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

An established individual account holder deposits 5,500inphysicalcurrencywithabranchrepresentativeonThursdaymorning.Laterthatsameafternoon,thecustomerreturnstothebranchanddepositsanadditional5,500 in physical currency with a branch representative on Thursday morning. Later that same afternoon, the customer returns to the branch and deposits an additional 5,500 in physical currency with a different representative, specifically inquiring whether either transaction triggers federal reporting. Under FinCEN rules implemented under the Bank Secrecy Act, which compliance reporting obligations apply to the member broker-dealer for these transactions?

  1. The firm must file both a Currency Transaction Report (CTR) within 15 calendar days and a Suspicious Activity Report (SAR) within 30 calendar days.Answer
  2. B
    The firm must file only a Currency Transaction Report (CTR) within 15 calendar days, because SAR filings are restricted to non-cash wire transactions.
  3. C
    The firm must file only a Suspicious Activity Report (SAR) within 30 calendar days, because structured cash deposits are exempt from Currency Transaction Reporting obligations.
  4. D
    The firm must file a Currency Transaction Report (CTR) within 30 calendar days and formally notify the account holder of the submission.

Answer

The firm must file both a Currency Transaction Report (CTR) within 15 calendar days and a Suspicious Activity Report (SAR) within 30 calendar days.
Under FinCEN regulations under the Bank Secrecy Act, broker-dealers must aggregate all physical currency deposits made by a customer on a single business day. Because the total deposit of 11,000exceedsthe11,000 exceeds the 10,000 currency reporting threshold, the firm must file a Currency Transaction Report (CTR) within 15 calendar days. Simultaneously, attempting to split cash deposits to stay under the 10,000thresholdconstitutesillegalstructuring.Becausestructuringrepresentssuspiciousactivityexceeding10,000 threshold constitutes illegal structuring. Because structuring represents suspicious activity exceeding 5,000, the firm must also file a Suspicious Activity Report (SAR) within 30 calendar days.

Step-by-Step Solution

1
Calculate the aggregate physical currency received in a single business day.
The total physical cash deposited is 5,500+5,500 + 5,500 = $11,000.
FinCEN regulations require aggregating all physical cash transactions conducted by or on behalf of the same person within one business day.
2
Evaluate Currency Transaction Report (CTR) requirements and filing deadlines.
Because the total physical currency exceeds $10,000 in a single business day, a CTR must be filed with FinCEN within 15 calendar days.
The Bank Secrecy Act mandates CTR filings for cash transactions exceeding $10,000 within 15 calendar days.
3
Evaluate Suspicious Activity Report (SAR) requirements based on customer conduct.
Splitting deposits into two separate transactions under $10,000 on the same day and asking about reporting thresholds indicates structuring, requiring a SAR within 30 calendar days.
Structuring cash transactions to avoid federal reporting constitutes illegal activity that triggers a mandatory SAR filing for transactions of $5,000 or more within 30 calendar days.

Key Concept

Dual AML Filing Obligations for Cash Structuring (CTR vs SAR)
Estimated Time:2m 0s
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Topics

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