CCA Anti-Money Laundering & Financial Crime in Crypto 1 — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), U.S. cryptocurrency exchanges registered as Money Services Businesses (MSBs) are required to file a Currency Transaction Report (CTR) for cash transactions exceeding what threshold?
- $10,000 (Correct answer)
- $5,000
- $25,000
- $3,000
Correct answer: $10,000
The BSA CTR threshold is $10,000 for cash transactions, and FinCEN has confirmed this applies to MSBs including cryptocurrency exchanges that handle cash equivalent transactions.
Question 2: Which blockchain analytics technique do CCA-certified auditors primarily use to identify cryptocurrency wallets associated with sanctioned entities?
- Cluster analysis to group wallets by common ownership indicators and cross-reference against OFAC SDN addresses (Correct answer)
- Social media monitoring for wallet address disclosures
- IP address logging from exchange servers
- Review of mining pool payout records
Correct answer: Cluster analysis to group wallets by common ownership indicators and cross-reference against OFAC SDN addresses
Cluster analysis groups blockchain addresses believed to be controlled by the same entity based on transaction patterns, and matching these clusters against OFAC's Specially Designated Nationals list identifies potential sanctions violations.
Question 3: A cryptocurrency transaction shows funds moving through a chain of 15 intermediate wallets before reaching a final destination. This pattern is most consistent with which money laundering stage?
- Layering — obscuring the trail between illicit funds and their ultimate destination (Correct answer)
- Placement — introducing illicit funds into the financial system
- Integration — reintroducing cleaned funds into the legitimate economy
- Structuring — breaking transactions into small amounts to avoid reporting
Correct answer: Layering — obscuring the trail between illicit funds and their ultimate destination
Chaining transactions through many intermediate wallets is a classic layering technique designed to create distance between the source of illicit funds and their final destination, complicating blockchain tracing.
Question 4: What is a 'mixer' or 'tumbler' in the context of cryptocurrency AML compliance?
- A service that pools and redistributes cryptocurrency to obscure the link between sending and receiving addresses (Correct answer)
- A tool for converting cryptocurrency to fiat currency
- A DeFi protocol for earning yield on idle crypto
- A hardware device for secure private key storage
Correct answer: A service that pools and redistributes cryptocurrency to obscure the link between sending and receiving addresses
Mixers pool funds from multiple users and redistribute equivalent amounts to output addresses, deliberately breaking the on-chain transaction trail to prevent blockchain analytics from tracing the original source.
Question 5: Under FATF Recommendation 15 and its interpretive note for Virtual Assets, which type of entity is defined as a Virtual Asset Service Provider (VASP) subject to AML obligations?
- Any natural or legal person that conducts one or more of the specified VA activities (exchange, transfer, custody, etc.) as a business for another person (Correct answer)
- Only centralized cryptocurrency exchanges with more than 10,000 users
- Only entities that hold a state money transmitter license
- Only DeFi protocols with more than $1B in total value locked
Correct answer: Any natural or legal person that conducts one or more of the specified VA activities (exchange, transfer, custody, etc.) as a business for another person
FATF defines VASPs broadly as any entity conducting virtual asset activities (exchange, transfer, safekeeping, administration, or financial services for token offerings) as a business on behalf of others, regardless of size.
Question 6: A CCA auditor reviewing a crypto exchange's AML program finds that the exchange does not screen customers against the OFAC Specially Designated Nationals (SDN) list. What is the potential consequence?
- Civil and criminal penalties under the International Emergency Economic Powers Act (IEEPA) and OFAC regulations (Correct answer)
- Revocation of the exchange's MSB registration only
- SEC enforcement action for securities violations
- Loss of banking relationships only
Correct answer: Civil and criminal penalties under the International Emergency Economic Powers Act (IEEPA) and OFAC regulations
Failing to screen against and comply with OFAC sanctions programs can result in civil penalties up to $1M+ per violation and criminal penalties under IEEPA, which prohibits transactions with sanctioned parties regardless of knowledge.
CCA Anti-Money Laundering & Financial Crime in Crypto 1
Under the Bank Secrecy Act (BSA), U.S. cryptocurrency exchanges registered as Money Services Businesses (MSBs) are required to file a Currency Transaction Report (CTR) for cash transactions exceeding what threshold?