FBI FBI Financial Crimes and Money Laundering 1 — Questions and Answers
Question 1: What are the three recognized stages of money laundering?
- Placement, Layering, Integration (Correct answer)
- Collection, Transfer, Concealment
- Acquisition, Distribution, Laundering
- Deposit, Movement, Extraction
Correct answer: Placement, Layering, Integration
The three stages are placement (introducing illicit funds into the financial system), layering (disguising the trail through complex transactions), and integration (making funds appear legitimate).
Question 2: The Bank Secrecy Act (BSA) requires financial institutions to file a Currency Transaction Report (CTR) for cash transactions exceeding what threshold in a single business day?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
The BSA mandates that financial institutions file a CTR for any cash transaction exceeding $10,000 in a single business day to help detect potential money laundering.
Question 3: What is 'structuring' (also known as 'smurfing') in the context of federal financial crimes?
- Organizing a criminal enterprise's financial management hierarchy
- Breaking large cash transactions into smaller amounts to evade mandatory reporting requirements (Correct answer)
- Creating shell companies to conceal ownership of assets
- Layering funds through multiple international wire transfers
Correct answer: Breaking large cash transactions into smaller amounts to evade mandatory reporting requirements
Structuring involves deliberately breaking up large cash transactions into amounts below the $10,000 CTR threshold to avoid mandatory reporting, and is itself a federal crime under 31 U.S.C. § 5324.
Question 4: Which federal statute serves as the primary law used to prosecute money laundering offenses in the United States?
- Racketeer Influenced and Corrupt Organizations Act (RICO)
- Money Laundering Control Act (18 U.S.C. § 1956) (Correct answer)
- Bank Secrecy Act (31 U.S.C. § 5311)
- Foreign Corrupt Practices Act (FCPA)
Correct answer: Money Laundering Control Act (18 U.S.C. § 1956)
18 U.S.C. § 1956, the Money Laundering Control Act of 1986, is the primary federal statute for prosecuting money laundering offenses involving proceeds from specified unlawful activities.
Question 5: In financial crimes investigations, what is a 'shell company'?
- A company primarily engaged in seafood or natural resource imports
- A legitimate small business with no more than 10 employees
- A business entity with no active operations used to conceal ownership or launder money (Correct answer)
- A foreign-owned company operating legally within the United States
Correct answer: A business entity with no active operations used to conceal ownership or launder money
A shell company is a legal entity with no genuine operations, employees, or assets that is often used to disguise the true ownership of assets or to facilitate money laundering by creating layers of transactions.
Question 6: What is a Suspicious Activity Report (SAR) and who is required to file it?
- A report filed by law enforcement after arresting a financial crime suspect
- A document financial institutions must file with FinCEN when they detect potentially illegal financial activity (Correct answer)
- An FBI internal memo documenting potential terrorist financing leads
- A court document submitted when requesting subpoenas for financial records
Correct answer: A document financial institutions must file with FinCEN when they detect potentially illegal financial activity
SARs are mandatory reports that financial institutions must file with the Financial Crimes Enforcement Network (FinCEN) when they identify transactions suspected of involving money laundering, fraud, or other financial crimes.
Question 7: Which U.S. government agency serves as the primary financial intelligence unit and processes Suspicious Activity Reports and Currency Transaction Reports?
- Securities and Exchange Commission (SEC)
- Internal Revenue Service Criminal Investigation (IRS-CI)
- Financial Crimes Enforcement Network (FinCEN) (Correct answer)
- Office of Foreign Assets Control (OFAC)
Correct answer: Financial Crimes Enforcement Network (FinCEN)
FinCEN, a bureau of the U.S. Department of Treasury, serves as the U.S. Financial Intelligence Unit (FIU), collecting and analyzing financial data from SARs and CTRs to combat money laundering and terrorist financing.
FBI FBI Financial Crimes and Money Laundering 1
What are the three recognized stages of money laundering?