Anti-money Laundering Quiz Questions

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Anti-money Laundering Quiz Questions - Quiz

Money laundering is the act of failing to disclose money got by criminal means and passing it off as legitimate money. There are three stages involved in money laundering: placement, layering and integration. There are legal controls put in place to prevent, detect, and report money-laundering activities. See how much you know about this practice.


Questions and Answers
  • 1. 

    FAILURE TO REPORT SUSPICIOUS ACTIVITIES CAN RESULT IN PENALTIES OR LEGAL ACTION AGAINST YOU AND YOUR COMPANY.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    Failure to report suspicious activities can result in penalties or legal action against you and your company. This means that if you fail to report any suspicious activities that you come across, you and your company may face consequences such as fines or legal action. It is important to report any suspicious activities to the appropriate authorities in order to maintain compliance with the law and ensure the safety and security of your company and its stakeholders.

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  • 2. 

    MONEY LAUNDERING IS THE PROCESS BY WHICH THE PROCEEDS OF CRIMINAL ACTIVITY ARE INTRODUCED INTO LEGITIMATE MAINSTREAM OF FINANCIAL COMMERCE.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    Money laundering is the process of making illegally obtained money appear legal by disguising its true origin. This is done by introducing the proceeds of criminal activity into the legitimate financial system. It involves a series of complex transactions to hide the original source of the funds and make them appear legitimate. Therefore, the statement that money laundering is the process by which the proceeds of criminal activity are introduced into the legitimate mainstream of financial commerce is true.

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  • 3. 

    THE PATRIOT ACT STRENGTHENED SEVERAL ANTI-MONEY LAUNDERING LAWS.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The Patriot Act, passed in response to the 9/11 attacks, did indeed strengthen several anti-money laundering laws. The act expanded the authority of law enforcement agencies to investigate and prosecute money laundering activities, particularly those related to terrorism. It introduced stricter regulations for financial institutions to prevent money laundering and required them to implement robust customer identification and due diligence measures. The act also enhanced international cooperation in combating money laundering by promoting information sharing and coordination among countries. Overall, the Patriot Act aimed to enhance the government's ability to track and disrupt financial transactions associated with illicit activities.

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  • 4. 

    SECTION 352 OF THE PATRIOT ACT REQUIRES ALL MSB'S TO IMPLEMENT ANTI-MONEY LAUNDERING PROGRAMS THAT INCLUDE

    • A.

      WRITTEN POLICIES AND PROCEDURES

    • B.

      APPOINTMENT OF A COMPLIANCE OFFICER

    • C.

      ONGOING EMPLOYEE TRAINING PROGRAM

    • D.

      THE INDEPENDENT REVIEW FUNCTION

    • E.

      ALL OF THE ABOVE

    Correct Answer
    E. ALL OF THE ABOVE
    Explanation
    Section 352 of the Patriot Act requires all MSBs (Money Services Businesses) to implement anti-money laundering programs that include written policies and procedures, appointment of a compliance officer, ongoing employee training program, and the independent review function. This means that MSBs are obligated to have written guidelines and protocols in place to prevent money laundering, designate a compliance officer to oversee these efforts, provide regular training to employees to ensure their understanding and compliance with anti-money laundering measures, and conduct independent reviews to assess the effectiveness of their anti-money laundering program. Therefore, the correct answer is "ALL OF THE ABOVE."

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  • 5. 

    AS A MANAGER/OR COMPLIANCE OFFICER, IT IS PART OF YOUR JOB TO

    • A.

      MAINTAIN YOUR COMPANYS AML PROGRAM

    • B.

      ENSURE THAT PROPPER REPORTS ARE FILED AND RECORDS MAINTAINED

    • C.

      ENSURE THAT EMPLOYEES REPORT SUSPICIOUS ACTIVITIES

    • D.

      ALL OF THE ABOVE

    Correct Answer
    D. ALL OF THE ABOVE
    Explanation
    As a manager or compliance officer, it is part of your job to maintain your company's AML (Anti-Money Laundering) program. This involves ensuring that the proper reports are filed and records are maintained in accordance with AML regulations. Additionally, you are responsible for ensuring that employees report any suspicious activities they come across. Therefore, the correct answer is "ALL OF THE ABOVE" as all of these tasks are essential for effective AML compliance.

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  • 6. 

