Potentially suspicious activity following an increase in the volume of transactions by an import company included outgoing wires to Indonesia and Uganda referencing invoice numbers. Incoming funds included large cash deposits and checks/wires from pet stores, breeders, and private individuals. What financial crime might the bank reference in the SAR/STR?
Answer : C
The best reason the EU bank should file a SAR/STR is that the events raise concerns that the payment represents proceeds from illegal wildlife trade, which is a serious financial crime and a predicate offense for money laundering in many jurisdictions3. The fact that the incoming funds came from pet stores, breeders, and private individuals suggests that the import company may be involved in smuggling or trafficking endangered or protected animals or their parts4. The outgoing wires to Indonesia and Uganda, which are known source countries for wildlife trafficking, may indicate payments to suppliers or facilitators of this illicit activity.
A SAR/STR regarding money-mule activity prompts law enforcement action. Under U.S. law, the alleged money mules can be prosecuted:
Answer : D
According to U.S. law, money mules can be prosecuted even if they were unaware that money was transferred, as long as they acted with reckless disregard of the source of the funds or the purpose of the transaction1. This is because money mules are considered to be aiding and abetting money laundering, which does not require proof of specific intent2.
A government entity established a trust to provide social welfare programs. The entity wants cash payments made to persons without supporting documentation. These persons would oversee the allocation of funds to beneficiaries without complying with internal disbursement of government funds controls. Which is the main premise for filing a SAR/STR?
Answer : D
The main premise for filing a SAR/STR is that the entity is not implementing adequate internal controls according to what is expected, and mishandling of funds could be occurring. This raises suspicion that the entity may be involved in corruption, fraud, or diversion of funds for illicit purposes. Trust service providers are obliged by law to follow government internal controls, as they are subject to AML/CFT regulations and supervision. Cash disbursements are allowed for social welfare programs, but they should be properly documented and verified. Social welfare programs are not necessarily difficult to document, as there are ways to identify and monitor the beneficiaries, such as biometric data or unique identifiers.
A financial institution (Fl) has considered the available relevant factors in a transaction and has determined it will file a SAR^STR. Which is needed to support the contents of the report to the financial intelligence unit?
Answer : D
A SAR/STR does not require definitive proof or enough circumstantial evidence of suspicious activity, as these are high evidentiary thresholds that may be difficult or impossible to obtain by the FI. A SAR/STR should include a factual description of the suspicious activity, as this is essential for the FIU to analyze and disseminate the information. A low evidentiary threshold means that the FI has reasonable grounds to suspect that the activity is related to money laundering, terrorism financing, or other financial crimes, based on the available relevant factors. This is the main criterion for filing a SAR/STR.
A client at a financial institution deposits large amounts of money into an account, and almost immediately, the funds are then distributed to numerous individuals' accounts. The transaction activity described in the scenario is a pattern of:
Answer : B
Deposit trading is a pattern of suspicious activity where a client deposits large amounts of money into an account, and then transfers the funds to other accounts, often in different jurisdictions or countries. This could be an attempt to disguise the source or destination of the funds, or to avoid reporting requirements. Deposit trading is also known as layering, which is the second stage of money laundering.
A bank investigator notices an account receiving multiple deposits from the same employer under different employees' names. A cash withdrawal occurs one day after each deposit. The outcome of this investigation will likely uncover which crime typology?
Answer : D
The correct answer is A because this scenario describes a possible case of human trafficking, which is a crime where people are exploited for labor or sexual services against their will. Human traffickers may use bank accounts to launder their proceeds and pay their victims, and they may use fake or stolen identities to avoid detection. The other options are not likely because they do not explain why multiple deposits from the same employer under different employees' names would occur, nor why cash withdrawals would follow each deposit.
The investigations team of a financial institution (Fl) wants to perform enhanced due diligence measures on operations done by a foreign bank related to transactions of companies that export scrap gold and silver. What would be the next best steps for the investigations team? (Select Two.)
Answer : B, C
The correct answers are B and C because these are the most relevant and reasonable steps for the investigations team to perform enhanced due diligence on the operations of the foreign bank and its customers. Asking for the risk rating, customer profiles, and official licenses would help the team assess the level of risk and compliance of the foreign bank and its customers, who are engaged in a high-risk activity of exporting scrap gold and silver. The other options are not appropriate because they are either premature or ineffective. Rescinding the contract, filing a SAR/STR, or closing the accounts would require more evidence and justification, and they may also damage the relationship with the foreign bank.