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

A customer opens a new brokerage account at a member firm and completes two physical cash deposits on the same business day at different branch offices: one for 6,500inthemorningandanotherfor6,500 in the morning and another for 4,800 in the afternoon. The customer specifically asks the branch clerk if either deposit will trigger federal tax or government reporting. Recognizing potential structuring, the registered representative reports the events to the firm's Anti-Money Laundering (AML) compliance officer. Under federal Bank Secrecy Act (BSA) regulations and FINRA rules, which of the following correctly identifies the mandatory reporting obligations for the broker-dealer?

  1. The broker-dealer must file a Currency Transaction Report (CTR) within 15 calendar days due to aggregate daily cash exceeding $10,000, and file a Suspicious Activity Report (SAR) within 30 calendar days for potential structuring.Answer
  2. B
    The broker-dealer must file a Suspicious Activity Report (SAR) within 15 calendar days because the total cash exceeds 10,000,butnoCurrencyTransactionReport(CTR)isrequiredbecauseneithersingledepositexceeded10,000, but no Currency Transaction Report (CTR) is required because neither single deposit exceeded 10,000.
  3. C
    The broker-dealer must file a Currency Transaction Report (CTR) within 30 calendar days, but is prohibited from filing a Suspicious Activity Report (SAR) unless the individual deposits each exceeded $5,000.
  4. D
    The broker-dealer must file a Suspicious Activity Report (SAR) within 15 calendar days for cash structuring, while the Currency Transaction Report (CTR) requirement is optional since the funds were deposited at separate branch locations.

Answer

The broker-dealer must file a Currency Transaction Report (CTR) within 15 calendar days due to aggregate daily cash exceeding $10,000, and file a Suspicious Activity Report (SAR) within 30 calendar days for potential structuring.
Under the Bank Secrecy Act (BSA), broker-dealers must aggregate all currency deposits made by or on behalf of a single customer within a single business day. Because the combined cash deposit of 11,300exceedsthe11,300 exceeds the 10,000 threshold, a Currency Transaction Report (CTR) must be filed with FinCEN within 15 calendar days. Additionally, attempts to structure cash deposits to evade reporting thresholds constitute suspicious activity; because the total amount involved exceeds $5,000, a Suspicious Activity Report (SAR) must be filed within 30 calendar days of detection.

Step-by-Step Solution

1
Evaluate Currency Transaction Report (CTR) requirements.
The customer deposited 6,500+6,500 + 4,800 = $11,300 in physical cash in a single business day across branches of the same firm.
The Bank Secrecy Act requires financial institutions to aggregate all currency deposits made by or on behalf of a single customer in one business day. Because 11,300>11,300 > 10,000, a CTR must be filed with FinCEN within 15 calendar days.
2
Evaluate Suspicious Activity Report (SAR) requirements.
The customer made multiple deposits below the threshold and inquired about reporting triggers, indicating potential structuring.
Structuring to evade currency reporting laws is illegal. Under FinCEN regulations, broker-dealers must file a SAR for suspicious transactions conducted or attempted through the firm involving $5,000 or more within 30 calendar days of initial detection.
3
Synthesize the correct reporting mandates and timelines.
Both a CTR (15 days) and a SAR (30 days) are required.
CTR and SAR mandates operate independently; when activity meets both criteria, both reports must be filed under their respective regulatory deadlines.

Key Concept

AML Reporting Thresholds and Deadlines (CTR vs. SAR)
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Topics

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