CFA Bank Secrecy Act & SAR Filing 3 — Questions and Answers
Question 1: An AML compliance officer notices a corporate account receiving multiple wire transfers from high-risk jurisdictions followed by immediate cash withdrawals. What stage of money laundering does the cash withdrawal represent?
- Placement
- Layering
- Integration (Correct answer)
- Structuring
Correct answer: Integration
Integration is the final stage where laundered funds re-enter the legitimate economy, often through cash withdrawals or purchases of assets.
Question 2: Under BSA record-keeping rules, banks must retain records of wire transfers of $3,000 or more for at least:
- 1 year
- 3 years
- 5 years (Correct answer)
- 7 years
Correct answer: 5 years
BSA regulations require financial institutions to retain wire transfer records of $3,000 or more for a minimum of five years.
Question 3: Which of the following best describes a 'nested correspondent account' risk in BSA compliance?
- A domestic bank opening accounts for foreign nationals
- A foreign bank using a U.S. correspondent bank to serve its own foreign bank clients (Correct answer)
- A U.S. bank opening multiple accounts for one customer
- A bank providing services to politically exposed persons
Correct answer: A foreign bank using a U.S. correspondent bank to serve its own foreign bank clients
Nested correspondent accounts occur when a foreign bank's correspondent relationship is used by that bank's foreign bank clients, creating layers that obscure the ultimate customer's identity.
Question 4: A BSA/AML program must include four pillars. Which of the following is NOT one of the required pillars?
- Internal controls
- Independent testing/audit
- Customer profit analysis (Correct answer)
- Designation of a BSA compliance officer
Correct answer: Customer profit analysis
The four BSA pillars are internal controls, independent testing, a designated BSA officer, and ongoing employee training — customer profit analysis is not required.
Question 5: When a suspicious activity involves an insider (bank employee), to whom should the SAR typically be addressed to avoid compromising the investigation?
- The employee's direct supervisor
- Senior management above the suspect (Correct answer)
- The bank's board of directors only
- Local law enforcement first
Correct answer: Senior management above the suspect
When insider activity is suspected, the SAR process should bypass the suspect and be escalated to senior management above the involved employee to protect the investigation.
Question 6: Under FinCEN's Customer Due Diligence (CDD) rule, what is the beneficial ownership threshold requiring identification?
- 10% or more ownership
- 25% or more ownership (Correct answer)
- 51% or more ownership
- 5% or more ownership
Correct answer: 25% or more ownership
FinCEN's CDD rule requires financial institutions to identify and verify the identity of individuals who own 25% or more of a legal entity customer.
Question 7: A casino is required to file a CTR for cash transactions over $10,000. Casinos file their BSA reports using which specific form?
- FinCEN Form 104
- FinCEN Form 112
- FinCEN Form 103 (Correct answer)
- FinCEN Form 101
Correct answer: FinCEN Form 103
Casinos use FinCEN Form 103 (the Currency Transaction Report by Casinos) when reporting cash transactions over $10,000.
CFA Bank Secrecy Act & SAR Filing 3
An AML compliance officer notices a corporate account receiving multiple wire transfers from high-risk jurisdictions followed by immediate cash withdrawals.
What stage of money laundering does the cash withdrawal represent?