SIE Ready✨ The big ideas of the SIE · Lesson 7 of 8 · 60 sec
Spot the Money Launderer
A customer deposits $9,500 in cash, then $9,800, then $9,700. Each is under $10,000. That is the red flag.
💡 Key idea
Placement, layering, integration. CTR for cash over $10,000; broker-dealer SAR at $5,000; structuring and tipping off are both illegal.
🧠 Why it matters
Laundering runs in three stages: placement (getting dirty cash into the system), layering (moving it around to hide its trail) and integration (bringing it back as clean-looking wealth). A Currency Transaction Report is filed for cash over $10,000 in a business day. Splitting deposits to avoid that report is structuring, itself a crime. Broker-dealers file a Suspicious Activity Report for suspicious transactions of $5,000 or more, and must never tell the customer a SAR was filed.
📈 In the real world
A new customer funds an account with several cashier's checks just under $10,000, buys a few low-priced stocks, and asks to wire everything abroad a week later. Little investment logic, lots of movement: the rep escalates to the AML officer.
📌 Takeaways
- Stages: placement, layering, integration
- CTR: cash over $10,000; broker-dealer SAR: suspicious activity of $5,000 or more
- Never tip off the customer that a SAR was filed
📖 Terms in this lesson
P-L-I (money laundering stages): Placement, Layering, Integration: put dirty money in, move it around to hide it, bring it back looking clean.
✅ Test yourself
A customer makes several cash deposits of about $9,000 each on different days to avoid a report. What is this called?
- Structuring
- Integration
- Front running
- Layering
Answer: A · Structuring
Breaking cash into amounts under $10,000 to avoid a Currency Transaction Report is structuring, which is illegal on its own. Layering and integration are later laundering stages, and front running is a trading abuse.
A broker-dealer files a SAR on a customer's activity. What may the firm tell the customer about it?
- That a report was filed
- The amount reported
- Only the filing date
- Nothing about the filing
Answer: D · Nothing about the filing
SAR filings are confidential: the firm may not disclose to the customer that a SAR was filed or any detail of it. Telling the customer the date, the fact of filing or the amount would all be tipping off.
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