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Series 79 chapter 4 > Ch 4 Deck 5 > Flashcards

Ch 4 Deck 5 Flashcards

1
Q

Under regulation FD information when material nonpublic information is intentionally or unintentionally released to some trading on it is only legal

A

after the required public disclosure is made

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2
Q

Firms are required to establish and maintain reasonable procedures to prevent insider trading Most firms do this by

A

constructing a Chinese wall (information barrier)

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3
Q

The purpose of a Chinese wall is to prevent the flow of material nonpublic information

A

from sensitive areas like IB to other parts of the firm

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4
Q

Chinese walls often include physical separation between

A

investment banking areas and trading areas.

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5
Q

to prevent insider trading, Sometimes when information is needed from an employee it is necessary to

A

bring the employee “over the wall”

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6
Q

to prevent insider trading, Investment Banking and Research areas must maintain on certain securities current

A

restricted and watch lists.

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7
Q

to prevent insider trading, Investment Banking and Research areas must make sure that restricted and watch lists are

A

disseminated to employees

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8
Q

list of securities that the firm and employees are currently restricted from trading in.

A

Restricted List

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9
Q

list of securities that is under scrutiny from the firm’s compliance program.

A

Watch List

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10
Q

To prevent insider trading, The firm’s policy must explain how and why a security is

A

placed on a list (watch or restricted) and when it can be removed

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11
Q

To prevent insider trading, both watch and restricted lists should be

A

documented and records should be kept

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12
Q

Three stages of money laundering are

A
  1. Placement
  2. Layering
  3. Integration
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13
Q

the stage of money laundering when money moves into the financial system

A
  1. Placement
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14
Q

the stage of money laundering when transactions take place in order to confuse the origin of the assets

A
  1. Layering
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15
Q

the stage of money laundering when the assets are invested in authentic investments.

A
  1. Integration
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16
Q

Law that requires certain steps from financial institutions as part of their anti-money laundering program.

A

The Bank Secrecy Act of 1970 (BSA ‘70)

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17
Q

as an anti-money laundering measure, BSA ‘70 requires financial institutions to keep a

A

Monetary Instrument Log

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18
Q

as an anti-money laundering measure, BSA ‘70 requires financial institutions to keep a

A

Monetary Instrument Log (MIL)

19
Q

A Monetary Instrument Log (MIL) records

A

cash purchases of monetary instruments

20
Q

monetary instruments tracked in A Monetary Instrument Log (MIL) include

A

Money orders
Cashiers checks
Traveler’s checks

21
Q

Monetary Instrument Log must record cash purchases of monetary instruments with a value over

A

$3,000

22
Q

A financial institution must maintain records in the MIL

A

for five years.

23
Q

as an anti-money laundering measure, BSA ‘70 requires financial institutions to file

A

Currency Transaction Reports (CTR)

24
Q

Currency Transaction Reports (CTR’s) are filed with

A

the IRS

25
Q

CTR’s must be filed with the IRS on any cash transaction above

A

$10,000 in one day

26
Q

the 10,000 threshold for filing a CTR with the IRS can come from

A

several smaller transactions

27
Q

as an anti-money laundering measure, BSA ‘70 requires that when financial institutions observe possible BSA violations they must file a

A

Suspicious Activity Report (SAR)

Exam loves this one!!!

28
Q

BSA ‘70 requires financial institutions to file an SAR on any client who appears to be avoiding

A

Bank Security Act reporting requirements (i.e., filing MILs or CTRs)

29
Q

BSA ‘70 requires financial institutions to file an SAR on any client who is behaving

A

in a way that suggests money laundering or other illegal activity.

30
Q

BSA ‘70 requires financial institutions to file an SAR when a client makes a transaction that is at least $5K and the broker dealer suspects or knows the funds are

A

derived from illegal activity

31
Q

BSA ‘70 requires financial institutions to file an SAR when a client makes a transaction that is at least $5K and the broker dealer suspects or knows The transaction was intended to hide or disguise

A

funds or assets derived from illegal activity,

32
Q

BSA ‘70 requires financial institutions to file an SAR when a client makes a transaction that is at least $5K and the broker dealer suspects or knows The transaction was designed to evade

A

reporting requirements or other laws/regulations

33
Q

BSA ‘70 requires financial institutions to file an SAR when a client makes a transaction that is at least $5K and the broker dealer suspects or knows There was no

A

business or apparent lawful purpose for the transaction

34
Q

BSA ‘70 requires financial institutions to file an SAR when a client makes a transaction that is at least $5K and the broker dealer suspects or knows The transaction was not

A

typical for the customer

35
Q

BSA ‘70 requires financial institutions to file an SAR when a client makes a transaction that is at least $5K and the broker-dealer knows of no reasonable

A

explanation for transaction after examining all available facts.

36
Q

At what point in the money laundering process is the money no longer traceable?

A

Integration

37
Q

An example of placement is cash routed through

A

front operations

38
Q

An example of placement is cash converted to

A

cashiers checks

39
Q

An example of layering is transferring money

A

across several accounts and different companies

40
Q

An example of layering is moving money into a

A

shell company

41
Q

transactions recorded in MIL’s don’t have to be reported

A

outside the firm

42
Q

ongoing amount of transactions that is suspicious

A

consistently just under 10,000

43
Q

Another name for an SAR is

A

a FinCEN

Series 79 chapter 4 (11 decks)

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