Anti-Money Laundering (AML)

C is correct. The pattern of multiple transfers totaling $25,200 ($4,200 × 6) to overseas accounts with no clear investment purpose, combined with Jennifer's evasive behavior, constitutes suspicious activity. David must file a SAR with FinCEN without notifying Jennifer due to the no tip-off rule, which prohibits alerting customers that a SAR has been filed.

A is incorrect because refusing service without filing a SAR is insufficient; the suspicious pattern requires reporting. B is incorrect because the no tip-off rule strictly prohibits informing the client about SAR filing, which could compromise investigations. D is incorrect because SAR requirements are based on aggregated suspicious activity, not individual transaction amounts; the total exceeds $5,000 with suspect identified, triggering mandatory reporting within 30 days.

B is correct. CIP requires four pieces of information: (1) full legal name, (2) date of birth (verified with documentation, not oral assurance), (3) physical street address (PO Box alone is never sufficient), and (4) taxpayer identification number (SSN for individuals, EIN for entities). Identity must be verified through unexpired government-issued identification.

A is incorrect because PO Box alone is never acceptable; a physical street address is required. C is incorrect because approximate age and employment history are not CIP requirements; date of birth must be verified with documentation. D is incorrect because bank references and income level are suitability considerations, not CIP requirements.

A is correct. The $11,500 cash deposit exceeds the $10,000 CTR threshold, requiring a Currency Transaction Report (CTR) to be filed within 15 days using FinCEN Form 112. The subsequent wire transfer does not trigger additional reporting unless there are suspicious circumstances.

B is incorrect because total transaction amount alone does not trigger SAR filing; there must be suspicious activity such as money laundering, fraud, or structuring. C is incorrect because these transactions do not show a structuring pattern (deliberately breaking transactions into smaller amounts to avoid the $10,000 CTR threshold); one large cash deposit followed by a legitimate wire transfer is not inherently suspicious. D is incorrect because the CTR is required for the $11,500 cash deposit regardless of the wire transfer.

C is correct (the EXCEPT answer). Financial institutions are strictly PROHIBITED from notifying customers that a SAR has been filed. This "no tip-off rule" is absolute and violations can result in criminal penalties. Alerting a subject to SAR filing could compromise law enforcement investigations by allowing money launderers to move funds or destroy evidence.

A is accurate: When suspicious activity is detected and a suspect is identified, the SAR must be filed within 30 days. If no suspect is identified, there is an additional 30-day extension (60 days total). B is accurate: The Bank Secrecy Act provides safe harbor protection, granting immunity from civil liability for financial institutions that file SARs in good faith, encouraging reporting without fear of lawsuits. D is accurate: SARs and all supporting documentation must be retained for 5 years to comply with recordkeeping requirements.

B is correct. Only statements 1 and 3 are accurate regarding FinCEN Investment Adviser Rule coverage.

Statement 1 is TRUE: SEC-registered investment advisers (RIAs) are covered by the FinCEN 2024 rule and must establish AML/CFT programs, file SARs for suspicious transactions aggregating $5,000+, and comply with BSA recordkeeping requirements starting January 1, 2028.

Statement 2 is FALSE: State-registered investment advisers are NOT covered by the FinCEN 2024 rule. The rule only applies to advisers registered with the SEC or exempt reporting advisers, not state-registered advisers.

Statement 3 is TRUE: Exempt reporting advisers (ERAs) such as venture capital fund advisers and private fund advisers are covered by the FinCEN 2024 rule despite being exempt from full SEC registration.

Statement 4 is FALSE: Family offices are specifically excluded from the FinCEN Investment Adviser Rule coverage.