BSA/AML lesson

Question 1

BSA was designed to help identify the source, volume, and movement of currency through which of the following?

Answer 1

Requiring individuals, banks and other financial institutions to file currency transaction reports.

Question 2

Pursuant to the BSA, a bank includes which of the following

Answer 2

• Credit unions
• Savings and loan associations
• Thrift Institutions.

Does NOT include branches of commercial banks in foreign countries

Question 3

Annunzio-Wylie Anti-Money Laundering Act

ONLY CIVIL

Answer 3

strengthened sanctions, including civil penalties, but did NOT impose criminal liability. The Money Laundering Control Act first imposed criminal liability for money laundering.

Question 4

Money Laundering Control Act of 1986

Answer 4

first imposed criminal liability for money laundering.

Question 5

Currency and Foreign Transactions Reporting Act

Answer 5

also known as the BSA, established requirements for record keeping and reporting by private individuals, banks and other financial institutions.

Question 6

Patriot Act

INCREASED. not first imposed which was done by Money Laundering control act

Answer 6

criminalized the financing of terrorism and increased both civil and criminal penalties for money laundering

Question 7

The Patriot Act

Answer 7

• expanded the AML program requirements to all financial institutions;
• increased civil and criminal penalties for money laundering;
• required banks to respond to regulatory requests for information within 120 hours;
• required the agencies to consider a bank’s AML record when reviewing bank mergers and acquisitions.

it did NOT develop the Suspicious Activity Report

Question 8

Pursuant to the Federal Reserve Board of Governors’ Regulation H, a bank must establish and maintain a BSA/AML compliance program that contains, at a minimum, which of the following element

Answer 8

The program must, at a minimum, include four elements, (1) a system of internal controls, (2) independent testing, (3) a designated individual that is responsible for day-to-day compliance, and (4) training for appropriate personnel.

it does not require to (1) protect customer from identity theft or (2) automate identification of suspicious transactions

Question 9

FinCEN

Financial Crimes Enforcement Network

Answer 9

the delegated administrator of the BSA. OFAC administers and enforces trade sanctions.

Question 10

OFAC-Office of Foreign Assets Control

Answer 10

administers and enforces trade sanctions.

administers and enforces trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries, terrorists and those engaged in activities related to the proliferation of weapons of mass destruction?

Question 11

As opposed to money laundering, the motivation behind terrorist financing is generally ideological.

Answer 11

True, The motivation for money laundering is generally profit seeking rather than ideological.

Question 12

Layering

Answer 12

involves the movement of funds around the financial system in a complex series of transactions to create confusion and complicate the paper trail.

Question 13

Civil penalties that may be imposed for violations of BSA/AML laws

Answer 13

Civil penalties include removal, forfeiture and civil money penalties

Question 14

Criminal penalties

Answer 14

may include forfeiture, but also include imprisonment and criminal money penalties.

Question 15

Legitimate funding sources, such as charitable donations, are used to finance terrorist organizations.

Answer 15

True. Terrorists generally finance their activities through both unlawful and legitimate sources.

Question 16

Pursuant to 18 USC 1956, a person convicted of money laundering can face up to 20 years in prison and a fine of up to $500,000.

Answer 16

True

Question 17

Placement

Answer 17

structuring currency deposits in amounts to evade reporting requirements or commingling currency deposits of legal and illegal enterprises

• divide large amt below 10,000 in smaller bank accounts
• purchase vacation package or insurance policy for refund
• purchase cashier checks or money order, and deposit into other accounts

Question 18

Integration

Answer 18

create the appearance of legality by connection to a plausible explanation for sources of funds such as purchase and resale of real estate, investment securities, foreign trusts or other assets.

Question 19

Layering - paper trail
Placement - structure deposits
Integration - purchase and resale of real estate

Answer 19

describes a process for money laundering

Question 20

Federal Reserve’s Regulation H - 12 CFR 208.63(c)(2)

Answer 20

requires that state member banks provide for independent testing for compliance, which can be conducted by bank personnel if they are independent of the BSA/AML compliance function, or by an outside party. If the BSA compliance officer completes this test, it represents a conflict of interest and would be a violation of Regulation H

Question 21

BSA compliance officer, tellers and other employees who regularly deal with cash should receive more frequent and higher-level training.

Answer 21

True. All bank employees should have training and basic understanding, but appropriate personnel may need more frequent training

Question 22

The independent testing of a bank’s Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) compliance cannot be performed by a telle

Answer 22

True

Question 23

A bank’s failure to file CTRs or the presence of errors on the CTRs could indicate an inadequate training program

Answer 23

True

Question 24

The BSA officer must first be knowledgeable of the BSA and all related regulations in order to ensure compliance.

Answer 24

The individual(s) must have the requisite authority and resources to administer an effective BSA compliance program. The title is not important as long as the authority is present and resources are available. A line of communication to senior management and the board is critical in order to keep them apprised of ongoing compliance with the BSA.

Question 25

12 CFR 208.63(c) of Regulation H states that the contents of the compliance program shall, at a minimum

Answer 25

(1) provide for a system of internal controls to ensure ongoing compliance; (2) provide for independent testing for compliance to be conducted by bank personnel or an independent party; (3) designate an individual or individuals responsible for coordinating and monitoring day-to-day compliance; and (4) provide training for appropriate personnel.

Question 26

A system of internal controls to ensure compliance with the BSA should do which of the following

Answer 26

Internal controls are the bank’s policies, procedures and processes designed to limit and control risks and, in this instance specifically, to achieve compliance with the BSA. Internal controls should provide for periodic updates to the bank’s risk profile, meet all regulatory recordkeeping and reporting requirements, and provide for timely updates in response to changes in regulations.

does NOT include training for personnel which is in a separate category

Question 27

The Federal Reserve System requires the U.S. branches, agencies and representative offices of the foreign banks they supervise that are operating in the United States to develop a written BSA compliance program.

Answer 27

The program must be approved by the respective bank’s board of directors and noted in the minutes, or approved by delegees acting under the express authority of their respective bank’s board of directors to give such approval.