BSA/AML Flashcards
Which of the following procedures would be MOST effective in controlling the flow of information from the bank to the government in conjunction with SAR filing?
A. File SARs only after they have been reviewed by the board of directors
B. Designate one department, such as Legal or Security, to process, review, and file SARs on behalf of the bank
C. Allow individual branches to file SARs on behalf of the bank to ensure that filing time requirements are met
D. Allow each business group or product group (e.g., Consumer Loans, Auto Loans) to develop and implement procedures to process, review, and file SARs related to its particular group
B. Designate one department, such as Legal or Security, to process, review, and file SARs on behalf of the bank
If the bank does not obtain the TIN from the deposit account holder when the account is opened, the Bank Secrecy Act requires that the bank:
A. Begin 28% withholding of interest
B. Close the account after 30 days
C. If the account holder has applied for a TIN but not received one, obtain the TIN within a reasonable time after account opening
D. Notify the Treasury Department of affected account information
C. If the account holder has applied for a TIN but not received one, obtain the TIN within a reasonable time after account opening
Banks must obtain the TIN of the customer either when the account is opened, or a reasonable time thereafter (if the account holder has applied for a TIN but not received it prior to account opening). Backup withholding at a 28% rate is not required by the BSA, nor does the BSA require the bank to close the account. The Treasury Department need not be notified, either.
Which of the following is considered a non-listed business that is eligible for exemption from CTR reporting requirements?
A. Pawn shop
B. Auction house
C. Licensed real estate broker
D. Licensed parimutuel racetrack
Parimutuel: A betting system in which all bets of a particular type are placed together in a pool
D. Licensed parimutuel racetrack
When reviewing continued eligibility for an exemption for currency transaction reporting under the Bank Secrecy Act, a review of which of the following is LEAST helpful?
A. Suspicious Activity Reports (SARs)
B. Currency Transaction Reports (CTRs)
C. Customer organizational documents
D. Reports of International Transportation of Currency or Monetary Instrument Reports (CMIRs)
B. Currency Transaction Reports (CTRs)
Your examiner tells you that your bank is straining its resources by not exempting any of its commercial account holders from CTR filing. The examiner notes that many of these customers are publicly traded and could be exempted. Which of the following actions is in the bank’s BEST interest?
A. Exempt all large commercial customers by the end of the month
B. Hire more staff to handle the volume of CTRs generated by your bank
C. Provide your commercial customers with an exemption request form
D. Determine whether granting exemptions is a manageable risk for the bank
D. Determine whether granting exemptions is a manageable risk for the bank
The bank’s examiner is correct that publicly-traded commercial customers are eligible for CTR exemptions; however, there is no requirement under the BSA for the bank to exempt them, if it does not wish to do so. Hiring more staff, while perhaps wise in this situation, is not in the bank’s best interest if some of the customers are exemptible. There is no exemption request to provide customers. The bank should make a risk-based decision whether or not to exempt some of these commercial customers.
When establishing an exemption from currency transaction reporting for Phase II exempted customers, banks must perform all of the following EXCEPT:
A. Obtaining a signed customer exemption statement
B. Filing Form 110 (Designation of Exempt Person)
C. Establishing and maintaining a monitoring system to detect suspicious currency activities
D. Manually reviewing the exempt person supporting documentation
A. Obtaining a signed customer exemption statement
During a review of your bank’s customer identification procedures, you are likely to find regulatory deficiencies if the bank does NOT:
A. Require a CIP log at each branch in the prescribed format
B. Require its employees to copy the customer’s driver’s license
C. Require verification of the identity of each customer
C. Require verification of the identity of each customer
The Customer Identification Program (CIP) rules require banks to verify the identity of each customer. There is no requirement to maintain a CIP log at each branch, nor is there a requirement to copy the customer’s driver’s license. Banks must record information about the identification document, such as the driver’s license, but not copy it. Banks are permitted to verify identities using passports; thus, there is no regulatory deficiency there.
A customer presented $13,000 in cash for deposit to her account. She withheld $4,000 from the transaction when the teller began to complete a CTR. In this situation, the bank should:
A. File the appropriate SAR form with respect to the structured transaction
B. Make an entry in its log of cash sales of monetary instruments
C. File a CTR for the $13,000 transaction
D. Refuse the transaction
A. File the appropriate SAR form with respect to the structured transaction
This is an example of a structured transaction, which requires a SAR. Whenever a customer reacts in a way to avoid a regulatory filing such as a CTR, a SAR is required to be filed. This does not involve a sale of a monetary instrument, nor must the bank refuse the transaction. A CTR need not be filed because there was not a reportable cash-in of over $10,000, since the customer withheld $4,000.
You are developing bank procedures for determining when to escalate issues or problems identified as a result of repeat SAR filings on the same account. These procedures should include all of the following criteria EXCEPT:
A. Closing the account
B. Notifying the customer
C. Notifying law enforcement, if applicable
D. Review by senior management and legal staff
B. Notifying the customer
What is NOT included in an effective BSA/AML program?
A. Monitoring for suspicious activities
B. Risk assessment and risk identification process
C. Prohibiting transactions with SDNs and blocked persons
D. Customer due diligence and enhanced due diligence process
C. Prohibiting transactions with SDNs and blocked persons
For how long must a bank keep records of transactions involving currency in amounts greater than $10,000?
A. Two years
B. Three years
C. Five years
D. Seven years
C. Five years
James Walker DBA Walker Enterprises has been a customer of the bank for one month. The company told the bank that it would regularly make deposits in excess of $10,000 because it operates several laundromats in the city. The bank performed a background check on the company before opening the account. For its first 30 days, the company made 12 large cash deposits. Can the bank exempt this company now? Why or why not?
A. No. It is a not a corporation, but a sole proprietorship.
B. No. It has not maintained an account at the bank for 12 months.
C. No. It operates an ineligible business.
D. Yes. The bank conducted due diligence on the customer to determine that it had legitimate large cash transactions.
D. Yes. The bank conducted due diligence on the customer to determine that it had legitimate large cash transactions.
The company has been verified to have legitimate needs for cash transactions so the bank can exempt it once its due diligence is complete.
*It’s not a hard and fast rule that the customer be a customer of the bank for at least 2 months. A bank can exempt a customer who hasn’t been a customer for at least 2 months if it conducts due diligence and determines that it warrants an exemption despite not being a customer for at least 2 months.
