BSA Flashcards
The BSA was designed to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the United States or deposited in financial institutions. The statute sought to achieve that objective by requiring individuals, banks and other financial institutions to file currency transaction reports with the U.S. Department of the Treasury (U.S. Treasury), to properly identify persons conducting transactions and to maintain a paper trail by keeping appropriate records of financial transactions.
TRUE
This criminalized the financing of terrorism and augmented the existing BSA framework by strengthening customer identification procedures, prohibiting financial institutions from engaging in business with foreign shell banks, requiring financial institutions to have due diligence procedures—and, in some cases, enhanced due diligence procedures for foreign correspondent and private banking accounts—and improving information sharing between financial institutions and the U.S. government.
The Patriot Act
The Patriot Act expanded the AML program requirements to all financial institutions, increased the civil and criminal penalties for money laundering, •required federal banking agencies to consider a bank’s AML record when reviewing bank mergers, acquisitions and other applications for business combinations.
TRUE
The BSA Compliance Program The program must, at a minimum, include four elements
(1) a system of internal controls, (2) independent testing, (3) a designated individual who is responsible for day-to-day compliance and (4) training for appropriate personnel.
What is the criminal practice of processing ill-gotten gains, or “dirty” money, through a series of transactions; in this way the funds are “cleaned” so that they appear to be proceeds from legal activities?
Money Laundering
Three Steps of Money Laundering
1) Placement, 2) Layering, & 3) Integration
This stage is used to create the appearance of legality through additional transactions. These transactions further shield the criminal from a recorded connection to the funds by providing a plausible explanation for the source of the funds
Integration
Who is ultimately responsible for ensuring that the bank maintains an effective BSA/AML internal control structure, including suspicious activity monitoring and reporting?
The board of directors, acting through senior management
BSA provisions have been extended to cover not only traditional depository institutions, but what else?
non-bank financial institutions, including but not limited to money services businesses, casinos, brokers/dealers in securities and futures commission merchants.
BSA Criminal penalties may include fines ranging from?
$50,000 to $10 million and imprisonment from 10 to 30 years
Who is the delegated administrator of the BSA, issues regulations and interpretive guidance, provides outreach to regulated industries, supports the examination functions performed by federal banking agencies and pursues civil enforcement actions when warranted?
Financial Crimes Enforcement Network (FinCEN)
BSA civil penalties range from?
$11,000 to $1 million per violation
Who administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction.
Office of Foreign Assets Control (OFAC)
What is the introduction of unlawful proceeds into the financial system without attracting the attention of financial institutions or law enforcement? Techniques include structuring currency deposits in amounts to evade reporting requirements or commingling currency deposits of legal and illegal enterprises.
Placement
What established requirements for recordkeeping and reporting by private individuals, banks and other financial institutions?
Bank Secrecy Act
This law imposes criminal liability on a person or financial institution that knowingly assists in the laundering of money, or that structures transactions to avoid reporting them.
Money Laundering Control Act of 1986
This Law requires regulators to develop enhanced examination procedures and increased examiner training.
Money Laundering Suppression Act of 1994
The Patriot Act facilitated records access and required banks to respond to regulatory requests for information within how many hours?
120 Hours
Must a Customer Identification Program (CIP) must be included as part of the BSA/AML compliance program?
Yes.
The motivation behind terrorist financing is ideological as opposed to the profit-seeking motive that is generally associated with money laundering?
TRUE
Terrorist groups develop sources of funding that are relatively mobile to ensure that funds can be used to obtain material and other logistical items needed to commit terrorist acts?
TRUE
What involves moving funds around the financial system, often in a complex series of transactions to create confusion and complicate the paper trail?
Layering
A sound practice is for the bank to conduct independent testing how often, commensurate with the BSA/AML risk profile of the bank?
12 to 18 months
The persons conducting the BSA/AML testing should report directly to the board of directors or to a designated board committee comprised primarily or completely of outside directors.
TRUE
