Examkin

Question

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

A compliance analyst at a member firm conducts a post-trade surveillance review on a corporate brokerage account. The analyst notes several complex transactions, including outbound wire transfers totaling $45,000 sent to a foreign shell company without a clear business purpose, as well as a confirmed match against the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list for one of the account's ultimate beneficial owners. Based on federal Anti-Money Laundering (AML) and sanctions compliance regulations, which of the following compliance actions are mandatory for the member firm?

  1. File a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days of initial detection while keeping the filing strictly confidential from the customer.Answer
  2. B
    File a Currency Transaction Report (CTR) with the Securities and Exchange Commission (SEC) within 15 calendar days for the wire transfers exceeding $10,000.
  3. Immediately block the SDN-linked assets and submit a blocked property report to OFAC within 10 business days.Answer
  4. D
    Notify the account owner in writing within 5 business days that a Suspicious Activity Report is being processed regarding their transfer history.

Answer

The firm is required to file a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days without disclosing the filing to the customer, and immediately block all assets associated with the OFAC SDN list match while submitting a report to OFAC within 10 business days.
Under FinCEN regulations, broker-dealers must file a SAR for any suspicious transaction involving $5,000 or more within 30 calendar days of initial detection, maintaining strict confidentiality so that the customer is never notified. In addition, U.S. sanctions regulations require firms to immediately block transactions or accounts associated with individuals listed on the OFAC SDN list and file a report with OFAC within 10 business days.

Step-by-Step Solution

1
Evaluate the wire transfer activity against SAR filing rules.
Identified suspicious activity involving 5,000ormore(5,000 or more ( 45,000 wire transfer without business purpose), which triggers a SAR filing with FinCEN within 30 calendar days.
Broker-dealers are required under the Bank Secrecy Act to report suspicious transactions meeting or exceeding the $5,000 monetary threshold.
2
Assess SAR confidentiality requirements.
The firm must maintain absolute confidentiality and never inform the customer or any third party about a SAR filing.
Tipping off suspects about SAR filings compromises law enforcement investigations and violates federal law.
3
Differentiate wire transfers from CTR requirements.
Confirm that wire transfers do not trigger a Currency Transaction Report (CTR).
CTRs apply only to physical currency/cash transactions over $10,000 in a single business day and are submitted to FinCEN, not the SEC.
4
Evaluate compliance obligations for the confirmed OFAC SDN match.
Immediately block/freeze the account assets and report the blocked property to OFAC within 10 business days.
OFAC regulations strictly mandate blocking property of targeted foreign individuals and entities immediately upon confirmation.

Key Concept

Anti-Money Laundering (AML) Reporting Thresholds, SAR Confidentiality, and OFAC Sanctions Enforcement
Estimated Time:2m 0s
Rate this question

Topics

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