Money Laundering & AML Compliance Flashcards

A compliance officer discovers that a senior bank executive has been suppressing SAR filings on a major client. This conduct is best categorized as:

Answer: SAR suppression, which is a federal crime

Willfully suppressing SAR filings constitutes obstruction of justice and violation of the Bank Secrecy Act, exposing both the individual and the institution to criminal liability.

The 'layering' stage of money laundering is primarily designed to:

Answer: Create distance between funds and their criminal origin through complex transactions

Layering involves creating a complex web of financial transactions — wire transfers, shell companies, currency conversions — to obscure the audit trail.

Which type of financial institution is specifically required by FinCEN to implement a formal, written AML program under the Bank Secrecy Act?

Answer: Money services businesses (MSBs)

Money services businesses, including currency exchangers, check cashers, and money transmitters, are required to establish written AML programs under BSA regulations.

A customer wires $50,000 to a high-risk jurisdiction, then immediately wires equivalent funds back to a different account in the US. This pattern most likely indicates:

Answer: Round-tripping to create the appearance of foreign-source income

Round-tripping involves sending funds abroad and returning them to disguise domestic illicit proceeds as foreign investment income.

Under the Corporate Transparency Act (CTA), most small US corporations and LLCs are required to report beneficial ownership information to:

Answer: FinCEN

The Corporate Transparency Act requires covered companies to file beneficial ownership information reports directly with FinCEN to combat shell company abuse.

Which of the following best describes the 'risk-based approach' in AML compliance?

Answer: Allocating more compliance resources to higher-risk customers, products, and geographies

A risk-based approach requires institutions to assess ML/TF risk and apply proportionate controls, with enhanced measures for higher-risk situations.

A fraud examiner reviewing a company's books notices that a vendor paid $2.4 million over three years in transactions always just under $10,000. This pattern should trigger suspicion of:

Answer: Structuring to avoid BSA reporting requirements

Systematic transactions kept just below the $10,000 CTR threshold over time is a classic structuring pattern indicating deliberate evasion of reporting requirements.