Banking Anti-Money Laundering Compliance Questions and Answers

Question 1

A customer makes three separate cash deposits of $4,000, $5,000, and $3,500 into different branches of the same bank on the same business day.
Which of the following actions is the bank required to take?

Accepted Answer

File a Currency Transaction Report (CTR) because the total exceeds $10,000.

Answer

File a Suspicious Activity Report (SAR) for structuring.

Answer

Advise the customer that their account will be closed due to suspicious activity.

Answer

Do nothing, as no single transaction exceeded the $10,000 threshold.

Question 2

Which of the following scenarios best illustrates the 'layering' stage of money laundering?

Accepted Answer

An individual transfers funds through a complex series of wire transfers to multiple accounts in different countries.

Answer

A criminal group uses a cash-intensive front business, like a car wash, to co-mingle illicit and legitimate funds.

Answer

An individual purchases a luxury property with funds that have been moved through various offshore accounts.

Answer

A 'smurf' deposits $9,500 in cash into a bank account to avoid reporting thresholds.

Question 3

Under the Bank Secrecy Act (BSA), a financial institution must file a Suspicious Activity Report (SAR) if it knows, suspects, or has reason to suspect that a transaction of at least what amount involves funds derived from illegal activity?

Accepted Answer

$5,000

Answer

$10,000

Answer

$2,000

Answer

$25,000

Question 4

What is the primary distinction between Know Your Customer (KYC) and Customer Due Diligence (CDD)?

Accepted Answer

KYC is the initial process of identifying and verifying a customer's identity, while CDD is the ongoing process of assessing that customer's risk.

Answer

KYC is performed only for high-risk customers, while CDD is for all customers.

Answer

KYC focuses on ongoing transaction monitoring, while CDD is a one-time identity verification at onboarding.

Answer

KYC is mandated by the USA PATRIOT Act, while CDD is a recommendation from the Financial Action Task Force (FATF).

Question 5

An effective OFAC (Office of Foreign Assets Control) compliance program within a bank should include all of the following EXCEPT:

Accepted Answer

Appointing a dedicated BSA Officer, separate from any OFAC compliance responsibilities.

Answer

Screening new customers and transactions against OFAC sanctions lists.

Answer

Blocking or rejecting transactions with sanctioned individuals or entities.

Answer

Conducting a periodic, risk-based assessment of its exposure to sanctioned parties.

Question 6

A bank teller notices a customer who frequently makes large cash deposits is deliberately keeping each transaction just under the $10,000 reporting threshold. This activity is a red flag for which type of illicit financial activity?

Accepted Answer

Structuring

Answer

Integration

Answer

Layering

Answer

Placement

A customer makes three separate cash deposits of $4,000, $5,000, and $3,500 into different branches of the same bank on the same business day.Which of the following actions is the bank required to take?

A customer makes three separate cash deposits of $4,000, $5,000, and $3,500 into different branches of the same bank on the same business day.
Which of the following actions is the bank required to take?