AML & SARS Quiz

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| By Suzanne Lopez

Suzanne Lopez

Community Contributor

Quizzes Created: 1 | Total Attempts: 637

Questions: 10 | Attempts: 637 | Updated: Mar 21, 2023

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This quiz is to be taken after an employee has completed training on DFG's Anti-Money Laundering (AML) and Suspicious Activity Reporting policies and procedures. All employees must earn a passing score of 70%.

Questions and Answers

1.

Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) law requires what types of institutions to detect and prevent money laundering by reporting suspicious activity?
- A.
  
  Only banks insured by the FDIC
- B.
  
  All Financial Institutions (including residential mortgage lenders and originators)
- C.
  
  Only check cashing facilities
- D.
  
  None of the Above
Correct Answer
B. All Financial Institutions (including residential mortgage lenders and originators)

Explanation
The correct answer is "All Financial Institutions (including residential mortgage lenders and originators)." The Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) law require all types of financial institutions, including residential mortgage lenders and originators, to detect and prevent money laundering by reporting suspicious activity. This is done to ensure that all financial institutions are actively involved in preventing money laundering and maintaining the integrity of the financial system.

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2.

What do the acronyms AML and SAR refer to?
- A.
  
  Anti-Money Laundering and Sample Action Report
- B.
  
  Acceptable Mortgage Loan and Suspicious Activity Report
- C.
  
  Anti-Money Laundering and Suspicious Activity Report
- D.
  
  Anti-Money League and Start Asking for Referrals
Correct Answer
C. Anti-Money Laundering and Suspicious Activity Report

Explanation
AML stands for Anti-Money Laundering, which refers to the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. SAR stands for Suspicious Activity Report, which is a document filed by financial institutions to report suspicious transactions that may indicate money laundering or other illegal activities. The correct answer is Anti-Money Laundering and Suspicious Activity Report.

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3.

Which of the following employees/contractors are required to report suspicious activities to DFG's AML Compliance Officer, Barbara Austin?
- A.
  
  Underwriters
- B.
  
  Contract Loan Processors
- C.
  
  Loan Officers
- D.
  
  All of the Above
Correct Answer
D. All of the Above

Explanation
All of the employees/contractors mentioned in the options, including underwriters, contract loan processors, and loan officers, are required to report suspicious activities to DFG's AML Compliance Officer, Barbara Austin. This implies that all these individuals have a responsibility to be vigilant and report any suspicious activities that they come across in their respective roles.

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4.

True or False: SAR regulations require reporting of suspicious activities including but not limited to fraudulent attempts to obtain a mortgage or launder money by use of the proceeds of other crimes to purchase residential real estate.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
SAR regulations, which stands for Suspicious Activity Report regulations, indeed require reporting of suspicious activities, including but not limited to fraudulent attempts to obtain a mortgage or launder money by using the proceeds of other crimes to purchase residential real estate. This means that if any suspicious activity related to these matters is observed, it must be reported according to SAR regulations.

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5.

A Possible Suspicious Activity Form (PSA) must be submitted to DFG's AML Compliance Officer, Barbara Austin, within how many days of recognizing the activity/event/occurrence?
- A.
  
  7 Days
- B.
  
  90 Days
- C.
  
  365 Days
Correct Answer
A. 7 Days

Explanation
The correct answer is 7 Days. This means that if someone recognizes a suspicious activity/event/occurrence, they must submit a Possible Suspicious Activity Form (PSA) to DFG's AML Compliance Officer, Barbara Austin, within 7 days. This is important to ensure timely reporting and investigation of any suspicious activities that may be related to money laundering or other illicit activities.

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6.

True or False? An example of a Suspicious Activity involves transaction amounts that do not coincide with the stated business type and/or are unusual and unexpected in comparison with other similar businesses.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
An example of a Suspicious Activity involves transaction amounts that do not coincide with the stated business type and/or are unusual and unexpected in comparison with other similar businesses. This means that if a business claims to be a small retail store but consistently receives large transactions or if their transaction amounts are significantly higher or lower than other similar businesses, it could be considered suspicious.

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7.

While reviewing Hairdresser Barbie Smith's loan, Underwriter Bob notices that Smith has been depositing $120,000 cash into her bank account every month for the last 2 months. Smith's previous 2 years of tax returns indicate that she has been averaging 80k/year. What should Underwriter Bob do?
- A.
  
