Treasury Enforcement Agent Exam Regulatory Frameworks & Compliance 5 — Questions and Answers
Question 1: Under the Anti-Money Laundering Act of 2020 (AMLA), Congress made which significant change to BSA penalties?
- Reduced civil penalties for first-time violations
- Eliminated criminal liability for negligent BSA violations
- Increased civil and criminal penalties and extended whistleblower protections (Correct answer)
- Transferred enforcement authority from Treasury to the DOJ
Correct answer: Increased civil and criminal penalties and extended whistleblower protections
The AMLA significantly increased BSA penalties and strengthened whistleblower protections to incentivize reporting of AML violations.
Question 2: A financial institution files a SAR. What general rule governs whether the institution can disclose to the subject that a SAR was filed?
- They may disclose after 90 days if no investigation results
- They must notify the subject within 30 days of filing
- They are prohibited from disclosing to the subject or any person involved in the reported transaction (Correct answer)
- They must notify the subject only if the amount exceeds $25,000
Correct answer: They are prohibited from disclosing to the subject or any person involved in the reported transaction
BSA regulations contain a strict 'tipping off' prohibition — institutions may not inform the subject of a SAR or any person involved that a report was made.
Question 3: The Corporate Transparency Act (CTA), enacted as part of the AMLA 2020, requires many companies to report beneficial ownership information to which agency?
- IRS
- SEC
- FinCEN (Correct answer)
- OFAC
Correct answer: FinCEN
The CTA requires covered companies to file beneficial ownership information reports with FinCEN to combat anonymous shell company abuse.
Question 4: When OFAC designates an entity to the SDN list, what happens to that entity's property and interests in property subject to U.S. jurisdiction?
- They are immediately confiscated by the U.S. government
- They are frozen and blocked from being transferred, paid, exported, or withdrawn (Correct answer)
- They are subject to a 50% tax penalty
- They are transferred to a neutral escrow account pending judicial review
Correct answer: They are frozen and blocked from being transferred, paid, exported, or withdrawn
OFAC designation results in a blocking order that freezes the SDN's assets subject to U.S. jurisdiction, prohibiting any transactions involving them.
Question 5: Under the Gramm-Leach-Bliley Act (GLBA), financial institutions must provide customers with privacy notices describing their information sharing practices. This requirement is primarily enforced in relation to AML because:
- It requires reporting of all customer financial data to FinCEN
- It establishes baseline data governance that supports accurate customer identification and monitoring (Correct answer)
- It prohibits sharing customer data with law enforcement without a subpoena
- It mandates encryption of all SAR filings
Correct answer: It establishes baseline data governance that supports accurate customer identification and monitoring
GLBA's data governance requirements help ensure financial institutions maintain accurate, reliable customer information essential for effective AML/KYC programs.
Question 6: What is the 'risk-based approach' to AML compliance as endorsed by FATF and U.S. regulators?
- Applying the same level of due diligence to all customers regardless of risk
- Focusing compliance resources proportionally on higher-risk customers, products, and geographies (Correct answer)
- Relying solely on automated transaction monitoring systems
- Filing SARs for all transactions above a fixed dollar threshold
Correct answer: Focusing compliance resources proportionally on higher-risk customers, products, and geographies
The risk-based approach directs institutions to allocate AML compliance resources proportionally — applying enhanced due diligence where risk is highest and simplified measures where risk is lowest.
Question 7: A Treasury Enforcement Agent is reviewing a money services business (MSB). Under FinCEN regulations, at what dollar threshold must an MSB obtain and verify customer identification for currency exchange transactions?
- $1,000
- $3,000 (Correct answer)
- $5,000
- $10,000
Correct answer: $3,000
FinCEN's regulations require MSBs to verify customer identity for currency exchange transactions involving more than $3,000.
Treasury Enforcement Agent Exam Regulatory Frameworks & Compliance 5
Under the Anti-Money Laundering Act of 2020 (AMLA), Congress made which significant change to BSA penalties?