A registered representative observes a retail customer depositing 6,000 in currency at a b… — FINRA SIE (Securities Industry Essentials)

A registered representative observes a retail customer depositing $6,000 in currency at a branch location in the morning and another$ 5,000 in currency at a separate branch of the same broker-dealer later that afternoon. The representative suspects the customer is intentionally structuring cash deposits to evade reporting requirements. Under Federal Anti-Money Laundering (AML) regulations, which of the following actions must the broker-dealer take regarding regulatory reporting for these transactions?

File a Currency Transaction Report (CTR) within 15 calendar days for aggregate cash exceeding $10,000, and file a Suspicious Activity Report (SAR) within 30 calendar days for suspected structuring.Answer
B
File a Currency Transaction Report (CTR) within 30 calendar days, but refrain from filing a Suspicious Activity Report (SAR) because neither individual branch deposit exceeded $10,000.
C
File a Suspicious Activity Report (SAR) within 15 calendar days only, as SAR rules supersede CTR requirements whenever suspicious structuring is identified.
D
Notify the customer in writing regarding the filing of a Suspicious Activity Report (SAR) to allow them an opportunity to clarify the business rationale for the separate deposits.

Answer

The broker-dealer must file a Currency Transaction Report (CTR) within 15 calendar days because aggregate daily cash deposits exceed $10,000, and also file a Suspicious Activity Report (SAR) within 30 calendar days due to suspected structuring.

Under Bank Secrecy Act rules, broker-dealers must aggregate cash deposits made by a customer across all branch locations within a single business day. Because the aggregated cash amount (

11,000) exceeds

10,000, the firm must file a Currency Transaction Report (CTR) within 15 calendar days. Additionally, because the customer appears to be intentionally structuring deposits into amounts below

10,000 to evade CTR reporting, the firm must file a Suspicious Activity Report (SAR) within 30 calendar days of detection for suspicious transactions totaling

5,000 or more.

Step-by-Step Solution

Evaluate the Currency Transaction Report (CTR) filing requirement based on aggregate cash volume.

The total currency deposited across branches in a single business day is

6,000 +

5,000 =

11,000. Because cash deposits across all branches of the same firm are aggregated and exceed

10,000, a CTR must be filed with FinCEN within 15 calendar days of the transaction.

Bank Secrecy Act (BSA) rules require financial institutions to aggregate currency transactions conducted by or on behalf of the same person within a single business day.

Evaluate the Suspicious Activity Report (SAR) filing requirement based on suspicious behavior.

Splitting cash deposits across multiple branches to keep individual amounts under

10,000 is a primary indicator of structuring. Because the activity involves at least

5,000 and appears intended to evade BSA reporting, a SAR must be filed within 30 calendar days of initial detection.

Broker-dealers are required to report suspicious transactions involving $5,000 or more where the firm suspects the customer is attempting to evade reporting thresholds.

Determine confidentiality restrictions regarding SAR filings.

The broker-dealer must maintain strict confidentiality and cannot inform the customer or any outside party that a SAR has been filed.

Federal regulations strictly prohibit notifying any person involved in the transaction that the transaction has been reported on a SAR.

Key Concept

Currency Transaction Report (CTR) vs. Suspicious Activity Report (SAR) thresholds, deadlines, and aggregation rules.

Question

Answer

Step-by-Step Solution

Key Concept

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