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SIE AML and compliance practice questions

Free SIE exam questions on compliance: anti-money laundering, customer identification, books and records, privacy, communications with the public, telemarketing and complaints, with rationales.

Tap an answer to check it, or open "Show the answer and rationale" under each question. Customers in the questions are fictional. Exam practice only, not investment advice.

Question 1 of 20

Where does a broker-dealer file Suspicious Activity Reports?

  1. With FINRA's Market Regulation unit
  2. With the SEC's Division of Trading
  3. With FinCEN at the Treasury
  4. With the customer's state regulator
Show the answer and rationale

Answer: C

SARs and CTRs go to FinCEN, the Treasury's Financial Crimes Enforcement Network. FINRA and the SEC examine firms' AML programs, but they are not where the reports are filed.

📚 Learn it: Placement, Layering, Integration

Question 2 of 20

Which element is required in a broker-dealer's AML compliance program under FINRA Rule 3310?

  1. Daily account lists sent to FINRA
  2. Prior approval of each wire by FinCEN
  3. Ongoing training for appropriate staff
  4. A ban on all foreign customers
Show the answer and rationale

Answer: C

Rule 3310 requires written policies, independent testing, a designated AML compliance person, ongoing training and customer due diligence. It does not require FinCEN approval of wires, ban foreign customers or require daily filings.

📚 Learn it: Know Who You're Dealing With

Question 3 of 20

Under Rule 17a-4, which condition applies to the first two years of a record's retention period?

  1. The record must be stored only on paper, never electronically
  2. The record must be kept at the main office
  3. The record must be kept in an easily accessible place
  4. The record must be sent to FINRA at the end of each year
Show the answer and rationale

Answer: C

For the 3-year and 6-year categories, the first two years must be in an easily accessible place. Electronic storage is permitted, and there is no annual filing or main-office-only requirement in the rule.

📚 Learn it: Six, Three, and Forever

Question 4 of 20

A rep wants to throw a stack of old customer account forms into the office recycling bin. What does Regulation S-P require?

  1. Recycling is fine if the bin is indoors
  2. Sending the forms to FINRA to destroy
  3. Mailing the forms back to customers
  4. Proper disposal, such as shredding
Show the answer and rationale

Answer: D

S-P's disposal rule requires reasonable measures, such as shredding, to protect against unauthorized access when consumer information is thrown away. An indoor recycling bin does not protect it, and FINRA does not destroy firm records.

📚 Learn it: Reg S-P and Red Flags

Question 5 of 20

A firm's written market update goes only to pension plans, banks and insurance companies. How is it classified under Rule 2210?

  1. Retail communication
  2. An exempt research report
  3. Institutional communication
  4. Correspondence
Show the answer and rationale

Answer: C

A communication distributed only to institutional investors is an institutional communication. Correspondence and retail communications are defined by the number of retail investors reached, and nothing is exempt from supervision.

📚 Learn it: 25 in 30: Communications Rules

Question 6 of 20

Which call does NOT need to follow the 8 a.m. to 9 p.m. time-of-day restriction?

  1. A call to a broker-dealer
  2. A call to a prospect from a purchased list
  3. A call to a former customer from five years ago
  4. A call to a stranger's home
Show the answer and rationale

Answer: A

The time-of-day limit does not apply to calls to a broker or dealer, or to persons with an established business relationship or prior express permission. Strangers, purchased leads and a five-year-old former customer get full protection.

📚 Learn it: Cold Calls and Complaints

Question 7 of 20

Which sequence lists the three stages of money laundering in the order they usually occur?

  1. Placement, integration, layering
  2. Layering, placement, integration
  3. Integration, layering, placement
  4. Placement, layering, integration
Show the answer and rationale

Answer: D

Money is first placed into the financial system, then layered to hide its source, then integrated back as apparently clean funds. The other orders scramble the stages; integration is always last because it is the payoff.

📚 Learn it: Placement, Layering, Integration

Question 8 of 20

For a U.S. citizen opening an individual account, which identification number does CIP call for?

  1. A passport number
  2. A driver's license number
  3. A taxpayer ID number
  4. A bank account number
Show the answer and rationale

Answer: C

For U.S. persons the CIP identification number is a taxpayer identification number, usually a Social Security number. A passport or alien ID number is an option for non-U.S. persons. A license may verify identity but is not the required number.

📚 Learn it: Know Who You're Dealing With

Question 9 of 20

Which of these records must be kept for only three years rather than six?

  1. Customer account ledgers
  2. The firm's general ledger
  3. Order tickets (order memoranda)
  4. The firm's daily trade blotters
Show the answer and rationale

Answer: C

Order tickets are three-year records. Blotters, customer ledgers and the general ledger are the core six-year books under Rule 17a-4(a).

📚 Learn it: Six, Three, and Forever

Question 10 of 20

Which situation is most likely a red flag under a firm's identity theft program?

