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How to Audit Advertising - Compliance Issues Here, There, Everywhere!;
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#752283 - 06/13/07 12:14 PM LATE FILING OF CTR
maggie mae Offline
Member

Registered: 12/28/05
Posts: 75
Loc: Suffolk County, New York
While investigating a customer for SAR reporting, we discovered transactions (multiple checks cashed), that qualify(ied) for CTR reporting. Because the checks were part of what looks like standard payroll check cashing, with hundreds of checks at multiple sites, the transactions would not have been identified under normal circumstances. But now that we know, some of the transacation dates are past the filing deadline. Is there any special procedure for this situation?

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BSA/AML/CIP/OFAC
#752291 - 06/13/07 12:21 PM Re: LATE FILING OF CTR [Re: maggie mae]
BSAFrustration Offline
Gold Star

Registered: 08/18/06
Posts: 332
You should call the IRS for a backfiling determination.
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#752302 - 06/13/07 12:28 PM Re: LATE FILING OF CTR [Re: BSAFrustration]
MN Banker Offline
Platinum Poster

Registered: 08/02/06
Posts: 980
Just to clarify, are you saying that the customer's employees all went in one day and cashed their payroll checks? If so, I don't believe this qualifies for a CTR as they were conducted and are on behalf of "hundreds" of different people (unless of course one employee cashed over $10,000 worth).

I may be misunderstanding your situation, so I just wanted to make sure.

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#752318 - 06/13/07 12:35 PM Re: LATE FILING OF CTR [Re: BSAFrustration]
JubileeAnne97 Offline
100 Club

Registered: 03/05/07
Posts: 109
Loc: Empire State
As BSA Frustration mentioned, call the number 313-234-1612/1613 and ask for CTR Filing Determination Checklist. Complete the form for the subject customer along with a letter of explanation. IRS will send you a response letter and make sure that do not file a CTR unless you are instructed to file.
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#752460 - 06/13/07 02:10 PM Re: LATE FILING OF CTR [Re: JubileeAnne97]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
Maggie,

Are you talking about a couple of CTRs or a hundred? In any case, there probably is no need to get a backfiling determination as you will never receive a waiver for a situation like this. I would suggest just filing them (if you are just talking about a couple) along with a memo explaining the circumstances.

There is no regulatory requirement to get a backfiling determination prior to filing late CTRs. The only real reason to get one is in the hopes of getting a waiver. Only your examiners can order you to request a backfiling determination.
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The opinions expressed are my own, take them or leave them.

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#752574 - 06/13/07 03:40 PM Re: LATE FILING OF CTR [Re: maggie mae]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17444
Loc: Another trip around the sun
Maggie,
I'm a little fuzzy on the details, but I will say the same thing rlcarey did a bit differently: If the transactions were not eligible for exemption or thought to be eligible for exemption up front, there's not much chance they could be exempted after the fact.

I don't see that you are falling on your sword by filing them late. Banks often find CTRs during audits and investigations that the normal operation of their systems would not have brought to their attention. That's one of the things you mention in the memo rlcarey talked about; i.e. it wasn't a mistake, it was the result of enhanced due diligence over that normally applied to the customer. While I think the proper placement of the memo is in your file, not in the envelope with the CTRs, I won't debate the point. Just keep a copy for your files.
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The world is not a wish granting factory. Hazel Grace Lancaster

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#752806 - 06/13/07 06:54 PM Re: LATE FILING OF CTR [Re: Ken_Pegasus]
Titanic Offline
Gold Star

Registered: 02/08/05
Posts: 300
Loc: My Workplace
I'm curious as of why is it that under normal circumstances your systems wouldn't be able to track these transactions?

Is there a way that you can manipulate the settings or treshholds of your reporting system?

Could there be more customers facing the same or similar scenarios?

What corrective steps have you taken?


Edited by Titanic (06/13/07 06:55 PM)
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[b]"Common sense is not so common." Voltaire~[u]

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#752948 - 06/14/07 09:25 AM Re: LATE FILING OF CTR [Re: Titanic]
maggie mae Offline
Member

Registered: 12/28/05
Posts: 75
Loc: Suffolk County, New York
In a payroll situation the account/customer related to the transaction is not usually the individual receiving the cash. Nor is it unusual for large numbers of employees to cash checks at multiple locations. In our example two or more checks are issued to the suspect individuals who often cash one, deposit the other, or cash them on different days. Only when an individual slips up (usually due to business-day overlap) do multiple checks qualify for a CTR.

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#753099 - 06/14/07 11:20 AM Re: LATE FILING OF CTR [Re: maggie mae]
BrendaC Offline
Power Poster

Registered: 09/18/01
Posts: 6029
Loc: Sweet Home AL
Our daily cash report identifies any account with cash out(s) over a specified dollar limit (generally over $7000 to assist in monitoring for structuring). When we see an account with multiple cash outs that, if aggregated, could be CTR reportable, we pull copies of those checks to verify the payees. It doesn't happen every day and it is generally found in construction and real estate related accounts.
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Life without Jesus is like an unsharpened pencil - it has no point.

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#753125 - 06/14/07 11:34 AM Re: LATE FILING OF CTR [Re: BrendaC]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
Yes - many banks do that and it works well as long as their payroll or other customers that issue checks that may be cashed are small. However, if you have a payroll customer that issues thousands of check every week - that process becomes a little daunting. It all comes down to the risk reward factor and what may be considered reason diligence within your specific institution or in relationship to a specific customer.
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The opinions expressed are my own, take them or leave them.

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#753381 - 06/14/07 01:52 PM Re: LATE FILING OF CTR [Re: rlcarey]
BrendaC Offline
Power Poster

Registered: 09/18/01
Posts: 6029
Loc: Sweet Home AL
I definitely agree that this wouldn't work for every bank, depending on size, but it still works for us ($3 billion assets). We rarely verify checks when we see 150 $300-$500 checks on a payroll account. We focus more on the larger checks where 2 or 3, if aggregated, would be reportable.

Another tool could be how the report identifies the entries. For example, on our report you can see where the items were negotiated by teller number. If you see sequential batch/item numbers, you know they were cashed at the same time, so you know you need to look at those.
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Life without Jesus is like an unsharpened pencil - it has no point.

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