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Question

Difficulty: HardAnti-Money Laundering (AML), KYC, and Sanctions Compliance

A client delivers $12,500 in physical currency to a broker-dealer to fund a new account and explicitly requests that the representative record the deposit as three separate smaller entries to avoid federal oversight. Which of the following statements correctly describes the member firm's required reporting obligations under Anti-Money Laundering (AML) regulations?

  1. The firm must file a Currency Transaction Report (CTR) within 15 calendar days and a Suspicious Activity Report (SAR) within 30 calendar days.Answer
  2. B
    The firm is required to file only a Suspicious Activity Report (SAR) within 15 calendar days, because SAR filings supersede CTR requirements whenever illegal structuring is involved.
  3. C
    The firm must file a Currency Transaction Report (CTR) within 30 calendar days, but is exempt from filing a SAR because the amount involved is below the $50,000 threshold for suspicious cash transactions.
  4. D
    The firm must file a Suspicious Activity Report (SAR) within 30 calendar days, but no CTR is required because the client requested the cash to be divided into transactions under $10,000.

Answer

The firm must file a Currency Transaction Report (CTR) within 15 calendar days and a Suspicious Activity Report (SAR) within 30 calendar days.
Under the Bank Secrecy Act and FINRA rules, a Currency Transaction Report (CTR) must be filed within 15 calendar days for any currency transaction exceeding 10,000inasinglebusinessday.Inaddition,whenacustomerattemptsstructuring(dividingcurrencytransactionstoavoidreporting),itconstitutessuspiciousbehaviorinvolvingmorethan10,000 in a single business day. In addition, when a customer attempts structuring (dividing currency transactions to avoid reporting), it constitutes suspicious behavior involving more than 5,000, requiring a Suspicious Activity Report (SAR) to be filed within 30 calendar days. Both reports are required independently.

Step-by-Step Solution

1
Evaluate Currency Transaction Report (CTR) requirements
Because physical currency deposit (12,500)exceeds12,500) exceeds 10,000 in a single business day, a CTR must be filed with FinCEN within 15 calendar days.
FinCEN rules mandate CTR filing for currency transactions exceeding $10,000 in one business day.
2
Evaluate Suspicious Activity Report (SAR) requirements
Because the client attempted structuring (evading reporting threshold) on a transaction involving at least $5,000, a SAR must be filed within 30 calendar days.
Broker-dealers must report suspicious activity involving $5,000 or more within 30 calendar days of initial detection.
3
Determine dual-filing obligation
Both reports (CTR and SAR) are independently mandatory; filing one does not relieve the firm of filing the other.
CTR and SAR fulfill distinct regulatory purposes under the Bank Secrecy Act and Anti-Money Laundering regulations.

Key Concept

Anti-Money Laundering (AML) Reporting Thresholds and Timelines (CTR vs. SAR)
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Topics

Anti-Money Laundering (AML), KYC, and Sanctions Compliance