What should a bank’s Bank Secrecy Act compliance program include?
A. All lobby notice requirements
B. The one-year record retention requirements
C. Designation of individuals responsible for day-to-day compliance
D. A list of types of loans covered by the Act
C. Designation of individuals responsible for day-to-day compliance
B is not accurate because there is no overarching 1 year BSA record retention requirement. D. is not correct because BSA relates to more than loans.
Mammoth Enterprises is a new customer to the bank. It is a wholly owned subsidiary of Mammoth Corporation. Which of the following statements, if true, would make Mammoth Enterprises an exempt customer at the bank?
A. Mammoth Corporation is a London corporation, trading on the London Stock Exchange.
B. Mammoth Corporation is a U.S. corporation with unlisted stock.
C. Mammoth Corporation is a U.S. corporation trading on the American Stock Exchange.
D. Mammoth Enterprises is a U.S. corporation primarily in the investment banking business.
C. Mammoth Corporation is a U.S. corporation trading on the American Stock Exchange.
A subsidiary of a corporation whose common stock is listed on the New York or American Stock Exchanges may be designated as an exempt person.
Which of the following is NOT considered an acceptable form of identification for an individual when completing a CTR?
A. U.S. passport
B. Long-term deposit account relationship
C. State-issued photo identification (e.g., driver’s license)
D. Photo identification card issued by a local government agency
B. Long-term deposit account relationship
Only official documents can be used for identification.
Which of the following transactions requires completion of FinCEN Form 104, a CTR?
A. Deposit of checks totaling $12,000 to a checking account
B. Cash purchase of a cashier’s check for $7,800
C. Cash withdrawal of $3,000 from a checking account
D. Cashing of a $14,000 check for a customer
D. Cashing of a $14,000 check for a customer
This is the only one of the choices that involved currency in excess of $10,000
The manager of Main Street branch calls and relates the following information: John Smith purchased a cashier’s check for $1,000 cash at 10:00 a.m. on Tuesday. At 11:30 a.m. Mr. Smith returned and purchased a cashier’s check for $2,500 cash and deposited traveler’s checks totaling $9,000 into his checking account. At 4:00 p.m. Mr. Smith returned and deposited $8,000 cash into his checking account. This deposit was after normal banking hours, so it was recorded as of Wednesday’s business date. What action should the bank take?
A. None, because no single cash transaction exceeded $10,000
B. File a Currency Transaction Report (CTR) for $11,500
C. Record the $1,000, $2,500, and $9,000 transactions on the bank’s monetary instrument sales log because the total exceeds the $3,000 threshold
D. Record the $1,000 and $2,500 transactions on the bank’s monetary instrument sales log because the total exceeds the $3,000 threshold
D. Record the $1,000 and $2,500 transactions on the bank’s monetary instrument sales log because the total exceeds the $3,000 threshold
If a bank employee knows multiple currency transactions or multiple cash purchases of monetary instruments have occurred during a single business day, aggregation is necessary. During the business day of Tuesday, aggregate cash purchases of cashier’s checks totaling $3,500 would be sufficient to trigger log entries, but not a CTR.
Mrs. Evans, a customer of First National Bank, deposits $15,000 in cash to her account. During the transaction, Mrs. Evans explains that she received the money in the mail from her sister in Europe. What responsibility does the bank have?
A. Complete a Currency Transaction Report (CTR)
B. Complete a United States Customs form 4790 (CMIR)
C. Complete both a currency transaction report and a CMIR
D. Complete a CTR and encourage Mrs. Evans to file a CMIR
D. Complete a CTR and encourage Mrs. Evans to file a CMIR
The bank is not responsible for filing a CMIR because it was neither the sender nor the receiver of the cash.
First National Bank is attempting to determine which of the following customers would qualify as exempt persons:
* Nationwide Foods, Inc., is a national company with stock listed on the New York Stock Exchange
* National Paper Products, is a wholly owned subsidiary of Nationwide Foods, Inc.
* Products Incorporated, a depositor for three months, is a regional company whose stock is designated a NASDAQ Capital Markets Company and that sells and leases large boats
* Century Enterprises, a local company owning several local restaurants, is a long-time bank customer and frequently makes cash deposits in excess of $10,000. All of Century’s stock is owned by a local family.
Which of these customers would qualify as an exempt person?
A. All except for Nationwide Foods, Inc.
B. All except for National Paper Products
C. All except for Century Enterprises
D. All except for Products Incorporated
D. All except for Products Incorporated
The NYSE company and its wholly owned subsidiary are exempt. The local company can be exempt because it has maintained an account for at least two months and frequently makes large cash deposits. Products Incorporated is not eligible because its stock is not listed on a major exchange and does not qualify as a nonlisted business.
For which of the following is a bank most likely to be in danger of receiving a cease and desist order?
A. Repetition in a BSA examination of a noncritical deficiency reported in a previous BSA examination
B. Failure to document AML training to its part-time clerical employees
C. A 2 percent error rate on the bank’s CTRs
D. Failure to file suspicious activity reports
D. Failure to file suspicious activity reports
The other alternatives do not rise to the seriousness required for a cease and desist order.
An individual comes into the bank and makes a $6,000 cash deposit into a checking account. At the same time, the individual buys a $7,000 cashier’s check with cash. According to the Bank Secrecy Act, what is the bank is required to do?
A. File a SAR for $13,000
B. File a CTR for the $6,000 cash deposit
C. Aggregate the transactions and retain information about the purchase of the cashier’s check
D. Obtain the recordkeeping information for the purchase of the cashier’s check and complete a CTR for the total cash-in transaction of $13,000
D. Obtain the recordkeeping information for the purchase of the cashier’s check and complete a CTR for the total cash-in transaction of $13,000
Multiple cash transactions must be aggregated.
Martha Whitmire, the BSA Compliance Officer for First National Bank, is responsible for monitoring the bank’s daily currency activity and wire transfers, for compliance with information retention and reporting requirements. Ms. Whitmire notices during her review on March 10 that, during the previous two weeks, a transaction occurred on the same account several times during the week. The activity appeared at one branch office as cash deposits in dollar amounts under the reporting thresholds. Ms. Whitmire discusses this activity with the branch manager and determines that this same deposit activity occurred several times during the previous six weeks. She then conducts a more extensive examination of the account’s activity for several months and discovers that cash deposits were made at one branch office and purchases of bank cashier’s checks were made by withdrawals from the same account at a different branch office. All withdrawals and purchases of cashier’s checks were for the identical amount as the cash deposits.
