CTR Refresher: FinCEN Revises CTR Instructions Again

The Financial Crimes Enforcement Network (FinCEN) recently updated its CTR Electronic Filing Instructions, providing technical corrections and clarifications for financial institutions dealing with complex currency-related situations.

Quick Refresher. As outlined in the FFIEC BSA/AML Examination Manual, credit unions are required to electronically file a Currency Transaction Report (CTR) for each transaction in currency (deposit, withdrawal, exchange, or other payment or transfer) of more than $10,000 by, through, or to the credit union. Currency is defined in the manual as coin and paper money of the United States or any other country as long as it is customarily accepted as money in the country of issue. Therefore, transactions not involving currency are not subject to CTR reporting requirements.

The manual provides additional guidance on aggregation of multiple currency transactions on the same business day: “multiple currency transactions totaling more than $10,000 during any one business day are treated as a single transaction if the bank has knowledge that they are by or on behalf of the same person - and result in either cash in or cash out totaling more than $10,000 during any one business day.” See, FFIEC BSA/AML Examination Manual, Currency Transaction Reporting.

There are various additional resources available to help credit unions comply with CTR requirements. Undoubtedly, these resources were my best friends during my compliance officer days, especially the instructions and the FrequentlyAsked Questions (CTR FAQs).

Recent Update in a Nutshell. Late last year, FinCEN updated its CTR Electronic Filing Instructions and the corresponding answer to Question 16 in their CTR FAQs. The update includes technical corrections, changes how reporters should complete Part I of the CTR when multiple Item 2 roles apply to the person identified in Part I, and clarifies when to complete Item 3 for multiple transactions involving multiple Part I sections when more than one role applies to that conductor. Let’s go over some of these changes in more detail!

CTR Instructions Update

FinCEN’s example for aggregating transactions under the previous instructions read as follows:

“Item 3 Multiple transactions: If a customer makes a $12,000 deposit and a $300 withdrawal, box 3 will be checked even though only $12,000 is reportable. This applies when multiple Part I sections with different Item 2 person types are filed on the same person. Box 3 will be checked in all Part I sections on that person.”

The revised instructions have reversed the agency’s previous position on combining cash in transactions with cash out transactions regarding Item 3, as they now state the following:

“Item 3 Multiple transactions: Check Item 3 if multiple cash transactions of any amount totaling more than $10,000 as cash in or more than $10,000 as cash out (cash in and cash out transactions should not be combined) were conducted in a single business day by or for the person recorded in Part I. For example, if a customer makes a $12,000 deposit and a $300 deposit on the same day, item 3 should be checked. However, if a customer makes a $12,000 deposit and $300 withdrawal, item 3 should not be checked. Item 3 “Multiple transactions” is related to, but not the same as, the Item 24 “Aggregated transactions.” Whereas Item 3 should be checked each time multiple transactions are reported as a single transaction, the Item 24 option “Aggregated transaction” should only be checked when all the specific conditions underlying that option have been satisfied.”

This indicates credit unions reporting multiple transactions (cash in and cash out) should not combine the transactions in Item 3. Item 3 should be used to report transactions as a single transaction, as the bolded example above specifies.

Change to the CTR FAQs

The revised FAQ 16 reads as follows:

“Question: What if more than one “role“ (Item 2) applies to the person being listed in Part I?

Answer: If more than one Item 2 option applies to a Part I person, a separate Part I section will be prepared on that person for each Item 2 option. For example, if the Part I person conducted a $5,000 deposit into their personal account and a separate $7,000 deposit into the account of another person/entity, there will be one Part I on that person reporting option 2a on the personal deposit with that amount and account number in Item 21 “Cash in amount”. There will be a second Part I on that person reporting option 2b on the person/entity account transaction with that amount and account number in Item 21.”

This update changes the way credit unions should complete Part I of the CTR. When multiple Item 2 roles apply to the person identified in Part I; a separate Part I section is required for each applicable Item 2 option. As you may recall, the previous answer to FAQ 16 stated that only one Part I would be completed for persons with multiple roles.

Additional resources

FinCEN has made available some additional CTR related resources on its website:

· Instructions for Backfiling and Amending Currency Transaction Reports--Updated 03/05/2018;

· Instructions for Suppressing Duplicate Currency Transaction Reports; and

· FinCEN Educational Pamphlet on the Currency Transaction Reporting Requirement.

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