Question 1

For which of the following is a bank most likely to be in danger of receiving a cease and desist order?

Accepted Answer

Failure to file suspicious activity reports is a serious violation of the Bank Secrecy Act and can result in significant penalties including fines, reputational damage, and a cease and desist order. The other options listed are also violations, but they are generally considered less severe and do not typically result in a cease and desist order.

Question 2

Which of the following is MOST effective in strengthening an anti-money- laundering program involving cash transactions?

Accepted Answer

Monitoring cash transactions of less than $10,000 for suspicious patterns is most effective because it helps identify structuring, where individuals break down large amounts into smaller, less suspicious amounts to avoid detection.

Question 3

In which of the following circumstances is it LEAST appropriate for a bank to file a SAR regarding Internet activity?

Accepted Answer

Electronic transfers between a customer's own accounts below the $10,000 reporting level do not require filing a SAR unless they are suspicious in nature. The other scenarios involve actual or potential criminal activity and would warrant filing a SAR.

Question 4

Which of the following customers may be exempted under Phase II of the Bank Secrecy Act?

Accepted Answer

The answer of Which of the following customers may be...

Question 5

When completing and filing a SAR, what is the bank NOT required to do?

Accepted Answer

While the bank is required to maintain a copy of the SAR and supporting documentation for 5 years, they are not required to submit a copy of the supporting documentation with the SAR.

Question 6

What should a bank's Bank Secrecy Act compliance program include?

Accepted Answer

A bank's Bank Secrecy Act compliance program should include the designation of individuals responsible for day-to-day compliance to ensure that the bank adheres to the requirements of the Act.

Question 7

A routine review of account records reveals that suspicious activity involving foreign currency has occurred in the account of one of the bank's directors. Which of the following actions should be taken FIRST?

Accepted Answer

Filing a SAR (Suspicious Activity Report) is the first step required by law when suspicious activity is detected.

Question 8

On which of the following loans must a bank maintain records under the Bank Secrecy Act?

Accepted Answer

The Bank Secrecy Act requires banks to maintain records for all loans exceeding $10,000 that are not secured by real property.

Question 9

A compliance officer is constructing a review of a transaction in which M, a deposit account customer, used cash to purchase travelers' checks in an amount of $4,000. The compliance officer must determine compliance with financial recordkeeping and currency reporting regulations. Which of the following pieces of information must be part of the bank's records for this transaction?

Accepted Answer

The serial numbers of the travelers' checks purchased must be recorded by the bank in order to comply with financial recordkeeping and currency reporting regulations. M's date of birth and deposit account number are not necessary for this particular transaction review. The name of the branch where the transaction occurred may be helpful for recordkeeping purposes, but it is not essential for compliance with financial recordkeeping and currency reporting regulations.

Question 10

Your bank's president comes back from an industry conference and tells the compliance officer that she attended a presentation about OFAC. She heard the bank could be fined for not adhering to OFAC requirements. Thus, she has directed that every bank transaction be reviewed for OFAC compliance. What is the most appropriate statement the compliance officer could make to the bank president?

Accepted Answer

It is important to let the bank president know that the bank has already implemented risk-based OFAC procedures, which means that transactions are already being reviewed for OFAC compliance based on their level of risk. This will reassure the bank president that the bank is taking necessary measures to comply with OFAC requirements. Option A is not comprehensive enough to cover all bank transactions. Option C is not a correct statement as OFAC does apply to any US financial institution regardless of whether it conducts business in foreign countries or with foreign nationals. Option D is incorrect because banks can be fined for OFAC violations even if they do not conduct transactions with SDNs or blocked countries.

Question 11

Your institution has identified a transaction by an existing depositor that should be blocked under OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the transaction to OFAC, what should the bank do?

Accepted Answer

The bank should place the funds in an interest-bearing account to ensure they are blocked and not accessible to the depositor, as required by OFAC regulations, before reporting the transaction.

Question 12

An individual comes into the bank and makes a $6,000 cash deposit into a checking account. At the same time, the individual buys a $7,000 cashier's check with cash. According to the Bank Secrecy Act, what is the bank is required to do?

