Circumstances where Suspicion of Money Laundering should be Reported in Accordance with Legislation Flashcards
(12 cards)
What is the minimum monetary threshold for submitting a Suspicious Activity Report (SAR)?
A. There is no minimum threshold
B. £5,000
C. €10,000
D. £100,000
A. There is no minimum threshold
Explanation: Any suspicion—regardless of amount—must be reported via SAR .
Which term describes splitting cash deposits just below the reporting limit to avoid detection?
A. Integration
B. Structuring
C. Placement
D. Concealment
B. Structuring
Explanation: Structuring (also “smurfing”) involves multiple smaller deposits to evade reporting thresholds .
Identifying a Politically Exposed Person (PEP) client triggers which requirement?
A. No action needed
B. Basic due diligence
C. Enhanced due diligence
D. Termination of relationship
C. Enhanced due diligence
Explanation: PEP status demands extra checks, senior-management approval and ongoing monitoring .
Which of the following is NOT a recognized type of client due diligence under the MLR 2017?
A. Standard due diligence
B. Simplified due diligence
C. Enhanced due diligence
D. Complex due diligence
D. Complex due diligence
Explanation: MLR 2017 only provides Standard, Simplified and Enhanced CDD options
A client repeatedly changes personal details without explanation, raising AML concerns. The firm should:
A. File a SAR with the NCA
B. Continue monitoring without reporting
C. Terminate the client relationship only
D. Consult the client’s bank directly
A. File a SAR with the NCA
Explanation: Unexplained client secrecy is a red flag warranting an SAR
A payment for legal fees comes from an unconnected third party. This indicator is known as:
A. Legitimate funding
B. Third-party payment risk
C. Routine transaction
D. Standard client practice
B. Third-party payment risk
Explanation: Funds from unrelated parties often signal money-laundering attempts
A client’s transaction far exceeds their known income with no plausible source. This is a red flag called:
A. Structuring
B. Layering
C. Unexplained wealth
D. Placement
C. Unexplained wealth
Explanation: Disproportionately large transactions compared to client profile suggest illicit origins
Which indicator does NOT typically suggest money laundering suspicion?
A. Multiple small cash deposits
B. Use of offshore shell companies
C. PEP involvement without rationale
D. Regular salary payments from employer
D. Regular salary payments from employer
Explanation: Ordinary payroll deposits are normal and not usually suspicious .
When must a firm file a Suspicious Activity Report?
A. As soon as there are reasonable grounds to suspect money laundering
B. After confirming the client’s explanation
C. At the end of the fiscal year
D. Within 30 days of the transaction
A. As soon as there are reasonable grounds to suspect money laundering
Explanation: SARs must be submitted promptly upon suspicion—it is not permissible to wait .
Which action does not constitute tipping-off?
A. Disclosing to a client that an SAR has been filed
B. Filing an SAR with the NCA
C. Informing a third party about the SAR
D. Warning a client about a pending investigation
B. Filing an SAR with the NCA
Explanation: Submitting an SAR to the authorities is allowed; tipping-off is alerting the suspect
Which client behaviour is a red flag for potential money laundering?
A. Providing detailed source-of-funds explanations
B. Insisting on standard fee arrangements
C. Unwillingness to clarify transaction purpose
D. Using conventional payment methods
C. Unwillingness to clarify transaction purpose
Explanation: Refusal to explain a transaction’s rationale suggests concealment motives
Which UN Convention underpins the UK’s criminalisation of money laundering in PoCA?
A. UN Framework Convention on Climate Change
B. Vienna Convention on Diplomatic Relations
C. UN Convention on Contracts for the International Sale of Goods
D. Palermo Convention (UNTOC) 2000
D. Palermo Convention (UNTOC) 2000
Explanation: The Palermo Convention mandates money‐laundering criminalisation, implemented in UK law via PoCA .
