Examkin

Question

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

During an internal audit, a broker-dealer identifies two distinct transactions involving a newly opened customer account: first, a single physical currency deposit of $12,000; second, an attempted outgoing wire transfer to an individual listed on the OFAC Specially Designated Nationals and Blocked Persons (SDN) List. Which of the following compliance actions must the member firm take in response to these events? (Select all that apply)

  1. File a Currency Transaction Report (CTR) with FinCEN within 15 calendar days of the physical currency transactionAnswer
  2. Block the wire transfer immediately and submit a report to OFAC within 10 business daysAnswer
  3. C
    File a Suspicious Activity Report (SAR) within 15 calendar days based solely on the cash deposit exceeding $10,000
  4. D
    Notify the account holder in writing that a Suspicious Activity Report (SAR) is being prepared regarding the transactions

Answer

The firm must file a Currency Transaction Report (CTR) within 15 calendar days for the cash deposit exceeding $10,000 and block the SDN wire transfer while reporting it to OFAC within 10 business days.
Under anti-money laundering and sanctions compliance rules, receiving physical currency exceeding $10,000 obligates the firm to file a Currency Transaction Report (CTR) with FinCEN within 15 calendar days. Simultaneously, any transaction attempt associated with an entity listed on OFAC's Specially Designated Nationals (SDN) List requires the broker-dealer to immediately block the transaction and submit a formal report to OFAC within 10 business days.

Step-by-Step Solution

1
Analyze the cash deposit requirement under anti-money laundering regulations.
Physical currency transactions exceeding $10,000 in a single business day require a Currency Transaction Report (CTR) filed with FinCEN within 15 calendar days.
The Bank Secrecy Act establishes mandatory CTR reporting for currency transactions over $10,000.
2
Analyze the sanctions compliance requirement for the SDN wire transfer.
Transactions involving sanctioned entities on the OFAC SDN list must be blocked immediately, and a blocking report must be submitted to OFAC within 10 business days.
OFAC regulations mandate strict liability blocking and reporting for designated individuals and targeted countries.
3
Evaluate filing timelines and confidentiality restrictions to eliminate incorrect choices.
Disclosing a SAR filing is strictly illegal, and cash deposits over $10,000 mandate a CTR (15 days) rather than a 15-day SAR.
SAR confidentiality rules prohibit notifying subjects, and SARs have a standard 30-day filing window.

Key Concept

AML Reporting Thresholds, Timelines, and Sanctions Blocking Rules
Rate this question

Topics

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