customer's identity (Correct answer)
- Monitoring only high-risk accounts quarterly
- Filing a SAR within 30 days of account opening
Correct answer: Identifying and verifying the customer's identity
FATF Recommendation 10 requires financial institutions to identify and verify the identity of their customers when establishing a business relationship.
Question 3: Which of the following best describes a 'shell company' in the context of money laundering?
- A company that manufactures protective housing products
- A legal entity with no active business operations used to obscure ownership (Correct answer)
- A company in the early stages of incorporation
- A subsidiary of a publicly traded corporation
Correct answer: A legal entity with no active business operations used to obscure ownership
Shell companies have no genuine business activity and are often used to conceal the true beneficial owner of funds or assets.
Question 4: What is the primary purpose of the Bank Secrecy Act (BSA) in the United States?
- To protect customer bank account information from disclosure
- To require financial institutions to assist government agencies in detecting money laundering (Correct answer)
- To regulate interest rates charged by commercial banks
- To ensure equal lending practices across all customer segments
Correct answer: To require financial institutions to assist government agencies in detecting money laundering
The BSA requires U.S. financial institutions to maintain records and file reports that help identify, detect, and deter money laundering and other financial crimes.
Question 5: A politically exposed person (PEP) is identified in a bank's customer base. What is the most appropriate enhanced due diligence measure?
- Immediately close the account without notice
- Apply simplified due diligence due to public prominence
- Obtain senior management approval and conduct enhanced ongoing monitoring (Correct answer)
- File a SAR upon account opening regardless of transaction history
Correct answer: Obtain senior management approval and conduct enhanced ongoing monitoring
PEPs require enhanced due diligence including senior management sign-off and heightened monitoring due to their elevated corruption and money laundering risk.
Question 6: Which stage of the money laundering process involves making illicit funds appear to come from a legitimate source?
- Placement
- Layering
- Integration (Correct answer)
- Structuring
Correct answer: Integration
Integration is the final stage where laundered funds re-enter the legitimate economy appearing to come from a lawful source.
Question 7: What is 'smurfing' in the context of anti-money laundering?
- Using animated characters in AML training materials
- Breaking large sums of cash into smaller deposits to avoid CTR thresholds (Correct answer)
- Layering transactions through multiple shell companies
- Using digital currencies to hide transaction origins
Correct answer: Breaking large sums of cash into smaller deposits to avoid CTR thresholds
Smurfing (also called structuring) involves dividing large amounts of cash into smaller deposits below the CTR reporting threshold to avoid detection.
ACAMS General Practice 2
A bank receives a large cash deposit from a business customer that is inconsistent with the business's stated purpose.
Which type of report is the bank most likely required to file?