Source: https://www.fincen.gov/answers-frequently-asked-bank-secrecy-act-bsa-questions
Timestamp: 2019-04-26 09:51:35+00:00

Document:
Question 1: Is a depository institution required to file a Designation of Exempt Person form (FinCEN 110) in order to exempt transactions with a Federal Reserve Bank?
Answer 1: Depository institutions are not required to file a Designation of Exempt Person form (FinCEN 110) with respect to the transfer of currency to or from any of the 12 Federal Reserve Banks in accordance with an Interim Rule published by FinCEN in the Federal Register (65 FR 46356-46361) on July 28, 2000. This Interim Rule, which amends the CTR exemption regulation at 31 CFR 1020.315, became effective on July 31, 2000. (12/2017).
Question 2(a): Where can a depository institution obtain a copy of the Designation of Exempt Person form (FinCEN 110) which must be used to designate an eligible customer as an exempt person from currency transaction reporting rules of the Department of the Treasury (31 CFR 1020.315(c)).
Answer 2(a): The Designation of Exempt Person form is available from FinCEN’s web site at https://www.fincen.gov/resources/filing-information (12/2017).
Question 2(c): Does FinCEN provide depository institutions with a confirmation of receipt of the Designation of Exempt Person form (FinCEN 110)?
Question 3: There are frequently asked questions regarding Repeated SAR Filings on the same Activity. The following discussion is contained in Section 5 of The SAR Activity Review – Trends, Tips & Issues (October 2000).
Question 4: There are frequently asked questions regarding Filing SARs on Continuing Activity after Law Enforcement Contact. The following discussion is contained in Section 6 of The SAR Activity Review – Trends, Tips & Issues (June 2001).
Answer 4: In some instances, after the filing of one or more SARs, law enforcement has contacted a financial institution requesting more specific information with regard to the suspect activity or requesting identified supporting documentation. In other instances, a law enforcement agency has contacted a financial institution to report that it does not intend to investigate the matter reported on the SAR.
Question 5: There are frequently asked questions regarding Filing SARs on Activity Outside the United States. The following discussion is contained in Section 6 of The SAR Activity Review – Trends, Tips & Issues (June 2001).
Question 6: There are frequently asked questions regarding Cessation of Relationship/Closure of Account as a result of the identification of suspicious activity.
The following discussion is contained in Section 5 of The SAR Activity Review – Trends, Tips & Issues (October 2000).
Question 7: There are frequently asked questions regarding Timing for SAR Filings. The following discussion is contained in Section 5 of The SAR Activity Review – Trends, Tips & Issues (October 2000).
Answer 7: The SAR rules require that a SAR be filed no later than 30 calendar days from the date of the initial detection of the suspicious activity, unless no suspect can be identified, in which case, the time period for filing a SAR is extended to 60 days.
Question 8: There are frequently asked questions regarding the Disclosure of SARs and Underlying Suspicious Activity. The following discussion is contained in Section 5 of The SAR Activity Review – Trends, Tips & Issues (October 2000).
Answer 8: Federal law (31 U.S.C. 5318(g)(2)) prohibits the notification of any person that is involved in the activity being reported on a SAR that the activity has been reported. This prohibition effectively precludes the disclosure of a SAR or the fact that a SAR has been filed. However, this prohibition does not preclude, under Federal law, a disclosure in an appropriate manner of the facts that are the basis of the SAR, so long as the disclosure is not made in a way that indicates or implies that a SAR has been filed or that the information is included on a filed SAR.
Question 9: There are frequently asked questions regarding the Prohibition on Notification. The following discussion is contained in Section 6 of The SAR Activity Review – Trends, Tips & Issues (June 2001).
Answer 9: As set forth in the October 2000 SAR Activity Review (Section 5 – Disclosure of SARs and Underlying Suspicious Activity), Federal law (31 U.S.C. 5318(g)(2)) prohibits the notification to any person that is involved in the activity being reported on a SAR that the activity has been reported. This prohibition extends to disclosures that could indirectly result in the notification to the subject of a SAR that a SAR has been filed, effectively precluding the disclosure of a SAR or even its existence to any persons other than appropriate law enforcement and supervisory agency or agencies. This prohibition does not preclude, under Federal law, a disclosure in an appropriate manner of the facts that are the basis of the SAR, so long as the disclosure is not made in a way that indicates or implies that a SAR has been filed or that information is included on a filed SAR.
In the rare instance when suspicious activity is related to an individual in the organization, such as the president or one of the members of the board of directors, the established policy that would require notification of a SAR filing to such an individual should not be followed. Deviations to established policies and procedures so as to avoid notification of a SAR filing to a subject of the SAR should be documented and appropriate uninvolved senior organizational personnel should be so advised.
Question 10: There are frequently asked questions regarding Disclosure of SAR Documentation. The following discussion is contained in Section 6 of The SAR Activity Review – Trends, Tips & Issues (June 2001).
Question 11: There are frequently asked questions regarding the Applicability of Safe Harbor. The following discussion is contained in Section 6 of The SAR Activity Review – Trends, Tips & Issues (June 2001).
