Bank Secrecy Act Quiz 2010

The statement is true because the BSA policy must be documented in writing to ensure clarity and consistency. Having a written policy allows for easy reference and understanding by all members of the organization. Additionally, the policy must be approved by the Board of Directors to ensure that it aligns with the organization's goals and objectives. This approval process helps to ensure that the policy is well-thought-out and meets the necessary standards.

Money laundering is the process of making illegally obtained money appear legal by passing it through a legitimate financial institution. This involves three stages: placement, where the money is introduced into the financial system; layering, where the money is moved through various transactions to obscure its origin; and integration, where the money is reintroduced into the economy as legitimate funds. This practice allows criminals to enjoy the proceeds of their illegal activities without raising suspicion.

Prior to opening an account, it is necessary to run an OFAC scan to check for any matches to the Specially Designated Nationals and Blocked Persons (SDN) list. This is a requirement to ensure compliance with the Office of Foreign Asset Control regulations and to prevent any potential involvement with individuals or entities that are prohibited or restricted due to their involvement in illegal activities or national security concerns.

It is not necessary to inform the customer when a Suspicious Activity Report (SAR) is filed. SARs are typically filed by financial institutions to report any suspicious or potentially illegal activities observed in customer transactions. Informing the customer about the filing may compromise the investigation or alert the individual involved, thus defeating the purpose of reporting suspicious activity. Therefore, the statement that the customer must be informed when a SAR is filed is incorrect.

The action of advertising or notifying the public that the bank is in compliance with the BSA requirements is not part of the four basic components of BSA compliance. The four basic components include designating an individual to oversee the BSA program, providing annual training for employees and the Board of Directors, testing internal controls, and conducting independent testing of BSA compliance. Advertising or notifying the public is not a specific action required for BSA compliance, but rather a potential outcome or result of successfully implementing the four basic components.

Bank employees are expected to adhere to specific actions to maintain the quality of BSA compliance. These actions include filing Currency Transaction Reports for cash transactions over $10,000, filing Suspicious Activity Reports for suspicious transactions, keeping all BSA records for at least five years, and forming a reasonable belief about the identity of customers at account opening. However, conducting a follow-up call with clients after a CTR has been filed is not a part of maintaining BSA compliance.

The Bank Secrecy Act (BSA) requires banks to keep records of negotiable instrument sales for cash in amounts of $3,000 to $10,000. This means that when customers sell negotiable instruments such as money orders, traveler's checks, or cashier's checks for cash within this specified range, the bank must maintain records of these transactions. This requirement helps to prevent money laundering and other illicit financial activities by ensuring transparency and traceability of high-value cash transactions involving negotiable instruments.

The statement suggests that reporting certain types of transactions with legitimate businesses is not useful for law enforcement agencies. Therefore, the bank has the authority to exempt designated types of transactions and customers from reporting requirements. This implies that the statement is true.

The Customer Identification Program (CIP) is the fundamental part of BSA that has procedures in place to help identify customers and assist the bank in monitoring both normal and unusual activity. The CIP is a requirement under the USA Patriot Act, which aims to prevent money laundering and terrorist financing. It ensures that banks have a process to verify the identity of their customers and collect necessary information, such as name, address, and identification documents. By implementing a CIP, banks can better assess the risk associated with each customer and detect any suspicious or unusual transactions.

If a customer intentionally reduces the amount of a transaction to avoid triggering a Currency Transaction Report (CTR), it may indicate suspicious activity that should be reported in a Suspicious Activity Report (SAR). This behavior could be an attempt to evade reporting requirements and could potentially be linked to illegal activities such as money laundering or tax evasion. Reporting such activity helps banks and authorities identify and investigate potential financial crimes.

Signature Bank's policy is not to sell monetary instruments to non-customers.

The statement suggests that the bank is aware of the risks involved in sharing information and has made the decision not to share information with other financial institutions currently. Therefore, the correct answer is true, indicating that the bank has opted not to share information.

If an individual is opening a new account and you cannot form a reasonable basis that you know the customer's true identity, you should not open the account and provide an adverse action notice. This is because opening an account without proper identification can pose a risk of fraud or money laundering. By providing an adverse action notice, the individual is informed of the decision and the reason behind it. This helps maintain transparency and ensures compliance with regulations.

The statement "Auto Sales and Leasing is an eligible business for exemption" is incorrect. The other statements are true, including the requirement for exemptions to be reviewed annually for renewal, the need for the BSA Officer to approve and review exemption requests, and the requirement for the customer to have a "transaction account". However, Auto Sales and Leasing is not eligible for exemption.

The correct answer is the teller or employee conducting the transaction. The Currency Transaction Report (CTR) form is required to be completed by the individual who is directly involved in the transaction. This is because they have firsthand knowledge of the details and can accurately report the necessary information regarding the transaction. The other options listed, such as Deposit Operations, BSA or Alternate BSA Officer, and Manager of the location, may have oversight or supervisory roles, but they are not directly involved in the transaction itself.

Explain how the report helps to catch criminal activities would NOT be an appropriate communication point because it goes beyond the scope of the question. The question asks for the communication points to explain why a CTR is being completed, not how it helps catch criminal activities. The other options provided are all relevant to explaining the purpose and requirements of completing the report for a particular transaction.

This scenario fits the criteria for a multiple transaction requiring a Currency Transaction Report (CTR) under the Bank Secrecy Act (BSA). The business owner makes two separate cash deposits on the same day, one in the night depository and another to a different account. The total cash deposited exceeds the threshold amount, which triggers the requirement for a CTR to be filed.

The three fundamental components of risk assessment are detect, deter, and report. Detecting risks involves identifying potential hazards or threats. Deterrence refers to taking preventive measures to minimize or eliminate those risks. Reporting involves communicating the identified risks to relevant parties, such as management or authorities, in order to take appropriate action.

Failure to follow procedures or adhere to BSA requirements can result in serious consequences for the Bank, Board of Directors, and employees. These consequences can include Cease and Desist Orders, restrictions on mergers, acquisitions, and branching, termination of the institution's deposit insurance, personal fines and jail time for employees and Officers of the bank. The only consequence that is not mentioned as a potential result of non-compliance is the restriction of new account openings and deposit amounts.

Detecting terrorist financing is difficult for two reasons. Firstly, terrorist transactions are often not complex and do not involve large sums of money, making them harder to detect among legitimate financial activities. Secondly, terrorists often finance their activities through both legitimate and unlawful sources, making it challenging to distinguish between the two. Additionally, terrorists do not use the same money laundering techniques as other criminals, further complicating the detection process.