Anti-Money Laundering: Currency Transaction Reports (CTR) vs. SAR Thresholds
A retail client visits a broker-dealer branch and makes three cash deposits of $4,000 each over two consecutive business days to fund a brokerage account. The client acts evasive when asked about the source of funds and asks if deposits of $4,000 trigger federal government reporting. Under the Bank Secrecy Act and FinCEN regulations, what filing is required?
Structuring cash deposits to evade the $10,000 CTR trigger requires filing a confidential SAR within 30 calendar days. Tipping off the client is a federal crime.
Complete Analysis & Legal Rationale
A Currency Transaction Report (FinCEN Form 112) must be filed for aggregate physical currency deposits exceeding $10,000 in a single business day. Making multiple transactions just below $10,000 over successive days to evade reporting is called 'structuring' (smurfing), a federal crime. A Suspicious Activity Report (FinCEN Form 111) must be filed within 30 calendar days for any transaction involving at least $5,000 where the firm suspects illegal activity or evasion. Crucially, notifying or 'tipping off' the client that a SAR is being filed is strictly prohibited by federal law.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
While aggregate cash across separate days may evade the single-day $10,000 CTR trigger, the structuring behavior mandates a SAR.
Structuring below $10,000 triggers a confidential SAR filed with FinCEN within 30 calendar days.
Structuring is specifically designed to circumvent single-deposit limits and is explicitly reportable via SAR.
Disclosing or hinting that a SAR has been or will be filed is a severe federal criminal offense ('tipping off').
Official Standard: Establishes mandatory 30-day SAR filing for suspicious transactions ≥$5,000 and strict non-disclosure / anti-tipping provisions.