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

A client makes an in-person cash deposit of $12,500 into a brokerage account and explicitly asks the representative to avoid generating any government filings. The representative suspects the client may be attempting to evade tax reporting. Under federal Anti-Money Laundering (AML) regulations and FINRA rules, what are the firm's reporting obligations?

  1. File a Currency Transaction Report (CTR) within 15 calendar days and a Suspicious Activity Report (SAR) within 30 calendar days.Answer
  2. B
    File only a Suspicious Activity Report (SAR) within 15 calendar days, because suspicious activity reports replace Currency Transaction Reports.
  3. C
    File only a Currency Transaction Report (CTR) within 30 calendar days, because cash deposits over $10,000 do not require suspicious activity monitoring.
  4. D
    File a Currency Transaction Report (CTR) within 30 calendar days and a Suspicious Activity Report (SAR) within 15 calendar days.

Answer

The broker-dealer must file a Currency Transaction Report (CTR) within 15 calendar days for the cash deposit exceeding $10,000, and a Suspicious Activity Report (SAR) within 30 calendar days for the client's suspicious request.
Because the transaction involves a cash deposit exceeding $10,000 in a single day, federal law requires a Currency Transaction Report (CTR) to be filed within 15 calendar days. Additionally, because the client requested to avoid government filings (a classic AML red flag), the firm must file a Suspicious Activity Report (SAR) within 30 calendar days of initial detection. Both filings are required independently.

Step-by-Step Solution

1
Evaluate currency transaction threshold requirements
Since the single-day physical cash deposit is 12,500(exceeding12,500 (exceeding 10,000), a Currency Transaction Report (CTR) is required under the Bank Secrecy Act.
Broker-dealers must file a CTR with FinCEN within 15 calendar days for cash deposits or withdrawals exceeding $10,000 in a single business day.
2
Evaluate suspicious activity indicators and thresholds
The client's request to avoid government filings indicates potential money laundering or tax evasion, triggering a Suspicious Activity Report (SAR) filing requirement.
Broker-dealers are required to file a SAR with FinCEN within 30 calendar days of detecting suspicious transactions involving $5,000 or more.
3
Combine regulatory obligations and deadlines
Both reports must be filed independently within their respective statutory windows: CTR within 15 calendar days and SAR within 30 calendar days.
The CTR requirement and SAR requirement operate independently; satisfying one does not exempt the firm from the other.

Key Concept

Anti-Money Laundering Reporting Thresholds and Deadlines (CTR vs. SAR)
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Topics

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