AML & SARS Quiz

1. Which of the following employees/contractors are required to report suspicious activities to DFG's AML Compliance Officer, Barbara Austin?

Underwriters

Contract Loan Processors

Loan Officers

All of the Above

All of the employees/contractors mentioned in the options, including underwriters, contract loan processors, and loan officers, are required to report suspicious activities to DFG's AML Compliance Officer, Barbara Austin. This implies that all these individuals have a responsibility to be vigilant and report any suspicious activities that they come across in their respective roles.

Explanation

All of the employees/contractors mentioned in the options, including underwriters, contract loan processors, and loan officers, are required to report suspicious activities to DFG's AML Compliance Officer, Barbara Austin. This implies that all these individuals have a responsibility to be vigilant and report any suspicious activities that they come across in their respective roles.

2. What do the acronyms AML and SAR refer to?

Anti-Money Laundering and Sample Action Report

Acceptable Mortgage Loan and Suspicious Activity Report

Anti-Money Laundering and Suspicious Activity Report

Anti-Money League and Start Asking for Referrals

AML stands for Anti-Money Laundering, which refers to the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. SAR stands for Suspicious Activity Report, which is a document filed by financial institutions to report suspicious transactions that may indicate money laundering or other illegal activities. The correct answer is Anti-Money Laundering and Suspicious Activity Report.

Explanation

AML stands for Anti-Money Laundering, which refers to the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. SAR stands for Suspicious Activity Report, which is a document filed by financial institutions to report suspicious transactions that may indicate money laundering or other illegal activities. The correct answer is Anti-Money Laundering and Suspicious Activity Report.

3. Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) law requires what types of institutions to detect and prevent money laundering by reporting suspicious activity?

Only banks insured by the FDIC

All Financial Institutions (including residential mortgage lenders and originators)

Only check cashing facilities

None of the Above

The correct answer is "All Financial Institutions (including residential mortgage lenders and originators)." The Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) law require all types of financial institutions, including residential mortgage lenders and originators, to detect and prevent money laundering by reporting suspicious activity. This is done to ensure that all financial institutions are actively involved in preventing money laundering and maintaining the integrity of the financial system.

Explanation

The correct answer is "All Financial Institutions (including residential mortgage lenders and originators)." The Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) law require all types of financial institutions, including residential mortgage lenders and originators, to detect and prevent money laundering by reporting suspicious activity. This is done to ensure that all financial institutions are actively involved in preventing money laundering and maintaining the integrity of the financial system.

4. True or False: SAR regulations require reporting of suspicious activities including but not limited to fraudulent attempts to obtain a mortgage or launder money by use of the proceeds of other crimes to purchase residential real estate.

True

False

SAR regulations, which stands for Suspicious Activity Report regulations, indeed require reporting of suspicious activities, including but not limited to fraudulent attempts to obtain a mortgage or launder money by using the proceeds of other crimes to purchase residential real estate. This means that if any suspicious activity related to these matters is observed, it must be reported according to SAR regulations.

Explanation

SAR regulations, which stands for Suspicious Activity Report regulations, indeed require reporting of suspicious activities, including but not limited to fraudulent attempts to obtain a mortgage or launder money by using the proceeds of other crimes to purchase residential real estate. This means that if any suspicious activity related to these matters is observed, it must be reported according to SAR regulations.

5. True or False: There are no SAR exemptions based upon loan size. In other words, all suspicious activities must be reported regardless of loan amount.

True

False

All suspicious activities must be reported regardless of loan amount. This means that there are no exemptions or exceptions based on the size of the loan. Any suspicious activity, regardless of the loan size, must be reported to the appropriate authorities.

Explanation

All suspicious activities must be reported regardless of loan amount. This means that there are no exemptions or exceptions based on the size of the loan. Any suspicious activity, regardless of the loan size, must be reported to the appropriate authorities.

6. True or False? An example of a Suspicious Activity involves transaction amounts that do not coincide with the stated business type and/or are unusual and unexpected in comparison with other similar businesses.

True

False

An example of a Suspicious Activity involves transaction amounts that do not coincide with the stated business type and/or are unusual and unexpected in comparison with other similar businesses. This means that if a business claims to be a small retail store but consistently receives large transactions or if their transaction amounts are significantly higher or lower than other similar businesses, it could be considered suspicious.

