Legal Compliance & Ethical Standards Flashcards

The Bank Secrecy Act (BSA) requires financial institutions to file a Suspicious Activity Report (SAR) within how many days of initially detecting a suspicious transaction?

Answer: 45 days

Financial institutions must file a SAR within 30 calendar days of the date of the initial detection of facts constituting a suspicious transaction, with a 60-day extension if no suspect is identified initially — but the standard window is 30 days.

Which of the following BEST describes the 'tipping off' prohibition under anti-money laundering laws?

Answer: Prohibits informing a subject that a SAR has been filed about them

Tipping off prohibits financial institutions from notifying a subject that a SAR has been filed or that an investigation is underway, to protect the integrity of investigations.

An attorney who discovers fraud while providing legal services to a client is subject to which unique ethical constraint not applicable to other professionals?

Answer: Attorney-client privilege may prevent disclosure of client confidences

Attorney-client privilege can restrict an attorney's ability to disclose client fraud, creating a tension between ethical duties that other fraud examiners do not face.

The concept of 'constructive knowledge' in fraud law means that a party:

Answer: Is presumed to know facts that a reasonable inquiry would have revealed

Constructive knowledge is legal notice of facts that a person should have known because a reasonable investigation would have revealed them, even if actual knowledge is absent.

Under the ACFE's Code of Professional Ethics, a CFE who is offered a gift by a client during an engagement should:

Answer: Disclose the gift to their supervisor and decline it

CFEs must avoid conflicts of interest and should decline gifts that could impair or appear to impair their objectivity, disclosing the offer to maintain transparency.

Which federal statute specifically criminalizes making a materially false statement to a federal investigator, even when not under oath?

Answer: 18 U.S.C. § 1001

18 U.S.C. § 1001 makes it a federal crime to knowingly make false statements or conceal material facts in any matter within the jurisdiction of the federal government.

An organization implements a mandatory job rotation policy for employees in sensitive financial roles primarily to:

Answer: Detect and deter fraud by eliminating continuous opportunity

Job rotation removes the continuous opportunity needed to sustain long-running fraud schemes and may expose irregularities when a new person takes over a role.