CFE Money Laundering 1 — Questions and Answers
Question 1: Which of the following best describes the 'placement' stage of money laundering?
- Layering illicit funds through complex financial transactions
- Introducing illegally obtained cash into the financial system (Correct answer)
- Integrating laundered money back into the legitimate economy
- Converting proceeds into untraceable digital assets
Correct answer: Introducing illegally obtained cash into the financial system
Placement is the first stage where illegal cash is introduced into the financial system, often through bank deposits or cash-intensive businesses.
Question 2: A launderer deposits $9,500 in cash multiple times to avoid the $10,000 Currency Transaction Report (CTR) threshold. This activity is known as:
- Commingling
- Structuring (smurfing) (Correct answer)
- Integration
- Shell company fraud
Correct answer: Structuring (smurfing)
Structuring, also called smurfing, is the practice of breaking large amounts of cash into smaller deposits specifically to avoid CTR reporting requirements.
Question 3: Under the Bank Secrecy Act (BSA), financial institutions in the U.S. must file a Currency Transaction Report (CTR) for cash transactions exceeding:
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
The BSA requires financial institutions to file a CTR for any cash transaction exceeding $10,000 in a single business day.
Question 4: Which stage of money laundering involves moving funds through a series of accounts, wire transfers, or shell companies to obscure their origin?
- Placement
- Integration
- Layering (Correct answer)
- Conversion
Correct answer: Layering
Layering is the second stage designed to distance the funds from their criminal source through complex financial transactions.
Question 5: A Suspicious Activity Report (SAR) must be filed by U.S. financial institutions within how many calendar days of detecting a suspicious transaction?
- 15 days
- 30 days (Correct answer)
- 45 days
- 60 days
Correct answer: 30 days
FinCEN regulations require financial institutions to file a SAR within 30 calendar days of detecting suspicious activity, with a 60-day extension if no suspect is identified.
Question 6: Which federal agency is primarily responsible for administering the Bank Secrecy Act and overseeing anti-money laundering compliance in the U.S.?
- The Securities and Exchange Commission (SEC)
- The Financial Crimes Enforcement Network (FinCEN) (Correct answer)
- The Office of the Comptroller of the Currency (OCC)
- The Federal Reserve Board
Correct answer: The Financial Crimes Enforcement Network (FinCEN)
FinCEN, a bureau of the U.S. Department of the Treasury, administers the BSA and collects financial intelligence to combat money laundering and terrorist financing.
Question 7: In the context of money laundering, 'integration' refers to:
- Depositing cash into a bank account
- Moving funds through multiple accounts to hide their source
- Reintroducing laundered money into the legitimate economy (Correct answer)
- Converting drug proceeds into cryptocurrency
Correct answer: Reintroducing laundered money into the legitimate economy
Integration is the final stage where laundered funds are merged back into the legitimate economy, making them appear as lawful income or assets.
CFE Money Laundering 1
Which of the following best describes the 'placement' stage of money laundering?