Question 12a: A business customer of a depository institution provides payroll checks to individual employees for work performed. Each payroll check is under $10,000. However, several employees cash their payroll checks individually on the same business day, which results in an aggregate cash out from the business customer’s account in an amount exceeding $10,000. Would the institution be required to file a CTR, if no one person received an amount in excess of $10,000?
Answer 12a: The financial institution would not need to file a CTR because it would not be involved in a single cash transaction (or multiple cash transactions for which a duty to aggregate would arise) of more than $10,000. A financial institution must treat multiple transactions in currency as a single transaction if the financial institution has knowledge that the multiple transactions are "by or on behalf of any person" and result in cash in or cash out totaling more than $10,000 during any one business day. According to the facts described above, the cashing of checks would be conducted by or on behalf of each individual employee (rather than the business on whose account each check is drawn), and no one employee would be cashing more than $10,000 in a single transaction or in multiple transactions during the same business day.
Question 13b: Would a CTR be required if several individual employees endorsed their respective payroll checks (all individual payroll checks are under $10,000 but combined they aggregate to an amount that exceeds $10,000), and made the checks payable to one employee who, in turn, cashed them at a financial institution for the purpose of distributing the proceeds back to the individual employees?
Answer 13b: A CTR would be required in this instance because one person is receiving more than $10,000 in currency. (10/2001).
Question 13c: Is a CTR required when a person presents a check, in excess of $10,000, for payment in cash at a financial institution and receives less than $10,000 after fees, or other deductions, are charged against the amount of the check?
Answer 13c: The BSA only requires a CTR for a transaction in currency, such as a deposit, withdrawal, exchange or transfer of currency, in excess of $10,000. A transaction in currency involves the physical transfer of currency from one person to another. Accordingly, the transfer of currency below $10,000 would not trigger the CTR requirement, despite the amount of the check. For example, if a person cashed a check for $10,100 and received $9,990 after a service fee was charged against the amount of the check, the financial institution would not be required to file a CTR. On the other hand, if a person purchased a cashier’s check for $9,990 and paid a service fee of $20 for a total of $10,010 in cash, the financial institution would be required to file a CTR. The key lies in the amount of the physical deposit, withdrawal, exchange or transfer of currency. (10/2001).
Question 14: Is a state-licensed check-cashing business exemptible under the BSA?
1. An entity listed on one of the major national stock exchanges, or a subsidiary of an entity listed on those stock exchanges as described in 31 CFR § 1020.315). If a customer falls under one of the categories identified in 31 CFR § 1020.315, the depository institution does not need to determine if the business activity is considered ineligible for exemption as identified in 31 CFR § 1020.315(e)(8). Once the depository institution has determined that the customer qualifies for an exemption based on the above criteria, the depository institution may file a one-time DEP form.
2. A non-listed business, if the criteria of 31 CFR § 1020.315 are met. Determining if a business can be considered a non-listed business depends, in part, on whether the customer is primarily engaged in one or more of the ineligible business activities listed in 31 CFR § 1020.315. If primarily engaged in such ineligible business activities, then the customer cannot be treated as a non-listed business.
a. One of the ineligible business activities listed in 31 CFR § 1020.315 is serving as a financial institution. Under the BSA, the definition of “Financial Institution” includes money services businesses (MSBs) [31 CFR 1010.100(ff)]. A check casher is defined as an MSB if it cashes checks in an amount greater than $1,000 in currency or monetary instruments for any one person in any one day in one or more transactions [31 CFR 1010.100(ff)(2)]. Consequently, if the check casher meets the definition of an MSB, it is considered to be serving as a financial institution. Therefore, if the check casher is defined as an MSB and is primarily engaged (see item b. below) in the business of cashing checks [or other ineligible business activity listed in 31 CFR § 1020.315, then it is ineligible for treatment as an exempt person.
b. If a business engages in multiple business activities (e.g., money transmission in addition to check cashing), it may be treated as a non-listed business so long as no more than 50% of its gross revenues is derived from one or more of the ineligible business activities listed in § 1020.315.
Example 1: A check casher (whether licensed or non-licensed) that cashes checks in an amount less than $1,000 in currency or monetary instruments for any one person on any one day and is not involved in any other ineligible business activity, or derives no more than 50% of its gross revenue from any such business, may be exempted from CTR reporting requirements as a non-listed business (assuming that all other criteria listed in 31 CFR § 1020.315 are met).
Example 2: A check casher (whether licensed or non-licensed) that cashes checks in an amount more than $1,000 in currency or monetary instruments for any one person on any one day and derives more than 50% of its gross revenue from cashing checks (and/or other ineligible business activity) may not be exempted from CTR reporting requirements as a non-listed business because it is serving as a financial institution under the BSA regulations.
Question 15: Does FinCEN prepare and distribute training materials, such as videos, on the BSA reporting and recordkeeping requirements?
Answer 15: FinCEN does not currently prepare or distribute training videos or materials. FinCEN frequently participates in conferences and other forums to discuss BSA reporting and recordkeeping requirements, developments relating to FinCEN's regulations, and counter money laundering efforts.
