CRCM Bank Secrecy Act and Anti-Money Laundering 2 — Questions and Answers
Question 1: What is the minimum retention period for BSA-related records such as CTRs and SARs?
- 2 years
- 3 years
- 5 years (Correct answer)
- 7 years
Correct answer: 5 years
BSA requires financial institutions to retain most BSA records for a minimum of five years.
Question 2: Under OFAC regulations, what must a bank do when a transaction involves a specially designated national (SDN)?
- File a SAR within 10 days
- Block or reject the transaction and report to OFAC (Correct answer)
- Increase the customer's risk rating
- Notify the customer of the screening result
Correct answer: Block or reject the transaction and report to OFAC
When an OFAC match is identified, the bank must block or reject the transaction and file a report with OFAC.
Question 3: Which of the following is considered a 'red flag' for potential money laundering?
- A customer who always provides complete identification
- Large cash deposits inconsistent with the customer's business (Correct answer)
- Regular payroll deposits from the same employer
- A customer who asks detailed questions about account features
Correct answer: Large cash deposits inconsistent with the customer's business
Cash deposits inconsistent with a customer's stated business or income profile are a classic money laundering red flag.
Question 4: What does the term 'layering' refer to in the three stages of money laundering?
- Depositing illicit cash into financial accounts
- Moving funds through complex transactions to obscure their origin (Correct answer)
- Integrating laundered money back into the economy
- Filing false tax returns to conceal income
Correct answer: Moving funds through complex transactions to obscure their origin
Layering is the second stage of money laundering, involving complex transactions designed to disguise the audit trail.
Question 5: A bank's BSA/AML compliance program must be approved and overseen by whom?
- The bank's external auditors
- The board of directors or a designated committee (Correct answer)
- The state banking regulator only
- FinCEN directly
Correct answer: The board of directors or a designated committee
BSA regulations require that the BSA/AML compliance program be approved and overseen by the board of directors or a senior committee.
Question 6: Enhanced Due Diligence (EDD) is required for which category of customers?
- Customers with accounts open less than one year
- High-risk customers such as foreign politically exposed persons (Correct answer)
- All customers with more than three accounts
- Customers who use online banking exclusively
Correct answer: High-risk customers such as foreign politically exposed persons
EDD is required for higher-risk customers, including foreign politically exposed persons (PEPs) and high-risk business types.
CRCM Bank Secrecy Act and Anti-Money Laundering 2
What is the minimum retention period for BSA-related records such as CTRs and SARs?