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Question

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

Match each anti-money laundering (AML) and sanctions compliance obligation with its corresponding regulatory standard or filing timeline.

  • Customer Identification Program (CIP) Baseline VerificationRequires broker-dealers to collect and verify a customer's name, date of birth, physical residential address, and taxpayer identification number before or shortly after account opening.
  • Currency Transaction Report (CTR) Filing RequirementTriggers when physical cash deposits or withdrawals exceed $10,000 in a single business day, requiring a filing with FinCEN within 15 calendar days.
  • Suspicious Activity Report (SAR) Mandatory Reporting StandardApplies to transactions involving $5,000 or more in funds or assets where illegal activity or lack of business purpose is suspected, requiring a report to FinCEN within 30 calendar days.
  • OFAC Specially Designated Nationals (SDN) List Match ProtocolMandates the immediate blocking of property/assets and reporting to the U.S. Department of the Treasury within 10 business days.

Answer

CIP Baseline Verification matches the requirement to collect and verify name, date of birth, physical address, and TIN; CTR Filing Requirement matches the obligation to report physical cash transactions exceeding 10,000within15calendardays;SARMandatoryReportingStandardmatchesreportingsuspicioustransactionsof10,000 within 15 calendar days; SAR Mandatory Reporting Standard matches reporting suspicious transactions of 5,000 or more within 30 calendar days; and OFAC SDN List Match Protocol matches immediate asset blocking and reporting to the Treasury Department within 10 business days.
Each anti-money laundering and compliance rule corresponds to a distinct regulatory purpose: CIP ensures verification of basic customer identifying details; CTR tracks large physical cash movements (10,000+within15days);SARaddressessuspicioustransactions(10,000+ within 15 days); SAR addresses suspicious transactions ( 5,000+ within 30 days); and OFAC SDN compliance requires blocking prohibited accounts and reporting within 10 business days.

Step-by-Step Solution

1
Identify the minimum identity verification requirements under USA PATRIOT Act Section 326.
Confirm that CIP mandates obtaining four key identifying data points (name, date of birth, physical address, and tax ID number).
Customer Identification Programs focus on baseline identity verification rather than monetary transaction reporting.
2
Differentiate between cash reporting thresholds (CTR) and suspicious activity reporting thresholds (SAR).
Associate physical currency exceeding 10,000witha15−dayCTRfiling,andsuspiciousactivityof10,000 with a 15-day CTR filing, and suspicious activity of 5,000 or more with a 30-day SAR filing.
Confusing the 10,000cashthresholdwiththe10,000 cash threshold with the 5,000 suspicious activity threshold is a common misconception.
3
Evaluate economic sanctions requirements enforced by OFAC.
Link confirmed hits against the SDN list to immediate asset freezing and a 10-business-day reporting obligation to OFAC.
Sanctions compliance focuses on prohibiting transactions and blocking assets of restricted global actors.

Key Concept

Core AML, KYC, and Sanctions Compliance Thresholds and Reporting Deadlines
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Topics

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