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

Match each Anti-Money Laundering (AML) or sanctions compliance operational scenario with the primary regulatory obligation or mandatory broker-dealer action triggered.

  • A client makes multiple physical cash deposits between 8,000and8,000 and 9,500 across several branch locations within a single week to avoid detection.File a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days due to suspected currency structuring.
  • A foreign institution applies to open a correspondent account with a U.S. broker-dealer but maintains no physical presence in any jurisdiction.Refuse account establishment pursuant to USA PATRIOT Act Section 313 prohibitions against foreign shell banks.
  • An existing account holder executes frequent high-dollar wire transfers to shell companies in high-risk foreign jurisdictions with no clear business purpose.Conduct Enhanced Due Diligence (EDD) and evaluate the transactions for potential SAR filing based on red flag indicators.
  • A customer presents $14,000 in physical paper currency at a branch window to pay for a equity trade settlement.File a Currency Transaction Report (CTR) with FinCEN within 15 calendar days for currency exceeding $10,000 in a single day.

Answer

The correct matches are: 1) Cash deposits designed to evade threshold detection match filing a Suspicious Activity Report (SAR) within 30 calendar days for structuring. 2) Foreign institution with no physical presence matches mandatory refusal under USA PATRIOT Act Section 313 shell bank prohibitions. 3) Unexplained wire transfers to high-risk foreign shell entities match conducting Enhanced Due Diligence (EDD) and evaluating SAR filing. 4) Physical cash deposit of $14,000 matches filing a Currency Transaction Report (CTR) within 15 calendar days.
Each scenario represents a distinct AML regulatory obligation: 1) Cash deposits broken up to avoid threshold reporting define structuring and trigger a SAR filing within 30 calendar days. 2) Foreign shell banks (institutions without physical location) are prohibited from opening correspondent accounts under Section 313 of the USA PATRIOT Act. 3) High-risk wire transfers lacking business logic represent red flags requiring Enhanced Due Diligence (EDD) and SAR consideration. 4) Physical cash deposits above $10,000 require a CTR filing within 15 calendar days.

Step-by-Step Solution

1
Analyze cash transactions designed to circumvent reporting thresholds.
Identify pattern as structuring, which mandates filing a Suspicious Activity Report (SAR) with FinCEN within 30 calendar days.
Structuring cash deposits is illegal under federal law regardless of the source of funds.
2
Evaluate foreign correspondent account requests from institutions without physical presence.
Apply USA PATRIOT Act Section 313 statutory prohibition against foreign shell banks.
U.S. broker-dealers cannot establish or maintain correspondent accounts for banks without physical offices or regulation.
3
Assess suspicious international wire activity lacking legitimate commercial rationale.
Trigger Enhanced Due Diligence (EDD) procedures and monitor for potential SAR reporting.
Red flags indicating unusual volume or non-transparent destinations require investigation under CDD/AML rules.
4
Evaluate currency transactions exceeding the statutory $10,000 daily limit.
Trigger Currency Transaction Report (CTR) filing requirement within 15 calendar days of receipt.
The Bank Secrecy Act requires reporting of all single-day physical cash transactions over $10,000.

Key Concept

Anti-Money Laundering (AML) Compliance Obligations and Red Flag Response Protocols
Estimated Time:2m 0s
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Topics

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