Which statement best describes Ms. Whitmire’s responsibility?
A. Complete a CTR for each of the cash activities at the branch office
B. Make no report of the activities because the transactions were not discovered until after the 15-day reporting deadline
C. Report the account activity to senior management for further review
D. Report the account activity as suspicious account activity and recommend that a SAR be filed
D. Report the account activity as suspicious account activity and recommend that a SAR be filed
Based on the fact that the customer was structuring deposits and purchasing cashier’s checks after making the cash deposits, which is potentially a laundering activity, the bank should file a SAR.
When conducting a records search pursuant to a FinCEN request, what must a bank search?
A. All customer records from the previous five years
B. All accounts maintained within the previous 12 months and transaction records for 6 months
C. Only records that can be electronically searched
D. Nothing; searches are voluntary
B. All accounts maintained within the previous 12 months and transaction records for 6 months
The bank is required to search all current accounts and all records maintained in the last 12 months.
A compliance officer is constructing a review of a transaction in which Mary, a deposit account customer, used cash to purchase travelers checks in an amount of $4,000. The compliance officer must determine compliance with financial recordkeeping and currency reporting regulations. Which of the following pieces of information must be part of the bank’s records for this transaction?
A. Mary’s date of birth
B. Mary’s deposit account number
C. The serial numbers of the travelers’ checks purchased
D. The name of the branch where the transaction occurred
C. The serial numbers of the travelers’ checks purchased
If the purchaser has a deposit account with the bank, record the purchaser name, date, types of instruments, serial numbers, and amount.
If the purchaser does not have a deposit account with the bank, record the above info. Also record the purchaser’s name, address, SSN or other ID number, and date of birth.
A bank is conducting due diligence for a foreign correspondent bank account. Which of the following is NOT required information?
A. The identities of the correspondent bank’s true ownership
B. Information on the government licenses of the correspondent bank
C. Copies of the tax return of the correspondent bank
D. Information on the products and services the correspondent bank offers
C. Copies of the tax return of the correspondent bank
Fastfood, Inc., a nationwide restaurant chain, opened an account at First National Bank last year. Fastfood is making daily cash deposits in amounts of $15,000 to $20,000. First National needs to determine if this company is an exempt person. What should the bank do first?
A. Because the restaurant is an established depositor, the bank should provide an unlimited exemption for cash deposits and withdrawals.
B. The bank should look in the newspaper or on the Internet to determine if Fastfood, Inc.’s, stock appears on one of the listed exchanges.
C. The bank should ask the company if it qualifies as a listed business.
D. The bank should perform a corporate records check to determine if the company is chartered in the United States.
B. The bank should look in the newspaper or on the Internet to determine if Fastfood, Inc.’s, stock appears on one of the listed exchanges.
The bank is responsible for determining whether the company is a listed business. The bank may rely on a general circulation newspaper or an Internet Web site operated by one of the major exchanges.
On which of the following loans must a bank maintain records under the Bank Secrecy Act?
A. All loans exceeding $5,000 and secured by real property
B. All loans exceeding $5,000, but not secured by real property
C. All loans exceeding $10,000 and secured by real property
D. All loans exceeding $10,000, but not secured by real property
D. All loans exceeding $10,000, but not secured by real property
The record retention requirement applies to loans over $10,000, not secured by real property. The record should include the following:
* Name of borrower
* Address of borrower
* Amount of credit extended
* Nature or purpose of loan
* Date of loan
When all the required information is NOT provided by a person purchasing a cashier’s check with $8,000 in currency, what should the bank do?
A. Refuse the transaction
B. Complete the transaction and record available information
C. Complete the transaction and file a SAR
D. Complete the transaction and insist that the customer return with the required information
A. Refuse the transaction
The bank should not carry out a transaction that will result in a BSA violation.
Records that must be retained for deposit accounts include which of the following?
A. Average daily balance
B. Overdraft history
C. All amounts of currency deposited or withdrawn
D. Customer’s identity
D. Customer’s identity
In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?
A. Bank determines that one of its customers is the victim of identity theft
B. Bank becomes aware of identity theft of its domain name (i.e., another entity selects a name similar to the bank’s in order to confuse customers and obtain confidential financial information)
C. Bank discovers that someone has hacked into its data system in order to obtain confidential customer data
D. Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level
D. Bank determines through its transaction-monitoring program that a customer is making electronic transfers between his own checking and savings accounts that are just below the $10,000 reporting level
The other activity involves potential or suspected wrongdoing. The transfer of funds between an individual’s own account is less suspicious because it is less likely to be a criminal act or to facilitate a criminal act.
Bob Jones, president of ACME bank, has had a banking relationship with Linda O’Reilly, a local real estate agent for several years. Ms. O’Reilly keeps most of her deposit accounts with ACME and also has had several personal loans there. Over a three-month time period, Ms. O’Reilly consistently (two or three times a week) brings to the bank a series of money orders in amounts ranging from $7,000 to $15,000, made payable to her in denominations of $1,000, and asks the teller to take them and issue one cashier’s check payable to her. After this activity has continued for three months, Mr. Jones notices the frequency of cashier’s checks issued to Ms. O’Reilly on a management report. It catches his attention because he does not know why Ms. O’Reilly would need this number of cashier’s checks. On inquiry, the head teller explains the weekly transactions. Which of the following statements best describes Mr. Jones’s responsibility?
A. He should immediately file a SAR. There is no logical explanation for this activity.
B. He should immediately file a CTR. Ms. O’Reilly is trying to evade the BSA currency transaction.
C. He should ask Ms. O’Reilly why she is conducting these transactions and then determine whether to file a SAR.
D. He is not required to do anything. Mr. Jones is well acquainted with this customer, and it is not illegal to purchase cashier’s checks.
C. He should ask Ms. O’Reilly why she is conducting these transactions and then determine whether to file a SAR.
This activity is obviously out of the realm of the usual types of banking for this customer. It also appears somewhat suspicious. The exchange of one form of monetary instrument for another is unusual for this customer when done this frequently. Therefore, the banker has a responsibility to investigate and determine if any laws have been broken.
Which of the following customers may be exempted under Phase II of the Bank Secrecy Act?
