#1
What does BSA stand for in the context of financial regulations?
Bank Secrecy Act
ExplanationRegulation addressing financial transparency and anti-money laundering measures.
#2
What is the primary objective of AML (Anti-Money Laundering) regulations?
To deter the illegal activities of money laundering
ExplanationPreventing and detecting illicit financial activities.
#3
What is the purpose of the Customer Identification Program (CIP) in BSA/AML compliance?
To identify and verify the identity of customers
ExplanationEnsuring customer identities are known and verified.
#4
Which law requires financial institutions to report certain cash transactions and suspicious activities to government agencies?
Bank Secrecy Act (BSA)
ExplanationLegislation mandating financial transparency and reporting.
#5
In the context of BSA/AML, what is the purpose of the USA PATRIOT Act?
To combat money laundering and terrorist financing
ExplanationLegislation targeting financial crimes and terrorism funding.
#6
What is the purpose of the FinCEN (Financial Crimes Enforcement Network) in the United States?
To combat money laundering and financial crimes
ExplanationCentral authority combating financial crimes.
#7
Which agency primarily enforces BSA/AML regulations in the United States?
Financial Crimes Enforcement Network (FinCEN)
ExplanationCentral authority overseeing anti-money laundering initiatives in the U.S.
#8
What is the 'Know Your Customer' (KYC) principle in BSA/AML compliance?
A method of verifying the identity of clients
ExplanationVerifying customer identities to mitigate risks.
#9
What is the Currency Transaction Report (CTR) threshold amount that triggers reporting to FinCEN in the United States?
$10,000
ExplanationTransactions exceeding $10,000 require reporting to FinCEN.
#10
Which of the following is considered a red flag for potential money laundering activities?
Frequent small transactions with no apparent business purpose
ExplanationPattern suggesting potential money laundering.
#11
What is the role of a Suspicious Activity Report (SAR) in BSA/AML compliance?
To report potential illicit activities to authorities
ExplanationReporting suspicious financial activities to authorities.
#12
Which customer information is typically required for Customer Due Diligence (CDD) in BSA/AML compliance?
Name, address, date of birth, and social security number
ExplanationBasic information used to verify customer identities.
#13
Which of the following is NOT a key component of an effective AML compliance program?
Regular Tax Audits
ExplanationTax audits are unrelated to AML compliance measures.
#14
What is the role of a Designated Compliance Officer in the context of BSA/AML regulations?
Ensuring compliance with regulatory requirements
ExplanationOverseeing adherence to anti-money laundering regulations.
#15
What is the purpose of Enhanced Due Diligence (EDD) in BSA/AML compliance?
To apply a more rigorous scrutiny to higher-risk customers
ExplanationIntensified scrutiny for high-risk customers.
#16
Which of the following is a key requirement for an effective AML compliance program?
Ongoing employee training and education
ExplanationContinuous education to uphold AML standards.
#17
Which entity is responsible for examining and supervising financial institutions for BSA/AML compliance?
Office of the Comptroller of the Currency (OCC)
ExplanationSupervising financial institutions for regulatory compliance.
#18
What is the purpose of the USA PATRIOT Act's Section 314(a) provision?
To enhance information sharing among financial institutions and law enforcement
ExplanationImproving cooperation between financial institutions and law enforcement.