Banking Exam Anti-Money Laundering Compliance 4

Question 1

A real estate company receives cash payments for property purchases without reporting to a financial institution. Which AML stage does this most represent?

Accepted Answer

Placement

Answer

Placement is the first stage of money laundering, where illegal cash is introduced into the financial system or used to purchase assets.

Question 2

What is the primary purpose of a financial institution's AML risk assessment?

Accepted Answer

To identify, measure, and mitigate the institution's money laundering exposure

Answer

An AML risk assessment identifies an institution's specific money laundering and terrorist financing risks to allocate compliance resources appropriately.

Question 3

Which of the following best describes 'integration' in the money laundering process?

Accepted Answer

Re-introducing laundered funds into the legitimate economy

Answer

Integration is the final stage where laundered funds re-enter the legitimate economy appearing as normal business income or assets.

Question 4

An MSB (Money Services Business) customer wants to open a business account. Compared to a typical retail customer, the bank should apply:

Accepted Answer

Enhanced due diligence due to elevated risk

Answer

MSBs are considered higher-risk customers by regulators because they handle large volumes of cash and are frequently targeted by money launderers.

Question 5

Which of the following transactions would most likely require a SAR filing?

Accepted Answer

A customer wires $500,000 to an account with no apparent business purpose

Answer

A large wire transfer with no apparent business purpose is a classic SAR trigger due to its unusual nature and potential for hiding illicit fund movement.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Anti-Money Laundering Compliance 4