Lucky Money BSA Quiz
Questions and Answers
- 1.
The Bank Secrecy Act requires Lucky Money to file a _______ for certain transactions over $10,000 cash.
- A.
Suspicious Activity Report
- B.
Criminal Activity Report
- C.
MSB Registration Report
- D.
Currency Transaction Report
- E.
Specially Designated Nationals Report
Correct Answer
D. Currency Transaction ReportExplanation
The Bank Secrecy Act mandates that Lucky Money must submit a Currency Transaction Report for specific transactions involving cash over $10,000. This report is used to monitor and detect potential money laundering, terrorist financing, and other illicit activities. It helps ensure transparency and accountability in financial transactions and assists law enforcement agencies in their investigations.Rate this question:
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- 2.
The four pillars of an AML program are: 1) designation of compliance officer; 2) ongoing training; 3) independent testing; and 4)
- A.
Customer due diligence
- B.
OFAC screening
- C.
Policies, procedures and controls
- D.
Pre-payment disclosures
- E.
Proper data entry
Correct Answer
C. Policies, procedures and controlsExplanation
The correct answer is "Policies, procedures and controls." The four pillars of an AML program include the designation of a compliance officer, ongoing training, independent testing, and policies, procedures, and controls. Policies, procedures, and controls refer to the set of guidelines and measures put in place by an organization to ensure compliance with anti-money laundering regulations. This includes the establishment of internal controls, risk assessment processes, and the implementation of policies and procedures to detect and prevent money laundering activities.Rate this question:
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- 3.
Which of the following is required under the Bank Secrecy Act when a customer conducts a money transfer transaction in the amount of $3,000 or more:
- A.
Risk assessment
- B.
Customer due diligence
- C.
Social Security Number
- D.
Receipt with all the necessary disclosures
- E.
A Currency Transaction Report (CTR)
Correct Answer
C. Social Security NumberExplanation
When a customer conducts a money transfer transaction in the amount of $3,000 or more, providing their Social Security Number is required under the Bank Secrecy Act. This is because the Social Security Number helps in identifying and verifying the identity of the customer, which is an important aspect of preventing money laundering and other financial crimes. The Social Security Number also provides a unique identifier for the customer, making it easier for financial institutions to track and monitor their transactions.Rate this question:
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- 4.
The Bank Secrecy Act requires Lucky Money to
- A.
Report suspicious activities in amount $2,000 or greater
- B.
Keep records of all transactions for 7 years
- C.
File Currency Transaction Reports for certain transactions
- D.
A) and C) only
- E.
All of the above
Correct Answer
D. A) and C) onlyExplanation
The Bank Secrecy Act requires Lucky Money to report suspicious activities in amounts $2,000 or greater and file Currency Transaction Reports for certain transactions. This means that Lucky Money is obligated to report any suspicious activities involving transactions of $2,000 or more, and also file Currency Transaction Reports for specific transactions. Keeping records of all transactions for 7 years is not a requirement under the Bank Secrecy Act. Therefore, the correct answer is A) and C) only.Rate this question:
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- 5.
Perpetrators of a crime will often try to disguise the origin of their ill-gotten financial gain by creating complex financial transactions. Some of these transactions involve transferring money to several different accounts in order to complicate the paper trail. This phase of money laundering is called:
- A.
Placement
- B.
Layering
- C.
Integration
- D.
All of the above
- E.
None of the above
Correct Answer
B. LayeringExplanation
Perpetrators of a crime often attempt to conceal the source of their illegal financial gain by engaging in intricate financial transactions. These transactions often include transferring funds to multiple accounts, which makes it difficult to trace the money's origin. This phase of money laundering is referred to as "layering."Rate this question:
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- 6.
Which of these activities might require a suspicious activity report?
- A.
A customer attempts a transaction and requests another transaction for a lesser amount when you inform him this transaction requires his social security number
- 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 asks questions about how what amount he can send without providing documentation for his source of funds
- D.
4 different senders come to your location at different times today to send funds to one beneficiary, each sending no more than $10,000 cash.
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
All of the activities mentioned in the options can potentially be indicators of suspicious activity that may require a suspicious activity report. These activities include a customer attempting a transaction and then requesting a lesser amount when asked for their social security number, a customer requesting an unusually high dollar transaction without providing a reason or source of funds, a customer asking about sending money without providing documentation for the source of funds, and multiple senders coming to a location at different times to send funds to one beneficiary with cash amounts under $10,000. Each of these activities can raise concerns about potential money laundering or other illicit activities, thus warranting a suspicious activity report.Rate this question:
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- 7.
