Treasury Enforcement Agent Exam Regulatory Frameworks & Compliance 4 — Questions and Answers
Question 1: Under the Comprehensive Iran Sanctions, Accountability, and Divestiture Act (CISADA), what can OFAC do to foreign financial institutions that conduct significant transactions with sanctioned Iranian entities?
- Impose criminal penalties on their U.S. employees
- Cut them off from the U.S. financial system (Correct answer)
- Require them to file SARs with FinCEN
- Seize their U.S.-based assets immediately without a court order
Correct answer: Cut them off from the U.S. financial system
CISADA empowers OFAC to prohibit or impose strict conditions on the opening or maintaining of correspondent or payable-through accounts for non-compliant foreign banks.
Question 2: What does 'integration' represent in the three stages of money laundering?
- Converting illegal cash into monetary instruments
- Layering transactions through multiple accounts to hide fund origins
- Reintroducing laundered money into the legitimate economy (Correct answer)
- Opening shell corporations to receive illegal proceeds
Correct answer: Reintroducing laundered money into the legitimate economy
Integration is the final stage where laundered funds re-enter the legitimate economy through investments, real estate, or business activities.
Question 3: Under FinCEN's beneficial ownership rule, covered financial institutions must identify beneficial owners of legal entity customers. A beneficial owner is defined as any individual who owns what percentage or more of the entity?
- 10%
- 25% (Correct answer)
- 33%
- 51%
Correct answer: 25%
FinCEN's Customer Due Diligence (CDD) rule defines beneficial owners as natural persons who own 25% or more of a legal entity customer.
Question 4: The Egmont Group is an international organization that facilitates cooperation among which type of agencies?
- Central banks and monetary authorities
- Financial Intelligence Units (FIUs) (Correct answer)
- Customs and border enforcement agencies
- International tax collection authorities
Correct answer: Financial Intelligence Units (FIUs)
The Egmont Group is a network of Financial Intelligence Units (FIUs) that cooperates to combat money laundering and terrorist financing globally.
Question 5: A Treasury agent discovers a U.S. company paid a foreign official $500,000 to secure a government contract. Under the FCPA, who can be held liable?
- Only the company, not individual employees
- Only the individual employees who authorized the payment
- Both the company and the individuals who authorized or made the payment (Correct answer)
- Only the foreign official who received the bribe
Correct answer: Both the company and the individuals who authorized or made the payment
The FCPA imposes liability on both corporate entities and individual officers, directors, employees, or agents who authorized or participated in corrupt payments.
Question 6: What is 'correspondent banking' and why is it a significant AML concern?
- Banks sending mail on behalf of customers; concern is postal fraud
- A relationship where one bank provides services to another bank, potentially allowing indirect access to the financial system by higher-risk foreign banks (Correct answer)
- Electronic wire systems used for domestic transfers; concern is speed of transactions
- Investment banking advisory services; concern is insider trading
Correct answer: A relationship where one bank provides services to another bank, potentially allowing indirect access to the financial system by higher-risk foreign banks
Correspondent banking allows foreign banks to access U.S. financial services through a domestic bank, creating risk that the domestic bank becomes a conduit for illicit funds from poorly regulated jurisdictions.
Question 7: Which regulation requires U.S. persons with financial interest in or signature authority over foreign financial accounts exceeding $10,000 at any point during the year to file an FBAR?
- 31 C.F.R. § 1010.350 (Correct answer)
- 26 U.S.C. § 6038D (FATCA)
- 31 U.S.C. § 5318(h)
- 18 U.S.C. § 1956
Correct answer: 31 C.F.R. § 1010.350
31 C.F.R. § 1010.350 implements the BSA's FBAR requirement for U.S. persons with foreign financial account interests exceeding $10,000 in aggregate.
Treasury Enforcement Agent Exam Regulatory Frameworks & Compliance 4
Under the Comprehensive Iran Sanctions, Accountability, and Divestiture Act (CISADA), what can OFAC do to foreign financial institutions that conduct significant transactions with sanctioned Iranian entities?