Anti-Money Laundering Compliance Flashcards

Under the Bank Secrecy Act, what is the maximum civil penalty a financial institution can face per willful BSA violation?

Answer: $1,000,000

Willful BSA violations can carry civil penalties up to $1,000,000 or the amount involved in the transaction, whichever is greater.

A customer makes 10 cash deposits of $9,500 each over two weeks to avoid CTR filing. This is known as:

Answer: Smurfing

Smurfing (also called structuring) involves breaking large cash amounts into smaller deposits to evade the $10,000 CTR reporting threshold.

Which federal agency is primarily responsible for enforcing AML laws against financial institutions in the US?

Answer: FinCEN

FinCEN (Financial Crimes Enforcement Network), a bureau of the U.S. Treasury, is the primary agency administering and enforcing BSA/AML requirements.

What does the 'layering' stage of money laundering involve?

Answer: Disguising the trail through complex transactions

Layering is the second stage of money laundering, designed to conceal the audit trail through a series of complex financial transactions.

A Suspicious Activity Report (SAR) must be filed within how many days of identifying a suspicious transaction?

Answer: 30 days

SARs must be filed within 30 calendar days of the date the suspicious activity is initially detected, with a possible 60-day extension if no suspect is identified.

Which of the following is NOT a red flag for potential money laundering in a bank account?

Answer: Regular payroll direct deposits from a known employer

Regular payroll direct deposits from a known employer are a normal, explainable banking activity and not a money laundering red flag.

Under FATF guidelines, what is a 'Politically Exposed Person' (PEP)?

Answer: An individual entrusted with a prominent public function

A PEP is an individual who holds or has held a prominent public position, such as a head of state or senior government official, posing higher corruption and bribery risk.