Explanation

An example of a Suspicious Activity involves transaction amounts that do not coincide with the stated business type and/or are unusual and unexpected in comparison with other similar businesses. This means that if a business claims to be a small retail store but consistently receives large transactions or if their transaction amounts are significantly higher or lower than other similar businesses, it could be considered suspicious.

7. True or False: Former employees are EXEMPT from civil and criminal penalties for revealing the existence of a SAR to a person involved in the suspicious transaction.

True

False

Former employees are not exempt from civil and criminal penalties for revealing the existence of a SAR to a person involved in the suspicious transaction. This means that even if an employee is no longer working for the organization, they can still face legal consequences for disclosing information about a suspicious activity report to someone involved in the transaction.

Explanation

Former employees are not exempt from civil and criminal penalties for revealing the existence of a SAR to a person involved in the suspicious transaction. This means that even if an employee is no longer working for the organization, they can still face legal consequences for disclosing information about a suspicious activity report to someone involved in the transaction.

8. A Possible Suspicious Activity Form (PSA) must be submitted to DFG's AML Compliance Officer, Barbara Austin, within how many days of recognizing the activity/event/occurrence?

7 Days

90 Days

365 Days

The correct answer is 7 Days. This means that if someone recognizes a suspicious activity/event/occurrence, they must submit a Possible Suspicious Activity Form (PSA) to DFG's AML Compliance Officer, Barbara Austin, within 7 days. This is important to ensure timely reporting and investigation of any suspicious activities that may be related to money laundering or other illicit activities.

Explanation

The correct answer is 7 Days. This means that if someone recognizes a suspicious activity/event/occurrence, they must submit a Possible Suspicious Activity Form (PSA) to DFG's AML Compliance Officer, Barbara Austin, within 7 days. This is important to ensure timely reporting and investigation of any suspicious activities that may be related to money laundering or other illicit activities.

9. While reviewing Hairdresser Barbie Smith's loan, Underwriter Bob notices that Smith has been depositing $120,000 cash into her bank account every month for the last 2 months. Smith's previous 2 years of tax returns indicate that she has been averaging 80k/year. What should Underwriter Bob do?

File a PSA (Possible Suspicious Activity Report) and e-mail a copy to the loan officer, processor and borrower.

Complete and fax a PSA within 7 days of discovering the unusual deposits to DFG's AML Compliance Officer.

Underwriter Bob should complete and fax a PSA within 7 days of discovering the unusual deposits to DFG's AML Compliance Officer. This is because the sudden large cash deposits into Smith's bank account raise suspicions of possible suspicious activity. By filing a PSA, Bob can report this information to the appropriate authority for further investigation and ensure compliance with anti-money laundering regulations.

Explanation

Underwriter Bob should complete and fax a PSA within 7 days of discovering the unusual deposits to DFG's AML Compliance Officer. This is because the sudden large cash deposits into Smith's bank account raise suspicions of possible suspicious activity. By filing a PSA, Bob can report this information to the appropriate authority for further investigation and ensure compliance with anti-money laundering regulations.

10. Processor Nancy remembers that she processed a loan 2 years ago for Dave Druggie. The loan got cancelled because he was unable to source his down payment. Nancy hasn't had contact with Mr. Druggie since he cancelled his loan, but still has copies of his bank statements. What should Processor Nancy do?

File a PSA immediatly and attach copies of the bank statements from 2 years ago.

Do nothing because this occurred prior to 8/13/12 when mortgage loan originators weren't required to file SARs.

Text Dave Druggie and let him know that she will be filing a PSA on him.

None of the Above.

The correct answer is to do nothing because this occurred prior to 8/13/12 when mortgage loan originators weren't required to file SARs. SARs (Suspicious Activity Reports) are required for reporting suspicious transactions that may indicate money laundering or other illegal activities. Since the loan cancellation happened before the date when filing SARs became mandatory, there is no need for Processor Nancy to take any action.

Explanation

The correct answer is to do nothing because this occurred prior to 8/13/12 when mortgage loan originators weren't required to file SARs. SARs (Suspicious Activity Reports) are required for reporting suspicious transactions that may indicate money laundering or other illegal activities. Since the loan cancellation happened before the date when filing SARs became mandatory, there is no need for Processor Nancy to take any action.

AML & Sars Quiz