/anti-money-laundering

name: anti-money-laundering
description: "Guide BSA/AML compliance program design, ongoing transaction monitoring, and FinCEN reporting for broker-dealers, banks, and investment advisers. Use when the user asks about suspicious activity reports, currency transaction reports, OFAC screening, structuring detection, ongoing risk-rating reviews and escalation, or FinCEN requirements. Also trigger when users mention 'large cash deposit', 'sanctions check', 'money laundering red flags', 'unusual transaction patterns', 'wire to a foreign country', 'SDN list', 'tipping off a client about a SAR', 'AML audit', 'correspondent account due diligence', or ask whether a transaction needs to be reported. (For onboarding identity verification, CIP/CDD, beneficial ownership, and initial customer risk rating, use know-your-customer.)"

Anti-Money Laundering Compliance

Regulatory status current as of June 2026 — verify effective dates, dollar thresholds, and pending rulemakings against current SEC/FINRA/FinCEN sources before advising.

Core Concepts

BSA Framework — Key Hooks

The operative statutes and authorities: the Bank Secrecy Act (31 U.S.C. §§ 5311–5332) as expanded by the USA PATRIOT Act (2001), which added enhanced due diligence requirements, information-sharing provisions (Sections 314(a) and 314(b)), and the written AML program requirement. FinCEN, a bureau of the U.S. Treasury, administers the BSA, issues implementing rules (31 CFR Chapter X), and collects CTRs and SARs.

FINRA Rule 3310 — AML Compliance Program

FINRA Rule 3310 requires every FINRA member firm to establish and implement a written AML compliance program that includes four pillars:

1. **Written procedures** — Policies and procedures reasonably designed to detect and cause the reporting of suspicious activity. Must be tailored to the firm's business model, products, customer types, and geographic exposure. 2. **Designated AML Compliance Officer (AMLCO)** — A qualified individual responsible for day-to-day AML oversight. The AMLCO must be identified by name and title in the firm's written procedures and registered with FINRA. The AMLCO must have sufficient authority, resources, and expertise. 3. **Independent testing (audit)** — The AML program must be tested independently at least every calendar year (or every two years if the firm does not execute transactions or hold customer funds/securities). Testing may be performed by qualified internal personnel not involved in the AML program or by an outside party. 4. **Ongoing training** — All relevant personnel must receive AML training appropriate to their responsibilities. Training must cover applicable BSA/AML regulations, the firm's own policies, red flags, and how to escalate suspicious activity. Training frequency and content should be documented.

Currency Transaction Reports (CTRs)

Financial institutions must file FinCEN Form 112 (CTR) for each cash transaction exceeding $10,000 in a single business day (31 CFR § 1010.311). Key rules:

• **$10,000 threshold** — Applies to cash received or disbursed, including currency, coin, cashier's checks (under certain circumstances), and money orders purchased with cash.
• **Aggregation rule** — Multiple cash transactions by or on behalf of the same person during a single business day must be aggregated. If the aggregate exceeds $10,000, a CTR is required.
• **Filing deadline** — CTRs must be filed within 15 calendar days of the transaction date.
• **Structuring prohibition (31 U.S.C. § 5324)** — It is a federal crime to structure transactions (i.e., break up a transaction into smaller amounts) to evade CTR reporting requirements. Both the customer and any employee who assists are liable. Structuring is illegal regardless of the source of the funds — even legitimate funds structured to avoid reporting trigger criminal liability.
• **Exemptions** — Certain customers (e.g., listed companies, government agencies, banks) may be exempt from CTR filing under 31 CFR § 1020.315, but exemptions must be documented and periodically reviewed.

Suspicious Activity Reports (SARs)

SARs are filed using FinCEN Form 111 to report known or suspected violations of law, suspicious transactions, or transactions with no apparent lawful purpose. Filing thresholds and obligations vary by institution type:

• **Broker-dealers (FINRA members)** — Must file a SAR for transactions of $5,000 or more that the firm knows, suspects, or has reason to suspect involve funds from illegal activity, are designed to evade BSA requirements, lack a business or apparent lawful purpose, or involve use of the firm to facilitate criminal activity (31 CFR § 1023.320).
• **Banks** — Must file a SAR for transactions of $5,000 or more involving known suspects, or $25,000 or more regardless of suspect identification (31 CFR § 1020.320).
• **Filing deadline** — SARs must be filed within 30 calendar days of initial detection. If no suspect is identified, the deadline extends to 60 days.
• **Continuing activity** — If suspicious activity continues, the firm must file continuing SARs at least every 90 days.
• **Tipping-off prohibition** — It is a violation to notify the subject of the SAR that a SAR has been or will be filed (31 U.S.C. § 5318(g)(2)). This prohibition extends to all employees, officers, and directors. Disclosure of a SAR filing can result in criminal penalties.
• **Safe harbor** — Financial institutions and their employees are protected from civil liability for filing SARs in good faith (31 U.S.C. § 5318(g)(3)). This safe harbor applies even if the reported activity turns out to be legitimate.
• **SAR confidentiality** — SARs are confidential. They cannot be produced in response to subpoenas, discovery requests, or FOIA requests (with narrow law enforcement exceptions). The underlying facts that triggered the SAR, however, are not themselves privileged.

OFAC Screening

The Office of Foreign Assets Control (OFAC), a bureau within the U.S. Treasury