ACFE Money Laundering Investigation 2 — Questions and Answers
Question 1: Which financial instrument is most commonly associated with the 'smurfing' technique in money laundering?
- Wire transfers above $10,000
- Multiple cash deposits below the CTR reporting threshold (Correct answer)
- Foreign currency exchanges
- Cashier's checks over $50,000
Correct answer: Multiple cash deposits below the CTR reporting threshold
Smurfing involves breaking large sums into smaller deposits below the $10,000 Currency Transaction Report threshold to avoid detection.
Question 2: Under the Bank Secrecy Act, what is the maximum civil penalty per willful violation for failing to file a Currency Transaction Report?
- $10,000
- $25,000
- $100,000 (Correct answer)
- $1,000,000
Correct answer: $100,000
The BSA provides for civil penalties of up to $100,000 per willful violation for failure to file CTRs.
Question 3: A fraudster purchases lottery tickets at face value, then claims to have 'won' the lottery to explain a large cash windfall. This technique is called:
- Layering (Correct answer)
- Round-tripping
- White label laundering
- Loan-back scheme
Correct answer: Layering
Purchasing winning lottery tickets from actual winners to explain illicit funds is a form of layering that creates a legitimate-appearing source of income.
Question 4: What does the term 'beneficial owner' mean in the context of anti-money laundering regulations?
- The bank that holds the account
- The natural person who ultimately owns or controls a legal entity (Correct answer)
- The attorney who sets up a shell company
- A government agency that benefits from seizure
Correct answer: The natural person who ultimately owns or controls a legal entity
A beneficial owner is the natural person(s) who ultimately owns or controls a legal entity, which FinCEN's CDD rule requires financial institutions to identify.
Question 5: Which stage of the money laundering cycle involves moving funds through complex financial transactions to disguise their origin?
- Placement
- Integration
- Layering (Correct answer)
- Structuring
Correct answer: Layering
Layering is the second stage of money laundering, designed to put distance between criminal proceeds and their source through complex transactions.
Question 6: An investigator notices a car dealership accepting large cash payments for vehicles and then depositing only small amounts over time. This is an example of:
- Integration through real estate
- Structuring using a business front (Correct answer)
- Trade-based money laundering
- Hawala network use
Correct answer: Structuring using a business front
Using a cash-intensive business to break up and deposit illicit funds in small increments is structuring facilitated through a business front.
Question 7: Which of the following is a key indicator of trade-based money laundering (TBML)?
- Consistent invoice amounts matching market prices
- Over- or under-invoicing of goods and services (Correct answer)
- Shipments insured for replacement value
- Use of letters of credit with major banks
Correct answer: Over- or under-invoicing of goods and services
Over- or under-invoicing is the primary TBML technique, allowing the transfer of value between parties while disguising the true nature of funds.
ACFE Money Laundering Investigation 2
Which financial instrument is most commonly associated with the 'smurfing' technique in money laundering?