We have an MSB that has exemption II.
The customer has a line of credit tied to the checking account that is exempt. He withdraws cash frequently and the money is coming out of the line of credit (actually he makes a withdraw from the checking account but the funds come out of the line of credit.
Is this transaction subject to a CTR? can you exempt such transaction and be okay?
Please advise
Thanks.

The way I read the exemption regulations we are exempting the client and not individual accounts. If I am wrong someone please correct me.

Here'a a prior thread on recognizing an MSB as an exempt person under phase II. The consensus is that you probably can, but it fails the "Is this wise?" test miserably.

As long as the withdrawals are being made from a deposit account, their eligibility for exemption should not be affected by whether the source is avaialble funds or a line of credit.