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← Series 7: Opens & Maintains Customer Accounts
Series 7 practice questionmediumAccount Documentation — Suspicious Activity Reports

A registered representative notices that a customer has been making frequent large cash deposits just under $10,000, followed by immediate wire transfers to an overseas account. What should the representative do?

  1. AIgnore the activity since each individual deposit is under the reporting threshold
  2. BReport the suspicious activity to the firm's AML compliance officer so a Suspicious Activity Report (SAR) can be filed✓ Correct answer
  3. CConfront the customer directly and demand an explanation
  4. DClose the account immediately without notifying anyone
Explanation

Why B — Report the suspicious activity to the firm's AML compliance officer so a Suspicious Activity Report (SAR) can be filed

This pattern of depositing amounts just below the $10,000 Currency Transaction Report (CTR) threshold is known as 'structuring' and is a red flag for money laundering. The representative must report the suspicious activity to the firm's AML compliance officer, who will determine whether to file a Suspicious Activity Report (SAR) with FinCEN. The customer must not be notified that a SAR has been or may be filed, as 'tipping off' is prohibited.

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