CSCP Anti-Money Laundering & Financial Crimes 1 — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), broker-dealers are required to file a Suspicious Activity Report (SAR) within how many days of detecting a suspicious transaction?
- 15 calendar days
- 30 calendar days (Correct answer)
- 45 calendar days
- 60 calendar days
Correct answer: 30 calendar days
The BSA requires broker-dealers to file a SAR within 30 calendar days of initial detection of a suspicious transaction.
Question 2: Which of the following is the primary federal law that forms the foundation of the U.S. anti-money laundering regulatory framework?
- Securities Exchange Act of 1934
- Bank Secrecy Act of 1970 (Correct answer)
- USA PATRIOT Act of 2001
- Dodd-Frank Act of 2010
Correct answer: Bank Secrecy Act of 1970
The Bank Secrecy Act of 1970 is the foundational U.S. AML law, requiring financial institutions to assist government agencies in detecting and preventing money laundering.
Question 3: Which federal agency is primarily responsible for administering and enforcing the Bank Secrecy Act?
- Securities and Exchange Commission (SEC)
- Federal Bureau of Investigation (FBI)
- Financial Crimes Enforcement Network (FinCEN) (Correct answer)
- Office of Foreign Assets Control (OFAC)
Correct answer: Financial Crimes Enforcement Network (FinCEN)
FinCEN, a bureau of the U.S. Department of the Treasury, is the primary agency responsible for administering the BSA and combating money laundering.
Question 4: The three stages of money laundering, in the correct order, are:
- Placement, Layering, Integration (Correct answer)
- Integration, Placement, Layering
- Layering, Placement, Integration
- Placement, Integration, Layering
Correct answer: Placement, Layering, Integration
Money laundering occurs in three stages: Placement (introducing illicit funds into the financial system), Layering (concealing the trail), and Integration (re-entering funds as legitimate).
Question 5: Under FINRA Rule 3310, which of the following is a required element of a broker-dealer's AML compliance program?
- Annual external audit by a CPA firm
- Designation of a Chief Compliance Officer as the only AML contact
- Independent testing of the AML program (Correct answer)
- Quarterly reporting to the SEC
Correct answer: Independent testing of the AML program
FINRA Rule 3310 requires broker-dealers to conduct independent testing of their AML program, along with training, internal controls, and designation of an AML compliance officer.
Question 6: A Currency Transaction Report (CTR) must be filed for cash transactions exceeding what threshold?
- $5,000
- $7,500
- $10,000 (Correct answer)
- $25,000
Correct answer: $10,000
Financial institutions must file a CTR for cash transactions exceeding $10,000 in a single business day, as required by the Bank Secrecy Act.
Question 7: What is 'structuring' in the context of financial crimes compliance?
- Organizing a firm's compliance department into specialized units
- Breaking up large cash transactions into smaller amounts to avoid reporting thresholds (Correct answer)
- Establishing internal controls to detect suspicious trading patterns
- Categorizing customers by risk level for due diligence purposes
Correct answer: Breaking up large cash transactions into smaller amounts to avoid reporting thresholds
Structuring (also called 'smurfing') is the illegal practice of breaking up large cash transactions into smaller ones to avoid BSA reporting requirements.
