Written by Bernadette Clair, Regulatory Compliance Counsel
FinCEN recently issued revised guidance designed to help “banks” (defined to include credit unions) determine whether a customer is eligible for exemption from currency transaction reporting (CTR) requirements. The changes include:
- Updated citations to reflect the final rule transferring FinCEN’s regulations from 31 C.F.R. § 103 to 31 C.F.R. Chapter X, effective back in March 1, 2011; and
- Amended guidance dealing with exemption eligibility for payroll customers in accordance with FinCEN’s recent final rule amending 31 C.F.R. § 1020.315. See our previous blog post on June 6th for more details about this change.
If you haven’t had an opportunity to review this guidance previously, it’s a useful refresher on substantive changes made to the CTR exemption process back in 2009. These changes were designed to simplify the process, and your credit union may be able to take advantage of these changes to alleviate some of the CTR filing burden.
Here’s an excerpt from the guidance summarizing the 2009 changes:
“Elimination of designation and annual review for most Phase I customers.7 Banks are no longer required to file a designation of exempt person ("DOEP") report for, or conduct an annual review of, customers who are other depository institutions operating in the United States, U.S. or State governments, or entities acting with governmental authority. The DOEP filing and annual review are still required for businesses listed on a major national stock exchange ("listed businesses"), non-listed businesses, and payroll customers.
"Frequently" decreased to five reportable transactions. Banks may designate an otherwise eligible non-listed business customer or payroll customer8 for exemption after the customer has within a year conducted five or more reportable transactions in currency (previously, eight or more reportable transactions were required).
Waiting time for eligibility decreased . Banks may use a hybrid approach to designate an otherwise eligible customer for a Phase II exemption: The customer may be eligible for exemption after maintaining a transaction account for two months (previously twelve months were required); or, the customer may be eligible for exemption in less than two months if the bank conducts a risk-based analysis to form a reasonable belief that the customer has a legitimate business purpose for conducting frequent or regular large currency transactions.
Biennial renewals eliminated. Banks are no longer required to file a biennial renewal or record and report a change of control for an exempt Phase II customer.” (footnotes omitted).
For those of us who are visual learners, the guidance also includes a handy chart of the circumstances under which a customer may be treated as exempt.