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Question

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

A compliance officer at a broker-dealer firm is reviewing the firm's written Anti-Money Laundering (AML) and Customer Identification Program (CIP) compliance procedures. Which of the following statements correctly state regulatory obligations under FINRA rules and federal AML statutes?

  1. Suspicious Activity Reports (SARs) must be filed with FinCEN within 30 calendar days for suspicious transactions involving $5,000 or more.Answer
  2. Records of information used to verify a customer's identity under CIP must be retained for five years after the account is closed.Answer
  3. C
    Currency Transaction Reports (CTRs) must be filed whenever a customer executes cash transactions exceeding $5,000 in a single business day.
  4. D
    The firm must send written notification to a customer within 10 business days after filing a Suspicious Activity Report regarding their account.

Answer

The correct requirements state that Suspicious Activity Reports (SARs) must be filed within 30 calendar days for suspicious transactions involving $5,000 or more, and Customer Identification Program (CIP) identity verification records must be retained for five years after account closure.
The statements identifying the SAR filing deadline (within 30 calendar days for $5,000 or more) and the CIP record retention rule (5 years after account closure) accurately represent federal AML regulations and FINRA compliance requirements.

Step-by-Step Solution

1
Evaluate the SAR threshold and timeline requirement.
FinCEN rules mandate SAR filings for suspicious transactions of $5,000 or more within 30 calendar days.
This establishes standard reporting rules for suspicious activity detection under AML regulations.
2
Evaluate CIP recordkeeping requirements.
CIP guidelines require identity verification records to be maintained for 5 years post-account closure.
This maintains audit trails for regulatory compliance and law enforcement investigations.
3
Analyze CTR and confidentiality misconceptions in remaining statements.
CTRs require cash transactions exceeding 10,000(not10,000 (not 5,000), and notifying customers of SAR filings is strictly prohibited.
Differentiates CTR cash thresholds from SAR suspicious transaction thresholds and confirms SAR non-disclosure rules.

Key Concept

Anti-Money Laundering (AML) Reporting Thresholds, CIP Record Retention, and SAR Confidentiality
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Topics

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