A. Government agencies
B. Correspondent banks
C. Payroll customers
D. Businesses whose stocks are traded on a national stock exchange
C. Payroll customers
The other alternatives are all types of entities that are exempt under the Phase I rules.
Which of the following is an accurate statement according to the requirements of the customer identification program regulations?
A. A bank must always require documentary verification of a customer’s identification
B. A bank may waive any part of the CIP requirements if senior management approves the waiver and there is a good cause
C. A physical address or a post office box is acceptable for any new customer
D. The bank’s CIP program must enable it to form a reasonable belief about the identity of the person
D. The bank’s CIP program must enable it to form a reasonable belief about the identity of the person
CIP regulatory requirements cannot be waived. A bank may use nondocumentary methods to verify identification if it is reasonable to do so. A physical address is required for all customers except for a few exceptions, such as a person on active duty with an army post office box.
Which of the following businesses would be eligible to be an exempt person under the requirements of the Bank Secrecy Act?
A. Dalton’s Used Cars
B. Evanston Recreational Boats
C. Uncle Dan’s Seafood Restaurant
D. Goldsmith Aircraft Distributors
C. Uncle Dan’s Seafood Restaurant
The other businesses listed cannot be exempted from the reporting requirements of the Bank Secrecy Act. The act and regulation prohibit the exemption of any business that sells or buys automobiles, boats, or airplanes.
A routine review of account records reveals that suspicious activity involving foreign currency has occurred in the account of one of the bank’s directors. Which of the following actions should be taken FIRST?
A. A SAR should be filed.
B. The bank’s board of directors should discuss the account activity without the affected director being present.
C. The bank’s president should meet with the affected director to discuss the account activity.
D. The bank should file a CTR, checking the box that indicates the report is for suspicious activity.
A. A SAR should be filed.
Any suspicious activity involving an insider requires a SAR. If the activity has occurred (and there is no question that it is suspicious) the bank should file the SAR.
Which of the following is MOST effective in strengthening an anti-money-laundering program involving cash transactions?
A. Review all deposits of $25,000 or more
B. Complete CTR worksheets on all cash transactions of $5,000 or more
C. Complete SAR worksheets on all cash transactions of $5,000 or more
D. Monitor cash transactions of less than $10,000 for suspicious patterns
D. Monitor cash transactions of less than $10,000 for suspicious patterns
This is the only action that will assist the bank in detecting suspicious activity that is occurring under the $10,000 cash level. Monitoring transactions over $25,000 is probably already occurring with the bank’s reporting systems. Completing worksheets for cash transactions is not as helpful as looking for patterns in the activity.
First National Bank has several exempt customers.
- Alpha is an exempt person because its stock is listed on a major stock exchange.
- Beta is an exempt person because it meets the nonlisted customer requirements.
- Zeta is exempt because it is a payroll customer.
For which customer(s) must the bank conduct an annual review to determine its continuing eligibility to be exempt from CTR filings?
A. Alpha
B. Beta
C. Zeta
D. Alpha, Beta, and Zeta
D. Alpha, Beta, and Zeta
Alpha should be reviewed annually to ensure its stock continues to be listed on a major exchange, and Beta and Zeta are not listed businesses, so the bank must conduct a review annually.
At least once each year, banks must review the eligibility of an exempt person that is a listed public company, a listed public company subsidiary, a non-listed business, or a payroll customer to determine whether such person remains eligible for an exemption.
When completing and filing a SAR, what is the bank NOT required to do?
A. Submit a copy of the supporting documentation with the SAR
B. Submit the SAR within 30 days of the initial detection of facts
C. Report the SAR information to the bank’s board of directors
D. Maintain a copy of the SAR and supporting documentation for 5 years
A. Submit a copy of the supporting documentation with the SAR
The 5 year record retention requirement is from the date of the transaction or the date of account closure, whichever occurs later.
In April, Lillian Redmond, the teller supervisor for First National Bank, discovers five counterfeit $20 bills in several teller drawers. In May and in June she discovers two additional counterfeit $20 bills. She has no knowledge of criminal activity on the part of any of the bank’s employees or customers. She does not suspect any particular person in this transaction. Which of the following statements is true?
A. Ms. Redmond must report the counterfeit funds on a SAR and must name the most likely individual(s) on the report.
B. Ms. Redmond must report the counterfeit funds on a SAR but is not required to name any individual(s) on the report.
C. Ms. Redmond need not file a SAR on this incident because the total amount is less than $25,000.
D. Ms. Redmond need not report this incident on a SAR because each incident is less than $5,000.
C. Ms. Redmond need not file a SAR on this incident because the total amount is less than $25,000.
Because Ms. Redmond does not have a substantial basis for identifying a suspect and the amount is under $25,000, she may report it but is not required to do so.
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects; and
* transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
What are the 5 pillars of a BSA program?
- Perform risk-focused customer due diligence of CIP and beneficial ownership
- Establish a thorough and ongoing (at least annual) training program of role-specific information for all personnel (including Board)
- Board must appoint BSA Compliance Officer and grant sufficient resources as well as authority to make and enforce policies
- Develop a system of internal controls (including policies & procedures)
- Independent program testing and review by outside auditors/consultants or internal audit department (cannot be, or report to, the BSA Officer)
HInt: Remember the phrase “Big dogs take over cities together.”
BSA / Due diligence / Training / Officer / Controls / Testing
When is a CTR required?
Cash in or cash out of MORE than $10,000 by the same person or on behalf of the same person (or entity) on any one business day.
What are the Phase I CTR exemption requirements?
Automatically eligible for an exemption if the customer is:
- Another financial institution (no form required)
- A government entity (no form required)
- A listed entity including subsidiaries (form required)
Listed entities: Publicly traded on a stock exchange. Be aware of franchises that might not be traded, even though the corporate company is traded.
What is Phase II of CTR exemption requirements?
Businesses that are not listed on any exchange that meet certain qualifications before the exemption can be granted:
- Customer must have a transaction account
- Must be a customer for 2 months before exemption is permitted
- They must have frequent reportable transactions (5/yr)
- Must be incorporated or recognized in U.S.
How often must the Bank verify a customer’s CTR exemption status?
Annually. This must be a documented review.
When must the Bank file an exemption form for a customer who is eligible for CTR exemptions?
Within 30 days of an exemptible transaction.
