I am posting this anonymously for a reason -- you'll see. We were given the following scenario as part of our state examiner's review of our BSA procedures.

If a customer makes an $8,500 cash deposit into his account and leaves the bank. Then later in the same business day he comes back (to a different branch, of course) and purchases a monetary instrument for $2,000, would your system identify that the aggregate transactions equal $10,500 and create a CTR.

Although our system is capable of aggregating multiple transactions, we have set a threshold higher than $2,000 for the collection of info on the transactor purchasing a monetary instrument.

I am interested in knowing (1) Has anyone else had this question raised by their examiners?, (2) If your bank system would let this situation through, how did/would you respond?, (3) If this couldn't happen at your bank, what are you doing to capture all reportable transactions?

If you do not want to post your reply here, please post your email address so I can PM you.

Thanks. Just another concerned Compliance Officer trying to get my bank through the BSA minefield.

We require purchases of monetary instruments for cash to first be credited to the customer's account (we do not sell to non account-holders) and then be debited for the purchase. This is one way to capture and aggregate multiple transactions.

We don't have a system that would aggregate these types of transactions. That is why we also have a deposit to the account first policy.

Thanks for your replies. This sounds do-able, but I imagine some of our customers and employees will balk at the extra effort.

How about a slightly different scenerio? This time with cash out exceeding $10,000. A customer comes in and makes a $7,500 cash withdrawal from his money market account. Later that same business he comes back - same bank different branch -- and cashes a check his sister gave him for $3,000. His sister's account may or may not be with your bank.

Any suggestions?

I am the BSA Officer for a Community Bank with 4 branches. We have just completed a safety and soundness exam and one finding was that we were unable to capture all cash transactions by or for the benefit of an individual, if those transactions were spread out amongst several different entities. The senario was an individual deposits $6500.00 in cash to a business account in which they are a signer and then later in the day deposits $5,000.00 to their personal account (different TIN) at another branch. Our system will capture the two transactions but doesn't know because of the difference in TIN's that there is a connection between the two accounts. Can anyone share with me how you monitor for these type of transactions. Also do any of you have a core processing system which captures cash transactions using criteria other than by TIN's and SS's.

Some teller systems will prompt the teller to obtain ID on the conductor of a transaction over a certain amount, perhaps $5,000. This amount can be set higher or lower, depending upon the bank's situation. This would enable the bank to better aggregate transactions by conductor, even if they are made at different times at different branches to different accounts.

If we get a cash transaction that won't go through our teller system (which would capture it for CTR reporting), our tellers are instructed to manually enter the transaction into the CTR reporting module as if it were over $10,000. That will ensure it gets aggregated with any other transactions done under that TIN that day.

This type of situation was presented to us during our last BSA exam. The examiners suggested requiring that the funds be deposited, and then withdrawn in order for the purchase to be included in the aggregation report. (We have a $3,000 minimum.) So I asked, "How would I sell a $10 money order to a customer who has only a $2 million mortgage with us, or a customer who has only a $500,000 CD (a non-transaction account)?" The examiners finally agreed to accept my response that I would work with the Bank's service bureau to address this situation, and the examiners did not require any additional tracking or procedures.

No system is perfect. I think it is important to emphasize here that employee participation is essential to any BSA program. In my opinion, competerized aggregation systems are a back-up system. It is critical that employees know and understand your system's shortcomings. For example, our system cannot track transit items or currency exchanges.

Bank examiners may not be recommending the deposit first method any more. If you check page 60 of the new BSA exam manual, you will find:

"INDIRECT CURRENCY PURCHASES OF MONEY INSTRUMENTS Banks may implement a policy requiring customers who are deposit accountholders and who want to purchase monetary instruments in amounts between $3,000 and $10,000 with currency to first deposit the currency into their deposit accounts. Nothing within the BSA, or its implementing regulations prohibits a bank from instituting such a policy.

However, FinCEN takes the position that when a customer purchase a monetary instrument in amounts 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 recordkeeping requirements of 31 CFR 103.29. This requirement applies whether the transaction is conducted in accordance with a bank’s established policy or at the request of the customer. Generally, when a bank sells monetary instruments to deposit accountholders, the bank will already maintain most of the information required by 31 CFR 103.29 in the normal course of its business."

Time to go back to that old drawing board

vlg,
I think you are misinterpreting this information. They are merely saying that if you have such a policy, the Bank is still required to keep the records. The FDIC has NEVER suggested that we change our deposit first policy. I know many other banks in So. California have a similar policy and none of them have been criticized either. We also have a deposit first policy for cash wires.

We have over 30 branches. Having all cash activity run through the deposit account makes it a whole lot easier to detect suspicous activity. Everything hits the deposit account and if your employees use correct trancodes, you can see cash deposits followed by monetary instruments or outgoing wires.

Anon is correct. Fincen made that statement because some banks were requiring deposit first thinking that it meant they no longer had to keep the records for a "cash purchase". It is perfectly fine to require deposit first provided you otherwise treat the transaction as a cash purchase.

Here's a link to the original FinCEN announcement on what is being referred to here as the "deposit first" policy. As noted, all the new examination procedures do is reiterate that the practice is acceptable as long as the bank retains the information required by the regulation. However, I am glad that the examination procedures go on to point out that if a bank is only selling monetary instruments to deposit accountholders it will already have most of the required information.

In short, a bank that voluntarily restricts sales of monetary intstruments to deposit account holders and requires "deposit first" can virtually eliminate an ancillary (and completely worthless) set of records. It can also abbreviate its 314(a) searches. (If the bank only sells to deposit account holders and it has not found John Doe's name on that list, it need not review its list of remitters on official checks for John Doe's name, it's not going to be there.)

On the larger question which began this thread, banks are not required to have an aggregation system that is perfect. They are only required to use whatever system they have perfectly. Any regulatory comments regarding the system's capabilities should be in the form of suggestions, not requirements.

Question: If a customer is purchasing several cashier's checks that add up to more than $10,000.00 our system prompts the teller to complete a CTR. However, it does not prompt for the MISL info. I'm thinking that regardless of the total amount of the transaction, any monetary instrument sold for cash between $3,000 and $10,000 should have a MISL completed. Am I reading the reg/Act wrong??

Please help - we're testing a new teller program and need to be sure it's set up to do what is required.

Thank you...

You are correct. The information must be collected. Our teller system requires certain information be completed (name, payee, account involved in the transaction, etc) for any monetary instrument and if it hits the $3,000 amount the tellers are trained regarding what ID must be requested.

Thanks kaybee, I appreciate your help.

You might want to refer to this post - see here

The monetary instrument information is available for review by law enforcement - if you have transactions that fall outside of the specific requirements within these records - you might be faced with a RFPA issue.

So, if a single transaction exceeds $10,000 and requires a CTR, we do not have to record the info in our MISL log as well (I know the log is no longer required, but we're still using as a method of ensuring info is obtained)...seems logical that we will have the info via the CTR and thus not need the MISL..just want to be absolutely sure that we're okay in doing so. Thank you for sharing the other post.

By The Rules, if you are still keeping the log there is absolutely no reason why you would not enter this particular transaction simply because you are filing a CTR.

devsfan - you are wrong - if the aggregate amount of currency was greater than $10,000 - file the CTR and you are done. Do not enter the instruement purchase on the log.