Financial Crimes & Fraud Investigation Flashcards

Which federal law requires financial institutions to report cash transactions exceeding $10,000 to help detect money laundering?

Answer: The Bank Secrecy Act

The Bank Secrecy Act (BSA) of 1970 mandates that financial institutions report cash transactions over $10,000 via a Currency Transaction Report (CTR) to help identify and deter money laundering.

What is 'structuring' in the context of financial crimes?

Answer: Breaking large cash deposits into smaller ones to avoid reporting thresholds

Structuring (also called 'smurfing') is the illegal practice of breaking large sums of cash into smaller deposits—typically below $10,000—to evade mandatory Currency Transaction Reporting requirements.

What is a Suspicious Activity Report (SAR) used for?

Answer: Reporting suspected financial crimes to FinCEN

A SAR is filed by financial institutions with the Financial Crimes Enforcement Network (FinCEN) when they detect transactions that may indicate money laundering, fraud, or other financial crimes.

Which of the following best describes money laundering?

Answer: The process of making illegally obtained funds appear legitimate

Money laundering is the process by which criminals disguise the origin of illegally obtained money to make it appear as though it came from a legitimate source.

During the 'placement' stage of money laundering, what does the criminal typically do?

Answer: Introduces illegal cash into the financial system

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

What federal offense does 18 U.S.C. § 1344 define?

Answer: Bank fraud

18 U.S.C. § 1344 defines bank fraud, making it a federal crime to knowingly execute a scheme to defraud a financial institution or to obtain money from a financial institution under false pretenses.

Which agency is the primary federal agency responsible for investigating financial crimes such as bank fraud and money laundering?

Answer: The Federal Bureau of Investigation (FBI)

While multiple agencies may share jurisdiction, the FBI is the primary federal law enforcement agency responsible for investigating financial crimes including bank fraud, money laundering, and corporate fraud.