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> Intelligent Banking

June 16, 2008

Financial Crimes Enforcement Network

Department of the Treasury

P.O. Box 39

Vienna, VA 22183

RE: Currency Transaction Report Exemption Rule and Form Amendments

RIN 1506-AA90

Dear FinCEN:

Thank you for the opportunity to comment on proposed changes to the BSA
exemption process. This comment letter is submitted on behalf of Bank of
Central Florida, a \$75 million community bank located in Lakeland,
Florida. Our bank does not currently have any exemptions due mainly to
the de novo status of the bank and the limited number of accounts with
large cash activity. The proposals most likely would not have an affect
on our institution in the near-term but could as the bank grows. As the
BSA Officer, I have worked at one bank where a nominal number of
exemptions were in place. Several comments are made in reference to this
previous experience.

[Length of Time Required to Consider Phase II Entities for Exemptions
and Special Procedures]{.underline}

FinCEN is proposing to remove any prescribed amount of time before an
institution may consider a non-listed business or payroll customer for
exemption (from a current 12-month period). Instead, an institution
could make a risk-based determination as to when it has sufficient
history with such customers before treating them as an exempt person.
Currently, the regulation's exemption language states in part that to be
exempted the qualified business customer must "frequently engage in
transactions which are subject to the reporting requirements." We are
assuming that due to all the questions from financial institutions as to
what "frequently" means, FinCEN came up with the determination that 8
CTR-reportable transactions in a 12-month period fit that description.
It is surmised that the same scenario would take place since
"risk-based" is such a non-defined term. We, therefore, do not agree
that a risk-based determination method should be implemented due to the
subjectivity of this from financial institution to financial
institution, from regulator to regulator, and from examiner to examiner.

Similarly, the institution would still be required to conduct a
risk-based assessment of the transactional activity of that customer to
possibly include such factors as the past relationship with the
customer, specific characteristics of the customer's business model that
may be pertinent, the types of business in which the customer engages,
and where the business is operating. While some of this type of
information may be gathered during the CIP process, it appears to be an
overly burdensome process as compared to just determining that 8
reportable transactions were conducted in a 12-month period.
Institutions may be inclined to not exempt more customers if such a
burdensome risk-based approach is required. A more objective approach is
necessary to prevent criticism from examiners who may not agree with the
risk-based decision by the institution.

Alternatively, FinCEN suggested reducing the length of time from 12
months to 2 months. This alternative does appear more reasonable before
a CTR exemption can be designated. Clarification should be made though
as to whether a certain number of CTR-reportable transactions would then
need to be made in a two-month period if a more objective approach is
instituted (e.g., 8 reportable transactions in a 2-month period) since
this is unclear. A better approach may be to not designate a time period
but instead state a minimum number of CTR-reportable transactions is to
be done prior to exempting an eligible business customer. It is
suggested that five (5) such transactions be implemented instead of the
current informal eight transactions as stated in FinCEN guidance.

[Special Rules]{.underline}

FinCEN is recommending removing the requirement that institutions file a
FinCEN Form 110 for Phase I eligible customers. It is agreed that this
form should not be required filings of banks, government entities, and
entities listed on a major stock exchange since it does not appear to be
useful information to FinCEN, other government agencies, or law
enforcement.

[Annual Review]{.underline}

It is being proposed to remove the requirement of annual reviews for
Phase I exemptions. We agree that annual reviews should not be required
for such exemptions.

While an annual review of Phase I exemptions is being proposed to be
eliminated, annual reviews of Phase II customers still would be
required. We believe that this requirement also should be removed due to
the burdensome nature of documenting such reviews. In most cases, this
is unnecessary since banks are required to be monitoring customers and
transactional activity on a frequent basis to determine if suspicious
activity is occurring. By eliminating the Phase II annual review, this
could possibly increase the number of institutions who would take
advantage of the CTR exemption process.

A proposal is being made to notify FinCEN of any change in control of a
Phase II customer that it knows of, or should know of on the basis of
its records. Notification should occur through the filing of an amended
Form 110 by March 15 of the calendar year following every second year in
which the bank knew or should have known of the change in control. To
our knowledge, there is no definition of "change of control" stated in
the regulation or FinCEN guidance. Additional clarification is required
since "change of control" could mean various things ranging from the
company being sold to an owner changing. Foremost, FinCEN should
research as to whether this is truly information that is relevant and
necessary to the government prior to implementing another burdensome BSA
requirement. We do not agree that this requirement should be approved by
FinCEN. If implemented, it is recommended that the change of control
notice be reported within 90 days of any change in control (instead of
the alternative 30 days recommended). The BSA Officer may not be aware
of a change of control within 30 days if current bank procedures does
not require that new or revised account documentation be provided within
such a short timeframe (as is in our Bank's case). This short timeframe
is just setting banks up for a common regulatory violation in our
opinion.

[Current Biennial Filing]{.underline}

FinCEN is proposing to eliminate the requirement that institutions
biennially file a designation of exempt person for non-listed and
payroll customers. As stated in the GAO report, we agree that this
biennial designation serves no useful purpose and should be removed as a
BSA requirement, especially since an annual review is still required.
While this BSA recordkeeping requirement may be eliminated, we do not
feel that it will increase the CTR exemptions. This process was probably
one of the least cumbersome requirements of the exemption process, and
was fairly easy to perform if there were only a few exemptions (and the
tickler system for doing the biannual reviews was set up correctly).
Nonetheless, it is not a necessary requirement.

If a bank will be required to implement a risk-based approach to
exempting Phase II customers, we do not believe that the institution
should be required to file a revocation of exemption if they no longer
exempt an otherwise eligible customer. If a bank-determined revocation
is made, then CTRs would begin on that particular entity. Therefore, a
revocation is not necessary in our opinion.

In summary, certain of these proposals may reduce paperwork for those
financial institutions that avail themselves of the CTR exemption
process. However, many banks still do not utilize the exemption process
due to the risk of being cited by examiners for violations (based on
experience as a previous bank compliance examiner) and the less
burdensome nature of filing CTRs rather than exempting customers. FinCEN
is encouraged to find some common ground between regulatory agencies and
financial institutions to make the exemption process less burdensome for
financial institutions and regulatory agencies\--where the goal of more
eligible exemptions take place at financial institutions rather than the
risk of regulatory scrutiny.

Thank you for consideration of these comments and reducing the
burdensome nature of the BSA regulations.

Sincerely,

Cheryl A. Nakashige, VP

Compliance/BSA Officer