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Quizzes > Business & Finance > Finance & Economics

Test Your AML & Suspicious Activity Reporting Knowledge Now!

Take our anti-money laundering compliance quiz and suspicious activity reporting test now!

Editorial: Review CompletedCreated By: Erica KeoeckelUpdated Aug 28, 2025
Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art free AML compliance quiz on golden yellow background anti money laundering suspicious activity reporting knowledge

This AML compliance quiz helps you practice core BSA/AML rules, SAR triggers, and red flags through short, real-world scenarios. Use it to spot gaps before training or audits and see which topics need a quick refresh. New to AML? Start with the basics quiz , then tackle the advanced set .

What does "AML" stand for in financial compliance contexts?
Anti-Money Laundering
Anti-Money Legalization
Automated Money Ledger
Advanced Monetary Legislation
AML stands for Anti-Money Laundering, referring to laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. Effective AML programs help financial institutions detect and report suspicious activities. These frameworks are enforced globally by organizations such as the Financial Action Task Force (FATF).
In AML processes, what is the primary purpose of "KYC"?
Keep Your Cash
Know Your Customer
Key Yield Calculation
Know Your Compliance
KYC stands for Know Your Customer and refers to the process of a financial institution verifying the identity of its clients. The goal is to assess and monitor that client's risk level for money laundering or terrorist financing. Strong KYC procedures underpin effective AML compliance programs.
Which term describes an individual who is or has been entrusted with a prominent public function, thus requiring enhanced AML scrutiny?
Politically Exposed Person
Potential Exposure Person
Private Entry Partner
Public Enterprise Participant
A Politically Exposed Person (PEP) is someone who holds or has held a prominent public office or function. Due to their influence and control over resources, PEPs present a higher risk of being involved in bribery or corruption. AML regulations mandate Enhanced Due Diligence (EDD) for PEPs.
What does "SAR" stand for in the context of anti-money laundering?
Standardized Audit Report
Suspicious Activity Report
Suspicious Asset Registration
Secure Account Review
SAR stands for Suspicious Activity Report, which financial institutions must file to FinCEN when they detect unusual or suspicious transactions that may indicate money laundering or other financial crimes. Filing a SAR helps law enforcement investigate and prevent illicit finance. SAR thresholds and timelines are governed by the Bank Secrecy Act (BSA).
Which U.S. agency is primarily responsible for enforcing AML requirements and collecting financial transaction reports?
Office of the Comptroller of the Currency (OCC)
Securities and Exchange Commission (SEC)
Federal Deposit Insurance Corporation (FDIC)
Financial Crimes Enforcement Network (FinCEN)
The Financial Crimes Enforcement Network (FinCEN) is the bureau of the U.S. Department of the Treasury that enforces AML requirements, administers the Bank Secrecy Act, and collects, analyzes, and disseminates financial transaction reports such as SARs and CTRs. FinCEN's data supports investigations of money laundering, terrorist financing, and other financial crimes.
Under the FinCEN Customer Due Diligence (CDD) Rule, which percentage of ownership generally establishes a beneficial owner of a legal entity?
75%
25%
10%
50%
The FinCEN CDD Rule requires financial institutions to identify any individual who directly or indirectly owns 25% or more of a legal entity customer as a beneficial owner. This threshold helps ensure transparency in ownership and is critical in preventing the misuse of shell companies for money laundering.
What is the meaning of "CDD" in AML compliance?
Customer Due Diligence
Customer Debt Disclosure
Corporate Disclosure Directive
Continuous Data Documentation
Customer Due Diligence (CDD) refers to the process of collecting and verifying customer information to assess their risk for money laundering or terrorist financing. CDD involves identifying the customer and beneficial owners, understanding the nature of their activities, and monitoring transactions over time. Robust CDD is a foundational element of AML compliance programs.
A Currency Transaction Report (CTR) must be filed when a customer conducts cash transactions exceeding what amount in a single business day?
$20,000
$15,000
$5,000
$10,000
Under the Bank Secrecy Act, financial institutions must file a Currency Transaction Report (CTR) for cash transactions by or on behalf of a customer that exceed $10,000 in a single business day. This reporting requirement applies to deposits, withdrawals, currency exchanges, and other payments. Timely CTR filing assists law enforcement in detecting large cash movements.
Which list does the U.S. Treasury's Office of Foreign Assets Control (OFAC) maintain for individuals and entities subject to sanctions?
Financial Watch List
Specially Designated Nationals List
Special Reporting Entities List
Suspicious Persons Index
OFAC maintains the Specially Designated Nationals (SDN) List, which identifies individuals and entities that are blocked or subject to sanctions. U.S. persons and businesses are generally prohibited from conducting transactions with parties on the SDN List. Regularly screening against the SDN List is essential for sanctions compliance.
What is meant by a "risk-based approach" in AML compliance?
Applying the same controls to all customers
Focusing solely on financial crimes investigations
Mandating uniform transaction limits
Allocating resources based on customer risk profiles
A risk-based approach requires financial institutions to assess the money laundering and terrorist financing risks posed by customers, products, services, and geographies, then allocate resources and design controls proportionate to those risks. This ensures that higher risk areas receive greater scrutiny. The FATF and FinCEN both endorse this flexible framework.
Upon detecting suspicious activity, within how many days must a financial institution file a Suspicious Activity Report (SAR)?
60 days
30 days
15 days
45 days
Financial institutions must file a SAR within 30 calendar days of detecting facts that may constitute a basis for filing. If no suspect was identified at the time the suspicion arose, the institution may delay filing an additional 30 days, for a total of 60 days, but an initial SAR must still be filed within 30 days. This timeline is set by FinCEN under the BSA.
What does "EDD" stand for in enhanced AML measures?
Electronic Data Deposit
Enhanced Due Diligence
Extra Document Disclosure
Equity Debt Determination
Enhanced Due Diligence (EDD) involves more in-depth investigation of higher-risk customers, such as politically exposed persons or customers from high-risk jurisdictions. EDD goes beyond standard Customer Due Diligence (CDD) by requiring greater scrutiny, ongoing monitoring, and senior management approval. EDD helps mitigate elevated AML risks.
