Banking Exam Anti-Money Laundering Compliance 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act, what is the maximum civil penalty a financial institution can face per willful BSA violation?
- $10,000
- $25,000
- $1,000,000 (Correct answer)
- $250,000
Correct 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.
Question 2: A customer makes 10 cash deposits of $9,500 each over two weeks to avoid CTR filing. This is known as:
- Layering
- Smurfing (Correct answer)
- Integration
- Placement
Correct answer: Smurfing
Smurfing (also called structuring) involves breaking large cash amounts into smaller deposits to evade the $10,000 CTR reporting threshold.
Question 3: Which federal agency is primarily responsible for enforcing AML laws against financial institutions in the US?
- FBI
- SEC
- FinCEN (Correct answer)
- FDIC
Correct answer: FinCEN
FinCEN (Financial Crimes Enforcement Network), a bureau of the U.S. Treasury, is the primary agency administering and enforcing BSA/AML requirements.
Question 4: What does the 'layering' stage of money laundering involve?
- Initially depositing illegal funds into the financial system
- Disguising the trail through complex transactions (Correct answer)
- Making laundered money appear as legitimate income
- Structuring cash to avoid reporting thresholds
Correct 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.
Question 5: A Suspicious Activity Report (SAR) must be filed within how many days of identifying a suspicious transaction?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct 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.
Question 6: Which of the following is NOT a red flag for potential money laundering in a bank account?
- Frequent large cash deposits with no business explanation
- Regular payroll direct deposits from a known employer (Correct answer)
- Reluctance to provide identification when required
- Unusual wire transfers to high-risk jurisdictions
Correct 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.
Question 7: Under FATF guidelines, what is a 'Politically Exposed Person' (PEP)?
- Any individual with a net worth exceeding $1 million
- An individual entrusted with a prominent public function (Correct answer)
- A foreign national with diplomatic immunity
- Any customer who refuses to provide source of funds
Correct 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.
Banking Exam Anti-Money Laundering Compliance 2
Under the Bank Secrecy Act, what is the maximum civil penalty a financial institution can face per willful BSA violation?