  1. A customer updates her beneficiary after marriage
  2. ID documents that appear altered or forged
  3. A customer adds money from a payroll deposit
  4. A customer asks about margin interest rates
Show the answer and rationale

Answer: B

Documents that look altered or forged are a textbook identity theft red flag. The other events are normal account activity with an obvious, legitimate reason.

📚 Learn it: Reg S-P and Red Flags

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Question 11 of 20

A rep sends a personalized letter about bond funds to 20 retail customers this month. How does Rule 2210 classify it?

  1. Correspondence
  2. Independently prepared reprint
  3. Retail communication
  4. Institutional communication
Show the answer and rationale

Answer: A

25 or fewer retail investors within 30 calendar days is correspondence, which is supervised and reviewed but does not need pre-approval. Over 25 would make it a retail communication.

📚 Learn it: 25 in 30: Communications Rules

Question 12 of 20

Under FINRA Rule 4513, how long must a firm keep its records of written customer complaints?

  1. Two years
  2. Six years
  3. Three years
  4. Four years
Show the answer and rationale

Answer: D

Customer complaint records are preserved for at least four years at each office of supervisory jurisdiction (or be promptly available there). Three and six years are SEC Rule 17a-4 periods for other records.

📚 Learn it: Cold Calls and Complaints

Question 13 of 20

Which activity would most clearly call for review as possible suspicious activity at a broker-dealer?

  1. Wires in and out the same week with almost no trading
  2. A young customer adding $200 a month to an index fund
  3. A retiree reinvesting dividends into the same fund
  4. A customer funding an account by check from her own bank
Show the answer and rationale

Answer: A

Money that arrives and leaves quickly with little or no investing has no apparent business purpose and is a classic layering red flag. The other patterns are ordinary investing and funding behavior.

📚 Learn it: Placement, Layering, Integration

Question 14 of 20

Two broker-dealers want to share information about a customer they both suspect of laundering money. Which provision allows this voluntary sharing?

  1. Regulation S-P opt-out
  2. Section 314(a)
  3. Section 326
  4. Section 314(b)
Show the answer and rationale

Answer: D

Section 314(b) lets financial institutions share information with each other about possible money laundering or terrorist financing, after notifying FinCEN. 314(a) is the government asking firms; 326 is CIP.

📚 Learn it: Know Who You're Dealing With

Question 15 of 20

What is a blotter?

  1. A log of written customer complaints
  2. A list of a firm's restricted persons
  3. A daily record of all purchases and sales
  4. The firm's audited financials
Show the answer and rationale

Answer: C

A blotter is the firm's daily original-entry record of trades, receipts and deliveries of securities and money. It is a six-year record. Complaint logs, restricted-person lists and audited statements are separate records.

📚 Learn it: Six, Three, and Forever

Question 16 of 20

What must a broker-dealer have under Regulation S-ID?

  1. A policy on email retention
  2. A list of opted-out customers
  3. A written identity theft prevention program
  4. A plan for business continuity
Show the answer and rationale

Answer: C

Regulation S-ID requires a written program to identify, detect and respond to identity theft red flags, updated periodically. Opt-out lists are Reg S-P, email retention is books and records, and continuity plans fall under FINRA Rule 4370.

📚 Learn it: Reg S-P and Red Flags

Question 17 of 20

For how long after joining FINRA must a new member file its retail communications used in public media with FINRA before first use?

  1. One year
  2. Three years
  3. Six months
  4. Two years
Show the answer and rationale

Answer: A

For one year from the effective date of membership, a new member files retail communications distributed through electronic or public media at least 10 business days before first use.

📚 Learn it: 25 in 30: Communications Rules

Question 18 of 20

Where must a firm's records of written customer complaints be kept or made promptly available?

  1. At FINRA's district office
  2. At each office of supervisory jurisdiction
  3. At the customer's home branch bank
  4. At the SEC regional office for that state
Show the answer and rationale

Answer: B

Rule 4513 requires complaint records at each office of supervisory jurisdiction, or elsewhere if they can be promptly produced at that office for FINRA. Regulators do not hold the firm's complaint files.

📚 Learn it: Cold Calls and Complaints

Question 19 of 20

On one business day a customer makes three cash deposits of $4,000 each at the same firm. How should the firm treat them for CTR purposes?

  1. A CTR only if the customer appears nervous
  2. No CTR unless the deposits occur over two days
  3. A CTR, since the day's total tops $10,000
  4. No CTR, since each deposit is under $10,000
Show the answer and rationale

Answer: C

Multiple cash transactions by or for the same person in one business day are added together. $12,000 in total is over $10,000, so a CTR is required. Each deposit being small does not matter, and the customer's demeanor is a SAR question, not a CTR one.

📚 Learn it: Placement, Layering, Integration

Question 20 of 20

How long must a firm keep the identifying information it collected under CIP?

  1. Five years after the account closes
  2. Three years after collection
  3. Six years after the first trade
  4. Until the next FINRA exam
Show the answer and rationale

Answer: A

CIP identifying information is kept for five years after the account is closed. Records of verification methods are kept five years after each record is made.

📚 Learn it: Know Who You're Dealing With

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