Compliance Blog

Last week, I had the pleasure of presenting at NAFCU’s Regulatory Compliance and BSA Seminar. My presentation was different than the normal lecture style of presentations at NAFCU Conferences. Instead, I essentially conducted a workshop for the attendees in the BSA track of Seminar. My workshop was all about Currency Transaction Reports (CTRs). We had very informative conversations so I figured I would provide some scenarios here that came up during the workshop.

First, let’s start with some background. FinCEN requires a credit union to file a CTR for each currency transaction of more than $10,000 by, through, or to the credit union. FinCEN defines currency as coin and paper money, i.e., cash.

Now we’ll get into some scenarios:

Scenario #1

Member A’s car gets repossessed, and the amount owed is $13,000; Member B purchases the car from the credit union with $13,000 cash. Should a CTR be filed against both Member A and Member B?

No. A CTR should only be filed for Member B because they conducted a cash transaction over $10,000. Member A did not actually have anything to do with the purchase of the vehicle besides being delinquent.

Scenario #2

John Member comes into the credit union and deposits $10,050 cash and a few hours later he withdraws $7,000 cash. Should a CTR be filed?

Yes. John Member made a cash deposit of over $10,000. Deposits should be grouped with deposits and withdrawals with withdrawals. A credit union should not subtract withdrawals from deposits.

Scenario #3

Bob and Tina Smith walk into Dance Credit Union together. Bob goes to Teller A and deposits $6,500 cash into the couple’s joint account; while Tina goes to Teller B and deposits $5,000 cash into the couple’s joint account. Should a CTR be filed?

Yes. In its CTR FAQs, FinCEN states that “when a deposit is made into a joint account, the deposit is presumed to be made on behalf of all account holders because all account holders have potential access to the account funds.” In this scenario, the total cash transactions in one business day is more than $10,000 therefore a CTR with multiple Part Is is required. Since both account holders conducted a transaction into a joint account two Part Is should be completed for each transaction as follows:

• Bob Smith $6,500 “person conducting transaction on own behalf”
• Bob Smith $5,000 "person on whose behalf transaction was conducted”
• Tina Smith $5,000 “person conducting transaction on own behalf”
• Tina Smith $6,500 “person on whose behalf transaction was conducted”

It is important to note that multiple currency transactions totaling more than $10,000 during any one business day are treated as a single transaction if the credit union has knowledge that they are by or on behalf of the same person. Here are some scenarios involving multiple currency transactions:

Scenario #4

On October 31^st Sally Member made the following cash withdrawals:

• $4,500 with a teller at ABC Credit Union’s Arlington, VA branch
• $5,300 with a teller at ABC Credit Union’s Alexandria, VA branch
• $1,500 with a teller at ABC Credit Union’s Washington, DC branch
• $500 from an ABC Credit Union ATM

Would ABC Credit Union file a CTR and/or any other filings?

Yes. The above scenario involves multiple cash withdrawals totaling more than $10,000 in a single business day by the same person. This scenario is also an example of structuring, and when it occurs FinCEN requires a Suspicious Activity Report (SAR) to also be filed. The FFIEC BSA/AML Manual describes structuring as breaking down currency transactions to evade CTR requirements. 

Scenario #5

On December 5^th, Jane Doe deposited $8,000 cash into The Corner Store’s business account, and right before the branch closed, she deposited another $3,000 cash into the same business account. Should a CTR be filed?

Yes. Cash transactions conducted on behalf of an entity should also be reported when they are over the $10,000 threshold. FinCEN’s definition of person includes “An individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities.”

Finally, let’s discuss aggregated transactions. A credit union should check box 24e only if all the following are present:

• The credit union did not identify any of the individuals conducting the related transactions;
• All the transactions were below the reporting requirement; and
• At least one of the aggregated transactions was a teller transaction.

Scenario #6

On November 12^th, an unidentified individual deposited $500 into BBQ Restaurant business account via an ATM at DEF credit union. On the same day, Bob Member deposits $7,000 into BBQ Restaurant business account via a teller, and another unidentified individual deposits $8,000 into the same business account via a teller. It is clear that a CTR should be filed because there are multiple cash deposits on the same day and the total is greater than $10,000 but is this considered an aggregated transaction?

No. The credit union identified Bob Member when he made the $7,000 deposit via the teller. The credit union should complete Part I on BBQ Restaurant and check Item 3 “Multiple Transactions.” The credit union should also complete a separate Part I for Bob Member.

Please note that this is in no way an exhaustive list of the scenarios that could occur regarding cash transactions. For more information on CTRs please see FinCEN’s CTR FAQs.