What is the dollar amount threshold for a SAR if a bank suspects an identified insider of committing or aiding in committing a crime?
Any amount; there is no threshold.
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects; and
* transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
A SAR must be filed when the bank detects a known or suspected crime involving $_____ or more and has a substantial basis for identifying a suspect.
$5,000
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects; and
* transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
A SAR must be filed when the bank detects a known or suspected crime involving $_____ or more and has no substantial basis for identifying a possible suspect.
$25,000
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects; and
* transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
A SAR must be filed when the bank suspects transactions aggregating $____ or more than involves potential money laundering or violation of the BSA.
$5,000
If there is continuous suspicious activity, how often should a bank file a SAR?
Re-file a supplemental/additional SAR every 90 days (quarterly)
Who must be notified when a SAR has been filed?
A. The Board or Committee
B. The customer
C. The BSA Officer
D. The local police
A. The Board or Committee
True/False: You can’t inform the person on whom a SAR has been filed.
True
What additional information should you collect for a Monetary Purchase Record if the purchaser is not a depositor?
A. Address, SSN, and DOB
B. Address, Employer, SSN and DOB
C. SSN and DOB
D. Address and SSN
A. Address, SSN, and DOB
In addition to the other things you’d collect for a depositor, must also collect:
Address of purchaser
SSN or other identifying number
Birthdate
Are there any recordkeeping requirements for wire transfers over a certain threshold?
Yes, the Bank must maintain records for fund transfers for $3,000 or more.
What does FinCEN stand for?
Financial Crimes Enforcement Network (Treasury)
What is a 314(a) request?
A law enforcement agency may request information from a financial institution by contacting FinCEN.
What is a 314(b) request?
A voluntary information request between financial institutions regarding possible terrorist financing or money laundering activities.
What are the bank’s responsibilities regarding 314(b) requests?
A. Notify FinCEN every 2 years
B. Notify OFAC every 2 years
C. Notify FinCEN every year
D. Notify FinCEN every quarter
C. Notify FinCEN every year
Both banks involved in a 314(b) information sharing must notify FinCEN that they participate in this type of request/activity. This notification is good for 1 year.
What does MSB stand for?
Money service business
What are examples of MSBs?
Financial services providers who are:
- currency dealers or exchangers
- check cashers
- issuers of traveler’s checks, money orders or stored value
- sellers or redeemers of traveler’s checks, money orders or stored value
- money transmitters
With the exception of money transmitters*, what is the threshold for a company to be considered a MSB?
*Money transmitters have no activity threshold.
Someone who conducts more than $1,000 in business with one person in one or more transactions in one category of activity in any one day.
Who must MSBs register with every 2 calendar years?
The Treasury
BSA requires recordkeeping of all non-real estate loans above what amount?
$10,000. Banks must record the name and address of the borrower as well as the loan amount, purpose, and date.
What does PEP stand for?
Politically exposed persons
What is a politically exposed person?
Individuals entrusted with prominent public functions by a foreign country. This may include: heads of state or of government; senior politicians; senior government, judicial or military officials; senior executives of state owned corporations; and important political party officials.
Certain family members of PEPs might also be PEPs.
What is pouch activity?
Entails the use of a courier, carrier or other agent that transports currency, monetary instruments or other documents from outside the US to a financial institution in the US.
What are the requirements for CIP? Select all that apply.
A. Verify identity
B. Maintain records of identifying information
C. Create copies of identification documents
D. Determine whether the person appears on a list
A, B, and D
What are the 4 elements of identity that is required to be captured for CIP?
Name
Address
Date of birth
Identification number
Once a person’s identifying information is collected, what’s the next requirement under CIP?
Verifying the information that has been received (through documents or non-documentary means)
A bank’s CIP program should provide what direction for when a non-individual customer’s identity cannot be verified using standard methods such as documents or non-documentary?
A. Do not open the account
B. Identify measures to obtain information on others associated with the customer (such as signatories)
C. Open the account for 90 days to give the company an opportunity to provide identification
D. Require the customer register with the secretary of state
B. Identify measures to obtain information on others associated with the customer (such as signatories)
Does BSA require that banks maintain actual copies of the documents used to verify identities?
No, actual copies are not required; banks must only record descriptions of the documents that were relied upon.
Some states may prohibit actual documents.
True/False: CIP must include procedures for determining whether the customer appears on any list of known or suspected terrorists or terrorist organizations issued by an Federal government agency and designated as such by Treasury.
True. There’s no CIP specific list, but every person must be ran through OFAC.
BSA requires that banks give adequate notice to customers that the bank is requesting info to verify their identities. When and how must the notice be given?
Before the account is opened:
Orally or in writing,
May be posted in lobby or website,
May be included on the account application.
This type of prohibited transaction allows a transaction to happen, but the funds won’t be released to the account holder.
Blocked account
This type of prohibited transaction is not allowed to happen.
Rejected transaction
What are exceptions to blocking or rejecting transactions called?
Licenses
If you have a specific license that allows a transaction to occur, what does the bank need to do?
Verify the license with OFAC.
What amount would trigger a SAR for a criminal violation involving insider abuse?
A. Any amount
B. $1,000
C. $3,000
D. $5,000
A. Any amount
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects;
* and transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
What aggregate amount would trigger a SAR for a criminal violation when a suspect can be identified?
A. Any amount
B. $1,000
C. $3,000
D. $5,000
D. $5,000
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects; and
* transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
What aggregate amount would trigger a SAR for a criminal violation if a suspect isn’t identified?
A. $5,000
B. $10,000
C. $25,000
D. $50,000
C. $25,000
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects;
* and transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
What transaction aggregate amount would trigger a SAR for possible money laundering, possible BSA violations, or no apparent lawful purpose?
A. $1,000
B. $5,000
C. $10,000
D. $12,000
B. $5,000
Banks are required to file a SAR in the following circumstances:
* insider abuse involving any amount;
* transactions aggregating $5,000 or more where a suspect can be identified;
* transactions aggregating $25,000 or more regardless of potential suspects; and
* transactions aggregating $5,000 or more that involve potential money laundering or violations of the BSA.
Under Phase II, certain conditions must be met in order to exempt a business entity from CTR reporting. Which condition must be met for an entity to qualify as a Phase II exemption?
