Learning Objectives: Describe elements of a control framework to manage financial fraud risk and money laundering risk. Summarize the regulatory findings and describe the lessons learned from the USAA case study.
Questions:
24.2.1. HSBS Bank Plc has implemented a data analytics system that automatically monitors customer transactions for patterns that could indicate fraudulent activity. The system triggers alerts for transactions that exceed certain thresholds of £5,000 per day to/from high-risk jurisdictions. The alerts are then reviewed by a dedicated team trained to investigate potential financial crimes.
What is the most relevant type of control covered in this instance?
a. Selection
b. Prevention
c. Detection
d. Deterrents
24.2.2. In March 2022, USAA Federal Savings Bank (FSB) was fined $140 million by the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC). The fines were issued due to the bank’s failure to implement and maintain a Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program.
Which of the following represents a key lesson learned from this case study?
a. Outsourcing risk management functions without proper oversight can improve compliance efficiency.
b. Training and staffing are secondary to the technology used in monitoring transactions.
c. Implementing strong AML controls and compliance programs upfront is less costly than paying fines and remediation costs later.
d. Regulatory fines are typically unpredictable and not linked to accumulated failings in AML programs.
24.2.3. In response to the USAA Federal Savings Bank (FSB) case, where the bank was fined $140 million by the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) due to deficiencies in its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program, the board of Nicklewood Trustees is considering enhancing their control environment to avoid similar issues.
Which of the following is NOT an appropriate solution to address the problems identified in the USAA case?
a. Conducting SOC (Service Organization Control) audits on an annual basis.
b. Prohibit outsourcing of compliance functions and consider in-house compliance.
c. Increase the headcount of the compliance department from 2 staff to a team of 5.
d. Procure a transaction monitoring system leading to a backlog of unreviewed alerts.
Answers here:
Questions:
24.2.1. HSBS Bank Plc has implemented a data analytics system that automatically monitors customer transactions for patterns that could indicate fraudulent activity. The system triggers alerts for transactions that exceed certain thresholds of £5,000 per day to/from high-risk jurisdictions. The alerts are then reviewed by a dedicated team trained to investigate potential financial crimes.
What is the most relevant type of control covered in this instance?
a. Selection
b. Prevention
c. Detection
d. Deterrents
24.2.2. In March 2022, USAA Federal Savings Bank (FSB) was fined $140 million by the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC). The fines were issued due to the bank’s failure to implement and maintain a Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program.
Which of the following represents a key lesson learned from this case study?
a. Outsourcing risk management functions without proper oversight can improve compliance efficiency.
b. Training and staffing are secondary to the technology used in monitoring transactions.
c. Implementing strong AML controls and compliance programs upfront is less costly than paying fines and remediation costs later.
d. Regulatory fines are typically unpredictable and not linked to accumulated failings in AML programs.
24.2.3. In response to the USAA Federal Savings Bank (FSB) case, where the bank was fined $140 million by the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) due to deficiencies in its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program, the board of Nicklewood Trustees is considering enhancing their control environment to avoid similar issues.
Which of the following is NOT an appropriate solution to address the problems identified in the USAA case?
a. Conducting SOC (Service Organization Control) audits on an annual basis.
b. Prohibit outsourcing of compliance functions and consider in-house compliance.
c. Increase the headcount of the compliance department from 2 staff to a team of 5.
d. Procure a transaction monitoring system leading to a backlog of unreviewed alerts.
Answers here:
