AML & KYC Compliance Flashcards

Under the Bank Secrecy Act, what is the threshold for filing a Currency Transaction Report (CTR)?

Answer: $10,000

The BSA requires financial institutions to file a CTR for cash transactions exceeding $10,000 in a single business day.

Which practice involves breaking up large cash deposits into smaller amounts to avoid CTR reporting thresholds?

Answer: Smurfing

Smurfing (also called structuring) is the illegal act of splitting large cash transactions into smaller ones to evade reporting requirements.

What does 'Enhanced Due Diligence' (EDD) primarily apply to?

Answer: High-risk customers and Politically Exposed Persons

EDD is a deeper level of scrutiny applied to higher-risk customers, including PEPs and those from high-risk jurisdictions.

A Suspicious Activity Report (SAR) must generally be filed within how many days of detecting suspicious activity?

Answer: 30 days

SARs must be filed within 30 calendar days of the date the suspicious activity is initially detected.

Which FATF recommendation specifically addresses the risk-based approach to AML/CFT?

Answer: Recommendation 1

FATF Recommendation 1 requires countries and financial institutions to apply a risk-based approach to AML/CFT measures.

In KYC processes, what does 'beneficial ownership' refer to?

Answer: The natural person(s) who ultimately owns or controls a legal entity

Beneficial ownership identifies the natural persons who ultimately own or control a legal entity, even if ownership is indirect or through nominees.

Which AML stage involves moving illicit funds through complex transactions to obscure their origin?

Answer: Layering

Layering is the second stage of money laundering where criminals conduct complex financial transactions to distance funds from their illegal source.