Issue 10
Issued Date
October 01, 1998
Subject
Reformed CTR Exemption Process:Questions & Answers
FinCEN Advisory
This advisory provides answers to several questions concerning the process by which financial institutions may exempt retail and other businesses from the requirement to reportcurrency transactions exceeding $10,000.
On September 21, the Treasury Department’s Financial Crimes EnforcementNetwork (FinCEN) published a final rule which will substantially reviseand simplify the manner in which banks and other depository institutionsmay be relieved of the obligation to file recurring Currency TransactionReports (CTRs) on many of their customers. This rule represents the secondpart of FinCEN’s effort to significantly reduce the number of times depositoryinstitutions must report large currency transactions. An earlier rule wasaimed primarily at larger national and regional customers; this rule furthersimplifies the process for retail and other businesses.
Financial institutions have until July 1, 2000, to phase in compliance withthe simplified procedures, although they may use the new procedures beginningon October 21, 1998.
Background
Eliminating Paperwork
The requirement that financial institutions report currency transactions inexcess of $10,000 by their customers is a cornerstone of the Bank SecrecyAct. The information provided on CTRs is often vital to investigators. At thesame time, the reporting requirement includes recurring transactions bylegitimate cash intensive businesses that generally are of little interest toinvestigators. The Money Laundering Suppression Act (MLSA) asked Treasuryto study and implement new programs to encourage banks to take thesteps necessary to significantly reduce repetitive currency reporting on thesekinds of transactions.
More than 12 million CTRs were filed in 1997. It is anticipated that implementationof the procedures in the two regulations could lead banks to decreasetheir CTR filings by more than the 30 per cent reduction sought in the MLSA.
New Process
The new final rule permits financial institutions to exempt a domesticbusiness that has routine needs for large amounts of currency by simply filinga form stating that the business is exempt, so long as the business has been acustomer for at least one year.
The new procedures may be used by all depository institutions, banks,thrifts, and credit unions, but not by other financial institutions. This rule doesnot exempt financial institutions from reporting suspicious activity involvingthese exempted entities. In addition, certain categories of businesses, such asreal estate brokers, automobile dealers, and money transmitters, may not beexempted.
The exemption of the businesses covered by the new rule must be renewedevery two years, but a proposed requirement that financial institutions includeinformation about a customer’s total currency transactions on the renewal formhas been eliminated as unduly burdensome and unnecessary; now banks mustsimply indicate that they have maintained a system of monitoring the transactionsin the account for reportable suspicious activity and applied the system toaccounts at least annually.
Working Together
FinCEN has worked closely with the American Bankers Association andother groups to simplify and reform our regulatory programs so that they arecost-effective, not burdensome. We look forward to continuing these discussionsas we all work together to determine how best to fight money laundering.
The attached guidance is intended to answer general, basic questionsconcerning the implementation of the new regulations. It is not meant to becomprehensive and does not replace or supersede the regulations.
James F. Sloan
Director
FinCEN Advisory is a product of the Financial Crimes Enforcement Network, Department of the Treasury, Post Office Box 39, Vienna, Virginia 22183. For more information about FinCEN’s programs, visit the FinCEN web site at https://www.fincen.gov. General questions or comments regarding FinCEN publications should be addressed to the Office of Communications, FinCEN, (703) 905-3773. Information may also be faxed to (703) 905-3885.
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https://www.fincen.gov/resources/advisories/fincen-advisory-issue-10#
Issued Date
October 01, 1998
Subject
Reformed CTR Exemption Process:Questions & Answers
FinCEN Advisory
This advisory provides answers to several questions concerning the process by which financial institutions may exempt retail and other businesses from the requirement to reportcurrency transactions exceeding $10,000.
On September 21, the Treasury Department’s Financial Crimes EnforcementNetwork (FinCEN) published a final rule which will substantially reviseand simplify the manner in which banks and other depository institutionsmay be relieved of the obligation to file recurring Currency TransactionReports (CTRs) on many of their customers. This rule represents the secondpart of FinCEN’s effort to significantly reduce the number of times depositoryinstitutions must report large currency transactions. An earlier rule wasaimed primarily at larger national and regional customers; this rule furthersimplifies the process for retail and other businesses.
Financial institutions have until July 1, 2000, to phase in compliance withthe simplified procedures, although they may use the new procedures beginningon October 21, 1998.
Background
Eliminating Paperwork
The requirement that financial institutions report currency transactions inexcess of $10,000 by their customers is a cornerstone of the Bank SecrecyAct. The information provided on CTRs is often vital to investigators. At thesame time, the reporting requirement includes recurring transactions bylegitimate cash intensive businesses that generally are of little interest toinvestigators. The Money Laundering Suppression Act (MLSA) asked Treasuryto study and implement new programs to encourage banks to take thesteps necessary to significantly reduce repetitive currency reporting on thesekinds of transactions.
More than 12 million CTRs were filed in 1997. It is anticipated that implementationof the procedures in the two regulations could lead banks to decreasetheir CTR filings by more than the 30 per cent reduction sought in the MLSA.
New Process
The new final rule permits financial institutions to exempt a domesticbusiness that has routine needs for large amounts of currency by simply filinga form stating that the business is exempt, so long as the business has been acustomer for at least one year.
The new procedures may be used by all depository institutions, banks,thrifts, and credit unions, but not by other financial institutions. This rule doesnot exempt financial institutions from reporting suspicious activity involvingthese exempted entities. In addition, certain categories of businesses, such asreal estate brokers, automobile dealers, and money transmitters, may not beexempted.
The exemption of the businesses covered by the new rule must be renewedevery two years, but a proposed requirement that financial institutions includeinformation about a customer’s total currency transactions on the renewal formhas been eliminated as unduly burdensome and unnecessary; now banks mustsimply indicate that they have maintained a system of monitoring the transactionsin the account for reportable suspicious activity and applied the system toaccounts at least annually.
Working Together
FinCEN has worked closely with the American Bankers Association andother groups to simplify and reform our regulatory programs so that they arecost-effective, not burdensome. We look forward to continuing these discussionsas we all work together to determine how best to fight money laundering.
The attached guidance is intended to answer general, basic questionsconcerning the implementation of the new regulations. It is not meant to becomprehensive and does not replace or supersede the regulations.
James F. Sloan
Director
FinCEN Advisory is a product of the Financial Crimes Enforcement Network, Department of the Treasury, Post Office Box 39, Vienna, Virginia 22183. For more information about FinCEN’s programs, visit the FinCEN web site at https://www.fincen.gov. General questions or comments regarding FinCEN publications should be addressed to the Office of Communications, FinCEN, (703) 905-3773. Information may also be faxed to (703) 905-3885.