For several years we have asked Phase II exemption customers to certify if they own or operate ATMs? If yes, we then ask them if ATMs generate more than 50 % of their gross revenues from the ATM revenues. If they own the ATM, but don't generate more than 50% from ATMs we have exempted them in the past.
During an external audit, we were told since this is a chain store which have ATMs they own and some are owned/operated by other local institutions. We should receive documentation other financial institutions own and operate the ATMs at the stores we have accounts with. Do other institutions do this?
We just accept the certification from the entity they do not generate more than 50% of resvenue from ATM services.

I didn't realize owning/operating an ATM was an illegible business?

Ineligible Businesses
Certain businesses are ineligible for treatment as an exempt non-listed business (31 CFR 1020.315(e)(8)). An ineligible business is defined as a business engaged primarily in one or more of the following specified activities:
• Serving as a financial institution or as agents for a financial institution of any type.
• Purchasing or selling motor vehicles of any kind, vessels, aircraft, farm equipment, or mobile homes.89
• Practicing law, accounting, or medicine.
• Auctioning of goods.
• Chartering or operation of ships, buses, or aircraft.
• Operating a pawn brokerage.
• Engaging in gaming of any kind (other than licensed pari-mutuel betting at race tracks).
• Engaging in investment advisory services or investment banking services.
• Operating a real estate brokerage.
• Operating in title insurance activities and real estate closings.
• Engaging in trade union activities.
• Engaging in any other activity that may, from time to time, be specified by FinCEN, such as marijuana-related businesses.

Agreed, one of your predecessors has "blended" unrelated criteria. While it's important to know that a customer has on premise ATM, that does not mean they are a non bank financial institution.

Go back to your auditor and get a more refined criticism.

I thought the "not more than 50% revenue" was related to lottery sales and not ATM revenues.

It's related to any line of business listed in the "no exemptions" list in 1020.315(e)(8).

We have a form for Phase II CTR exempt customers to certify their eligibility. One of the questions is: Does the business own or operate a private ATM? ___ Yes ___ No. If they mark yes, do I need to document anything further?

One of the businesses on our exemption list marked they own ATMs, but it is our understanding a financial institution with a branch at their store operates the ATM. They could own the ATMs and the other institution may operate them? Do we need to document this? (Yes, they have a financial institution on site and bank with us.)

IMO if the business is not responsible for replenishing the cash in the ATM then they do not own the machine; they just receive rent or a fee from the owner. This would not make then an ATM owner and would not affect their eligibility for a CTR exemption.

What type of documentation is required for the exemption review.
Could someone please share their review procedures with me?

Thanks

What if you have a chain C store that is a registered MSB b/c of other locations but the one that banks with your bank has no MSB activity at that store or going thru your bank. Is it ok to exempt them?

IMO, allowing a customer to certify their own eligibility is silly. If you don't know your customer well enough to determine whether they are eligible for exemption, then you don't exempt them.

Also, you should probably get to know that customer better.

We have the same situation but with a Grocery Store. Do we need to complete the 50% test on all of the customers locations or just the one that banks with us? In our case this is a small chain of five stores spread across hundreds of miles. The nearest sister store is 150 miles from us.

There is only one company. What one store does or does not do has no bearing.