Examkin

Question

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

A registered representative receives an instruction from a client to process an wire transfer of $8,500 to an offshore shell company. The client insists that the representative omit the originator's identifying information from the transaction records and provides contradictory reasons for the transfer. The representative suspects potential money laundering. In accordance with Bank Secrecy Act (BSA) and FINRA regulations, which reporting action must the member firm take?

  1. File a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days, as the transaction involves at least $5,000 in suspicious funds.Answer
  2. B
    File a Currency Transaction Report (CTR) with FinCEN within 15 calendar days, because all suspicious transfers exceeding $5,000 mandate CTR reporting.
  3. C
    File a Currency Transaction Report (CTR) within 30 calendar days, as non-cash suspicious transfers between 5,000and5,000 and 10,000 require CTR filing.
  4. D
    File both a Currency Transaction Report (CTR) and a Suspicious Activity Report (SAR) within 15 calendar days, because suspicious international transfers trigger dual reporting.

Answer

The firm must file a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days of detecting the suspicious activity, because the transaction equals or exceeds $5,000.
Under FINRA rules and the Bank Secrecy Act (BSA), a Suspicious Activity Report (SAR) must be filed with the Financial Crimes Enforcement Network (FinCEN) when a broker-dealer detects a suspicious transaction involving $5,000 or more in client funds. The filing deadline is 30 calendar days from the date the suspicious activity is identified. Wire transfers without physical currency do not trigger CTR requirements.

Step-by-Step Solution

1
Analyze the nature of the transaction
The transaction is a non-cash wire transfer of $8,500 suspected of involving money laundering.
Determining whether physical cash or a negotiable/wire instrument is involved dictates whether CTR or SAR regulations apply.
2
Evaluate Currency Transaction Report (CTR) applicability
A CTR is not required because no physical cash exceeding $10,000 was deposited or withdrawn.
Under the Bank Secrecy Act, CTRs apply only to physical currency transactions greater than $10,000 in a single business day.
3
Evaluate Suspicious Activity Report (SAR) applicability and filing deadline
A SAR is required and must be filed within 30 calendar days of discovery.
Broker-dealers must file a SAR for suspicious transactions involving $5,000 or more within 30 calendar days.

Key Concept

Anti-Money Laundering (AML) Reporting Thresholds (SAR vs. CTR)
Rate this question

Topics

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