SIE Ready🛡️ Compliance Considerations · Lesson 1 of 6 · 5 min
Placement, Layering, Integration
🧺 Dirty money never arrives with a label. It arrives as a stack of cash, a string of wires, or a polite request to 'split this into smaller deposits.'
💡 Key idea
CTR: cash over $10,000. SAR: suspicious and $5,000 or more, within 30 days, kept confidential. Structuring to avoid a CTR is a crime even if the money is clean.
🧠 Why it matters
Money laundering has three stages, in order: PLACEMENT (dirty cash enters the financial system), LAYERING (transfers and trades that bury the trail) and INTEGRATION (the money returns looking legitimate). Under the Bank Secrecy Act, a CURRENCY TRANSACTION REPORT (CTR) is required when one customer's cash totals MORE THAN $10,000 in a business day, filed within 15 days. A broker-dealer files a SUSPICIOUS ACTIVITY REPORT (SAR) on suspicious activity involving $5,000 OR MORE, within 30 calendar days of first detecting it, and never tells the customer. STRUCTURING, splitting cash to dodge a CTR, is itself a crime. Example: $9,500 in cash Monday and $9,500 Tuesday from one customer looks like structuring, so think SAR. Firms also screen names against OFAC's SDN list.
📈 In the real world
🧾 A new customer, Dale, deposits $9,000 in money orders, then asks the rep to wire it overseas the next week and closes the account. No single item hit $10,000, but the pattern of deposit, quick move and exit is classic layering. The rep escalates to the AML officer, who files a SAR. Nobody tells Dale a thing.
📌 Takeaways
- Placement, Layering, Integration: the order money moves through laundering
- CTR for cash over $10,000 in a day; SAR for suspicious activity of $5,000 or more at a broker-dealer
- Never tip off a customer that a SAR was filed or considered
📖 Terms in this lesson
Money laundering: Disguising illegally obtained money so it appears to come from a legitimate source.
Placement: The first laundering stage: getting illegal cash into the financial system.
Layering: The second laundering stage: moving money through many transactions to hide where it came from.
Integration: The final laundering stage: bringing the money back into the economy so it looks legitimate.
Bank Secrecy Act (BSA): The federal law requiring financial institutions, broker-dealers included, to keep records and file reports that help detect money laundering.
Currency Transaction Report (CTR): A report filed with FinCEN for cash transactions over $10,000 by or for one person in one business day.
Suspicious Activity Report (SAR): A confidential FinCEN report a broker-dealer files on suspicious transactions of $5,000 or more; the customer must never be told.
Structuring: Breaking cash transactions into smaller amounts to avoid a currency transaction report, a crime even if the money is clean.
OFAC and the SDN list: The Treasury office that publishes the Specially Designated Nationals list of sanctioned parties firms must not do business with.
CTR 10, SAR 5: Currency Transaction Report for cash over $10,000; a broker-dealer's Suspicious Activity Report threshold is $5,000.
✅ Test yourself
A customer moves funds through a series of rapid wire transfers between accounts in three countries. Which stage of money laundering does this illustrate?
- Integration
- Placement
- Structuring
- Layering
Answer: D · Layering
Layering is moving money around to hide its origin. Placement is getting cash into the system in the first place, integration is the clean-looking return, and structuring is breaking up cash to avoid a CTR.
A broker-dealer must generally file a SAR on suspicious activity once the amount involved reaches what level?
- $10,000
- $10,001
- $5,000
- $3,000
Answer: C · $5,000
For broker-dealers the SAR threshold is $5,000 or more. More than $10,000 in cash is the CTR trigger, a different report that is filed whether or not anything looks suspicious.
After a SAR is filed, the customer asks the rep why the firm questioned the deposit. What may the rep tell the customer?
- Nothing about whether a SAR exists
- Only the date the SAR was filed
- That the AML officer flagged the deposit
- That a SAR was filed with FinCEN
Answer: A · Nothing about whether a SAR exists
SARs are confidential. Revealing that one was filed, or even suggesting it, is prohibited tipping off. The rep should not confirm or hint at a report and should route questions to compliance.
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