CAMS Suspicious Activity Reporting 2 — Questions and Answers
Question 1: What is 'structuring' as defined under the Bank Secrecy Act?
- Organizing a company's financial reporting into separate reporting units
- Breaking up transactions specifically to evade the $10,000 CTR reporting threshold, which is itself a federal crime (Correct answer)
- Creating structured financial products for investment purposes
- Organizing customer accounts into risk-tiered structures
Correct answer: Breaking up transactions specifically to evade the $10,000 CTR reporting threshold, which is itself a federal crime
Structuring (or 'smurfing') involves deliberately breaking cash transactions into smaller amounts — typically below $10,000 — to avoid triggering a Currency Transaction Report, and is itself a federal crime under 31 U.S.C. § 5324.
Question 2: What is a 'continuing SAR' and when is it appropriate?
- A SAR that must be refiled every month indefinitely once suspicious activity is identified
- A SAR filed at 90-day intervals while suspicious activity by the same subject continues, after the initial SAR has been filed (Correct answer)
- A SAR that spans multiple reporting periods and requires special FinCEN approval
- A SAR filed simultaneously with multiple law enforcement agencies
Correct answer: A SAR filed at 90-day intervals while suspicious activity by the same subject continues, after the initial SAR has been filed
After an initial SAR is filed, if the suspicious activity continues, institutions should file continuing SARs every 90 days until the activity ceases, maintaining the law enforcement alert.
Question 3: Which of the following would NOT typically be included in the narrative of a well-written SAR?
- Who is involved in the suspicious activity
- What specific transactions or behaviors are suspicious
- When and where the suspicious activity occurred
- The institution's opinion on whether the subject is guilty of money laundering (Correct answer)
Correct answer: The institution's opinion on whether the subject is guilty of money laundering
SAR narratives should document facts (who, what, when, where, how) and explain why activity is suspicious, but should avoid legal conclusions or opinions about guilt, as that determination is for law enforcement.
Question 4: What is 'layering' in the three stages of money laundering?
- The initial introduction of illicit funds into the financial system
- The final integration of laundered money into the legitimate economy
- The process of conducting complex transactions to distance funds from their criminal origin (Correct answer)
- The use of multiple bank accounts to hold illicit proceeds
Correct answer: The process of conducting complex transactions to distance funds from their criminal origin
Layering is the second stage of money laundering, involving complex financial transactions designed to obscure the audit trail and distance the funds from their criminal source — often through wire transfers, currency conversions, or shell companies.
Question 5: When is a financial institution NOT required to file a SAR even if it suspects illegal activity?
- When the transaction is below $5,000 and involves an unknown customer (Correct answer)
- When the institution has already filed a CTR for the same transaction
- There are no exemptions — SARs must always be filed if there is any suspicion
- When the activity relates to securities violations rather than banking fraud
Correct answer: When the transaction is below $5,000 and involves an unknown customer
For most financial institutions, SAR filing is only required when transactions meet or exceed minimum dollar thresholds ($5,000 for banks), so transactions below this threshold involving unknown suspects may not trigger a mandatory filing obligation.
Question 6: What is meant by 'integration' in the context of money laundering?
- The process of integrating AML software into the institution's IT systems
- The final stage where laundered funds re-enter the legitimate economy appearing as lawful income or assets (Correct answer)
- The integration of multiple bank accounts into a single consolidated account
- Combining BSA and AML reporting into a unified compliance function
Correct answer: The final stage where laundered funds re-enter the legitimate economy appearing as lawful income or assets
Integration is the third and final stage of money laundering, where criminals reintroduce the now-disguised funds into the legitimate economy through investments, real estate purchases, or business operations.
CAMS Suspicious Activity Reporting 2
What is 'structuring' as defined under the Bank Secrecy Act?