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Question

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

A registered representative suspects that a client is executing trades to obscure the origin of illicit funds. Under federal Anti-Money Laundering (AML) regulations and FinCEN rules, what is the minimum transaction dollar threshold that requires a broker-dealer to file a Suspicious Activity Report (SAR)?

  1. $5,000Answer
  2. B
    $10,000
  3. C
    $3,000
  4. D
    $25,000

Answer

$5,000 is the minimum threshold requiring a broker-dealer to file a Suspicious Activity Report (SAR).
Under the Bank Secrecy Act and FinCEN regulations, broker-dealers must file a Suspicious Activity Report (SAR) for any transaction involving or aggregating to $5,000 or more if the firm knows, suspects, or has reason to suspect that the transaction involves funds derived from illegal activity, is designed to evade AML laws, or serves no apparent lawful purpose.

Step-by-Step Solution

1
Identify the regulatory report requested in the scenario.
The scenario concerns suspicious transactions involving potential money laundering, requiring a Suspicious Activity Report (SAR).
Different reports (SAR vs. CTR) carry distinct monetary thresholds and filing requirements.
2
Recall the monetary threshold for filing a SAR under FinCEN and FINRA guidelines.
The mandatory reporting threshold for a SAR by a broker-dealer is $5,000 in funds or assets.
Transactions conducted or attempted by, at, or through a broker-dealer involving at least $5,000 that raise suspicion of illicit activity trigger a mandatory SAR filing within 30 calendar days.

Key Concept

Anti-Money Laundering (AML) Reporting Thresholds: SAR vs. CTR
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Topics

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