CAMS-RM practice question 1 of 15

In recordkeeping, what does section 326 of the USA PATRIOT Act requires in a financial institution?

Answer options

A: It requires that at the account level the financial institution must suspend the account or, in the case of credit, five years after the account becomes dormant.

B: It requires that at the account level the financial institution must retain the identifying information for recordkeeping, or, in the case of credit, five years after the account becomes dormant.

C: It requires that at the account level the financial institution must retain the identifying information for five years after the account is closed or, in the case of credit, five years after the account becomes dormant. Correct answer

D: It requires that at the account level the financial institution must not retain the identifying information as per the data privacy act after the account is closed or, in the case of credit, five years after the account becomes dormant.

Correct Answer:

C. It requires that at the account level the financial institution must retain the identifying information for five years after the account is closed or, in the case of credit, five years after the account becomes dormant.

Explanation

Section 326 of the USA PATRIOT Act mandates the creation of a Customer Identification Program (CIP). A key component of the CIP rule is recordkeeping. Financial institutions are explicitly required to maintain a record of all identifying information obtained from the customer. This information must be retained for a period of five years after the date the account is closed. For credit card accounts, the retention period is five years after the account becomes dormant. This ensures that law enforcement has access to critical identifying information for an appropriate period during investigations.

Why Incorrect

A. Section 326 pertains to recordkeeping requirements for customer identification, not the mandatory suspension of accounts.
B. The trigger for the five-year retention period is the closure of the account, not simply when identifying information is collected for recordkeeping.
D. This is incorrect; Section 326 of the USA PATRIOT Act imposes a legal requirement to retain information, which supersedes general data privacy preferences in this context.

References

1. 31 C.F.R. § 1020.220(a)(3)(ii). "Record retention. The bank must retain the information in paragraph (a)(3)(i)(A) of this section for a period of five years after the date the account is closed..."

2. ACAMS CAMS6 - Certified Anti-Money Laundering Specialist Study Guide, 6th Edition, (2020). Chapter 5, "Compliance Standards for Anti-Money Laundering and Combating the Financing of Terrorism," pp. 178-179. The guide details the requirements of Section 326, including the five-year record retention rule after account closure.

3. Financial Crimes Enforcement Network (FinCEN). (2003). Final Rule: Customer Identification Programs for Banks, Savings Associations, Credit Unions, and Non-Federally Regulated Private Banks. This document establishes the final regulations for Section 326, specifying the recordkeeping requirements.

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