The Bank Secrecy Act Quiz! Trivia

Answer A is incorrect. While highly intensive cash businesses may give rise to hiding criminal activities, a business that involves a high volume of cash is not the definition of money laundering. Answer B is incorrect because purchasing a home with illegal money is not allowable and is considered a form of money laundering. Answer C is incorrect because the mere passage of time does not convert criminally obtained money into "legal" money.

FinCEN stands for Financial Crimes Enforcement Network. This agency is responsible for combating and preventing financial crimes, such as money laundering and terrorist financing, in the United States. It collects and analyzes financial information to support law enforcement investigations and ensure the integrity of the financial system.

The correct answer is "Transaction exceeds $10,000." The Bank Secrecy Act mandates that financial institutions must file a Currency Transaction Report (CTR) when a transaction exceeds $10,000. This regulation is in place to monitor and prevent money laundering and other illicit financial activities. By reporting large transactions, financial institutions can help law enforcement agencies detect and investigate suspicious activities.

A credit card is not considered an acceptable form of identification for the Customer Identification Program because it does not contain the necessary personal information and identification details, such as a photograph and signature, that are required for verifying the identity of an individual. While a U.S. Passport and Driver's License are commonly accepted forms of identification, a credit card does not meet the criteria for identification purposes.

The statement is false because according to SAR (Suspicious Activity Report) regulations, financial institutions are generally prohibited from notifying customers about the filing of a SAR. This is to ensure the integrity of the investigation and prevent potential tipping off of suspicious individuals. The purpose of SARs is to report suspicious activities to the appropriate authorities for further investigation, and customer notification could compromise the effectiveness of these efforts.

Money laundering is a process that involves making illegally obtained money appear legitimate. The three main steps in money laundering are placement, layering, and integration. Placement refers to the initial stage where the illegal funds are introduced into the financial system. Layering involves complex transactions to obscure the origin of the funds. Integration is the final step where the laundered money is reintroduced into the legitimate economy. Spending, on the other hand, is not considered a step in money laundering as it simply refers to the act of using the laundered money for personal or business expenses.

A customer who is reluctant to provide ID can be considered a red flag of suspicious activity because it may indicate that the customer is trying to hide their true identity or engage in illegal activities. Proper identification is a standard requirement for most legitimate transactions, and a customer's refusal to provide ID raises concerns about their intentions and credibility.

Financial institutions should file a CTR (Currency Transaction Report) within 15 days from the date of the transaction. This is a requirement set by the Financial Crimes Enforcement Network (FinCEN) in the United States. Filing a CTR helps to detect and prevent money laundering and other illegal financial activities by monitoring and reporting large cash transactions. By filing the report within 15 days, financial institutions ensure timely reporting and compliance with regulatory requirements.

The correct answer is that a Currency Transaction Report (CTR) must be filed as the transaction involves more than $10,000. The Bank Secrecy Act (BSA) requires financial institutions to file a CTR for any cash transaction exceeding $10,000 in a single day. In this case, the customer conducted 3 transactions on the same day, and the total amount involved was $15,000, which exceeds the threshold. Therefore, a CTR must be filed to comply with BSA regulations.

The correct answer is "SAR must be filed when there is no identifiable suspect and the transaction involves $10,000 or more." This statement is incorrect because SAR must be filed when there is an identifiable suspect and the transaction involves $5,000 or more. SARs are filed by financial institutions to report suspicious transactions that may indicate money laundering or other illegal activities. The threshold for filing SARs is $5,000, not $10,000.

The Bank Secrecy Act requires financial institutions to report suspicious activities that may indicate money laundering, tax evasion, or other criminal activities. It also mandates the implementation of a written, board-approved compliance monitoring program. However, keeping records of all cash transactions is not a specific requirement of the Bank Secrecy Act.