The acronym "OFAC" stands for which of the following?
Office of Financial and Audit Compliance
Organization for Financial Asset Compliance
Office of Foreign Assets Control
Office of Finance and Accounting Control
OFAC stands for the Office of Foreign Assets Control, a division of the U.S. Treasury Department responsible for administering and enforcing economic and trade sanctions based on U.S. foreign policy and national security goals. OFAC's regulations prohibit dealings with designated countries, regimes, and individuals.
Which of the following scenarios is a common red flag for potential money laundering?
Paying household bills electronically
Multiple cash deposits just under reporting thresholds
Routine salary payment by check
Setting up direct deposit for a paycheck
Structuring transactions - making multiple cash deposits just below the $10,000 reporting threshold - is a common red flag for money laundering as individuals attempt to evade Currency Transaction Report requirements. AML programs train staff to detect and investigate these patterns. Identifying and reporting such behavior helps law enforcement track illicit fund flows.
Under the FinCEN CDD Rule, if no individual owns 25% or more of a legal entity customer, which person must be identified as a beneficial owner?
A Senior Managing Official
The Registered Agent
The Chief Financial Officer
The Lead Auditor
If no individual owns 25% or more of a legal entity customer, the FinCEN CDD Rule requires financial institutions to identify an individual with significant responsibility to control, manage, or direct the entity - commonly a senior managing official. This ensures transparency in entities lacking a clear ownership structure.
What is the primary purpose of FinCEN's Section 314(b) authority?
Imposing civil penalties for BSA violations
Mandating SAR filings within 30 days
Allowing voluntary information sharing between financial institutions
Requiring banks to file CTRs
Section 314(b) of the USA PATRIOT Act allows U.S. financial institutions and regulatory agencies to share information on individuals, entities, and transactions that may be related to money laundering or terrorist financing, provided certain safeguards are met. This voluntary information-sharing regime enhances industry collaboration to identify and report suspicious activity.
Which of the following best describes the "Travel Rule" under U.S. AML regulations?
Requirement for bank employees to travel for on-site inspections
Rule governing customer due diligence interviews
Obligation to collect and transmit originator and beneficiary information for certain funds transfers
Mandate to report cross-border travelers to customs authorities
The AML "Travel Rule" requires financial institutions to collect, verify, and transmit required originator and beneficiary information on funds transfers and certain related messages of $3,000 or more. It aims to ensure traceability of wire transfers and reduces anonymity in cross-border transactions.
What type of Suspicious Activity Report (SAR) is filed when updating information on a previously submitted SAR?
Final SAR
Supplemental SAR
Preliminary SAR
Initial SAR
When financial institutions need to provide additional information or correct details on a previously filed SAR, they must submit a "Supplemental SAR." This ensures that law enforcement has the most accurate and complete information. Supplemental SARs reference the original SAR report control number.
Under U.S. AML regulations, which entity must register as a Money Services Business (MSB) if they deal in virtual currencies?
A stock brokerage platform
A bank holding virtual currency reserves
An individual selling personal cryptocurrency holdings
A company cashing out customer cryptocurrency exchanges
Companies that exchange, transfer, or cash out virtual currencies on behalf of customers are considered Money Services Businesses (MSBs) under FinCEN regulations and must register, implement AML programs, and file reports. This requirement ensures that virtual currency providers are subject to the same AML standards as other MSBs.
What key information must be collected and verified under the Customer Identification Program (CIP) rule?
Employment history and references
Date of birth, address, name, and identification number
Annual income and tax returns
Loan history and credit score
The CIP rule requires financial institutions to collect and verify a customer's name, date of birth, address, and an identification number (e.g., Social Security Number or passport number). These data points form the minimum necessary to verify identity and guard against money laundering. The institution must also maintain records of this process for five years.
How many years must financial institutions retain Customer Identification Program (CIP) records after account closure?
7 years
5 years
3 years
10 years
Under the CIP rule, financial institutions must retain records of customer identification and verification for five years after the account is closed. This retention requirement supports potential future investigations and regulatory examinations. Retention of these records is critical for demonstrating compliance with AML regulations.
What dollar threshold triggers the requirement to file a Foreign Bank and Financial Accounts Report (FBAR)?
Individual foreign account balance over $50,000
Aggregate foreign account balances over $100,000
Aggregate foreign account balances over $10,000
Aggregate foreign account balances over $5,000
U.S. persons must file an FBAR if the aggregate value of their foreign financial accounts exceeds $10,000 at any time during the calendar year. The FBAR is filed electronically with FinCEN using Form 114. Failure to file can result in significant penalties.
Under Section 311 of the USA PATRIOT Act, what authority does the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) have regarding a foreign financial institution?
To designate it as a primary money laundering concern and require special measures
To merge it with a U.S. bank
To appoint a new board of directors
To impose a prison sentence on its executives
Section 311 of the USA PATRIOT Act authorizes FinCEN to designate a foreign financial institution, or jurisdiction, as a primary money laundering concern and impose special measures, such as enhanced recordkeeping, information sharing, and transaction blocking. These measures aim to protect U.S. financial systems from illicit finance.
In anti-money laundering terminology, what does "smurfing" refer to?
Integrating illicit proceeds into legitimate businesses
Using shell companies for layering
Smuggling cash across borders concealed in vehicles
Structuring multiple small transactions to evade reporting requirements
"Smurfing" is the practice of breaking up large sums of money into many small transactions below regulatory reporting thresholds to avoid detection. It is a form of structuring used in the placement stage of money laundering. Financial institutions monitor for patterns indicative of smurfing to file SARs when necessary.
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Study Outcomes

