Compliance with Bank Secrecy Act
All FINRA member firms are required to establish and implement written policies, procedures, and internal controls designed to achieve compliance with the following reporting and recordkeeping requirements of the amended Bank Secrecy Act:
• To record cash purchases of negotiable instruments between $3,000 and $10,000 in a Monetary Instrument Log (MIL) and to maintain these records for a minimum of five years.
• To report to the IRS any cash transactions exceeding $10,000 in a single day, whether conducted in one transaction or several smaller ones, using the Department of the Treasury’s Currency Transaction Report (CTR).
• To file a Suspicious Activity Report (SAR) on any client who appears to be avoiding Bank Secrecy Act reporting requirements or is behaving in a way that suggests money laundering or some other illegal activity. Member firms and their employees are prohibited from disclosing to anyone involved in the suspicious activity that it has been reported.
Suspicious Activity Reports must be filled out whenever a client makes a transaction in excess of $5,000 and the dealer knows or suspects foul play. Specifically, if the transaction seems to have:
• Arisen from illegal activity or attempted to disguise funds or assets derived from illegal activity
• Attempted to avoid reporting requirements or other laws or regulations
• Served no apparent business or lawful purpose
SARs must be filed with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) no later than 30 days after the date the suspicious activity was detected. The Bank Secrecy Act forbids anyone who files a Suspicious Activity Report from notifying any person involved in the suspected activity that an SAR has been filed.
Finally, the Bank Secrecy Act mandates that all reports and documentation related to Monetary Instrument Logs, Currency Transaction Reports, and Suspicious Activi