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Question

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

Match each Anti-Money Laundering (AML), KYC, or sanctions compliance component on the left with its corresponding regulatory requirement or filing timeline on the right.

  • Customer Identification Program (CIP)Requires verifying four baseline identifiers (name, date of birth, physical address, and TIN/SSN) before or within a reasonable time after account opening.
  • FinCEN Customer Due Diligence (CDD) RuleMandates identifying beneficial owners holding a 25% or greater equity interest in legal entity accounts.
  • Suspicious Activity Report (SAR)Must be filed within 30 calendar days for suspicious transactions involving $5,000 or more.
  • OFAC Specially Designated Nationals (SDN) ListRequires immediate blocking of transaction assets and reporting to the U.S. Department of the Treasury within 10 business days.

Answer

Customer Identification Program (CIP) matches with verifying the four baseline customer identifiers; FinCEN Customer Due Diligence (CDD) Rule matches with identifying 25% equity beneficial owners; Suspicious Activity Report (SAR) matches with filing within 30 calendar days for suspicious activity of $5,000 or more; OFAC SDN List matches with immediate asset blocking and reporting within 10 business days.
Each AML/KYC component is correctly mapped to its governing legal standard: CIP mandates verifying four key identity metrics; CDD focuses on 25% beneficial ownership of corporate accounts; SAR requires filing within 30 calendar days for suspicious transactions of $5,000+; and OFAC SDN requires immediate blocking of funds along with reporting within 10 business days.

Step-by-Step Solution

1
Review the core verification requirements established under the Customer Identification Program (CIP).
CIP requires broker-dealers to collect and verify basic identifying details (name, DOB, physical address, TIN/SSN) within a reasonable timeframe.
This establishes essential identity confirmation at or near account opening.
2
Evaluate the regulatory ownership threshold defined by FinCEN's CDD rule for legal entity customers.
The CDD rule establishes an equity ownership threshold of 25% or more for identifying beneficial owners.
This rule prevents bad actors from disguising illicit funds behind corporate entities.
3
Analyze monetary thresholds and filing calendar days for Suspicious Activity Reports (SARs).
A SAR is triggered by suspicious transactions involving $5,000 or more and must be filed within 30 calendar days.
This regulatory threshold distinguishes SAR obligations from cash-specific CTR requirements.
4
Determine mandatory protocol when a customer or transaction matches the OFAC SDN sanctions list.
Transactions involving SDN entities must be blocked immediately and reported to OFAC within 10 business days.
U.S. sanctions law strictly prohibits executing transactions for blocked persons or foreign targets.

Key Concept

AML, KYC, and Sanctions Compliance Frameworks
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Topics

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