$3,000 Cash Sales Record Requirement Clarified: Cash Deposit / Debit Now Must Be Recorded
Section 103.29 of the Bank Secrecy Act requires financial institutions to verify a person's identity and to retain records for five years of certain information when bank checks and drafts, cashier's checks, money orders or traveler's checks are purchased with between $3,000 and $10,000 in cash.
Many financial institutions, in order to avoid the record keeping requirement, and depending on the fact that they were dealing with known depositors, instituted policies requiring the cash to be deposited into the account, and then issued a debit against the account to offset the monetary instrument. FinCEN says there is nothing within the BSA, or its implementing regulations, prohibiting a financial institution from instituting such a policy. Up until recently, there seemed to be no objection to the practice.
Changed Their Minds
However, Treasury, through FinCEN now "…takes the position that when a customer purchases a monetary instrument between $3,000 and $10,000 using currency that the customer first deposits into the customer's account, the transaction is still subject to the record-keeping requirements of §103.29."
This means that many who still keep the $3,000 log must maintain records for five years on such sales. FinCEN goes on to illustrate that this rule applies to the straightforward purchase of a check - $4,000 in cash into the account, debit the account $4,000 and issue a cashier's check.
Aggregate Different Sales
FinCEN goes on to emphasize that multiple purchases of the same or different types of monetary instruments on the same business day totaling between $3,000 and $10,000 must be treated as one purchase if the financial institution has knowledge that the purchases have occurred. For instance, if a customer brings in $2,000 in cash in the morning to purchase a money order at Bank A, Teller #1 and then later the same day goes again to Bank A, Teller # 1 with another $2,000 in cash, to buy a cashier's check.
FinCEN's complete interpretation can be found at: http://www.fincen.gov/monetaryinstrumentsales3a.pdf
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