You will be prosecuted under the Bank Secrecy Act if your suspicious activity reports turned out to be incorrect.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the Bank Secrecy Act does not prosecute individuals for submitting incorrect suspicious activity reports (SARs). The purpose of the Bank Secrecy Act is to prevent money laundering and other financial crimes by requiring financial institutions to report any suspicious activities. While it is important to provide accurate information in SARs, submitting an incorrect report does not automatically lead to prosecution under the Bank Secrecy Act.Rate this question:
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- 8.
A customer brings in $15,000 cash and requests three different money transfer transactions sent to three different beneficiaries for $5,000 each. A CTR is not required.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
False. A CTR (Currency Transaction Report) is required in this scenario. According to the Bank Secrecy Act, any cash transaction exceeding $10,000 in a single day must be reported to the Financial Crimes Enforcement Network (FinCEN) through a CTR. In this case, the customer is conducting three separate transactions of $5,000 each, which totals $15,000 and exceeds the reporting threshold. Therefore, a CTR is necessary.Rate this question:
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- 9.
Under Lucky Money customer identification procedures, which of the following is acceptable:
- A.
Use of nick names
- B.
Use of a P.O. Box address
- C.
Use of expired identification documents
- D.
Use of foreign passports as identification
- E.
Use of foreign driver’s license as identification
Correct Answer
D. Use of foreign passports as identificationExplanation
The use of foreign passports as identification is acceptable under Lucky Money customer identification procedures. This means that customers can provide their foreign passport as a valid form of identification when conducting transactions with Lucky Money.Rate this question:
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- 10.
Under Lucky Money policy, the maximum amount for an individual to send per day is:
- A.
$25,000 cash
- B.
$250,000 check
- C.
$100,000 check
- D.
A) and C) only
- E.
None of the above
Correct Answer
D. A) and C) onlyExplanation
The correct answer is A) and C) only. This means that under the Lucky Money policy, the maximum amount an individual can send per day is $25,000 in cash and $100,000 in check. The option B) $250,000 check is incorrect as it exceeds the maximum limit set by the policy.Rate this question:
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- 11.
Why does Lucky Money ask for proof of source of funds?
- A.
To file suspicious activity reports
- B.
To mitigate risk of money laundering and financial crimes
- C.
To conduct Know Your Customer procedures
- D.
All of the above
- E.
B) and C) only
Correct Answer
E. B) and C) onlyExplanation
Lucky Money asks for proof of source of funds to mitigate the risk of money laundering and financial crimes. By conducting Know Your Customer procedures, they can verify the legitimacy of the funds and ensure that they are not being used for illegal activities. This also allows them to file suspicious activity reports if necessary, further enhancing their efforts to prevent money laundering and financial crimes.Rate this question:
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- 12.
A customer sends $10,000 paid in cash to a relative, and there is no fee for this transaction. A CTR is required.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
A CTR (Currency Transaction Report) is required for cash transactions that exceed $10,000. In this scenario, the customer is sending $10,000 in cash, which meets the threshold for a CTR. Therefore, the correct answer should be True.Rate this question:
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- 13.
A customer sends $9,000 paid in cash to a relative, and there is no fee for this transaction. A SAR is required.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because a SAR (Suspicious Activity Report) is not required for a transaction where a customer sends $9,000 paid in cash to a relative with no fee. SARs are typically required for transactions that are suspicious or involve large amounts of money, but in this case, there is no indication of any suspicious activity or violation of regulations.Rate this question:
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- 14.
When you report a suspicious activity in good faith, the law protects you from civil liability.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When you report a suspicious activity in good faith, it means that you genuinely believe that the activity is suspicious and you are reporting it with honest intentions. The law recognizes this and provides protection from civil liability for individuals who report such activities in good faith. This protection is in place to encourage people to come forward and report suspicious activities without fear of facing legal consequences or being sued for defamation. Therefore, the statement that the law protects you from civil liability when you report a suspicious activity in good faith is true.Rate this question:
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- 15.
Notifying a customer about the investigation of a potential filing of a SAR on that customer is a violation of the Bank Secrecy Act and punishable by fines and imprisonment.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Notifying a customer about the investigation of a potential filing of a SAR (Suspicious Activity Report) is indeed a violation of the Bank Secrecy Act. The Bank Secrecy Act requires financial institutions to report suspicious transactions to the appropriate authorities without tipping off the customer. This is done to prevent money laundering, terrorist financing, and other illicit activities. Violating this act can result in fines and imprisonment as it undermines the effectiveness of the reporting system. Therefore, the statement "True" is correct.Rate this question:
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- 16.
Lucky Money’s Know Your Customer Policy is intended to:
- A.
Identify customers
- B.
Verify customer’s information
- C.