A. The entity’s signers must all be U. S. persons
B. The entity must be a business entity and not an individual
C. The entity must also be a Phase I exempt person
D. The entity must be an ineligible business as defined by the BSA
B. The entity must be a business entity and not an individual
A is incorrect because, although the entity must be licensed to do business in the U.S. or be a U.S. business, there are no specific requirements that all the signers must be U.S. persons. C is incorrect because a Phase II exempt entity cannot also be a Phase I exempt entity. D is incorrect because ineligible businesses do not qualify to be exempt.
Phase II would make which business eligible for exemption?
A. An online retailer that only accepts credit card payments
B. A cash-only gas station that has been a customer for three years
C. A car dealership
D. A local check casher
B. A cash-only gas station that has been a customer for three years
A is incorrect because in order to qualify as a Phase II exempt entity, the entity must make cash deposits large enough to require CTR filing. C and D are incorrect because both a check casher and an auto dealership are ineligible entities.
Businesses that are eligible under the Phase II category of exempt status must meet certain requirements. Which eligibility requirement is correct?
A. The business has at least 10 reportable transactions in a year
B. The business has maintained a transaction account for two months
C. The business must derive no more than 60% of its gross revenues from any ineligible business activity
D. The business must be formed under the laws of any country eligible to do business in the U.S.
B. The business has maintained a transaction account for two months
A is incorrect because the business must have at least five reportable transactions in a year. C is incorrect because the business must derive no more than 50% of its gross revenues from any ineligible business activity. D is incorrect because the business must be formed under the laws of the United States or a State to be eligible for exemption. Businesses formed in foreign countries are not eligible.
Which of the following businesses is ineligible for exemption from CTR reporting?
A. Bean Me Up Coffee Shop
B. Cake My Day Bakery
C. Sid Riphoff’s Used Cars
D. Sofa So Good Consignment Shop
C. Sid Riphoff’s Used Cars
Which statement is true regarding the exemption of Phase I entities?
A. For Phase I customers, a bank must consider both the time it has been a customer of the bank and the number of reportable transactions it has conducted
B. Banks must file a DOEP for every Phase 1 customer
C. Exemption of a Phase I entity covers all transactions in currency, not only transactions in currency conducted through an account
D. For any Phase 1 entity, a bank may exempt the entity automatically and does not need to assure itself of a customer’s initial eligibility for exemption
C. Exemption of a Phase I entity covers all transactions in currency not only transactions in currency conducted through an account
A is incorrect because the bank does not have to take these factors into consideration. B is incorrect because banks need not file a DOEP on entities that are a bank (to the extent of its domestic operations), a federal, state, or local government agency or department, or any entity exercising governmental authority within the United States. D is incorrect because a bank should take steps to assure itself of a customer’s initial eligibility for exemption, and document the basis for the conclusion.
Severe penalties can be assessed for violations of the BSA/AML compliance program. Which scenario describes a potential violation that could lead to civil or criminal penalties for noncompliance?
A. Robert, a customer service representative, uses the client’s middle initial rather than looking up his middle name when completing the CTR
B. Nellie, a bank officer in the private banking department, has opened an account for an individual about whom she is unable to obtain sufficient information or credentials
C. Natasha, a compliance officer responsible for detecting multiple transactions in one day, reviews a standard analysis report but accidentally misses multiple transactions by a customer
D. Mark, a lender, feels confident in identifying suspicious illegal activity and always asks for the appropriate customer identification. Last month, however, he inadvertently opened two deposit accounts for a client that is arrested for alleged drug trafficking and money laundering
B. Nellie, a bank officer in the private banking department, has opened an account for an individual about whom she is unable to obtain sufficient information or credentials
A, C, and D are incorrect because although these types of mistakes can be noted in an exam, Robert, Natasha, and Mark followed all the correct BSA/AML procedures but unfortunately, had oversights in their daily tasks.
If you are responsible for opening deposit accounts at your bank, what is one responsibility you have for complying with BSA requirements?
A. Monitor transactions weekly to identify any attempts to avoid currency transaction reporting requirements
B. File CTRs for incoming cash transactions that exceed $10,000
C. Form a reasonable belief as to the true identity of customers and beneficial owners at account opening
D. File SARs for all large cash transactions that appear suspicious
C. Form a reasonable belief as to the true identity of customers and beneficial owners at account opening
A is incorrect because transactions are to be monitored daily—not weekly—and is usually not an account opening function. B is incorrect because CTRs are to be filed for incoming and outgoing cash transactions and is commonly the job of tellers and the person responsible for BSA compliance. D is incorrect because SARs are to be filed for transactions that appear suspicious regardless of the amount or whether they involve cash.
There are significant civil and criminal penalties for not complying with the requirements of the Bank Secrecy Act. Which option correctly lists one of those penalties?
A. Financial institutions that violate BSA criminal statutes are subject to sanctions that may be so severe that they revoke a bank’s federal charter or terminate the institution’s deposit insurance
B. When a bank’s failure to execute its BSA program enables serious criminal infractions to go unreported, the bank will be added to a ‘‘Do Not Bank Here’’ list established by FinCEN
C. Violations can expose the bank to prosecution by the United States Bureau of Engraving and Printing
D. Violations could cause the bank’s customers to be liable for the amount of criminal proceeds that flowed through the bank
A. Financial institutions that violate BSA criminal statutes are subject to sanctions that may be so severe that they revoke a bank’s federal charter or terminate the institution’s deposit insurance
B is incorrect because there is no such list and banks that fail to execute their BSA programs are subject to prosecution and sanctions. C is incorrect because the bank would be subject to prosecution by the Department of Justice. D is incorrect because the bank, its employees and its management would be liable, not the bank’s customers.
Banks are required to establish and maintain procedures reasonably designed to assure and monitor the compliance with the BSA/AML. On-site examinations are performed to ensure the banks compliance with the regulations. What is a common area of concern when BSA/AML examinations are performed?
A. Failure to adequately train employees and hold them accountable for their actions
B. Failure by institutions to prosecute customers
C. Failure of customers to identify, investigate, and report illegal, suspicious, or unusual activity
D. Failure to address changes in the bank’s Fair Lending Policy
A. Failure to adequately train employees and hold them accountable for their actions
B is incorrect because the concern is institutions will fail to commit adequate resources to BSA/AML compliance programs, not prosecute customers. C is incorrect because employees, not customers are required to identify and report suspicious activity. D is incorrect because failure of the bank’s Fair Lending policy would not be a BSA violation.