  1. Understand AML Framework -

    Explain fundamental anti-money laundering compliance principles and regulatory mandates guiding financial institutions.

  2. Identify Suspicious Activity Indicators -

    Recognize common red flags and transaction patterns that may signal potential money laundering schemes.

  3. Apply SAR Procedures -

    Demonstrate the correct steps for completing and filing suspicious activity reports in accordance with compliance standards.

  4. Analyze Real-World Scenarios -

    Interpret practical case studies to pinpoint compliance gaps and propose appropriate AML responses.

  5. Evaluate Compliance Risk -

    Assess client and transaction profiles to determine risk levels and necessary due diligence measures.

  6. Reinforce Regulatory Knowledge -

    Recall key AML training concepts to solidify readiness for compliance audits and examinations.

Cheat Sheet

  1. Regulatory Framework and Key Standards -

    Familiarize yourself with cornerstone AML laws like the US Bank Secrecy Act (BSA) and the Financial Action Task Force's (FATF) 40 Recommendations, which form the backbone of any AML compliance quiz study guide. Remember the "B-SAFE" mnemonic: BSA, Sanctions, AML, FinCEN, Enforcement (FATF, fatf-gafi.org). Solid regulatory knowledge boosts your confidence in an anti money laundering quiz context.

  2. Customer Due Diligence (CDD) and Know Your Customer (KYC) -

    Master the risk-based CDD framework by classifying customers into risk tiers and conducting enhanced due diligence on high-risk clients, as outlined by FinCEN guidelines (FinCEN.gov). Use PEP screening and beneficial ownership checks to ensure compliance and reduce false flags in a suspicious activity reporting test. Regularly review CDD policies to excel in your AML training assessment.

  3. Suspicious Activity Reporting (SAR) Essentials -

    Understand when to file a SAR by identifying red flags like structuring, unusual fund flows, or mismatched customer profiles, according to FinCEN's SAR form instructions (FinCEN). Note the 30-day filing deadline and ensure your SAR narratives are concise yet comprehensive to ace any compliance quiz. Practice writing SARs to reinforce learning in an anti money laundering quiz environment.

  4. Transaction Monitoring and Red Flags -

    Implement automated monitoring systems to detect anomalies such as rapid fund movement, high-volume cash deposits, or transactions inconsistent with customer risk profiles, as per Basel Committee guidance (bis.org). Memorize key red flags - like "three transfers, three countries, three days" - to help during an anti money laundering quiz. Fine-tune your thresholds and alerts to sharpen skills in a compliance quiz setting.

  5. Recordkeeping and Ongoing Training -

    Maintain transaction and CDD records for at least five years, per BSA and FATF guidelines, to demonstrate a robust audit trail (FATF, BSA regs). Engage in regular AML training assessments, leveraging quizzes and scenario-based modules to stay current on emerging typologies. A proactive training regimen ensures you're always ready when faced with a compliance quiz or real-world audit.

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