Accepted Answer

The bank is required to obtain recordkeeping information for the purchase of the cashier's check and complete a CTR for the total cash-in transaction of $13,000. The Bank Secrecy Act requires banks to file CTRs for currency transactions exceeding $10,000, and in this case, the total cash-in transaction amounts to $13,000. Additionally, the bank must obtain recordkeeping information for the purchase of the cashier's check, as this type of transaction is often used to evade the reporting requirements of the BSA. Filing a SAR or aggregating the transactions is not necessary in this scenario.

Question 13

The BSA officer has just been notified by the chief operations officer that, due to a glitch in the bank's OFAC interdiction software, wires have been regularly transmitted to a bank on the SDN list. Based on the OFAC Enforcement Guidance, what should the BSA Officer do FIRST to attempt to mitigate any penalties?

Accepted Answer

The answer of The BSA officer has just been notified...

Question 14

When all the required information is NOT provided by a person purchasing a cashier's check with $8,000 in currency, what should the bank do?

Accepted Answer

Banks must comply with federal regulations regarding the sale of cashier's checks, which includes recording certain information from the customer, such as name, address, and identification number. If the customer does not provide all the required information, the bank should refuse the transaction rather than risk violating compliance regulations.

Question 15

What should a bank do when it receives a request from a customer to transfer funds to an individual in Iraq?

Accepted Answer

As long as the individual and the financial institution are not on the SDN list, the bank can conduct the transfer as requested. It is important to ensure that the transaction is not in violation of any national or international laws, regulations or sanctions.

Question 16

ACME Bank is a $600 million institution with 15 branches within three counties. Because of its proximity to Mexico, the bank has many foreign national customers and makes many foreign wire transfers for its customers. Currently the bank's branch managers print the OFAC list of SDNs and place them in strategic places in each branch. The wire transfer department keeps its own copy of the list. The compliance officer has implemented an annual auditing program to check the bank's compliance with OFAC regulations. The findings of this audit are provided to the bank's board of directors annually. The bank's regulatory agency has indicated to management that the bank has a high risk for BSA/AML/OFAC compliance. Of the following actions, which would be the most effective to strengthen the bank's OFAC compliance?

Accepted Answer

Purchasing and implementing interdiction software for the wire transfer area would be the most effective way to strengthen the bank's OFAC compliance. This software would automatically screen transactions against the SDN list and prevent any illegal transactions from going through. Conducting compliance audits twice a year and requiring the BSA officer to check the OFAC web site daily are both good practices, but they do not address the issue of screening transactions in real-time. Routinely providing account transaction information to federal security agencies is not related to OFAC compliance and may raise privacy concerns.

Question 17

State National Bank is a $250 million community bank. It makes a variety of consumer and commercial loans, regularly transmits funds via wire transfers for its customers, and issues commercial and stand-by letters of credit. Which of the following transactions can State National make without checking the OFAC SDN list and without incurring liability?

Accepted Answer

All transactions should be checked against the OFAC SDN list to ensure compliance and avoid liability.

Question 18

FA presents cash to the bank and seeks to wire it to his spouse, RA, in Cub A. The OFAC list identifies RA as a specially designated national. Under OFAC Regulations, what should the bank do?

Accepted Answer

OFAC regulations prohibit US persons and entities from conducting transactions with individuals or entities on the Specially Designated Nationals (SDN) List. RA is listed on the SDN List, therefore the bank should block the transfer. Conducting the transfer would violate OFAC regulations and could result in significant fines or penalties.

Question 19

Which of the following is NOT considered an acceptable form of identification for an individual when completing a CTR?

Accepted Answer

Long-term deposit account relationship is not a form of identification. The other options (A, C, and D) are all acceptable forms of identification for completing a CTR.

Question 20

Which of the following countries are currently subject to the Office of Foreign Assets Control Regulations?

Accepted Answer

The answer of Which of the following countries are currently...

Exam 1: Certified Regulatory Compliance Manager