Examkin

Question

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

Match each Anti-Money Laundering (AML) or sanctions compliance mechanism on the left with its corresponding regulatory requirement or trigger on the right.

  • Currency Transaction Report (CTR)Mandatory report for physical currency deposits or withdrawals exceeding $10,000 in a single business day
  • Suspicious Activity Report (SAR)Confidential report for transactions of $5,000 or more involving suspected illegal activity, filed within 30 calendar days
  • Customer Identification Program (CIP)Requirement to collect and verify customer name, date of birth, physical address, and tax ID at account opening
  • OFAC Specially Designated Nationals (SDN) ListSanctions compliance registry requiring immediate blocking or freezing of account assets upon an identity match

Answer

The correct pairings connect each compliance tool with its specific regulatory rule: Currency Transaction Report (CTR) pairs with currency transactions exceeding 10,000;SuspiciousActivityReport(SAR)pairswithsuspicioustransactionsof10,000; Suspicious Activity Report (SAR) pairs with suspicious transactions of 5,000 or more filed within 30 calendar days; Customer Identification Program (CIP) pairs with verifying customer identifying data (name, DOB, address, TIN); and the OFAC SDN List pairs with freezing assets of designated sanctioned entities.
Each AML and sanctions mechanism fulfills a precise regulatory purpose: CTRs monitor cash movements above 10,000;SARsreportsuspiciouspatternsstartingat10,000; SARs report suspicious patterns starting at 5,000; CIP enforces identity verification at account setup; and OFAC SDN screening mandates asset blocking for prohibited entities.

Step-by-Step Solution

1
Identify the threshold for cash transaction reporting.
Currency Transaction Reports (FinCEN Form 112) specifically apply to physical currency transactions greater than $10,000 in a single business day.
Federal law requires monitoring large physical cash flows to prevent illicit funds from entering the financial system.
2
Identify the threshold and timeline for suspicious activity reporting.
Suspicious Activity Reports apply to suspicious transactions involving $5,000 or more and must be filed confidentially within 30 calendar days.
Broker-dealers must proactively detect and report transactions that appear to lack commercial purpose or evade regulatory oversight.
3
Determine identity verification requirements under Know Your Customer (KYC) guidelines.
Customer Identification Programs (CIP) mandate obtaining and verifying baseline identity details (name, DOB, physical address, SSN/TIN) for prospective account holders.
Prevents financial institutions from unwittingly opening accounts for anonymous or fictitious individuals.
4
Identify sanctions enforcement measures under OFAC.
Screening against the OFAC Specially Designated Nationals (SDN) list requires immediate blocking and freezing of target accounts/assets upon a match.
U.S. sanctions policy prohibits broker-dealers from facilitating financial commerce with foreign enemies, terrorists, and designated narcotics traffickers.

Key Concept

Anti-Money Laundering (AML), Customer Identification Program (CIP), and Sanctions Compliance Thresholds
Estimated Time:1m 15s
Rate this question

Topics

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