  File a PSA (Possible Suspicious Activity Report) and e-mail a copy to the loan officer, processor and borrower.
- B.
  
  Complete and fax a PSA within 7 days of discovering the unusual deposits to DFG's AML Compliance Officer.
- C.
  
  Call the beauty salon where Smith works and find out how much she charges for a hair cut to get proof that Smith could not have earned that money as a hairdresser.
- D.
  
  Go out for happy hour with the underwriting department and get everyone's feedback on how to complete the PSA form correctly.
Correct Answer
B. Complete and fax a PSA within 7 days of discovering the unusual deposits to DFG's AML Compliance Officer.

Explanation
Underwriter Bob should complete and fax a PSA within 7 days of discovering the unusual deposits to DFG's AML Compliance Officer. This is because the sudden large cash deposits into Smith's bank account raise suspicions of possible suspicious activity. By filing a PSA, Bob can report this information to the appropriate authority for further investigation and ensure compliance with anti-money laundering regulations.

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8.

True or False: Former employees are EXEMPT from civil and criminal penalties for revealing the existence of a SAR to a person involved in the suspicious transaction.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Former employees are not exempt from civil and criminal penalties for revealing the existence of a SAR to a person involved in the suspicious transaction. This means that even if an employee is no longer working for the organization, they can still face legal consequences for disclosing information about a suspicious activity report to someone involved in the transaction.

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9.

Processor Nancy remembers that she processed a loan 2 years ago for Dave Druggie. The loan got cancelled because he was unable to source his down payment. Nancy hasn't had contact with Mr. Druggie since he cancelled his loan, but still has copies of his bank statements. What should Processor Nancy do?
- A.
  
  File a PSA immediatly and attach copies of the bank statements from 2 years ago.
- B.
  
  Do nothing because this occurred prior to 8/13/12 when mortgage loan originators weren't required to file SARs.
- C.
  
  Text Dave Druggie and let him know that she will be filing a PSA on him.
- D.
  
  None of the Above.
Correct Answer
B. Do nothing because this occurred prior to 8/13/12 when mortgage loan originators weren't required to file SARs.

Explanation
The correct answer is to do nothing because this occurred prior to 8/13/12 when mortgage loan originators weren't required to file SARs. SARs (Suspicious Activity Reports) are required for reporting suspicious transactions that may indicate money laundering or other illegal activities. Since the loan cancellation happened before the date when filing SARs became mandatory, there is no need for Processor Nancy to take any action.

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10.

True or False: There are no SAR exemptions based upon loan size. In other words, all suspicious activities must be reported regardless of loan amount.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
All suspicious activities must be reported regardless of loan amount. This means that there are no exemptions or exceptions based on the size of the loan. Any suspicious activity, regardless of the loan size, must be reported to the appropriate authorities.

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Current Version
Mar 21, 2023

Quiz Edited by
ProProfs Editorial Team
Aug 06, 2012

Quiz Created by
Suzanne Lopez

AML & Sars Quiz

Bank Secrecy Act (BSA) and the Anti-Money Laundering (AML) law requires what types of institutions to detect and prevent money laundering by reporting suspicious activity?

What do the acronyms AML and SAR refer to?

Which of the following employees/contractors are required to report suspicious activities to DFG's AML Compliance Officer, Barbara Austin?

True or False: SAR regulations require reporting of suspicious activities including but not limited to fraudulent attempts to obtain a mortgage or launder money by use of the proceeds of other crimes to purchase residential real estate.

A Possible Suspicious Activity Form (PSA) must be submitted to DFG's AML Compliance Officer, Barbara Austin, within how many days of recognizing the activity/event/occurrence?

True or False? An example of a Suspicious Activity involves transaction amounts that do not coincide with the stated business type and/or are unusual and unexpected in comparison with other similar businesses.

While reviewing Hairdresser Barbie Smith's loan, Underwriter Bob notices that Smith has been depositing $120,000 cash into her bank account every month for the last 2 months. Smith's previous 2 years of tax returns indicate that she has been averaging 80k/year. What should Underwriter Bob do?

True or False: Former employees are EXEMPT from civil and criminal penalties for revealing the existence of a SAR to a person involved in the suspicious transaction.

True or False: There are no SAR exemptions based upon loan size. In other words, all suspicious activities must be reported regardless of loan amount.