SAR and CTR Reporting Obligations

CTRs and SARs are the two BSA filings every Series 24 candidate must master. The differences live in three dimensions: the dollar threshold, the trigger (objective vs subjective), and the filing window. Get those three right and the rest follows.

The CTR vs SAR Comparison

Think of it this way: A CTR is a cash speed bump: any cash transaction over $10,000 triggers it, no judgment required. A SAR is a judgment call: $5,000 plus a reasonable suspicion. Different forms, different windows, and a much tighter confidentiality wall around the SAR.

Exam Tip: Gotchas

• CTR = $10,000 cash, objective trigger; SAR = $5,000, subjective suspicion. The exam loves to flip the thresholds. A $50,000 wire transfer with no red flags is not a SAR (no suspicion); a $6,000 transfer with clear structuring evidence is a SAR (suspicion plus threshold).
• The CTR threshold is exceed $10,000, not equal to or above. A single cash transaction of exactly $10,000 does not trigger a CTR. $10,000.01 does.

Currency Transaction Reports (CTRs)

A CTR is filed for any cash transaction (or aggregate of cash transactions) exceeding $10,000 in a single business day, by, through, or to the broker-dealer. Key mechanics:

• Aggregation rule: multiple cash transactions during a single business day by or on behalf of the same person are aggregated. Debits aggregate with debits, and credits aggregate with credits, but a debit and a credit are not netted
• Filed on FinCEN Form 112 through the BSA E-Filing System
• Filing deadline: within 15 calendar days after the date of the transaction
• Retention: copy of the filed CTR retained per the firm's AML recordkeeping procedures (FinCEN guidance recommends 5 years)

Exam Tip: Gotchas

• Aggregation runs by direction, not by netting. Three $4,000 cash deposits in one day by the same customer aggregate to $12,000 (a CTR-triggering amount). A $12,000 deposit and a $5,000 withdrawal by the same customer do not net to $7,000; the deposit alone triggers the CTR.
• The CTR window is 15 days from the transaction date, not from year-end or month-end. Each CTR runs on its own clock.

Anti-Structuring (Federal Bank Secrecy Act)

It is a federal crime to structure a transaction (break it into amounts under $10,000) to evade CTR filing. Penalties:

• Up to 5 years imprisonment
• Up to $250,000 fine (individual)
• Doubled penalties if the structuring is part of a pattern of illegal activity exceeding $100,000 in any 12-month period (up to 10 years and $500,000)

Structuring is itself a SAR trigger: a customer who deposits $9,500 in cash on three consecutive days is the textbook structuring fact pattern, and the firm must file a SAR even if no CTR is required.

Exam Tip: Gotchas

• Structuring is a federal crime committed by the customer; the firm's response is a SAR. A customer who repeatedly deposits $9,500 has potentially committed structuring. The firm files a SAR; it does not file a CTR (no single transaction crossed the threshold).
• A firm employee who helps a customer structure shares criminal liability. A registered representative who advises the customer to break up deposits violates the federal anti-structuring statute personally, plus the FINRA commercial-honor standard.

Suspicious Activity Reports (SARs)

A SAR is required for any transaction (conducted or attempted) that:

• Involves or aggregates at least $5,000 in funds or other assets, AND
• The firm knows, suspects, or has reason to suspect that:
  • The transaction involves funds derived from illegal activity or is intended to disguise such funds, OR
  • The transaction is designed to evade BSA reporting (structuring), OR
  • The transaction has no apparent business or lawful purpose and the firm cannot identify a reasonable explanation, OR
  • The transaction involves use of the firm to facilitate criminal activity

Note the conducted or attempted language: a customer who tries to wire money to a known drug-trafficking jurisdiction can trigger a SAR even if the wire was rejected at the firm's compliance review.

SAR Filing Deadline

• Initial deadline: within 30 calendar days of the date the firm initially detects facts that may constitute a basis for filing
• Extension: if no suspect is identified at day 30, the firm may delay an additional 30 days to identify a suspect, but never more than 60 days total from initial detection
• The 30-day clock runs from initial detection, not from the transaction date

Exam Tip: Gotchas

• The SAR clock starts at initial detection of facts, not at the transaction. A transaction that occurred six months ago can still trigger a SAR today if the suspicious facts only just surfaced.
• The maximum SAR filing window is 60 days, only if no suspect can be identified within 30. A firm that knows the suspect on day 1 cannot wait 60 days; it must file within 30.

SAR Confidentiality and the Tipping-Off Prohibition

SARs and the existence of a SAR are strictly confidential. Disclosure to the subject of the SAR (or to any unauthorized third party) is a federal crime under the BSA. This is the tipping-off prohibition.

A firm may, however:

• Share SARs and underlying information with U.S. parent or affiliate entities subject to FinCEN guidance
• Share information with other FIs under FinCEN's voluntary FI-to-FI information-sharing authority (with notice to FinCEN, in good faith)
• Respond to FinCEN law-enforcement information-sharing requests
• Cooperate with examiners (FINRA, SEC, FinCEN) reviewing AML compliance

The firm may never tell the customer "we filed a SAR on you" or imply that a SAR is being filed.

Exam Tip: Gotchas

• Telling the customer a SAR was filed is a federal crime. The exam tests this as: "Can the firm explain to the customer why the account is being closed?" The answer is not in any way that discloses or implies a SAR.
• The confidentiality applies even within the firm. Only personnel with a legitimate need to know should see a SAR. A registered representative who is the subject of a SAR cannot be told that the SAR was filed by their employer.

SAR Retention and Safe Harbor

• Retention: SAR plus supporting documentation must be retained for 5 years from the date of filing
• Safe harbor: the BSA grants a safe harbor from civil liability for filing SARs in good faith. A customer who learns that a SAR was filed (for example, in litigation) cannot sue the firm for the filing itself

The safe harbor protects the firm's decision to file but does not protect a tipping-off violation. A firm that files a SAR in good faith is shielded; a firm that then tells the customer is not.

Exam Tip: Gotchas

• The SAR safe harbor protects filing in good faith, not tipping off. The firm is shielded from civil liability for the filing. The firm is not shielded from criminal liability for telling the customer.