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

A retail client makes two physical currency deposits of 6,000eachonconsecutivebusinessdaysintotheirbrokerageaccount.Theclientoffersnobusinessjustificationfordepositingcashandimmediatelyrequestsanoutgoingwiretransferoftheentire6,000 each on consecutive business days into their brokerage account. The client offers no business justification for depositing cash and immediately requests an outgoing wire transfer of the entire 12,000 balance to an unrelated third party. Under anti-money laundering (AML) regulations, which reporting obligation applies to this activity?

  1. A Suspicious Activity Report (SAR) must be filed within 30 calendar days because the activity involves suspected structuring exceeding 5,000,whilenoCurrencyTransactionReport(CTR)isrequiredbecausecashdepositsdidnotexceed5,000, while no Currency Transaction Report (CTR) is required because cash deposits did not exceed 10,000 in a single business day.Answer
  2. B
    A Currency Transaction Report (CTR) must be filed within 15 calendar days because total cash deposits across consecutive days exceeded $10,000, but no Suspicious Activity Report (SAR) is required.
  3. C
    Both a Currency Transaction Report (CTR) and a Suspicious Activity Report (SAR) must be filed within 15 calendar days because the cash deposits exceeded $5,000.
  4. D
    No regulatory report is required because neither individual transaction exceeded the $10,000 threshold required for mandatory broker-dealer disclosure.

Answer

A Suspicious Activity Report (SAR) must be filed within 30 calendar days because the activity involves suspected structuring exceeding 5,000,whilenoCurrencyTransactionReport(CTR)isrequiredbecausecashdepositsdidnotexceed5,000, while no Currency Transaction Report (CTR) is required because cash deposits did not exceed 10,000 in a single business day.
Under the Bank Secrecy Act and FINRA rules, a Currency Transaction Report (CTR) is triggered only when a customer deposits or withdraws more than 10,000inphysicalcurrencyinasinglebusinessday.Sincetheclientdeposited10,000 in physical currency in a single business day. Since the client deposited 6,000 on separate business days, no CTR trigger was met. However, depositing cash in smaller increments to evade CTR reporting (structuring) without economic rationale constitutes suspicious behavior. Broker-dealers are required to file a Suspicious Activity Report (SAR) for suspicious transactions involving $5,000 or more within 30 calendar days of detection.

Step-by-Step Solution

1
Evaluate Currency Transaction Report (CTR) applicability.
No CTR is required.
CTRs apply to physical cash transactions exceeding 10,000executedinasinglebusinessday.Eachdepositwas10,000 executed in a single business day. Each deposit was 6,000 on separate days.
2
Evaluate Suspicious Activity Report (SAR) applicability.
A SAR is required.
The pattern of splitting cash deposits below 10,000combinedwithimmediatewiringtoathirdpartysuggestsstructuringandsuspiciousactivityexceedingthe10,000 combined with immediate wiring to a third party suggests structuring and suspicious activity exceeding the 5,000 SAR threshold.
3
Determine the regulatory filing deadline for the SAR.
30 calendar days.
FinCEN and FINRA regulations mandate that a SAR must be filed by the firm within 30 calendar days of initial detection.

Key Concept

AML Reporting Thresholds: CTR (10,000+single−daycash/15days)vsSAR(10,000+ single-day cash / 15 days) vs SAR ( 5,000+ suspicious activity / 30 days)
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Topics

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