Banking Anti-Money Laundering 5 — Questions and Answers
Question 1: What does 'de-risking' mean in the context of AML compliance?
- Reducing interest rate risk through hedging instruments
- Banks terminating or restricting relationships with entire categories of high-risk customers (Correct answer)
- Lowering a customer's risk rating after an annual review
- Implementing new technology to reduce false-positive SAR alerts
Correct answer: Banks terminating or restricting relationships with entire categories of high-risk customers
De-risking occurs when banks exit entire customer categories deemed too costly or risky to monitor, rather than managing risk through enhanced due diligence.
Question 2: Under the USA PATRIOT Act Section 314(a), FinCEN can require financial institutions to search their records for accounts or transactions associated with:
- Any civil lawsuit involving a banking customer
- Suspects of money laundering or terrorist financing identified by law enforcement (Correct answer)
- Foreign nationals holding accounts above $100,000
- Any customer who fails to update their contact information
Correct answer: Suspects of money laundering or terrorist financing identified by law enforcement
Section 314(a) allows law enforcement to request that financial institutions search their records for accounts linked to specific suspects in money laundering or terrorist financing investigations.
Question 3: Which statement about SAR confidentiality is CORRECT?
- A bank can share a SAR with the subject of the report upon their written request
- SARs and the fact that one has been filed are strictly confidential and protected from disclosure (Correct answer)
- SARs become public record after five years
- Bank employees may discuss SARs with other customers as a warning
Correct answer: SARs and the fact that one has been filed are strictly confidential and protected from disclosure
Federal law strictly prohibits disclosure of SARs or even the fact that a SAR has been filed, protecting the integrity of investigations and the filer from liability.
Question 4: A bank's AML training program must cover which of the following employee groups?
- Only tellers and branch managers
- Only compliance and legal staff
- All bank personnel, including senior management and the board (Correct answer)
- Only employees who directly handle cash transactions
Correct answer: All bank personnel, including senior management and the board
Effective AML training must be provided to all employees whose jobs could relate to BSA compliance, including senior management and the board of directors.
Question 5: What is the minimum dollar threshold for a transaction to potentially require a SAR filing related to insider abuse?
- No minimum threshold — any amount is reportable (Correct answer)
- $5,000
- $10,000
- $25,000
Correct answer: No minimum threshold — any amount is reportable
When a bank employee or insider is involved, there is no minimum dollar threshold for SAR filing; even small amounts must be reported if insider abuse is suspected.
Question 6: Which of the following best describes 'hawala' as an AML concern?
- A digital currency used on dark web marketplaces
- An informal value transfer system that moves money without physical transfer of currency (Correct answer)
- A type of offshore account used to hide assets from tax authorities
- A derivative instrument used to hedge currency risk
Correct answer: An informal value transfer system that moves money without physical transfer of currency
Hawala is an informal system where brokers transfer value through a network of trusted intermediaries, leaving little or no paper trail and posing significant AML risks.
Question 7: Which factor would most increase a customer's AML risk rating at account opening?
- The customer has been a local resident for over 20 years
- The customer is a cash-intensive business operating in a high-risk geographic area (Correct answer)
- The customer opens a standard personal savings account
- The customer provides two forms of government-issued identification
Correct answer: The customer is a cash-intensive business operating in a high-risk geographic area
Cash-intensive businesses in high-risk jurisdictions combine two major AML risk factors—business type and geography—significantly elevating the customer's risk profile.
Banking Anti-Money Laundering 5
What does 'de-risking' mean in the context of AML compliance?