Anti-Money Laundering and Financial Crimes Flashcards

What are the three stages of the money laundering process?

Answer: Placement, layering, and integration

Money laundering moves through placement (introducing dirty money), layering (obscuring its trail), and integration (reintroducing it as legitimate funds).

What does a Suspicious Activity Report (SAR) require from a financial institution?

Answer: Confidential filing with FinCEN when suspicious transactions are detected

SARs must be filed confidentially with FinCEN when transactions suggest money laundering, fraud, or other financial crimes without alerting the subject.

What is the Bank Secrecy Act (BSA)?

Answer: The primary US anti-money laundering law requiring financial institutions to assist government agencies in detecting and preventing money laundering

The BSA is the foundational US AML law that requires financial institutions to maintain records and file reports to help identify and prevent money laundering.

What is 'Know Your Customer' (KYC)?

Answer: The process of verifying customer identity and assessing financial crime risk before and during a business relationship

KYC requires financial institutions to verify the identity of clients and assess potential risks of illegal intentions to prevent financial crimes.

What is a Currency Transaction Report (CTR)?

Answer: A mandatory report filed with FinCEN for cash transactions exceeding $10,000

CTRs must be filed with FinCEN for all cash transactions exceeding $10,000 in a single day by the same customer.

What is 'structuring' in the context of AML?

Answer: Deliberately breaking up transactions to avoid CTR reporting thresholds

Structuring, also called 'smurfing,' is the illegal act of breaking large cash transactions into smaller ones specifically to evade the $10,000 CTR filing requirement.