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AML Test Quiz

Your Name

Name the three stages of money laundering.

Layering

Integration

Placement

Secrecy

In its 2012 Advisory, the Financial Crimes Enforcement Network ("FinCEN", a division of the U.S. Treasury Department) identified risks associated with payment processor activities. Which of the following risks was not included in the 2012 Advisory?

Unfair or deceptive merchant practices

Cryptocurrency Fraud

Payment processor use of consolidation accounts to conceal high chargeback rates

Use of ACH credits to place illegal funds into a financial institution

When onboarding a new merchant client, BSA regulations require a payment processor to perform a due-diligence review of the merchant.

True

False

As presented in FinCEN's 2012 Advisory, for which of the following activities must a bank file a Suspicious Activity Report? If the bank knows, suspects, or has reason to suspect that a Payment Processor has:

Conducted a transaction to pay for a product or service which was not known to the bank

Attempted to conduct a transaction that appeared to lack a legitimate business purpose

Conducted a transaction involving funds derived from illegal activity

Attempted to engage in a transaction which was designed to evade a BSA regulatory requirement

If a Canadian merchant is listed on OFAC's list of Specially Designated Nationals and Blocked Persons, what must a payment processor do before conducting business with the merchant?

Ensure that the payment processor's bank first files a SAR on which the merchant is identified

Under no condition may the payment processor conduct business with the merchant

Conduct a full verification of the merchant's identity before providing services to the merchant

Refer the merchant to a Canadian sub-ISO of the payment processor

In the context of AML regulations, what does the acronym BSA stand for?

Bank Secrecy Act

Banking Security Act

US Bank Supremacy Act

Boy Scouts of America

Which money laundering stage is occurring when a criminal uses his merchant account with a payment processor to conduct transactions designed to hide the source of the illicit funds?

Placement

Layering

Integration

Secrecy

Payment processors are generally exempted from coverage under Federal AML regulations. As an exempted entity, how can a payment processor give its merchants clients access to the U.S. Financial system?

Through the use of its bank account, a payment processor's transactions run through the U.S. Financial system

When engaging in U.S. dollar-denominated transactions, any business is considered to be a regulated Financial Institution

When the payment processor files a Federal tax return and makes tax payments, those funds are introduced into the U.S. Financial system

All payments made to a business automatically enter the financial system of the country in which the business is located

In its exam manual, the FFIEC presents which of the following steps as ways in which a bank can mitigate the risks associated with a payment processor's account:

Having the processor perform a self-certification of AML compliance

Determining whether a processor re-sells its services to a third-party agent

Reviewing the processor's policies, procedures, and processes to determine the adequacy of its due diligence standards for new merchants

Requiring the processor to identify its major customers

What does OFAC stand for?

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