SIE Exam Question 105: Answer and Explanation

Question: 105

Dividing a larger transaction into smaller transactions to avoid triggering a reporting or recordkeeping requirement is called ___________.

• A. Layering
• B. Fraud
• C. Structuring
• D. Laundering

Correct Answer: C

Explanation:

Dividing a larger transaction into smaller transactions to avoid triggering a reporting or recordkeeping requirement is called structuring or smurfing. Layering is the second step in money laundering in which the criminal conceals the source of their money by executing multiple transactions. Fraud is an umbrella term for criminal activity such as tax fraud, credit card fraud, or securities fraud. Money laundering is the process of taking money that was generated from illegal activity and making it appear that it was earned legitimately.