    THE PATRIOT ACT DOES NOT REQUIRE WHICH OF THE FOLLOWING AS PART OF AN APPROPRIATE AML PROGRAM?

    • A.

      APPOINTMENT OF COMPLIANCE OFFICER

    • B.

      WRITTEN POLICIES AND PROCEDURES

    • C.

      INDEPENDENT REVIEW OF THE PROGRAM

    • D.

      MANDATORY DRUG SCREENING

    Correct Answer
    D. MANDATORY DRUG SCREENING
    Explanation
    The Patriot Act does not require mandatory drug screening as part of an appropriate AML (Anti-Money Laundering) program. The Act focuses on preventing and detecting money laundering and terrorist financing activities. It mandates the appointment of a compliance officer, the establishment of written policies and procedures, and the independent review of the program. However, drug screening is not directly related to these objectives and therefore not required by the Patriot Act for AML programs.

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  • 7. 

    EMPLOYEE TRAINING PROGRAMS SHOULD

    • A.

      INCLUDE ALL EXISTING AND NEW EMPLOYEES

    • B.

      BE ONGOING AND UPDATED TO INCLUDE NEW CHANGES IN THE LAW AND INDUSTRY

    • C.

      BE SPECIFIC TO THE EMPLOYEES DUTIES AND THE SERVICES PROVIDED BT THE MSB

    • D.

      BE DOCUMENTED AND CONFIRMED BY APPROPRIATE TESTING

    • E.

      ALL OF THE ABOVE

    Correct Answer
    E. ALL OF THE ABOVE
    Explanation
    The correct answer is "ALL OF THE ABOVE". This is because the question asks for the characteristics that employee training programs should have, and all of the given options are valid and necessary. Employee training programs should include all existing and new employees to ensure consistency and fairness. They should also be ongoing and updated to keep up with changes in the law and industry. Additionally, the programs should be specific to the employees' duties and the services provided by the MSB. Lastly, the programs should be documented and confirmed by appropriate testing to ensure that the employees have successfully completed the training.

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  • 8. 

    OFAC REGULATIONS APPLY ONLY TO BANKS

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    OFAC regulations do not apply only to banks. The Office of Foreign Assets Control (OFAC) is a part of the U.S. Department of the Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. These regulations apply to a wide range of entities, including individuals, businesses, nonprofits, and other organizations, in addition to banks. Therefore, the statement that OFAC regulations apply only to banks is false.

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  • 9. 

    WHAT ACT IS AIMED AT THE PROVIDING STRONGER SURVEILLANCE POWERS, STRENGTHENING CRIMINIAL LAWS AGAINST TERRORISM, AND COMBATING MONEY LAUNDERING?

    • A.

      OFAC

    • B.

      BSA

    • C.

      IDENTITY THEFT ACT

    • D.

      USA PATRIOT ACT

    Correct Answer
    D. USA PATRIOT ACT
    Explanation
    The correct answer is the USA PATRIOT Act. This act was passed in response to the 9/11 terrorist attacks and aimed to provide stronger surveillance powers to law enforcement agencies, strengthen criminal laws against terrorism, and combat money laundering. It expanded the ability of authorities to monitor communications, collect intelligence, and track financial transactions in order to prevent future terrorist attacks. The act has been controversial due to concerns about civil liberties and privacy rights.

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  • 10. 

    THE BANK SECRECY ACT REQUIRES FINANCIAL INSTITUTIONS TO

    • A.

      REPORT SUSPICIOUS ACTIVITIES

    • B.

      KEEP RECORDS OF ALL TRANSACTIONS

    • C.

      FILE CURRENCY TRANSACTION REPORTS WITH THE IRS

    • D.

      A & C

    • E.

      NONE OF THE ABOVE

    Correct Answer
    D. A & C
    Explanation
    The Bank Secrecy Act requires financial institutions to report suspicious activities and file currency transaction reports with the IRS. This means that financial institutions are obligated to monitor and report any suspicious activities that may indicate money laundering or other illegal activities. Additionally, they must also file reports with the IRS for any currency transactions that exceed a certain threshold. Therefore, the correct answer is A & C.

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  • 11. 

