AML

A suspicious activity report (SAR) must be filed on any transaction that involves at least how much in funds or other assets?

$5,000

Which of the following is NOT a basic requirement for anti-money laundering programs?

Compliance with FATF's Nine Special Recommendations on Terrorist Financing

Which of the following is NOT considered a covered insurance product under the anti-money laundering rules for insurance companies?

Group annuities

Which of the following statements best describes the money laundering process?

Illegal money is converted to seemingly legal money.

Who determines which methods of payment are acceptable for the purchase of insurance policies?

Insurance company issuing the policy

Which of the following is NOT a core component of the AML program requirement?

Membership in the FATF.

Whose regulations specify which accounts and transactions are subject to economic sanctions?

OFAC

Depositing illicit money in a financial institution is an example of

Placement

Which of the following organizations issued the Forty Recommendations? fatf, iais, icor, ofac

The FATF issued the Forty Recommendations.

Why is it necessary to monitor wire transfers from one country to another country?

The transfer ensures that the insurance company does not accept or send funds to an OFAC-blocked party.

The insurance industry is most vulnerable to money laundering during the layering and integration stages of the money laundering cycle.

True

What primary factor determines what information must be collected about a policy or contract owner for identification purposes?

Whether the insurance product under consideration is at a low or high risk for money laundering

Regulators recognize that there cannot be a one-size-fits-all AML program for all insurance companies for all of the following reasons EXCEPT

there are uniform methods of payment

A Currency Transaction Report (Form 8300) captures all of the following information EXCEPT

whether or not the cash was obtained from illegal activities

Which of the following statements is NOT true about a red flag suspicious activity?

Automatically requires the filing of a SAR.

Integration

involves putting the money back into the financial system disguised as legitimate business earnings and mixing it with other assets so it cannot be distinguished from them.

A Currency Transaction Report (CTR)

is generally required when an insurer receives more than $10,000 in cash in one transaction or in two or more related transactions.

CTR or Form 8300

captures the identity of the individual from whom the cash was received, the person on whose behalf the transaction was conducted, a description of the transaction and the method of payment, and the name of the business that received the cash.

Who maintains a list of high-risk or noncooperative countries and territories due to a lack of AML/CFT measures?

FATF - considers jurisdictions as "high-risk and non-cooperative when they have detrimental rules and practices in place which constitute weaknesses and impede international co-operation in the fight against money laundering and terrorism financing" and maintains a list of those jurisdictions.

Which of the following is NOT an element of a customer identification program (CIP)?

Criminal background check and fingerprinting

OFAC

maintains a list of specially designated nationals (SDNs), who are viewed as threats to the United States and are subject to specific governmental sanctions. Failure to follow OFAC regulations could result in serious penalties.

Which of the following is NOT a reason why a financial institution would have a know your customer program?

To determine whether or not its program meets the requirements of the Bank Secrecy Act.

When does an insurance company particularly rely on an insurance agent to collect customer information?

At the point of sale

Which of the following is the international standard for combating money laundering activities?

The FATF's Forty Recommendations

The Act that brought all financial institutions under its regulations.

USA PATRIOT Act

Each CIP must contain at least the following four elements:

customer identity verification procedures, verification recordkeeping, government list comparison, and notification to customers.

Integration occurs when

illegal money is mixed with legitimate business earnings

three items are identified as core components of the AML program requirement.

the program must be in writing, approved by senior management, and made available to the US Treasury Department upon request.

Why are agents and brokers not individually or independently required to create their own anti-money laundering programs?

Insurers are in the best position to maintain AML programs.

Which stage of the money laundering process involves carrying out a series of financial transactions to hide the illicit source of the funds?

Layering

Agents should collect all of the following types of information about a potential client EXCEPT

personal and professional references

AML programs must focus on covered insurance products because

they are likely to present a higher degree of risk for money laundering.

The Bank Secrecy Act of 1970 encourages an insurer to report any activity that appears to violate the law, if the amount of the transaction is greater than $1,000, $3,000, $5,000

none of these, An insurance company is encouraged to report any activity that appears to violate the law, regardless of the amount of the transaction.

One of the reasons suspicious activity reporting was extended beyond banks to all relevant financial institutions is the intense scrutiny to which banks have been subject.

true - Banks have been subject to intense scrutiny by the federal government concerning money laundering. This scrutiny, along with the banks' compliance with AML requirements, has made it far more difficult for money launderers to use banks for their illicit purposes.

An insurance company is encouraged to report any activity that is suspicious or appears to violate the anti-money laundering laws or regulations, regardless of the amount of the transaction.

true - FinCEN encourages insurance companies to report any activity that is suspicious or appears to violate the anti-money laundering laws or regulations, regardless of the amount of the transaction. Not every suspicious activity must be reported by insurance companies. Insurance companies may report any suspicious activity, but a suspicious activity that meets or exceeds the $5,000 threshold and involves a red flag must be reported.

All of the following are failures to comply with BSA requirements EXCEPT

failure to verify identifying information through primary sources

Only those companies in the insurance industry that pose a significant risk of money laundering or terrorist financing must comply with anti-money laundering regulations.

true

The Money Laundering Control Act made money laundering a criminal activity.

True

an agent should collect the following information:

mailing address (if different from home address); Social Security number or tax identification number; previous experience with owned financial products; financial objective in purchasing product; net worth, liquid net worth, and annual income; and citizenship status, date and place of birth, full name (first, middle initial, last) and home address (not just a post office box).

Basic requirements of anti-money laundering programs include:

development of policies, procedures, and internal controls designed to detect and prevent money laundering; designation of an executive-level internal compliance officer; creation of an employee training program; and development of an independent audit function.

All of the following are failures to comply with BSA requirements:

failure to maintain required records failure to file a report or filing a report containing any material omission or misstatement failure to secure identifying information

The regulations provide insurers with a great deal of flexibility so they can design their anti-money laundering programs to meet their specific profiles and risks. A) False

true - Given the vast differences between the products, distribution methods, and customer bases of insurance companies, regulators recognize that there is no one-size-fits-all anti-money laundering program for insurance companies. Consequently, the regulations provide insurers with a great deal of flexibility so they can design their programs to meet their specific profiles and risks.

Real or personal property purchased with laundered money is subject to

both government seizure and forfeiture

A Currency Transaction Report is generally required when an insurance company receives more than $10,000 in cash in one transaction or in two or more related transactions.

true