Money Laundering & Asset Tracing Flashcards

Which of the following best describes the 'placement' stage of money laundering?

Answer: Introducing illicit cash into the financial system

Placement is the first stage where illegal cash is introduced into the financial system, often through bank deposits, currency exchanges, or cash-intensive businesses.

Under the Bank Secrecy Act (BSA), financial institutions are required to file a Currency Transaction Report (CTR) for cash transactions exceeding:

Answer: $10,000

The BSA requires CTRs for cash transactions exceeding $10,000 in a single business day, regardless of whether the transaction is suspicious.

The practice of breaking large amounts of cash into smaller deposits to avoid CTR reporting thresholds is known as:

Answer: Smurfing (structuring)

Smurfing, also called structuring, involves making multiple small deposits below the $10,000 CTR threshold to avoid detection — itself a federal crime under 31 U.S.C. § 5324.

Which federal agency is primarily responsible for enforcing the Bank Secrecy Act and combating money laundering in the United States?

Answer: FinCEN

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, administers and enforces the BSA and collects financial intelligence to combat money laundering.

A Suspicious Activity Report (SAR) must generally be filed within how many days of detecting a suspicious transaction?

Answer: 30 days

Financial institutions must file a SAR within 30 calendar days of detecting a suspicious transaction, or 60 days if no suspect is initially identified.

Which of the following is an example of the 'layering' stage of money laundering?

Answer: Conducting a series of wire transfers through multiple offshore accounts

Layering involves creating complex financial transactions — such as multiple international wire transfers — to obscure the audit trail and distance funds from their criminal origin.

The USA PATRIOT Act expanded AML requirements by mandating that financial institutions establish Customer Identification Programs (CIPs). What is the primary purpose of a CIP?

Answer: To verify the identity of customers opening new accounts

CIPs require financial institutions to collect and verify identifying information (name, date of birth, address, ID number) for all customers opening new accounts to prevent anonymous financial activity.