C4 Quality Assurance & Compliance 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), what is the minimum transaction amount that triggers a Currency Transaction Report (CTR) for crypto exchanges operating in the US?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
The BSA requires filing a CTR for any currency transaction exceeding $10,000, including those at cryptocurrency exchanges registered as Money Services Businesses.
Question 2: Which FATF Recommendation specifically addresses the 'Travel Rule' for virtual asset service providers (VASPs)?
- Recommendation 10
- Recommendation 15
- Recommendation 16 (Correct answer)
- Recommendation 20
Correct answer: Recommendation 16
FATF Recommendation 16 (the Travel Rule) requires VASPs to transmit originator and beneficiary information alongside virtual asset transfers.
Question 3: A crypto exchange discovers a customer has structured multiple deposits just below the $10,000 CTR threshold. What is this practice called and what report must be filed?
- Layering; file a CTR
- Structuring; file a SAR (Correct answer)
- Smurfing; file a CTR
- Placement; file an STR
Correct answer: Structuring; file a SAR
Structuring (also called smurfing) involves deliberately breaking up transactions to avoid reporting thresholds, and must be reported via a Suspicious Activity Report (SAR).
Question 4: Which US regulatory body requires cryptocurrency exchanges to register as Money Services Businesses (MSBs)?
- SEC
- CFTC
- FinCEN (Correct answer)
- OCC
Correct answer: FinCEN
FinCEN (Financial Crimes Enforcement Network) requires cryptocurrency exchangers and administrators to register as MSBs under the BSA.
Question 5: What does a robust blockchain analytics tool primarily help a compliance team detect?
- Network consensus failures
- Smart contract bugs
- Illicit transaction patterns and wallet clustering (Correct answer)
- Mining pool inefficiencies
Correct answer: Illicit transaction patterns and wallet clustering
Blockchain analytics tools use heuristics and clustering algorithms to identify wallets associated with illicit activity such as darknet markets, ransomware, and mixing services.
Question 6: Under GDPR, what right allows a user to request that their personal data held by a crypto exchange be permanently deleted?
- Right of Access
- Right to Portability
- Right to Erasure (Correct answer)
- Right to Rectification
Correct answer: Right to Erasure
The Right to Erasure (also called the 'right to be forgotten') under GDPR Article 17 allows individuals to request deletion of their personal data under certain conditions.
Question 7: Which international standard provides a framework for information security management systems (ISMS) relevant to crypto businesses?
- ISO 9001
- ISO 27001 (Correct answer)
- ISO 31000
- ISO 22301
Correct answer: ISO 27001
ISO/IEC 27001 specifies requirements for establishing, implementing, and maintaining an ISMS, which is critical for protecting private keys and customer data in crypto businesses.
C4 Quality Assurance & Compliance 2
Under the Bank Secrecy Act (BSA), what is the minimum transaction amount that triggers a Currency Transaction Report (CTR) for crypto exchanges operating in the US?