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Regulatory Compliance and AML Flashcards

7 cards from real CBA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Compliance and AML flashcards as text

  1. Under OFAC regulations, what must a bank do when a transaction matches a name on the SDN (Specially Designated Nationals) list?

    Answer: Block the transaction, hold the funds, and report to OFAC within 10 business days

    OFAC requires institutions to block transactions involving SDN-listed parties, hold the funds in a segregated account, and file a report with OFAC within 10 business days.

  2. What does 'layering' refer to in the three stages of money laundering?

    Answer: Creating complex financial transactions to obscure the audit trail

    Layering is the second stage where criminals conduct complex, multi-step transactions to distance the funds from their illegal source and obscure the audit trail.

  3. Which regulation requires financial institutions to establish Customer Due Diligence (CDD) procedures, including identifying beneficial owners of legal entity customers?

    Answer: FinCEN CDD Rule effective May 2018

    FinCEN's CDD Rule (effective May 11, 2018) added a fifth pillar to BSA compliance requiring identification of beneficial owners who own 25% or more of a legal entity customer.

  4. Under the FinCEN CDD Rule, a bank must identify and verify beneficial owners of a legal entity customer who own what minimum percentage of equity interests?

    Answer: 25%

    The CDD Rule requires identifying all individuals who own 25% or more of a legal entity, plus one control prong individual regardless of ownership.

  5. A politically exposed person (PEP) is subject to enhanced due diligence because they:

    Answer: Pose higher AML risk due to potential for corruption and abuse of public positions

    PEPs are considered higher risk because their public positions of trust create vulnerability to corruption, bribery, and misappropriation of public funds.

  6. Which AML typology involves using multiple businesses or individuals to convert drug proceeds into seemingly legitimate income?

    Answer: Black market peso exchange

    The Black Market Peso Exchange is a method where drug proceeds in the US are used to purchase goods for export, converting criminal dollars into legitimate pesos through commercial transactions.

  7. When must a financial institution file a SAR after initially identifying suspicious activity?

    Answer: Within 30 calendar days, or 60 days if no suspect is identified

    A SAR must be filed within 30 calendar days of detecting suspicious activity; if no suspect can be identified, the deadline is extended to 60 days.