In order to avoid fines and penalties, which action should a bank consider?
A. Commit one person to monitor and address BSA issues
B. Develop new products and services with more risk to attract a more diversified customer base
C. Involve senior management in the bank’s BSA/AML compliance program
D. Allow employees more freedom to make mistakes so they can learn by them
C. Involve senior management in the bank’s BSA/AML compliance program
A is incorrect because to ensure a strong compliance program the bank should identify appropriate staffing levels needed to monitor and address BSA issues. B is incorrect because a bank should monitor and manage risk by identifying high-risk products and services offered by the bank, taking into consideration the potential risk posed by new products and services. D is incorrect because a bank should hold employees individually accountable for fulfilling their BSA/AML related compliance responsibilities.
True or False: A credit union must file a Currency Transaction Report (CTR) if a member purchases $15,000 worth of traveler’s checks with a transfer from her checking account.
False
A Currency Transaction Report (CTR) is filed for every deposit, withdrawal, payment, transfer, or other transaction involving CASH (currency) of more than $10,000.00. This includes any coin or paper money of the United States or of any other country. The purchase of cash equivalents or negotiable instruments like traveler’s checks do not trigger a filing of a CTR unless made with cash and exceeds $10,000. This answer is false because the travelers’ checks were paid for by a transfer from the member’s account.
True or False: A customer writes three checks (one check each) to three different people. The total amount of the three checks exceeds $10,000. Each payee cashes his or her check at the FI on the same day. The total amount of cash that is withdrawn from the customer’s account in one day is more than $10,000. Under these circumstances, the bank must file a Currency Transaction Report (CTR).
False
If a deposit, withdrawal, payment, transfer, or other transaction involving cash of more than $10,000 is done in one day by or on behalf of any person, a CTR must be filed. BSA regs require an FI to treat multiple currency transactions as a single transaction and file a CTR only if the bank has knowledge that the multiple transactions are by or on behalf of any person and the transactions result in either cash in or cash out totaling more than $10,000 during any single business day.
In this case, one person is not cashing the checks and, unless the bank has knowledge otherwise, it has to assume the three individuals cashing the checks are not acting on behalf of the check-writer. This situation is similar to when checks are written to pay bills. The creditors are not cashing the checks on the check-writer’s behalf - they are cashing the checks on their own behalf. The same is true in this case. The three individuals are presumably cashing the checks on their own behalf.
Of course, if the bank has knowledge that the three individuals are acting on behalf of the check-writer, the bank must file a CTR.
Yes or No: The compliance officer at the bank learned during an audit that a customer made a $15,000 cash deposit at the teller lane but no Currency Transaction Report (CTR) was filed. The transaction occurred over two months ago. Should the form be filed?
Yes
According to the BSA, a bank has 15 days after a transaction to file a CTR. In cases where this deadline has been missed, the CTR should be prepared and the reason(s) for delinquency documented. If a bank has doubts as to whether CTR backfilling of unreported transactions is necessary, it should contact FinCEN’s Regulatory Hotline or email the BSA Resource Center.
Yes or No: A customer deposited $9,000 in cash at the FI in the morning, and later that day withdrew $3,000 in cash from an ATM. Is a CTR required?
No
When aggregating cash transactions for the purpose of filling out a currency transaction report (CTR), you must consolidate deposits (Cash In) and withdrawals (Cash Out) separately. You do not add deposits and withdrawals together, or off-set them.
Yes or No: Does a CTR need to be filed when you know a customer is placing more than $10,000 in a Safe Deposit Box?
No
You do not need to file a CTR in this situation because no “transaction” has occurred. A transaction is defined as “deposit, withdrawal, exchange or other payment or transfer by, through, or to the bank”. However, if the situation feels suspicious to you, you may consider filling out a suspicious activity report (SAR).
True or False: Deposits made at night or over a weekend or holiday must be treated as if received on the next business day following the deposit.
True
Which of the following transactions are subject to CTR reporting requirements? Select all that apply
A. Loan payments in cash
B. Cash funding of IRA
C. CD purchases with cash
D. Cash to or from prepaid cards
All transactions
Types of currency transactions subject to reporting requirements individually or by aggregation include, but are not limited to: deposits and withdrawals, ATM transactions, denomination exchanges, loan payments, currency transactions used to fund individual retirement accounts (IRAs), purchases of certificates of deposit, funds transfers paid for in currency, monetary instrument purchases, certain transactions involving armored car services, and currency to or from prepaid access devices.
What is the cash range for logging a Monetary Instrument Record?
A. $3,000 and up
B. $3,000-$10,000
C. $1,000-$10,000
C. $3,000-$20,000
B. $3,000-$10,000
Under $3000 does not require a MIR. CTR’s are filed for those above $10,000, so the MIR is no longer necessary.
True or False: Wires under $3,000 are exempt from the funds transfer recordkeeping requirements of the BSA.
True
Exempted funds transfers: those under $3,000, covered by Reg. E, ACH, where both the originator and beneficiary are domestic financial institutions, securities brokers, or subs, government agency, or the same person using the same institution
Which of the following statements is NOT correct regarding the blocked countries and specially designated nationals covered by OFAC?
A. The customer’s address must be outside the U.S. for OFAC to apply to the customer’s transactions
B. Nonbank subsidiaries of U.S. banks must comply with OFAC regulations
C. The bank is subject to fines, regardless of whether the funds get to the blocked country or specially designated national
D. Fines and penalties for OFAC violations of the Syrian Sanctions Regulation can cost banks and individuals up to $1 million in criminal penalties and/or up to 20 years in jail
A. The customer’s address must be outside the U.S. for OFAC to apply to the customer’s transactions
In which situation is there an EXEMPTION to the requirement to file a SAR?
A. Insider abuse involving any amount
B. A robbery that has been reported to the appropriate law enforcement
C. Violations aggregating $25,000 or more, regardless of the potential suspect
D. Transactions aggregating $5,000 or more that may involve money laundering
B. A robbery that has been reported to the appropriate law enforcement
How long are banks required to retain CIP identifying information obtained at account opening?
