Life & Health Insurance Exam (National Portion)Federal RegulationsEasy
A financial institution is reviewing its policies to ensure it has appropriate measures in place to prevent money laundering and terrorist financing. This includes verifying the identity of new customers and monitoring suspicious transactions. Which federal act primarily mandates these requirements?
- AGramm-Leach-Bliley Act (GLBA)
- BHealth Insurance Portability and Accountability Act (HIPAA)
- CEmployee Retirement Income Security Act (ERISA)
- DUSA PATRIOT Act
Show answer & explanationAnswer & explanation
Correct answer: D. USA PATRIOT Act
The USA PATRIOT Act was enacted to deter and punish terrorist acts in the United States and around the world, and to enhance law enforcement investigatory tools. It requires financial institutions to implement measures like Customer Identification Programs (CIP) to prevent money laundering and terrorist financing.
Why the other options are wrong
- A. GLBA focuses on the privacy of consumer financial information.
- B. HIPAA protects health information privacy.
- C. ERISA governs employee benefit plans.
USA PATRIOT Act (AML/CTF)
The USA PATRIOT Act mandates financial institutions to implement measures to detect and prevent money laundering and terrorist financing.
- Requires Customer Identification Programs (CIP).
- Mandates Suspicious Activity Reports (SARs).
- Aims to enhance national security by disrupting financial crimes.
Memory trick: Patriot's watch, money's caught, terror's fought.