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

A chief compliance officer at a member broker-dealer is conducting an internal audit of the firm's regulatory filing procedures and Customer Identification Program (CIP) policies under federal Anti-Money Laundering (AML) laws. Which of the following statements regarding mandatory reporting thresholds, filing timelines, and recordkeeping obligations under FinCEN and FINRA rules are correct? (Select ALL that apply.)

  1. A Suspicious Activity Report (SAR) must be filed with FinCEN within 30 calendar days after the initial detection of suspicious transactions involving $5,000 or more in funds or assets.Answer
  2. A Currency Transaction Report (CTR) must be filed with FinCEN within 15 calendar days for physical cash deposits or withdrawals from a single customer exceeding $10,000 in a single business day.Answer
  3. C
    A broker-dealer must file a Currency Transaction Report (CTR) within 30 calendar days whenever a customer initiates non-cash wire transfers totaling $5,000 or more that lack a apparent business purpose.
  4. Records of all customer identity verification documents collected under the firm's Customer Identification Program (CIP) must be retained for at least five years after the account is closed.Answer

Answer

The correct statements are those establishing that: 1) SARs must be filed within 30 calendar days for suspicious transactions involving 5,000ormore;2)CTRsmustbefiledwithin15calendardaysforphysicalcashtransactionsexceeding5,000 or more; 2) CTRs must be filed within 15 calendar days for physical cash transactions exceeding 10,000 in a single business day; and 3) CIP identification records must be retained for at least five years after account closure.
The statements establishing the SAR requirements (5,000threshold,30−daytimeline),CTRrequirements(5,000 threshold, 30-day timeline), CTR requirements ( 10,000 cash threshold, 15-day timeline), and CIP record retention requirements (5 years after account closure) accurately reflect federal AML regulations and FINRA rules. Suspicious activity involving 5,000ormorerequiresaSARwithin30days.Physicalcurrencytransactionsexceeding5,000 or more requires a SAR within 30 days. Physical currency transactions exceeding 10,000 in a business day require a CTR within 15 days. CIP identity records must be kept for 5 years after account termination.

Step-by-Step Solution

1
Analyze the SAR reporting threshold and timeline requirements for broker-dealers.
Broker-dealers are required under FinCEN rules to file a Suspicious Activity Report (SAR) within 30 calendar days of detecting suspicious activity involving $5,000 or more in assets.
This establishes the mandatory threshold ($5,000) and calendar timeframe (30 days) for SAR filings.
2
Analyze the CTR reporting trigger, monetary threshold, and filing timeline under the Bank Secrecy Act.
Currency Transaction Reports (CTRs) must be filed with FinCEN within 15 calendar days when a customer conducts physical cash/currency transactions exceeding $10,000 in a single business day.
CTRs strictly govern physical cash (currency) transactions over $10,000, not non-cash wire transfers.
3
Evaluate the record retention requirements for Customer Identification Program (CIP) verification data.
Under federal CIP rules, broker-dealers must retain customer identity verification records for five years following the date the account is closed.
This ensures compliance records remain accessible for regulatory audit purposes post-account termination.

Key Concept

Anti-Money Laundering (AML) Reporting Thresholds, Timelines, and CIP Recordkeeping Obligations
Estimated Time:2m 0s
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Topics

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