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

A retail customer visits two separate branch offices of a FINRA member broker-dealer on the same business day, making a 6,500cashdepositatthefirstbranchanda6,500 cash deposit at the first branch and a 4,500 cash deposit at the second branch. During the second deposit, the customer asks the registered representative if total deposits under $10,000 are reported to the federal government. Which of the following statements correctly describes the broker-dealer's regulatory reporting obligations under FinCEN rules?

  1. The firm must file a Currency Transaction Report (CTR) within 15 calendar days due to aggregate daily cash deposits exceeding $10,000, AND file a Suspicious Activity Report (SAR) within 30 calendar days due to potential structuring.Answer
  2. B
    The firm must file only a Suspicious Activity Report (SAR) within 15 calendar days, because inquiring about federal reporting thresholds cancels the requirement to file a Currency Transaction Report (CTR).
  3. C
    The firm must file only a Currency Transaction Report (CTR) within 30 calendar days, because total cash deposits exceed $10,000 and SAR filings apply exclusively to wire transfers.
  4. D
    The firm must refuse the cash deposits and immediately submit an Specially Designated Nationals (SDN) blocking report to OFAC within 10 business days.

Answer

The firm must file a Currency Transaction Report (CTR) within 15 calendar days due to aggregate daily cash deposits exceeding $10,000, AND file a Suspicious Activity Report (SAR) within 30 calendar days due to potential structuring.
The correct answer identifies that both a Currency Transaction Report (CTR) and a Suspicious Activity Report (SAR) must be filed. Member firms must aggregate all cash transactions conducted by a customer across all branches within a single business day. Because the combined deposit total is 11,000(whichexceedsthe11,000 (which exceeds the 10,000 threshold), a CTR must be submitted to FinCEN within 15 calendar days. Additionally, splitting transactions across branches and asking about reporting thresholds indicates cash structuring, which is suspicious activity involving at least $5,000. Therefore, a SAR must also be submitted to FinCEN within 30 calendar days.

Step-by-Step Solution

1
Evaluate Currency Transaction Report (CTR) applicability and deadline.
Under Bank Secrecy Act / FinCEN rules, broker-dealers must aggregate all currency (cash) deposits made by or on behalf of a single customer in a single business day across all branches. Here, 6,500+6,500 + 4,500 = 11,000.Because11,000. Because 11,000 > $10,000, a CTR (FinCEN Form 112) is mandatory and must be filed within 15 calendar days of the transaction.
Cash transactions exceeding $10,000 in one business day require CTR filing.
2
Evaluate Suspicious Activity Report (SAR) applicability and deadline.
The customer's pattern of splitting cash deposits across multiple locations on the same day combined with explicitly asking about reporting limits strongly indicates structuring (intentionally designing transactions to avoid the 10,000CTRlimit).Structuringisafederalcrime.Forsuspiciousactivityinvolving10,000 CTR limit). Structuring is a federal crime. For suspicious activity involving 5,000 or more, a SAR (FinCEN Form 111) must be filed within 30 calendar days of initial detection.
Structuring cash deposits is illegal under federal law and triggers a mandatory SAR filing.
3
Determine the combined regulatory requirement.
Both filings are triggered independently. The firm must comply with both the 15-day CTR requirement and the 30-day SAR requirement without notifying the customer of either filing.
CTR and SAR filings serve distinct anti-money laundering reporting obligations and have separate statutory timelines.

Key Concept

Anti-Money Laundering (AML) Dual Reporting Requirements (CTR vs. SAR)
Estimated Time:2m 0s
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Topics

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