    IF A REGULAR CUSTOMER CONDUCTS A CASH TRANSACTION INVOLVING MORE THAN $10,000, YOUR COMPANY IS NOT REQUIRED TO FILE A CTR

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The statement is false because if a regular customer conducts a cash transaction involving more than $10,000, the company is required to file a Currency Transaction Report (CTR) with the Financial Crimes Enforcement Network (FinCEN). This is a legal requirement under the Bank Secrecy Act (BSA) to prevent money laundering and other financial crimes. Failing to file a CTR can result in penalties and legal consequences for the company.

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  • 12. 

    LAUNDERERS MIGHT ATTEMPT A SERIES OF SMALL CURRENCY TRANSACTIONS OVER TIME BECAUSE

    • A.

      A PROVISION OF THE BANK SECRECY ACT REQUIRES THE FILING OF A CTR FOR TRANSACTIONS EXCEEDING $10,000

    • B.

      LARGER AMOUNTS ARE TOO RISKY TO CARRY AROUND

    • C.

      THATS HOW LAUNDERERS TAKE IN THE FUNDS

    • D.

      NONE OF THE ABOVE

    Correct Answer
    A. A PROVISION OF THE BANK SECRECY ACT REQUIRES THE FILING OF A CTR FOR TRANSACTIONS EXCEEDING $10,000
    Explanation
    Launderers might attempt a series of small currency transactions over time because a provision of the Bank Secrecy Act requires the filing of a CTR (Currency Transaction Report) for transactions exceeding $10,000. By conducting multiple smaller transactions, they can avoid triggering this reporting requirement and potentially evade detection by authorities. This allows them to hide the source of their funds and make it more difficult for law enforcement to track their illegal activities.

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  • 13. 

    YOUR AML PROGRAM MUST COVER THE BANK SECRECY ACTS REQUIREMENT THAT FINANCIAL INSTITUTIONS FILE A ________________________ FOR CERTAIN TRANSACTIONS OVER $10,000

    • A.

      CURRENCY TRANSACTION REPORT

    • B.

      SUSPICIOUS ACTIVITY REPORT

    • C.

      EXCEPTION NOTICE

    • D.

      CRIMINAL ACTIVITY REPORT

    Correct Answer
    A. CURRENCY TRANSACTION REPORT
    Explanation
    The correct answer is "CURRENCY TRANSACTION REPORT". Financial institutions are required to file a Currency Transaction Report (CTR) for certain transactions over $10,000 as part of their Anti-Money Laundering (AML) program. This report helps to monitor and detect any suspicious or potentially illegal financial activities, as mandated by the Bank Secrecy Act. By filing CTRs, financial institutions can provide crucial information to law enforcement agencies and regulatory authorities to combat money laundering, terrorist financing, and other criminal activities.

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  • 14. 

    A CUSTOMER BRINGS IN $12,000 IN CURRENCY AT ONE TIME AND REQUESTS THREE SEPERATE MONEY ORDERS OF $4,000 EACH. A CTR IS NOT REQUIRED.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The statement is false because according to the Bank Secrecy Act (BSA), any cash transaction of $10,000 or more must be reported on a Currency Transaction Report (CTR) by the financial institution. In this case, the customer is bringing in $12,000 in currency, which exceeds the threshold, and therefore a CTR would be required.

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  • 15. 

    AN EXAMPLE OF SMURFING IS:

    • A.

      A BROKER BUYING PESOS WITH U.S. DOLLARS

    • B.

      A DRUG DEALER ASKING A STRANGER TO BUY A MONEY ORDER WITH DRUG MONEY

    • C.

      WIRING MONEY TO A FOREIGN COUNRTY

    • D.

      NONE OF THE ABOVE

    Correct Answer
    B. A DRUG DEALER ASKING A STRANGER TO BUY A MONEY ORDER WITH DRUG MONEY
    Explanation
    The correct answer is "A DRUG DEALER ASKING A STRANGER TO BUY A MONEY ORDER WITH DRUG MONEY". Smurfing refers to the practice of breaking up large financial transactions into smaller ones in order to avoid suspicion and detection by authorities. In this scenario, the drug dealer is using a stranger to purchase a money order with the proceeds from drug sales, which is a common smurfing tactic. This helps to conceal the illegal source of the funds and make it harder for law enforcement to track the money trail.

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  • 16. 