A. Three years after customer identification is verified
B. Three years after the last transaction posted to the account
C. Five years after account opening
D. Five years after account closure or dormancy
D. Five years after account closure or dormancy
The PRIMARY objective of a bank’s customer due diligence (CDD) program is to:
A. Determine the customer’s identity.
B. Predict the type and volume of the customer’s transactions.
C. Avoid opening accounts for customers deemed high risk.
D. Determine whether the customer has provided false information.
B. Predict the type and volume of the customer’s transactions.
CIP is to determine the customer’s identity. CDD is to understand the nature and purpose of customer relationships for the purpose of developing a customer risk
profile.
What percentage of equity interest must an individual own of a business entity to require identification and due diligence under the ownership prong of the customer due diligence rule?
A. 10%
B. 15%
C. 20%
D. 25%
D. 25%
A bank must retain information supporting its CTR exemptions for how long?
A. 2 years after the exemptions were created
B. 5 years after the exemptions were created
C. 2 years after the exemptions were last updated
D. 5 years after the exemptions were last updated
D. 5 years after the exemptions were last updated
Which is a key component of a suspicious activity monitoring program?
A. Filing currency transaction reports
B. Managing alerts of customer transactions
C. Reporting positive 314(a) matches to FinCEN
D. Blocking transactions of OFAC-designated entities
B. Managing alerts of customer transactions
Under BSA/AML rules, what does structuring involve?
A. Opening of a customer account without proper identification
B. Coercion of a bank employee to hide a reportable transaction
C. A customer’s use of someone else to conduct a reportable transaction
D. Breaking down large sums of cash to avoid CTR reporting requirements
D. Breaking down large sums of cash to avoid CTR reporting requirements
Money laundering stages: Placement, layering, integration
Structuring may take place during the placement state.
The bank receives a phone call from a government agency requesting the financial records of one of the bank’s customers. The request is related to a criminal investigation involving this customer. What should the bank do?
A. Send the requested records to the government agency within 30 days of the request.
B. Wait to provide the requested records until the bank receives a written request for the documents.
C. Send the requested records to the government agency within 45 days of the request.
D. Send the requested records to the government agency after the bank has notified the customer of the request.
B. Wait to provide the requested records until the bank receives a written request for the documents.
During a compliance review and testing of OFAC inquiries, the compliance professional determines that screenings made with mortgage related transactions are incomplete. What is the BEST course of action to take?
A. Require all employees to complete online OFAC training.
B. Report incomplete screenings to the banks OFAC officer.
C. Retrain all lending division employees on OFAC procedures.
D. Stop all OFAC inquiries until lending employees are retrained.
C. Retrain all lending division employees on OFAC procedures.
In which of the following situations is a bank required by federal regulation to verify and record the identity of the customer?
A. An established customer asks to withdraw $5,000 from his checking account and asks that the withdrawal be issued in the form of a cashier’s check
B. An established customer purchases $2,000 worth of traveler’s checks using cash to pay for the purchase
C. An individual uses cash to purchase traveler’s checks totaling $2,000 and, at the same time, uses cash to purchase a cashier’s check for $3,000
D. A customer deposits $6,000 in cash to her savings account
C. An individual uses cash to purchase traveler’s checks totaling $2,000 and, at the same time, uses cash to purchase a cashier’s check for $3,000
The BSA requires the bank to identify the customer when the customer purchases monetary instruments, such as traveler’s checks and cashier’s checks, in amounts over $3,000 in cash. None of the other choices mandate collection of identifying information from the customer, per the BSA.
When is an institution considered to have actual knowledge of a transaction or a commercial customer engaged in unlawful gambling?
A. Law enforcement contacts the bank
B. A particular fact is known or is brought to the attention of either an officer of the institution or an individual in the organizations compliance function
C. The bank receives a formal 314(a) request from FINCEN
B. A particular fact is known or is brought to the attention of either an officer of the institution or an individual in the organizations compliance function
CTR’s are filed with what agency?
A. IRS
B. FINCEN
C. Bureau of Customs and Border Protection
D. FBI
A. IRS
CTRs are filed with the IRS and maintained in the FinCEN database, which is made available to Federal Banking Agencies and law enforcement.
If an elderly or disabled person doesn’t have the normally accepted forms of identification necessary to purchase monetary instruments, are banks allowed to alter their CIP requirements to allow the following forms of ID?
* Social security cards; or
* Medicare/ Medicaid cards; and
* Another form of ID containing name and address
Yes
A bank shall use whatever information available, in accordance with its policies and procedures, to determine identity. This includes review of its records and asking for other forms of identification, including a SSN or Medicare/ Medicaid card along with another document containing both the patron’s name and address (such as an organizational membership card, voter registration card, utility bill or real estate tax bill). These forms of ID shall be identified as acceptable in the bank’s policy and procedures as ID for transactions involving the elderly or the disabled. The bank should record the word “Elderly” or “Disabled” on the CTR and/or chronological log and the method used to identify the person, such as “Social Security and Costco Membership Card only ID.”
The examiners criticized your bank at the last examination for failing to conduct a BSA/AML risk assessment of its operations. You have been asked to complete the assessment. Which of the following categories is NOT suggested by the FFIEC Examination Manual for your risk assessment?
A. Products
B. Vendors
C. Customers
D. Services
B. Vendors
What is the MOST appropriate thing a compliance professional should do when becoming aware of the addition of entries onto the Office of Foreign Asset Control (OFAC) Specially-Designated Nationals (SDN) list?
A. Ensure the bank’s vendor who handles OFAC screening for the bank is aware of the updates
B. Immediately download the new list and circulate it among new account staff and loan officers
C. Notify the bank’s executive management of the additions to the list
D. Screen the new entries against the names of the bank’s deposit account and loan customers
A. Ensure the bank’s vendor who handles OFAC screening for the bank is aware of the updates
It is a regulatory requirement that Banks maintain an updated version of the SDN list, so it is appropriate to ensure the bank’s vendor who is responsible for OFAC screening maintains a current copy of the list. Downloading and distributing the new list to new account staff and loan officers may be something the bank does, but in most cases, screening is not done in this manner; it is more appropriate for vendors to have the updated list. There is no requirement that updates to the list be applied to customer lists, and executive management need not be updated to any additions.
What are the five essential program requirements for OFAC compliance?
(1) Management commitment;
(2) Risk assessment;
(3) Internal controls;
(4) Testing and auditing; and
(5) Training
Hint: Remember the phrase “Only mighty robots can attack tanks.”
OFAC / Management / Risk Assessment / Controls / Auditing / Training
