Banking Anti-Money Laundering 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act, what is the minimum threshold that triggers a mandatory Currency Transaction Report (CTR)?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
The BSA requires banks to file a CTR for any cash transaction exceeding $10,000 in a single business day.
Question 2: Which of the following best describes 'layering' in the money laundering process?
- Depositing illicit cash in small amounts below reporting thresholds
- Moving funds through multiple transactions to obscure their origin (Correct answer)
- Converting laundered funds into legitimate business assets
- Creating shell companies to receive criminal proceeds
Correct answer: Moving funds through multiple transactions to obscure their origin
Layering involves complex financial transactions designed to disguise the audit trail and separate the funds from their illegal source.
Question 3: A customer makes multiple cash deposits of $9,500 on consecutive days. What AML concern does this raise?
- Trade-based money laundering
- Structuring (smurfing) (Correct answer)
- Integration
- Correspondent banking risk
Correct answer: Structuring (smurfing)
Structuring, also called smurfing, involves breaking up large cash amounts into smaller deposits to evade CTR filing requirements.
Question 4: Which federal agency primarily administers and enforces the Bank Secrecy Act?
- Federal Reserve
- Securities and Exchange Commission
- Financial Crimes Enforcement Network (FinCEN) (Correct answer)
- Office of the Comptroller of the Currency
Correct answer: Financial Crimes Enforcement Network (FinCEN)
FinCEN, a bureau of the U.S. Treasury Department, is the primary regulator responsible for administering the BSA.
Question 5: What does the term 'beneficial owner' refer to in the context of AML compliance?
- The bank officer who approves a loan
- The individual who ultimately owns or controls a legal entity (Correct answer)
- The government agency overseeing a regulated entity
- A customer who benefits from an interest rate reduction
Correct answer: The individual who ultimately owns or controls a legal entity
A beneficial owner is the natural person who ultimately owns or exercises control over a legal entity customer, as required to be identified under FinCEN's CDD Rule.
Question 6: Which of the following is NOT one of the three stages of money laundering?
- Placement
- Layering
- Structuring (Correct answer)
- Integration
Correct answer: Structuring
The three stages of money laundering are placement, layering, and integration; structuring is a technique used during the placement stage, not a separate stage.
Question 7: Under FinCEN's Customer Due Diligence (CDD) Rule, banks must identify beneficial owners of legal entity customers who own what percentage or more?
- 10%
- 15%
- 25% (Correct answer)
- 51%
Correct answer: 25%
The CDD Rule requires identifying all natural persons who own 25% or more of a legal entity, plus one control person regardless of ownership percentage.
Banking Anti-Money Laundering 2
Under the Bank Secrecy Act, what is the minimum threshold that triggers a mandatory Currency Transaction Report (CTR)?