CAMS AML Compliance Programs 1 — Questions and Answers
Question 1: What are the four pillars of a Bank Secrecy Act (BSA) compliance program?
- Internal controls, independent testing, designated compliance officer, training (Correct answer)
- Policies, procedures, audits, reporting
- KYC, CDD, EDD, transaction monitoring
- Risk assessment, governance, technology, staffing
Correct answer: Internal controls, independent testing, designated compliance officer, training
The four pillars of a BSA/AML compliance program are internal controls, independent testing (audit), a designated compliance officer, and ongoing training for employees.
Question 2: Which U.S. law is the cornerstone of the anti-money laundering regulatory framework and requires financial institutions to maintain records and file reports?
- USA PATRIOT Act
- Bank Secrecy Act (BSA) (Correct answer)
- Dodd-Frank Act
- Foreign Corrupt Practices Act
Correct answer: Bank Secrecy Act (BSA)
The Bank Secrecy Act of 1970 is the primary U.S. AML law requiring financial institutions to file Currency Transaction Reports (CTRs), Suspicious Activity Reports (SARs), and maintain records that assist law enforcement.
Question 3: What is the primary purpose of an independent AML audit function?
- To generate revenue for the compliance department
- To train new employees on AML procedures
- To objectively assess the effectiveness of the AML compliance program (Correct answer)
- To file Suspicious Activity Reports on behalf of the institution
Correct answer: To objectively assess the effectiveness of the AML compliance program
An independent AML audit objectively evaluates whether the institution's AML program is effective, identifying gaps and weaknesses that management may have missed.
Question 4: Under the USA PATRIOT Act, which section requires financial institutions to establish a Customer Identification Program (CIP)?
- Section 312
- Section 314
- Section 326 (Correct answer)
- Section 352
Correct answer: Section 326
Section 326 of the USA PATRIOT Act requires financial institutions to establish a Customer Identification Program to verify customer identities at account opening.
Question 5: What does a risk-based approach to AML compliance primarily mean?
- Applying the same level of scrutiny to all customers regardless of risk
- Allocating compliance resources proportional to the identified level of money laundering risk (Correct answer)
- Focusing AML efforts exclusively on high-net-worth customers
- Eliminating lower-risk customers from the customer base
Correct answer: Allocating compliance resources proportional to the identified level of money laundering risk
A risk-based approach means directing the most resources and scrutiny to the highest-risk customers, products, and geographies rather than applying uniform controls across the board.
Question 6: Which federal agency is primarily responsible for enforcing the Bank Secrecy Act and AML regulations for banks in the U.S.?
- SEC
- CFTC
- FinCEN (Correct answer)
- FDIC
Correct answer: FinCEN
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, is the primary administrator and enforcer of the Bank Secrecy Act and related AML regulations.
CAMS AML Compliance Programs 1
What are the four pillars of a Bank Secrecy Act (BSA) compliance program?