3.8 Anti-Money Laundering (AML) & KYC
Federal laws (Bank Secrecy Act, USA PATRIOT Act) mandate strict AML procedures to detect illicit financial flows.
Key FINRA Exam Takeaways
- AML Stages: 1. Placement (dirty cash enters system); 2. Layering (complex transactions to hide source); 3. Integration (re-enters economy as clean funds).
- Currency Transaction Report (CTR / FinCEN Form 112): Filed for cash transactions > $10,000 in 1 business day. Customer must NOT be informed.
- Suspicious Activity Report (SAR / FinCEN Form 111): Filed within 30 days for suspicious transactions ≥ $5,000. Strictly confidential.
- CIP (Customer Identification Program): Verifies identity using government photo ID, DOB, physical address, and SSN/TIN.
Knowledge Checkpoint • Section 3.8
A broker-dealer must file a Currency Transaction Report (CTR) with FinCEN when a customer conducts cash transactions exceeding what dollar threshold in a single business day?