ACFE Money Laundering Investigation 5 — Questions and Answers
Question 1: Which cryptocurrency characteristic makes it particularly attractive for the placement stage of money laundering?
- Blockchain transactions are fully anonymous with no audit trail
- Peer-to-peer transactions can occur without a regulated financial intermediary (Correct answer)
- Cryptocurrency values are stable, reducing conversion risk
- All crypto exchanges are located in unregulated jurisdictions
Correct answer: Peer-to-peer transactions can occur without a regulated financial intermediary
Peer-to-peer crypto transactions can bypass traditional financial institutions, allowing funds to be moved without triggering BSA reporting requirements at the placement stage.
Question 2: A CFE reviewing bank records notices a customer deposits $9,500 in cash on Monday, $9,400 on Tuesday, and $9,800 on Wednesday at three different branches. This pattern suggests:
- Normal business cash management
- Structuring to evade CTR filing requirements (Correct answer)
- Legitimate payroll deposits
- Over-the-counter bond purchases
Correct answer: Structuring to evade CTR filing requirements
Multiple sub-threshold cash deposits across different branches over consecutive days is a textbook structuring pattern designed to avoid the $10,000 CTR trigger.
Question 3: The USA PATRIOT Act expanded BSA requirements to include which new category of financial institution in AML program obligations?
- Grocery stores accepting EBT payments
- Broker-dealers, mutual funds, and money services businesses (Correct answer)
- Nonprofit charitable organizations receiving foreign donations
- Commercial landlords accepting monthly rent payments
Correct answer: Broker-dealers, mutual funds, and money services businesses
The USA PATRIOT Act extended BSA AML program requirements to broker-dealers, mutual funds, money services businesses, and other non-bank financial institutions.
Question 4: In a Ponzi scheme money laundering investigation, early investor returns paid from new investor funds are best characterized as:
- Legitimate returns subject to capital gains tax only
- Proceeds of wire fraud potentially subject to money laundering charges (Correct answer)
- Civil fraud requiring SEC referral only
- Theft subject to state prosecution only
Correct answer: Proceeds of wire fraud potentially subject to money laundering charges
Payments to early Ponzi investors using funds from later investors constitute proceeds of wire or mail fraud, making subsequent transactions potential money laundering violations.
Question 5: Which international body maintains a list of 'high-risk jurisdictions subject to a call for action' that financial institutions use to assess AML risk?
- International Monetary Fund (IMF)
- Financial Action Task Force (FATF) (Correct answer)
- World Bank Group
- Bank for International Settlements (BIS)
Correct answer: Financial Action Task Force (FATF)
FATF publishes its 'black list' and 'grey list' of high-risk and non-cooperative jurisdictions, which financial institutions use to calibrate AML due diligence.
Question 6: A key investigative technique for identifying unreported income in a money laundering case is the net worth method, which works by:
- Subtracting total liabilities from total assets at year-end only
- Comparing increases in net worth plus living expenses to known income sources (Correct answer)
- Analyzing debt-to-equity ratios across multiple accounting periods
- Calculating the present value of all future cash flows from assets
Correct answer: Comparing increases in net worth plus living expenses to known income sources
The net worth method detects hidden income by measuring unexplained increases in wealth relative to reported income, a technique used by the IRS and CFEs.
Question 7: Under 31 U.S.C. § 5318(g), financial institutions that file SARs in good faith are protected from civil liability. This protection is commonly known as:
- Qualified immunity
- Safe harbor provision (Correct answer)
- Good Samaritan doctrine
- Whistleblower shield
Correct answer: Safe harbor provision
The safe harbor provision protects financial institutions and their employees from civil liability for filing SARs, even if the reported activity turns out to be innocent.
ACFE Money Laundering Investigation 5
Which cryptocurrency characteristic makes it particularly attractive for the placement stage of money laundering?