Banking Exam Anti-Money Laundering (AML) Principles 2 — Questions and Answers
Question 1: What is the primary purpose of a Suspicious Activity Report (SAR)?
- To report large cash transactions over $10,000
- To notify law enforcement of potentially illicit financial activity (Correct answer)
- To document routine wire transfers for compliance purposes
- To alert customers that their accounts are under review
Correct 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.
Question 2: Under the Bank Secrecy Act, which of the following transactions triggers a mandatory Currency Transaction Report (CTR)?
- Any wire transfer over $5,000
- Cash transactions exceeding $10,000 in a single business day (Correct answer)
- Structured deposits of $3,000 each over five days
- Foreign currency exchanges above $1,000
Correct 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.
Question 3: Which money laundering stage involves disguising the trail of illicit funds through complex financial transactions?
- Placement
- Layering (Correct answer)
- Integration
- Structuring
Correct answer: Layering
Layering is the second stage, where criminals obscure the audit trail by moving money through multiple accounts, entities, or jurisdictions.
Question 4: 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:
- Legitimate business cash flow
- Structuring (smurfing) (Correct answer)
- Trade-based money laundering
- Layering through real estate
Correct 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.
Question 5: Which regulatory body in the U.S. serves as the primary administrator of the Bank Secrecy Act and receives BSA filings?
- The Federal Reserve
- The Office of the Comptroller of the Currency (OCC)
- The Financial Crimes Enforcement Network (FinCEN) (Correct answer)
- The Securities and Exchange Commission (SEC)
Correct 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.
Question 6: When a bank files a SAR, what is the standard timeframe for submission after identifying a suspicious transaction?
- 24 hours
- 15 calendar days
- 30 calendar days (60 if no suspect is identified) (Correct answer)
- 90 business days
Correct 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.
Question 7: Which of the following best describes 'tipping off' in the context of AML compliance?
- Alerting FinCEN to an emerging money laundering scheme
- Informing a customer that a SAR has been or may be filed about them (Correct answer)
- Sharing SAR data with a correspondent bank under a safe harbor agreement
- Reporting a suspicious transaction to a bank's BSA officer
Correct 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.
Banking Exam Anti-Money Laundering (AML) Principles 2
What is the primary purpose of a Suspicious Activity Report (SAR)?