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Question

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

A registered representative observes a series of wire transfers totaling $7,500 originating from a customer's account over a three-day period to an offshore entity. The transactions lack any apparent business purpose, and the customer refuses to provide legitimate justification when queried. Under Financial Crimes Enforcement Network (FinCEN) regulations and Anti-Money Laundering (AML) rules, which of the following actions is the broker-dealer required to take?

  1. File a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days of detecting the activity.Answer
  2. B
    File a Currency Transaction Report (CTR) with FinCEN within 15 calendar days of the initial wire transfer.
  3. C
    File a Suspicious Activity Report (SAR) only if the aggregate wire transfer amount reaches the $10,000 reporting threshold.
  4. D
    Take no regulatory reporting action because wire transfers are exempt from Anti-Money Laundering reporting requirements.

Answer

The broker-dealer must file a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days of detecting the activity.
Under FinCEN regulations, broker-dealers must file a Suspicious Activity Report (SAR) for any transaction conducted or attempted through a broker-dealer that involves or aggregates at least $5,000 in funds and has no business or apparent lawful purpose. The firm must submit the SAR within 30 calendar days of initial detection of the suspicious activity.

Step-by-Step Solution

1
Analyze the nature of the transaction and determine the appropriate reporting framework.
The activity involves wire transfers totaling $7,500 that lack a clear business rationale, triggering Suspicious Activity Report (SAR) requirements.
Broker-dealers must monitor customer accounts for suspicious activity that may involve illegal funds or lack reasonable business logic.
2
Evaluate the monetary threshold and filing timeline for a Suspicious Activity Report (SAR).
The total amount (7,500)meetsorexceedsthemandatory7,500) meets or exceeds the mandatory 5,000 threshold for broker-dealers, requiring a filing within 30 calendar days.
FinCEN rules mandate that broker-dealers file a SAR within 30 calendar days of initial detection for suspicious transactions of $5,000 or more.

Key Concept

Suspicious Activity Report (SAR) thresholds and filing deadlines for broker-dealers under AML regulations.
Estimated Time:1m 15s
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Topics

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