UNIT 25 CHECKPOINT EXAM Flashcards
A Suspicious Activity Report would be triggered if the broker-dealer suspects a transaction involves funds derived from illegal activity and
A) involves at least $10,000 in funds or other assets.
B) involves at least $5,000 in funds or other assets.
C) involves more than $10,000 in funds or other assets.
D) involves more than $5,000 in funds or other assets.
B) involves at least $5,000 in funds or other assets.
Explanation
The triggering amount for a Suspicious Activity Report (SAR) is at least $5,000. Do not confuse this with a Currency Transaction Report (CTR), which is triggered by an amount greater than $10,000.
The Bank Secrecy Act requires that all financial services firm must appoint
A) a chief compliance officer.
B) an anti-money laundering officer.
C) a privacy officer.
D) a bank security associate.
B) an anti-money laundering officer.
Explanation
The BSA requires that all financial institutions appoint and empower an officer to create and implement anti-money laundering procedures.
The three stage of money laundering include
A) placement, layering, and integration.
B) insertion, processing, and integration.
C) soak, rinse, and spin.
D) placement, layering, and insertion.
A) placement, layering, and integration.
Explanation
Placement is the first part of the process where the money is moved from its illegal source. The money is then moved through multiple financial transactions to obscure its origins, called layering. Last, the money moves into the legal system appearing as a legal transaction, called integration.
The Office of Foreign Asset Control maintains a list of people and organizations with whom U.S. citizens and companies are not allowed to do business. This list is called the
A) Banned and Barred Individuals List.
B) Known Criminal and Terrorist List.
C) Specially Designated Nationals List.
D) Persona Non Grata List.
C) Specially Designated Nationals List.
Explanation
This list of prohibited organizations and individuals is called the Specially Designated Nationals List.
The federal agency charged with the collection and analysis of financial transactions in order to detect illegal activity is
A) the Financial Crimes Enforcement Network (FinCEN).
B) the Federal Bureau of Investigation (FBI).
C) the Internal Revenue Service (IRS).
D) the Department of Justice.
A) the Financial Crimes Enforcement Network (FinCEN).
Explanation
This is the job of FinCEN, a division of the Treasury Department. FinCEN disseminates the intelligence it collects to other government agencies, particularly to the Justice Department.
One characteristic of large criminal enterprises is that they often generate significant sums of cash. The process of obscuring the source of this cash so that it can be used for legitimate purposes is
A) cash cleaning.
B) money cleaning.
C) money laundering.
D) integration.
C) money laundering.
Explanation
The term for this activity is money laundering. Money laundering is an illegal activity, and the source of the initial funds are acquired illegally.
Shortly after the branch opens, a customer, Martin, deposits $4,000 in cash into a business account. About midday, his spouse Cindy deposits another $4,000 in cash into the same account. Just before closing, Martin returns and makes another identical $4,000 deposit as he did that morning. What is this action called and which report should be filed?
A) Extraction, and a CTR should be filed
B) Structuring, and an SAR should be filed
C) Structuring, and a CTR should be filed
D) Integration, and an SAR should be filed
C) Structuring, and a CTR should be filed
Explanation
It appears that Martin is structuring deposits to avoid attention being drawn to the amount of cash he and his spouse are depositing. This activity is called structuring. As the transactions exceed $10,000 in a day of currency your firm would file a Currency Transaction Report with FinCEN.
What government organization maintains the Specially Designated Nationals List?
A) The FBI
B) The OFAC
C) FinCEN
D) FINRA
B) The OFAC
Explanation
This is one of the functions of the Office of Foreign Asset Control (OFAC), a division of the Treasury that enforces economic and trade sanctions.
The final phase of money laundering, when the money moves into the legal economy, is called
A) insertion.
B) layering.
C) placement.
D) integration.
D) integration.
Explanation
The phases of money laundering are placement (i.e., where the cash enters of process), layering (i.e., multiple transactions through multiple institutions to hide the original source of the funds), and finally integration (i.e., where the money enters the legitimate financial system).
