Banking Exam Anti-Money Laundering (AML) Principles 5

Question 1

What is 'smurfing' in the context of AML?

Accepted Answer

Breaking large cash sums into multiple smaller deposits across different branches or individuals to avoid reporting thresholds

Answer

Smurfing is a form of structuring where multiple individuals ('smurfs') deposit smaller amounts across different locations to avoid triggering CTR requirements.

Question 2

Which of the following describes the 'integration' stage of money laundering?

Accepted Answer

Reintroducing laundered funds into the legitimate economy so they appear as lawful income

Answer

Integration is the final stage, where laundered money re-enters the legitimate financial system — often through luxury purchases, investments, or business revenue — appearing as clean funds.

Question 3

A Money Services Business (MSB) such as a check casher or money transmitter must register with:

Accepted Answer

FinCEN, and comply with BSA requirements

Answer

MSBs are required to register with FinCEN, implement AML programs, and comply with BSA obligations including filing SARs and CTRs.

Question 4

A bank discovers it failed to file a required SAR six months ago. What should it do?

Accepted Answer

File the SAR immediately and document the reason for the delay

Answer

Banks should file late SARs promptly upon discovery and document the circumstances; regulators take a more favorable view of good-faith late filings than of willful non-filing.

Question 5

What is the primary purpose of a bank's transaction monitoring system in an AML program?

Accepted Answer

To automatically detect unusual or suspicious patterns in account activity that may warrant further investigation

Answer

Transaction monitoring systems analyze account activity against expected behavior and peer groups to flag anomalies that compliance staff can then investigate for potential SAR filing.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Anti-Money Laundering (AML) Principles 5