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Question

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

Match each Anti-Money Laundering (AML) or sanctions compliance mechanism with its corresponding regulatory obligation or operational requirement.

  • FinCEN 314(a) Information RequestMandatory search of firm records for named suspect individuals or entities with reporting required within 14 days of receipt
  • FinCEN 314(b) Safe Harbor ProvisionVoluntary information sharing among financial institutions regarding suspected money laundering with civil liability immunity
  • OFAC SDN List Asset BlockingImmediate freezing of target customer property with mandatory reporting to the U.S. Treasury within 10 business days
  • CIP Verification Recordkeeping MandateMandatory retention of identifying information used to verify customer identity for at least 5 years after account closure

Answer

The correct matches pair FinCEN 314(a) with the mandatory 14-day record search obligation, FinCEN 314(b) with voluntary inter-institution information sharing under safe harbor, OFAC SDN asset blocking with immediate fund freezing and 10-business-day Treasury reporting, and CIP verification recordkeeping with the 5-year post-closure retention rule.
Each AML compliance tool aligns directly with its governing rule: FinCEN 314(a) commands a mandatory record search completed within 14 days; FinCEN 314(b) offers safe harbor immunity for voluntary sharing between financial institutions; OFAC SDN blocking demands immediate asset freezing paired with a 10-business-day report to Treasury; and CIP rules enforce a 5-year record retention period post account closure.

Step-by-Step Solution

1
Analyze FinCEN Section 314 provisions to distinguish government-initiated search mandates from inter-firm sharing rules.
Determine that Section 314(a) governs mandatory government queries requiring a 14-day search turnaround, whereas Section 314(b) authorizes voluntary sharing between institutions with statutory safe harbor protection.
USA PATRIOT Act regulatory framework for information sharing.
2
Examine Office of Foreign Assets Control (OFAC) enforcement procedures upon confirming an SDN match.
Establish that blocked assets must be frozen immediately without notifying the customer, and a report must be filed with OFAC within 10 business days.
U.S. Treasury Department sanctions compliance regulations.
3
Determine customer identification document retention timelines under Customer Identification Program (CIP) requirements.
Confirm that customer verification records must be maintained for 5 years following account termination.
FINRA Rule 3310 and Bank Secrecy Act recordkeeping standards.

Key Concept

AML, KYC, and Sanctions Regulatory Compliance Frameworks
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Topics

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