Build customer relationship
- D.
Understand the nature of the customer’s transactions
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
Lucky Money's Know Your Customer Policy is intended to cover all aspects mentioned in the options. It aims to identify customers, verify their information, build a customer relationship, and understand the nature of their transactions. By implementing this policy, Lucky Money ensures that they have a comprehensive understanding of their customers and their activities, which helps in mitigating risks and complying with regulatory requirements.Rate this question:
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- 17.
A customer conducts a money transfer transaction for $6,000 cash on Monday; He returns on Tuesday and conducts a money transfer transaction for $9,000. On Wednesday the customer returns and conducts a money transfer transaction for $8,000. On Thursday the customer returns and conducts a money transfer transaction for $10,000. There is no fee for this transaction. Which of the following is true:
- A.
None of the transactions require a Currency Transaction Report
- B.
The transaction on Thursday requires a Currency Transaction Report
- C.
The transactions may require a Suspicious Activities Report
- D.
A) and C) only
- E.
B) and C) only
Correct Answer
D. A) and C) onlyExplanation
The transactions on Monday, Tuesday, and Wednesday do not individually meet the threshold of $10,000 for a Currency Transaction Report (CTR) to be required. However, when combined, the total amount transferred over the four days is $33,000, which exceeds the $10,000 threshold. Therefore, a CTR would be required for the transactions collectively. Additionally, the frequency and pattern of the transactions may raise suspicions and warrant a Suspicious Activities Report (SAR). Thus, options A) and C) are both true.Rate this question:
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- 18.
Lucky Money conducts OFAC screening in order to:
- A.
Determine whether a recipient is sanctioned from conducting business with the U.S.
- B.
Reduce the risk of terrorist financing
- C.
Determine whether the sender has been traveling overseas
- D.
A) and B) only
- E.
None of the above
Correct Answer
D. A) and B) onlyExplanation
Lucky Money conducts OFAC screening in order to determine whether a recipient is sanctioned from conducting business with the U.S. and reduce the risk of terrorist financing. This screening helps to ensure compliance with U.S. regulations and prevent any potential involvement in illegal activities or funding of terrorism. The option "A) and B) only" correctly captures these reasons for conducting OFAC screening.Rate this question:
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- 19.
What is the objective of Lucky Money’s Institutional Customer policy?
- A.
Establish the legal existence of the customer
- B.
Identify and verify the true owner(s) of the business
- C.
Understanding the customer’s risk profile
- D.
Understanding the customer’s business purpose
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
The objective of Lucky Money's Institutional Customer policy is to establish the legal existence of the customer, identify and verify the true owner(s) of the business, understand the customer's risk profile, and understand the customer's business purpose. This means that Lucky Money aims to ensure that they are dealing with legitimate institutional customers, understand the ownership structure and potential risks associated with the customer, and have a clear understanding of the customer's business purpose.Rate this question:
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- 20.
Lucky Money’s KYC policy is
- A.
A one-time project done for first-time customers only
- B.
Conducted only by the Compliance Department
- C.
Conducted every 5 years
- D.
An ongoing process
- E.
Is only important if the customer is sending a large sum of money
Correct Answer
D. An ongoing processExplanation
Lucky Money's KYC policy is an ongoing process. This means that it is not a one-time project done only for first-time customers, nor is it conducted only by the Compliance Department. It is also not conducted every 5 years. The KYC policy is important for all customers, not just those sending a large sum of money.Rate this question:
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- 21.
Which of the following activity is most unusual and potentially suspicious?
- A.
A customer sending monthly the same amount to the same beneficiary
- B.
A customer cancelling a transaction when certain identification information is required
- C.
A customer asking about Lucky Money’s privacy and security policy
- D.
A customer paying in cash
- E.
None of the above
Correct Answer
B. A customer cancelling a transaction when certain identification information is requiredExplanation
The most unusual and potentially suspicious activity is when a customer cancels a transaction when certain identification information is required. This behavior raises red flags as it suggests that the customer may be trying to hide their identity or engage in illicit activities. It is common for legitimate customers to provide the necessary identification information when required, so the act of cancelling the transaction in such a situation is highly suspicious.Rate this question:
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- 22.
A religious society wants to send funds to the Philippines to offer relief to disaster victims. Which of the following are necessary KYC information:
- A.
Name of the group
- B.
Name of the authorized representative for the group
- C.
Documents to show legal existence of the group
- D.
The TIN or EIN of the group
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
All of the above options are necessary KYC (Know Your Customer) information for a religious society to send funds to the Philippines for disaster relief. The name of the group and the authorized representative are important for identification and accountability purposes. Documents showing the legal existence of the group are required to ensure that the funds are being sent to a legitimate organization. Finally, the TIN (Tax Identification Number) or EIN (Employer Identification Number) of the group is necessary for tax and financial reporting purposes.Rate this question:
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- 23.
