Anti-Money Laundering & KYC Flashcards

Under the Bank Secrecy Act, what is the minimum threshold for filing a Currency Transaction Report (CTR)?

Answer: $10,000

Financial institutions must file a CTR for any cash transaction exceeding $10,000 in a single business day.

Which AML red flag best describes 'structuring'?

Answer: Breaking large cash transactions into smaller amounts to avoid reporting thresholds

Structuring (also called 'smurfing') involves deliberately splitting transactions below the $10,000 CTR threshold to avoid detection.

What is the primary purpose of a Suspicious Activity Report (SAR)?

Answer: To alert FinCEN of transactions suspected to involve illicit funds or criminal activity

SARs are filed with FinCEN to report transactions suspected of involving money laundering, fraud, or other criminal activity.

In AML compliance, what does 'layering' refer to?

Answer: A series of complex transactions designed to disguise the audit trail of illicit funds

Layering is the second stage of money laundering, involving complex financial transactions to obscure the origin of dirty money.

Which government agency in the U.S. has primary authority to enforce BSA/AML compliance for banks?

Answer: FinCEN

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, administers and enforces the BSA.

A customer makes frequent deposits just below $10,000 over several days. What AML concern does this raise?

Answer: Structuring or smurfing

Multiple deposits just under the CTR reporting threshold is a classic indicator of structuring, a federal crime.

Under FATF Recommendation 10, what is the core requirement for financial institutions regarding customer due diligence?

Answer: Identify and verify the identity of customers and beneficial owners

FATF Recommendation 10 requires institutions to identify and verify customer identity, including beneficial owners, as part of CDD.