Banking Exam Anti-Money Laundering (AML) Principles 4

Question 1

Under the USA PATRIOT Act, which program must banks establish to verify the identity of new customers?

Accepted Answer

Customer Identification Program (CIP)

Answer

Section 326 of the USA PATRIOT Act requires covered financial institutions to implement a CIP to collect and verify identifying information for new account holders.

Question 2

OFAC (Office of Foreign Assets Control) sanctions programs require banks to:

Accepted Answer

Block or reject transactions involving sanctioned individuals, entities, or countries

Answer

OFAC administers economic sanctions that prohibit U.S. financial institutions from engaging in transactions with designated individuals, entities, and jurisdictions.

Question 3

Which of the following best describes a 'shell company' in the context of money laundering?

Accepted Answer

A company with no significant assets or operations used to conceal the true beneficial owner

Answer

Shell companies are corporate entities with no real business activity, used to obscure the identity of the true owner and facilitate layering of illicit funds.

Question 4

A bank's AML program must include four core elements. Which of the following is NOT one of the four required pillars?

Accepted Answer

Customer credit monitoring and scoring

Answer

The four BSA/AML pillars are: internal controls, a designated BSA officer, ongoing employee training, and independent audit/testing — credit monitoring is not among them.

Question 5

Real estate transactions are a common vehicle for money laundering integration because:

Accepted Answer

Property values are easy to manipulate and real estate can be sold to produce seemingly legitimate proceeds

Answer

Real estate allows criminals to integrate dirty money by purchasing property with illicit funds and reselling it, generating what appears to be clean, legitimate sales proceeds.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Anti-Money Laundering (AML) Principles 4