What is the retention period for records as required by the Bank Secrecy Act?
- A.
1 year
- B.
2 years
- C.
5 years
- D.
7 years
- E.
Indefinitely
Correct Answer
C. 5 yearsExplanation
The retention period for records as required by the Bank Secrecy Act is 5 years. This means that financial institutions are required to keep records related to their transactions, including customer information, for a period of 5 years. This is to ensure that there is a sufficient record of financial activities that can be accessed for regulatory and legal purposes.Rate this question:
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- 24.
The financing of terrorist activities may involve legally obtained funds such as business profits and funds raised through charitable contributions.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The financing of terrorist activities can involve legally obtained funds, including business profits and funds raised through charitable contributions. This means that terrorists may use legitimate sources of income to fund their operations, making it more difficult to track and disrupt their activities. It is important to be aware of this possibility and implement measures to prevent the misuse of funds for terrorist purposes.Rate this question:
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- 25.
Under the Bank Secrecy Act, at what transaction amount is Lucky Money required to obtain and retain a copy of a customer’s identification?
- A.
$1,000
- B.
$2,000
- C.
$3,000
- D.
$5,000
- E.
$10,000
Correct Answer
C. $3,000Explanation
Under the Bank Secrecy Act, Lucky Money is required to obtain and retain a copy of a customer's identification for transactions that exceed $3,000.Rate this question:
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- 26.
________ refers to introduction of illicit proceeds into the financial system.
- A.
Placement
- B.
Layering
- C.
Integration
- D.
Structuring
- E.
Smurfing
Correct Answer
A. PlacementExplanation
Placement refers to the process of introducing illicit proceeds into the financial system. It involves the initial stage of money laundering where the illegal funds are placed into legitimate financial institutions or businesses. This can be done through various means such as depositing cash into bank accounts, purchasing assets, or making investments. The purpose of placement is to make the illicit funds appear legitimate and to distance them from their illegal source.Rate this question:
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- 27.
_________ refers to the reintroduction of the laundered proceeds back into the economy in such a way that they appear as legitimate funds.
- A.
Placement
- B.
Layering
- C.
Integration
- D.
Structuring
- E.
Smurfing
Correct Answer
C. IntegrationExplanation
Integration refers to the process of reintroducing laundered proceeds back into the economy in a way that makes them appear legitimate. This involves merging the illicit funds with legitimate funds, making it difficult to trace their origin. Integration is the final stage of the money laundering process, following placement, layering, and structuring. Smurfing, on the other hand, refers to the practice of breaking down large amounts of illicit funds into smaller transactions to avoid detection.Rate this question:
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- 28.
____________ refers to the breaking up of a large transaction into smaller amounts so to avoid certain recordkeeping or reporting requirements of the Bank Secrecy Act.
- A.
Placement
- B.
Layering
- C.
Integration
- D.
Structuring
- E.
Smurfing
Correct Answer
D. StructuringExplanation
Structuring refers to the breaking up of a large transaction into smaller amounts in order to avoid recordkeeping or reporting requirements of the Bank Secrecy Act. This practice is often used by individuals or organizations involved in money laundering or other illicit activities to make it more difficult for authorities to detect suspicious transactions. Smurfing, on the other hand, refers specifically to the practice of using multiple individuals to conduct these smaller transactions to further obscure the source of the funds.Rate this question:
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- 29.
The Lucky Money AML Manual is not required under the Bank Secrecy Act.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The Lucky Money AML Manual is required under the Bank Secrecy Act. This act requires financial institutions to establish and maintain anti-money laundering (AML) programs. The AML Manual is a crucial component of such programs as it provides guidelines and procedures for identifying and reporting suspicious activities that may involve money laundering or terrorist financing. Therefore, the statement that the manual is not required under the Bank Secrecy Act is false.Rate this question:
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- 30.
Assisting a customer in avoiding recordkeeping and reporting requirement is:
- A.
Part of the Lucky Money KYC policy
- B.
Good customer service
- C.
Proper risk management
- D.
A violation of the Bank Secrecy Act
- E.
None of the above
Correct Answer
D. A violation of the Bank Secrecy ActExplanation
Assisting a customer in avoiding recordkeeping and reporting requirements is a violation of the Bank Secrecy Act. The Bank Secrecy Act requires financial institutions to maintain records and report certain transactions to help prevent money laundering and other illegal activities. By assisting a customer in avoiding these requirements, it would be enabling potential illegal activities and therefore violating the law.Rate this question:
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