Anti-Money Laundering (AML) Principles Flashcards
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Read the first 7 Anti-Money Laundering (AML) Principles flashcards as text
What is the primary purpose of a Suspicious Activity Report (SAR)?
Answer: To notify law enforcement of potentially illicit financial activity
A SAR is filed with FinCEN to notify law enforcement of transactions that a bank suspects may be related to money laundering, fraud, or other illegal activity.
Under the Bank Secrecy Act, which of the following transactions triggers a mandatory Currency Transaction Report (CTR)?
Answer: Cash transactions exceeding $10,000 in a single business day
The BSA requires banks to file a CTR for any cash transaction (or multiple related transactions) exceeding $10,000 in a single business day.
Which money laundering stage involves disguising the trail of illicit funds through complex financial transactions?
Answer: Layering
Layering is the second stage, where criminals obscure the audit trail by moving money through multiple accounts, entities, or jurisdictions.
A bank employee notices a customer deposits $9,500 in cash on Monday and $9,500 again on Tuesday. This pattern is most likely an example of:
Answer: Structuring (smurfing)
Breaking up deposits to stay just below the $10,000 CTR threshold is called structuring, which is itself a federal crime under 31 U.S.C. § 5324.
Which regulatory body in the U.S. serves as the primary administrator of the Bank Secrecy Act and receives BSA filings?
Answer: The Financial Crimes Enforcement Network (FinCEN)
FinCEN, a bureau of the U.S. Treasury Department, administers the BSA and is the central repository for CTRs, SARs, and other BSA filings.
When a bank files a SAR, what is the standard timeframe for submission after identifying a suspicious transaction?
Answer: 30 calendar days (60 if no suspect is identified)
Banks must file a SAR within 30 calendar days of detecting the suspicious activity; if no suspect can be identified, the deadline extends to 60 calendar days.
Which of the following best describes 'tipping off' in the context of AML compliance?
Answer: Informing a customer that a SAR has been or may be filed about them
Tipping off — disclosing to a subject that a SAR has been filed or is under consideration — is prohibited under 31 U.S.C. § 5318(g)(2) and can result in criminal penalties.