FinCEN’s publications also impart information that may be useful in the preparation of training materials, such as SAR Guidance, Strategic Analytical Reports, and The SAR Activity Review: Trends, Tips & Issues, which are available on FinCEN’s web site under the tab for “Reports & Publications". FinCEN also frequently issues guidance to financial institutions on BSA reporting and recordkeeping requirements.
Furthermore, financial institutions, particularly depository institutions such as banks, thrifts and credit unions, have significant resource materials available to help them train from their industry associations and other sources in the private sector. In addition, the primary regulators may also provide publications and resource material to use in BSA training and may be consulted on BSA compliance issues.(10/2001).
Question 16: When a Federal, state or local government official, as part of his or her official duties, engages in a transaction in currency over $10,000, or purchases a monetary instrument for more than $3,000 in currency, as a non-accountholder, what kind of identifying information must a financial institution obtain?
Answer 16: Government officials sometimes need to conduct large currency transactions as part of their official duties. For example, a law enforcement official may wish to convert seized currency into monetary instruments for security reasons. Banks are not required to file a CTR when a Federal, state or local government official, as part of his or her official duties, engages in a transaction in currency over $10,000. In addition, banks do not need to file a Designation of Exempt Person form (FinCEN Form 110) for customers that are a department or agency of the United States, of any State, or of any political subdivision of any State. A bank should, however, take the steps to ensure that the customer is eligible for the exemption (that the customer is a government official conducting business on behalf of a government agency) and document the basis for that determination (e.g., reviewing the customer’s law enforcement credentials or government photo ID). Non-bank financial institutions, however, are required to file a CTR when a Federal, state or local government official, as part of his or her official duties, engages in a transaction in currency over $10,000.
Regardless if a financial institution is required to file or voluntarily files a currency transaction report for this scenario, it generally is required only to obtain, verify, and record identifying information pertaining to the agency for which the individual is working. Thus, any employee identification number, address, or other identifying information obtained should correspond to the government agency involved, and not the government official conducting the transaction.
Questions 17: Can you provide guidance on how money services businesses should conduct independent reviews of their anti-money laundering programs?
Answer 17: There are frequently asked questions regarding how to conduct independent reviews on money services business anti-money laundering programs. FinCEN has issued the following guidance 1.
Provide for independent review to monitor and maintain an adequate program. The scope and frequency of the review shall be commensurate with the risk of the financial services provided by the money services business. Such review may be conducted by an officer or employee of the money services business so long as the reviewer is not the person designated in paragraph (d)(2) of this section.
The primary purpose of the independent review is to monitor the adequacy of the money services business’ anti-money laundering program. The review should determine whether the business is operating in compliance with the requirements of the Bank Secrecy Act and the business’ own policies and procedures. Each money services business should identify and assess the money laundering risks that may be associated with its unique products, services, customers, and geographic locations. Regardless of where risks arise, money services businesses must take reasonable steps to manage them. Each money services business should focus resources on the areas of its business that management believes pose the greatest risks, and the level of sophistication of the associated internal controls should be appropriate for the size, structure, risks, and complexity of the money services business.
Question 18(a): What should be done during the review? The review should provide a fair and unbiased appraisal of each of the required elements of the company’s anti-money laundering program, including its Bank Secrecy Act-related policies, procedures, internal controls, recordkeeping and reporting functions, and training.
Answer 18(a): The review should include testing of internal controls and transactional systems and procedures to identify problems and weaknesses and, if necessary, recommend to management appropriate corrective actions. For example, if the program requires that a particular employee or category of employee should be trained once every six months, then the independent testing should determine whether the training occurred and whether the training was adequate.
The review also should cover all of the anti-money laundering program actions taken by – or defined as part of the responsibility of – the designated compliance officer. These actions include, for example, the determination of the level of money laundering risks faced by the business, the frequency of Bank Secrecy Act anti-money laundering training for employees, and the adoption of procedures for implementation and oversight of program-related controls and transactional systems.
Question 18(b): Who should conduct the review?
Answer 18(b): Our regulations require an independent review, not a formal audit by a certified public accountant or third-party consultant. Accordingly, a money services business does not necessarily need to hire an outside auditor or consultant. The review may be conducted by an officer, employee or group of employees, so long as the reviewer is not the designated compliance officer and does not report directly to the compliance officer.
Question 18(c): How often should the review occur?
Answer 18(c): The review should be conducted on a periodic basis. The scope and frequency of the review will depend on the money services business’ risk assessment, which should take into account the business’ products, services, customers, and geographic locations. For some money services businesses, based on their risk assessments, an annual review may not be necessary; for others, more frequent review may be warranted. For example, if the money services business’ risk assessment changes, more frequent review may be prudent. Similarly, if compliance problems are identified in a review, it may be advisable to advance the date of the next review to confirm that corrective actions have been taken.
Question 18(d): Should the review be documented in some manner and reported to management?
For other BSA related questions, you may call FinCEN’s Regulatory Helpline at 1-800-949-2732, leave a message with your name, name of your financial institution, and telephone number, and one of our staff will return your call promptly.

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