Examkin

Question

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

A broker-dealer receives a single physical cash deposit of 15,000intoacustomer′stradingaccountonMonday.Thefollowingweek,thecompliancedepartmentdetectsaseriesofjournaltransferstotaling15,000 into a customer's trading account on Monday. The following week, the compliance department detects a series of journal transfers totaling 8,000 from the same account to an unrelated third-party entity, which the compliance principal determines has no reasonable business or lawful purpose. Under federal anti-money laundering (AML) regulations and FINRA rules, which statement correctly describes the firm's required reporting obligations?

  1. The firm must file a Currency Transaction Report (CTR) within 15 calendar days for the cash deposit and a Suspicious Activity Report (SAR) within 30 calendar days for the journal transfers.Answer
  2. B
    The firm must file a Suspicious Activity Report (SAR) within 15 calendar days for the cash deposit and a Currency Transaction Report (CTR) within 30 calendar days for the journal transfers.
  3. C
    The firm must file a Currency Transaction Report (CTR) for both transactions within 30 calendar days while immediately notifying the Securities and Exchange Commission.
  4. D
    The firm must file a Suspicious Activity Report (SAR) covering both transactions within 15 calendar days and notify the client in writing within 5 business days.

Answer

The firm must file a Currency Transaction Report (CTR) within 15 calendar days for the cash deposit and a Suspicious Activity Report (SAR) within 30 calendar days for the journal transfers.
The answer stating that the firm must file a CTR within 15 calendar days for the cash deposit and a SAR within 30 calendar days for the journal transfers is correct. Currency Transaction Reports (FinCEN Form 112) must be submitted within 15 calendar days whenever a single cash deposit exceeds 10,000inabusinessday.SuspiciousActivityReports(FinCENForm111)mustbesubmittedwithin30calendardaysofidentifyingsuspicioustransactionsof10,000 in a business day. Suspicious Activity Reports (FinCEN Form 111) must be submitted within 30 calendar days of identifying suspicious transactions of 5,000 or more with no legitimate economic purpose.

Step-by-Step Solution

1
Analyze the cash transaction requirement
The physical cash deposit of 15,000exceedsthe15,000 exceeds the 10,000 threshold for cash transactions in a single business day, requiring a Currency Transaction Report (CTR) filed with FinCEN within 15 calendar days.
Bank Secrecy Act (BSA) rules mandate reporting for cash/currency transactions exceeding $10,000.
2
Analyze the suspicious journal transfer requirement
The 8,000journaltransferlacksalawful/commercialpurposeandexceedsthe8,000 journal transfer lacks a lawful/commercial purpose and exceeds the 5,000 threshold for suspicious activity reporting, requiring a Suspicious Activity Report (SAR) filed with FinCEN within 30 calendar days.
FinCEN regulations mandate SAR filings for suspicious transactions totaling $5,000 or more once detected.
3
Verify disclosure and authority rules
Firms must maintain strict confidentiality and never inform the customer about SAR filings.
Tipping off a client regarding a SAR filing violates federal law.

Key Concept

AML Reporting Thresholds and Deadlines (CTR vs SAR)
Rate this question

Topics

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