ACAMS - Association of Certified Anti-Money Laundering Specialists Suspicious Activity Investigation Questions and Answers 1 — Questions and Answers
Question 1: An AML investigator is reviewing an alert for a customer's account. Which of the following is the most crucial first step in the investigation process?
- Immediately file a Suspicious Activity Report (SAR).
- Contact the customer to inquire about the unusual activity.
- Review the customer's profile and historical transactions to understand the baseline activity. (Correct answer)
- Close the account to mitigate any potential risk.
Correct answer: Review the customer's profile and historical transactions to understand the baseline activity.
Before determining if an activity is truly suspicious, an investigator must understand the customer's profile, risk rating, and normal transaction history. This provides the necessary context to assess whether the flagged activity is a deviation from the norm or within the expected pattern of behavior for that specific customer. Filing a SAR prematurely, tipping off the customer, or closing the account without proper investigation are all inappropriate actions.
Question 2: A compliance officer at a bank is investigating a series of complex wire transfers involving a corporate account. The transfers originate from a high-risk jurisdiction and are immediately moved to another account in a different country, with no clear business rationale. After a thorough review of the customer's due diligence file and transaction history, the officer develops a reasonable suspicion of money laundering. What is the immediate and most critical obligation of the financial institution?
- Continue monitoring the account for another 90 days to gather more evidence.
- Report the suspicious activity to the relevant Financial Intelligence Unit (FIU) without delay. (Correct answer)
- Request a meeting with the customer's management to discuss the transactions.
- Discontinue the customer relationship and close the account immediately.
Correct answer: Report the suspicious activity to the relevant Financial Intelligence Unit (FIU) without delay.
Once reasonable grounds to suspect money laundering or terrorist financing are established, the primary obligation is to report the activity to the appropriate authorities, which is the Financial Intelligence Unit (FIU) in most jurisdictions, by filing a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR). Delaying the report or tipping off the customer by discussing the suspicion with them would be a violation of AML regulations. While account closure may be a subsequent step, the immediate legal duty is to report.
Question 3: Which of the following is NOT an essential element that should be included in the narrative of a well-written Suspicious Activity Report (SAR)?
- A clear and chronological description of the suspicious activity.
- The investigator's personal opinion on the suspect's guilt. (Correct answer)
- The names of the individuals or entities involved (Who).
- An explanation of why the activity is considered suspicious (Why).
Correct answer: The investigator's personal opinion on the suspect's guilt.
A SAR narrative should be factual, objective, and concise. It must describe the who, what, when, where, and why of the suspicious activity. Including personal opinions, speculations, or legal conclusions about the subject's guilt is inappropriate and detracts from the factual basis of the report. The focus should be on presenting the observed facts and the reasons for suspicion.
Question 4: An investigator identifies a customer making frequent cash deposits in amounts just under the $10,000 reporting threshold across several different branches on the same day. This pattern is inconsistent with the customer's stated business profile. This activity is a classic red flag for:
- Correspondent banking risk.
- Terrorist financing.
- Structuring. (Correct answer)
- Trade-based money laundering.
Correct answer: Structuring.
Structuring is the act of breaking down a large transaction into smaller, individual transactions to evade currency reporting requirements. Making multiple cash deposits below the reporting threshold is a common method used to structure transactions and is a significant red flag for money laundering that requires investigation.
Question 5: After filing a SAR on a customer, what is the most appropriate next step for the financial institution regarding the customer's account?
- Inform the customer that a SAR has been filed to maintain transparency.
- Immediately freeze all assets in the account pending law enforcement action.
- Continue to monitor the account, potentially under enhanced due diligence, and report any further suspicious activity. (Correct answer)
- Cease all monitoring of the account as the responsibility has been transferred to the FIU.
Correct answer: Continue to monitor the account, potentially under enhanced due diligence, and report any further suspicious activity.
Filing a SAR does not end the institution's AML obligations. The institution must not 'tip off' the customer about the SAR filing. It should continue to monitor the customer's activity, applying enhanced due diligence as appropriate, and file supplemental SARs for any new suspicious transactions. Account closure decisions should be made based on the institution's risk appetite and policies, but monitoring must continue as long as the account is open.
Question 6: During an internal investigation, an AML analyst gathers information from multiple sources to build a comprehensive picture of the suspicious activity. Which of the following would be considered an internal source of information?
- Law enforcement requests for information.
- Publicly available corporate registries.
- Customer Identification Program (CIP) and due diligence records. (Correct answer)
- Adverse media reports from news websites.
Correct answer: Customer Identification Program (CIP) and due diligence records.
Internal sources of information are those held within the financial institution itself. This includes the data collected during onboarding, such as CIP information, account opening documentation, and ongoing due diligence records, as well as the customer's transaction history. Law enforcement requests, public records, and media reports are all valuable external sources of information.
ACAMS - Association of Certified Anti-Money Laundering Specialists Suspicious Activity Investigation Questions and Answers 1
An AML investigator is reviewing an alert for a customer's account.
Which of the following is the most crucial first step in the investigation process?