Currency Transaction Report

What does screening a customer against the Specially Designated Nationals list actually require of a firm?

1. A.Comparing every customer and transaction against the published list, regardless of size or any suspicion.Correct. The prohibition arises from the identity of the counterparty, so no threshold or suspicion trigger applies.
2. B.Checking customers whose transactions exceed the reporting threshold that triggers a currency report.Wrong. Attaching sanctions screening to a currency threshold would leave every smaller dealing with a prohibited person unexamined.
3. C.Reviewing the list whenever the firm has already decided that a customer's activity is suspicious.Wrong. Suspicion drives the judgment-based reporting obligations, whereas sanctions screening runs unconditionally.
4. D.Confirming at account opening that the customer is not a resident of a country subject to sanctions.Wrong. The list names specific persons and entities, and residence is neither the test nor a substitute for it.

Why: Screening against the SDN list is a mechanical comparison of names against a published list of persons and entities with whom United States persons may not deal. It applies to every customer and every transaction regardless of size, and it does not depend on the firm finding anything suspicious, because the prohibition arises from who the counterparty is rather than from what the transaction looks like. Where a genuine match exists, the firm must block or reject the transaction as the sanctions programme requires and report the action, rather than simply declining the business quietly. This is why sanctions screening sits alongside, and not inside, the judgment-based parts of an anti-money-laundering programme.

What is the fundamental difference between a firm's obligation to file a Currency Transaction Report and its obligation to file a Suspicious Activity Report?

1. A.The currency report is filed with FinCEN while the suspicion report is filed with the firm's designated examining authority.Wrong. Both go to FinCEN, so the recipient is not what separates the two obligations.
2. B.The currency report is mechanical once a currency threshold is crossed; the suspicion report rests on the firm's judgment about the activity.Correct. One is an automatic consequence of an amount and the other is an assessment of meaning, so both can arise from one episode.
3. C.The currency report covers customers while the suspicion report covers the conduct of the firm's own employees.Wrong. Suspicion reports frequently concern customer activity and are not confined to insider conduct.
4. D.The currency report must be filed before the transaction settles; the suspicion report is filed only after an investigation closes.Wrong. Neither report is timed to settlement or to the conclusion of an internal investigation.

Why: A currency transaction report is mechanical: currency transactions are aggregated by customer over a business day, and once the total passes the threshold FinCEN sets, the report is filed whether the activity looks innocent or not. A suspicious activity report rests on judgment, requiring the firm to conclude that a transaction involves funds from illegal activity, is designed to evade reporting requirements, has no business or apparent lawful purpose, or facilitates criminal activity. The two coexist, and the same episode can require both, because a perfectly ordinary large cash deposit generates a currency report while a pattern of deliberately smaller ones generates a suspicion report as well. Filing the mechanical report never discharges the judgment-based one.

A firm processes a large currency transaction for a customer and separately identifies a different transaction pattern it finds suspicious, regardless of the dollar amount involved. What is the basic distinction between the report triggered by the first situation and the report triggered by the second?

1. A.Both situations trigger the identical report, since both ultimately concern the movement of money through the firm.Wrong. The two situations trigger different reports based on different triggers, not an identical report.
2. B.Neither situation triggers any report unless both the size and the suspicious nature are present together in the same transaction.Wrong. Each report is triggered independently; neither requires the other condition to also be present.
3. C.The large currency transaction triggers a Currency Transaction Report, filed based on the size of the currency transaction itself regardless of whether anything about it looks suspicious, while the suspicious pattern triggers a suspicious activity report, filed based on the nature of the activity regardless of the dollar amount involved.Correct. A Currency Transaction Report is size-triggered; a suspicious activity report is suspicion-triggered, independent of each other.
4. D.The suspicious pattern triggers a Currency Transaction Report, while the large currency transaction triggers a suspicious activity report, the reverse of how the two reports are actually triggered.Wrong. This reverses which report is triggered by which situation.

Why: A Currency Transaction Report and a suspicious activity report are triggered by different things entirely. The Currency Transaction Report is triggered mechanically by the size of a currency transaction, filed regardless of whether anything about the transaction looks unusual. A suspicious activity report is triggered by the nature of the activity itself -- something that appears suspicious -- regardless of the dollar amount involved, meaning even a small transaction can trigger a suspicious activity report if the pattern itself raises concern.

Which event at Lockhart Pyne Securities can, standing alone, give rise to a Currency Transaction Report obligation for the cashiering department?

1. A.A customer deposits physical currency at the branch counter above the reporting threshold.Correct. The duty keys on the form the money takes, and only cash across the counter is currency.
2. B.A customer instructs an outgoing wire in an amount above the reporting threshold.Wrong. A bank-to-bank funds movement is not currency however large the figure on the instruction happens to be.
3. C.A customer deposits a certified check drawn above the reporting threshold.Wrong. Certification makes the item good but does not turn an instrument drawn on a bank account into cash.
4. D.A customer transfers an account holding assets above the reporting threshold.Wrong. Positions moving between broker-dealers involve no receipt or disbursement of money by the firm at all.

Why: The currency transaction reporting duty is triggered by currency, meaning physical cash, received or paid out by the financial institution above the applicable reporting threshold and aggregated for the same customer on the same day. The size of the movement alone is not the test; the form the money takes is. Wires, checks and account transfers can all be very large, and none of them is a currency transaction. A firm may well owe other escalation or reporting duties on those items, but not this one.