    A CUSTOMER BUYS MONEY ORDERS FOR $5,999 CASH ON MONDAY, $9,000 CASH ON WEDNESDAY, $9,500 CASH ON THURSDAY, AND $8,000 CASH ON FRIDAY. THIS DESERVES MORE INVESTIGATION AS A POTENTIAL CASE OF STRUCTURING.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The customer's pattern of buying money orders with large amounts of cash on multiple consecutive days raises suspicion of structuring. Structuring refers to the practice of making multiple smaller deposits or purchases to avoid triggering reporting requirements for large transactions. In this case, the customer's purchases of money orders with cash totaling $32,499 over four days could indicate an attempt to evade reporting thresholds and warrants further investigation.

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  • 17. 

    WHICH OF THE FOLLOWING TRANSACTIONS REQUIRE A RECORD TO BE MADE?

    • A.

      EXCHANGING $2,000 IN TWENTY DOLLAR BILLS TO $2,000 IN ONE HUNDRED DOLLAR BILLS

    • B.

      EXCHANGING $1,500 IN DOLLAR TO MEXICAN PESOS

    • C.

      EXCHANGING $500 IN PESOS AND $900 IN TWENTY DOLLAR BILLS TO $1,400 IN HUNDRED DOLLAR BILLS

    • D.

      ALL OF THE ABOVE

    • E.

      A & C

    Correct Answer
    D. ALL OF THE ABOVE
    Explanation
    All of the above transactions require a record to be made because they involve exchanging different currencies or denominations of bills. In order to keep track of the exchange and ensure accuracy, a record should be made to document the transaction.

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  • 18. 

    IF A CUSTOMER IS RECEIVING A WIRE TRANSFER OF $6,000, THE MSB IS NOT REQUIRED TO TAKE ID AD RECORD THE CUSTOMERS INFORMATION.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The correct answer is FALSE. According to anti-money laundering regulations, when a customer is receiving a wire transfer of $6,000 or more, the MSB (Money Services Business) is required to take identification and record the customer's information. This is done to prevent money laundering and ensure transparency in financial transactions.

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  • 19. 

    FOR THE MONEY LAUNDERING PROCESS TO BE A SUCCESS, TRANSACTIONS SUCH AS CURRENCY EXCHANGE, WIRE TRANSFERS, AND MONEY ORDERS NEED TO BE COMPLIMENTED WITHOUT ANY PAPER TRAIL.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The statement claims that for money laundering to be successful, transactions such as currency exchange, wire transfers, and money orders need to be completed without any paper trail. However, this statement is false. In reality, money laundering involves disguising the origins of illegally obtained money through a complex series of transactions, often involving multiple countries and financial institutions. These transactions typically leave a paper trail, and the success of money laundering depends on the ability to hide the true source of funds rather than avoiding any paper trail altogether.

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  • 20. 

    YOUR MSB AND ANY OF ITS EMPLOYEES ARE LIABLE FOR _________ PENALTIES RANGING FROM FINES OF $250,000 AND IMPRISONMENT OF FIVE YEARS, UP TO FINES OF $5000,000 AND IMPRISONMENT OF 10 YEARS.

    • A.

      CIVIL

    • B.

      FINANCIAL

    • C.

      LOCAL

    • D.

      CRMINAL

    Correct Answer
    D. CRMINAL
    Explanation
    The correct answer is "CRMINAL". This is because the sentence is discussing the potential penalties that can be imposed on MSB and its employees. The mention of fines and imprisonment suggests that these penalties are related to criminal offenses rather than civil, financial, or local violations.

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  • 21. 

    YOU AND YOUR MSB CAN RECEIVE CIVIL AND MONETARY PENALTIES IF YOU UNKNOWINGLY ASSIST MONEY LAUNDERERS.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The statement is true because if you unknowingly assist money launderers, both you and your MSB (Money Services Business) can face civil and monetary penalties. Money laundering is a serious crime that involves disguising the origins of illegally obtained money, and knowingly or unknowingly aiding in this activity is punishable by law. Therefore, it is important to be vigilant and ensure that you are not inadvertently involved in any money laundering activities to avoid legal consequences.

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  • 22. 

