Source: http://agrisk.umd.edu/blog/currency-transaction-reports-and-exemptions-to-when-one-has-to-be-filed
Timestamp: 2017-10-17 11:18:44
Document Index: 763954035

Matched Legal Cases: ['§ 5313', '§ 1010', '§ 1010', '§ 1020', '§ 5313', '§ 1020']

Before we look at the exemptions to filing a CTR, let’s look at when a CTR filing is required. Federal law currently requires all financial institutions to file a CTR with the Internal Revenue Service (IRS) for all transactions greater than $10,000 (31 U.S.C. § 5313 (a)). But what if you go to the bank this morning and deposit $5,000, then go to a different branch and deposit $6,000 later that day? This would be considered one transaction totaling $11,000 because federal regulations clarify that multiple transactions in one business day are treated as a single transaction (31 C.F.R. § 1010.313). Now consider you broke the transaction up over two days or over a span of days. This potentially would be considered “structuring” because you attempted to cause the bank to avoid filing a CTR (31 C.F.R. § 1010.314). Transactions such as these can lead to a bank filing a “Suspicious Activity Report” (SAR) (31 C.F.R. § 1020.320(a)(2)(ii)). A bank is required to file a SAR when it believes the transaction is being conducted in a way to avoid federal reporting requirements (i.e., filing a CTR).
The statute does allow for the Secretary of the Treasury to develop exemptions for a “qualified business customer” (31 U.S.C. § 5313(e)(2)). A qualified business customer would not be required to file a CTR on deposits over $10,000, but the bank would still be required to file a SAR when it believes a transaction is suspicious. The Financial Crimes Enforcement Network (FinCEN) has developed guidelines for when a business can be considered a qualified business customer. FinCEN has developed 6 exemptions to the reporting requirement, but we are only going to focus on the “non-listed business” exemption.
To qualify as a non-listed business, a business would need to meet the following requirements:
1. Have 5 or more transactions over $10,000 in a year;
2. Have had the account opened for at least 2 months (or if opened for a shorter period, the bank must do a risk assessment on the customer);
3. File a designation of exempt person report with FinCen; and
4. Undergo an annual review conducted by the bank to determine if customer still meets qualifications for exemption.
A non-listed business would also need to have no more than 50% of gross revenues coming from ineligible activities. Ineligible activities include:
“financial institutions or agents of financial institutions of any type; purchase or sale to customers of motor vehicles of any kind, vessels, aircraft, farm equipment or mobile homes; the practice of law, accountancy, or medicine; auctioning of goods; chartering or operation of ships, buses, or aircraft; gaming of any kind (other than licensed parimutuel betting at race tracks); investment advisory services or investment banking services; real estate brokerage; pawn brokerage; title insurance and real estate closing; trade union activities; and any other activities that may be specified by FinCEN” (31 C.F.R. § 1020.315(e)(8)).
Any farm participating in these businesses listed above would want to make sure that less than 50% of their gross revenue comes from those ineligible activities.
Before a farmer talks with their bank about becoming a non-listed business, the farmer should speak with an accountant and possibly an attorney to determine if utilizing the exemption is in the farm’s best interest. After this discussion, a farmer would be ready to talk with their bank about filing the paperwork with FinCEN to become exempt from CTR reporting requirements as a non-listed business.