CBA Regulatory Compliance and AML 2 — Questions and Answers
Question 1: Under the USA PATRIOT Act Section 314(a), financial institutions must search their records upon receiving a request from FinCEN within how many days?
- 3 business days
- 5 business days (Correct answer)
- 7 calendar days
- 14 calendar days
Correct answer: 5 business days
Section 314(a) requires financial institutions to respond to FinCEN information requests within 5 business days of the request date.
Question 2: Which AML red flag is most indicative of 'structuring' (smurfing) activity?
- A customer making a single large wire transfer to a foreign bank
- Multiple cash deposits just below $10,000 made on consecutive days (Correct answer)
- Frequent currency exchanges between dollars and euros
- A business account receiving payroll direct deposits from many employers
Correct answer: Multiple cash deposits just below $10,000 made on consecutive days
Structuring involves deliberately breaking up transactions to stay below the $10,000 CTR reporting threshold, often on consecutive days.
Question 3: What is the primary purpose of a Suspicious Activity Report (SAR) filed with FinCEN?
- To freeze a customer's account pending investigation
- To notify law enforcement of confirmed criminal activity
- To alert FinCEN to transactions that may involve money laundering or other financial crimes (Correct answer)
- To document the bank's refusal to process a transaction
Correct answer: To alert FinCEN to transactions that may involve money laundering or other financial crimes
SARs are intelligence tools that alert FinCEN to suspicious activity that may involve money laundering, fraud, or other financial crimes — not confirmed crimes.
Question 4: Under BSA regulations, a Currency Transaction Report (CTR) must be filed for cash transactions exceeding what threshold?
- $5,000
- $10,000 (Correct answer)
- $25,000
- $50,000
Correct answer: $10,000
Financial institutions must file a CTR with FinCEN for any cash transaction exceeding $10,000 in a single business day.
Question 5: The 'travel rule' in BSA/AML compliance requires banks to pass along certain information when transmitting funds. What is the minimum dollar threshold that triggers this rule?
- $1,000
- $3,000 (Correct answer)
- $5,000
- $10,000
Correct answer: $3,000
The Travel Rule (31 CFR 103.33) requires that banks include originator and beneficiary information for funds transfers of $3,000 or more.
Question 6: Which of the following is NOT one of the four core elements of an effective BSA/AML compliance program?
- Internal policies, procedures, and controls
- Designation of a BSA compliance officer
- Annual external audit of all customer accounts (Correct answer)
- Ongoing employee training
Correct answer: Annual external audit of all customer accounts
The four pillars are: internal controls, a designated BSA officer, employee training, and independent testing — not an annual audit of all accounts.
Question 7: A bank receives a grand jury subpoena for a customer's records. Under the BSA 'tipping off' prohibition, the bank may NOT:
- Produce the requested records to law enforcement
- File a SAR related to the same activity
- Notify the customer that a SAR was filed regarding their account (Correct answer)
- Consult with legal counsel about the subpoena
Correct answer: Notify the customer that a SAR was filed regarding their account
The BSA tipping-off prohibition explicitly forbids notifying a customer (or anyone else) that a SAR has been filed concerning their account.
CBA Regulatory Compliance and AML 2
Under the USA PATRIOT Act Section 314(a), financial institutions must search their records upon receiving a request from FinCEN within how many days?