    YOUR AML PROGRAM SHOULD WARN EMPLOYEES AGAINST DISCLOSING ANY CUSTOMERS SOCIAL SECURITY NUMBER, DRIVERS LICENSE NUMBER, ADDRESS, OR DATE OF BIRTH DATE BECAUSE IT COULD BE USED TO HELP IDENTITY THEFT.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The given statement is true because disclosing personal information such as social security number, driver's license number, address, or date of birth can potentially lead to identity theft. These pieces of information are crucial for identity thieves to impersonate someone and commit fraudulent activities. Therefore, warning employees against disclosing such information is an important measure to protect customers and prevent identity theft.

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  • 23. 

    A CUSTOMER COMES IN FOUR DAYS IN A ROW, EACH TIME REQUESTING A WIRE TRANSFER OF $2,900. YOU DO NOT NEED TO REPORT THIS AS A SUSPICIOUS ACTIVITY.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    This statement is false because a customer coming in four days in a row and requesting a wire transfer of the same amount each time could potentially be a suspicious activity. It may indicate a pattern of behavior that raises concerns about money laundering or fraudulent activity. Financial institutions are required to report any suspicious transactions to the appropriate authorities for further investigation.

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  • 24. 

    WHICH OF THESE ACTIVITIES MIGHT REQUIRE A SUSPICIOUS ACTIVITY REPORT?

    • A.

      A CUSTOMER CANCELS A TRANSACTION AND REQUESTS TO DO A SECOND TRANSACTION FOR LESS AMOUNT IN ORDER TO AVOID PROVIDING ID.

    • B.

      A CUSTOMER REQUESTS AN UNUSUALLY HIGH DOLLAR TRANSACTION AND CANNOT EXPLAIN THE REASON FOR THE TRANSACTION OR THE SOURCE OF THE CASH

    • C.

      A CUSTOMER APPEARS NERVOUS AND ASKS UNUSUAL QUESTIONS ABOUT YOUR RECORD KEEPING

    • D.

      A CUSTOMER TRIES TO BRIBE A TELLER

    • E.

      ALL OF THE ABOVE

    Correct Answer
    E. ALL OF THE ABOVE
    Explanation
    All of the activities mentioned in the options can be considered as suspicious and may require a suspicious activity report. A customer canceling a transaction and requesting to do a second transaction for a lesser amount in order to avoid providing ID can be seen as an attempt to evade identification and raise suspicion. A customer requesting an unusually high dollar transaction without being able to explain the reason or the source of the cash can indicate potential money laundering or illicit activities. A nervous customer asking unusual questions about record keeping may be trying to gather information for fraudulent purposes. Lastly, a customer trying to bribe a teller is a clear violation of ethical and legal standards and should be reported.

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  • 25. 

    JOHN WANTS TO MAKE A $3,500 WIRE TRANSFER. AS IDENTIFICATION, HE PRESENTS HIS VISA CREDIT CARD. THIS IS SATISFACTORY IDENTIFICATION.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Presenting a Visa credit card as identification for a wire transfer is not satisfactory. While a Visa credit card can provide some information about the individual, it does not meet the requirements for proper identification for a wire transfer. Typically, identification for a wire transfer would require a government-issued ID such as a driver's license or passport. Therefore, the statement is false.

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  • 26. 

    WHICH OF THE FOLLOWING ARE EXAMPLES OF WILLFUL BLINDNESS?

    • A.

      ALLOWING A CUSTOMER TO PURCHASE MONEY ORDERS UNDER DIFFERENT NAMES

    • B.

      SELLING MULTIPLE MONEY ORDERS TO A CUSTOMERS AND NOT RECORDING HIS OR HER ID

    • C.

      COMPLETING A TRANSACTION FOR A LESS, NON-REPORTABLE AMOUNT AFTER A CUSTOMER HAS REFUSED TO PRODUCED ID FOR A LARGER TRANSACTION

    • D.

      CASHING A CHECK FOR SOMEONE WHO IS NOT THE PAYEE OF THE CHECK

    • E.

      ALL OF THE ABOVE

    Correct Answer
    E. ALL OF THE ABOVE
    Explanation
    The examples provided in the question all demonstrate willful blindness. Willful blindness refers to intentionally ignoring or avoiding knowledge or information that would otherwise require action or investigation. Allowing a customer to purchase money orders under different names, selling multiple money orders without recording identification, completing a smaller transaction after a customer refuses to provide ID for a larger transaction, and cashing a check for someone who is not the payee all involve knowingly disregarding potential red flags or suspicious activity. Therefore, all of the given examples are instances of willful blindness.

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