Anti-Money Laundering on the SIE: Placement to Integration, SARs vs CTRs, CIP and OFAC

When FINRA's content outline explains what "rule-based knowledge" means, the first example it gives is the reporting requirements for a Suspicious Activity Report. Anti-money laundering is a small topic on the outline, but it's built from exact thresholds and deadlines, which makes it one of the more learnable parts of Section 3.

What the SIE outline lists under anti-money laundering

Topic 3.2.3 of the 2025 content outline covers the definition of money laundering, its stages, the AML compliance program, the Suspicious Activity Report (SAR), the Currency Transaction Report (CTR), FinCEN, and the Office of Foreign Assets Control (OFAC) with its Specially Designated Nationals and Blocked Persons (SDN) list. The rule list adds FINRA Rule 3310, MSRB Rule G-41, and Sections 314, 326 and 352 of the USA PATRIOT Act.

FinCEN, the Financial Crimes Enforcement Network, describes itself as the designated administrator of the Bank Secrecy Act, the 1970 law at the center of these requirements. FinCEN's history page lists the USA PATRIOT Act of 2001 among the later laws that enhanced and amended it, and FINRA Rule 3310 refers to the BSA regulations issued by the Department of the Treasury.

Money laundering and its stages: placement, layering, integration

FinCEN defines money laundering as disguising financial assets so they can be used without detection of the illegal activity that produced them: the criminal turns proceeds of crime into funds with an apparently legal source.

The Office of the Comptroller of the Currency's banker's guide describes three steps, which it notes can happen at the same time:

1. Placement: putting unlawful proceeds into the financial system, through deposits or other means
2. Layering: separating the proceeds from their origin through layers of complex financial transactions
3. Integration: using more transactions to create the appearance of legality, for example through purchases of assets

The outline's own list reads "structuring, layering, placement," so expect structuring in this topic too. Federal rules define it at 31 CFR 1010.100: conducting or attempting one or more currency transactions, in any amount, at one or more financial institutions, on one or more days, for the purpose of evading the CTR reporting requirements. Breaking a sum over $10,000 into smaller amounts is the classic example, and the definition says the transactions don't have to exceed $10,000 at any one institution on any one day. In Passy's reading, structuring is a way of getting cash in without a report, which is why it's usually discussed next to placement.

SAR vs CTR, side by side

The sources are the federal regulations FinCEN administers: 31 CFR 1023.320 for broker-dealer SARs, and 31 CFR 1010.311, 1010.313 and 1010.306 for CTRs. FINRA's AML page adds that both reports must be filed electronically through the BSA E-Filing System.

Numbers like $5,000, $10,000, 15 days and 30 days are easy to swap under pressure, and rules-and-limits flashcards are planned for SIE launch. For free, write the table above from memory twice, a day apart.

What FINRA Rule 3310 requires in an AML program

FINRA Rule 3310 requires each member firm to have a written AML program, approved in writing by a member of senior management, that at a minimum:

• Has policies and procedures that can reasonably be expected to detect and cause the reporting of suspicious transactions
• Has policies, procedures and internal controls reasonably designed to comply with the Bank Secrecy Act and its regulations
• Provides for independent testing every calendar year, or every two years for firms that don't execute customer transactions or hold customer accounts, such as firms engaged only in proprietary trading
• Designates an AML compliance person or persons, who must be associated persons of the firm, identifies them to FINRA, and promptly reports any change
• Provides ongoing training for appropriate personnel
• Includes risk-based customer due diligence: understanding the nature and purpose of customer relationships to develop a customer risk profile, and ongoing monitoring to identify and report suspicious transactions and update customer information, including beneficial owners of legal entity customers

The outline also lists MSRB Rule G-41, the parallel AML program rule for municipal securities dealers.

The customer identification program at account opening

The outline lists the PATRIOT Act's Section 326, "Verification of Identification," and FINRA's AML page says a firm's program must include a risk-based customer identification program (CIP). The broker-dealer CIP rule, 31 CFR 1023.220, requires a written program, part of the AML program, that lets the firm form a reasonable belief that it knows each customer's true identity. Before opening an account, the firm must obtain at least:

The program must also check whether the customer appears on any federal list of known or suspected terrorists or terrorist organizations designated by the Treasury, and keep identifying information for five years after the account is closed. The rest of what a firm collects at account opening is in the customer accounts guide.

OFAC and the SDN list

OFAC, the Treasury Department's Office of Foreign Assets Control, publishes a list of individuals and companies owned or controlled by, or acting for, targeted countries, along with individuals, groups and entities such as terrorists and narcotics traffickers designated under programs that aren't country-specific. Together they're the Specially Designated Nationals. OFAC's FAQ says their assets are blocked: U.S. persons are prohibited from transactions with SDNs and must block any property in their possession or control in which an SDN has an interest. The list is updated often, with no fixed timetable, so firms screen against the current version.

Section 314: information sharing

The outline's last PATRIOT Act item is Section 314, cooperative efforts to deter money laundering. It works in two directions:

• 314(a), government to firms. Under 31 CFR 1010.520, when FinCEN sends a request naming individuals or entities, a firm must search its records quickly for accounts or transactions with them, report any matches to FinCEN, and not disclose the request to anyone outside the authorized agencies
• 314(b), firms to firms. FinCEN describes it as a safe harbor from liability for financial institutions that share information with one another to identify, and where appropriate report, possible money laundering or terrorist activity

FINRA's fail report shows your performance by section, not by topic, so AML misses show up only as part of Section 3. In the same spirit, the planned SIE prep would show which section is your weakest and point your next session there.

A Passy practice question on AML

This question was written by Passy for practice. It isn't a FINRA item.

On March 2, a broker-dealer's AML staff first detects a series of wire transfers through a customer account totaling $40,000, with no apparent business or lawful purpose. The firm suspects money laundering but hasn't yet identified who is behind the transfers. What is the latest date the firm may file the SAR?

A. March 17, 15 days after detection B. April 1, 30 days after detection C. May 1, 60 days after detection D. There's no deadline until a suspect is identified

Keyed answer: C. Under 31 CFR 1023.320, a SAR is due within 30 calendar days of initial detection, but when no suspect has been identified, the firm may take up to 30 more days to identify one. Reporting may never be delayed more than 60 days after detection, so the outer limit is May 1, which rules out D. B would be the deadline if a suspect had been identified at detection. A is the CTR filing period, which applies to currency transactions over $10,000, not to wire transfers flagged as suspicious.

Your next step with SIE AML

Learn the SAR and CTR table cold, then the four CIP items and the six Rule 3310 elements. The free SIE practice questions give a first check across Section 3, and the prohibited activities guide covers the fraud and manipulation schemes that often generate the suspicious activity in the first place. Closer to your test date, a 105-minute SIE mock exam planned for launch mixes AML back in with the rest of the outline, the way the real exam does.