RCMS Anti-Money Laundering & KYC 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act, what is the minimum threshold for filing a Currency Transaction Report (CTR)?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
Financial institutions must file a CTR for any cash transaction exceeding $10,000 in a single business day.
Question 2: Which AML red flag best describes 'structuring'?
- Depositing funds from multiple foreign accounts simultaneously
- Breaking large cash transactions into smaller amounts to avoid reporting thresholds (Correct answer)
- Using shell companies to obscure the source of funds
- Rapidly moving funds between accounts in different currencies
Correct 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.
Question 3: What is the primary purpose of a Suspicious Activity Report (SAR)?
- To notify law enforcement of confirmed criminal activity
- To alert FinCEN of transactions suspected to involve illicit funds or criminal activity (Correct answer)
- To document all large cash transactions for tax purposes
- To report foreign nationals conducting financial transactions
Correct 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.
Question 4: In AML compliance, what does 'layering' refer to?
- The first stage where illegal proceeds enter the financial system
- Adding multiple compliance officers to review suspicious transactions
- A series of complex transactions designed to disguise the audit trail of illicit funds (Correct answer)
- Applying multiple risk scores to a single customer
Correct 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.
Question 5: Which government agency in the U.S. has primary authority to enforce BSA/AML compliance for banks?
- SEC
- CFTC
- FinCEN (Correct answer)
- DOJ
Correct answer: FinCEN
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, administers and enforces the BSA.
Question 6: A customer makes frequent deposits just below $10,000 over several days. What AML concern does this raise?
- Excessive cash hoarding
- Trade-based money laundering
- Structuring or smurfing (Correct answer)
- Correspondent banking abuse
Correct answer: Structuring or smurfing
Multiple deposits just under the CTR reporting threshold is a classic indicator of structuring, a federal crime.
Question 7: Under FATF Recommendation 10, what is the core requirement for financial institutions regarding customer due diligence?
- File a CTR for every new customer
- Identify and verify the identity of customers and beneficial owners (Correct answer)
- Assign a risk score to every transaction over $1,000
- Report all foreign customers to national intelligence agencies
Correct 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.
RCMS Anti-Money Laundering & KYC 2
Under the Bank Secrecy Act, what is the minimum threshold for filing a Currency Transaction Report (CTR)?