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Question

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

Match each anti-money laundering (AML) or sanctions compliance obligation with its primary regulatory trigger or operational requirement under FINRA, FinCEN, and federal regulations.

  • Currency Transaction Report (CTR)Must be filed within 15 calendar days for physical cash transactions exceeding $10,000 in a single business day.
  • Suspicious Activity Report (SAR)Must be filed within 30 calendar days for suspect transactions involving $5,000 or more where money laundering or fraud is suspected.
  • Customer Identification Program (CIP)Requires verifying customer identity (name, date of birth, residential address, tax ID) prior to or within a reasonable time of account opening.
  • OFAC Sanctions ComplianceRequires checking customer names against Specially Designated Nationals (SDN) lists and immediately blocking or freezing matched assets.

Answer

Currency Transaction Report matches physical cash transactions over 10,000filedwithin15calendardays;SuspiciousActivityReportmatchessuspecttransactionsof10,000 filed within 15 calendar days; Suspicious Activity Report matches suspect transactions of 5,000 or more filed within 30 calendar days; Customer Identification Program matches identity verification of name, DOB, address, and tax ID upon account opening; OFAC Sanctions Compliance matches screening against SDN lists and freezing targeted assets.
Each regulatory requirement directly aligns with its legal standard: CTR covers cash above 10,000(15days),SARcoverssuspiciousactsof10,000 (15 days), SAR covers suspicious acts of 5,000 or more (30 days), CIP requires basic identity verification at account setup, and OFAC requires screening against SDN lists to freeze prohibited transactions.

Step-by-Step Solution

1
Identify the threshold and timeline for Currency Transaction Reports (CTR).
CTRs apply specifically to physical currency/cash transactions over $10,000 within a single business day and must be submitted within 15 calendar days.
FinCEN rules under the Bank Secrecy Act enforce strict cash reporting thresholds.
2
Identify the threshold and timeline for Suspicious Activity Reports (SAR).
SARs apply to suspicious activities involving $5,000 or more and must be filed confidentially within 30 calendar days.
Broker-dealers are required to report suspicious transactions that indicate potential legal violations or money laundering.
3
Identify the mandatory components of a Customer Identification Program (CIP).
CIP mandates obtaining four core customer pieces of information: legal name, date of birth, physical address, and taxpayer identification number (SSN/TIN).
USA PATRIOT Act Title III rules require firms to reasonably verify customer identity to prevent illegal account access.
4
Identify the primary obligation under OFAC screening rules.
Firms must screen names against OFAC sanction lists and immediately freeze assets and report any matches.
OFAC enforces U.S. economic and trade sanctions against targeted foreign countries and terrorists.

Key Concept

AML Filing Thresholds, CIP Verification, and OFAC Compliance Obligations
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Topics

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