Last November FinCEN came out with guidance on interpreting bank policies in relation to recordkeeping requirements under 31 CFR 103.29. The guidance indicated that even though banks do not sell monetary instrumments to non-customers and have their customers deposit the "cash" into a deposit account before purchasing the monetary instruments it does not relieve the bank from recordkeeping responsibilities. Are other bankers taking this to mean we should go back to maintaining a monetary instrument log as we "used" to do? That was my understanding when I read the quidance. We are trying to implement the logging process again.

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Account means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes.

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Short answer - Yes!

OK - we have two different opinions on this topic? Is it still up for debate?

FinCEN clarification

We just went through a Fed exam and were told that we need to resume the monetary instrument log.

BSA does not require you to keep a log, but you must keep all of the info. So, I agree with Randy. The short answer is "yes."

You must retain (log) info on cash sales of monetary instruments >$3000 and cash that is deposited and then a monetary instrument is sold.

Do you need to log visa or mc cash advances over $3,000.
I am thinking you don't, but someone said we do and now I'm not sure. I know you need to complete a CTR if the cash advance is over $10,000.

There is no 12 CFR Part 103 rule requiring that you log cash advances over $3,000. However, your financial institution may have a procedure requiring such a log in order to detect multiple transactions by one person in one day that add to more than $10,000, for CTR purposes, of course.

So you need to understand the basis on which "someone" told you that you need to log these transactions.

I was just given more information. The cash advances that mgmt wants logged would be the advances used to purchase a cashier check or money order or traveler check.
No money actually goes across the teller window, so would it still be required to log as cash purchased monetary instrument? I am leaning towards No.

In my opinion, you are correct. If the cash never goes across your teller counter, it's not a cash purchase.

Now, management may want to document these transactions to demonstrate that they are not, in fact, cash transactions. Take a look at how the purchase part of the transaction looks to your systems reports. If it looks like a cash advance paid out and a separate cash-in for the MI purchase, what management is doing is a CYA to show the examiner that no cash actually changed hands.

Sometimes we are not told all of the reasons behind some policies.

No, it would not need to be logged for BSA purposes, for the reason you stated.

However, the cash advance service is cash. Granted that it is a seemless transaction to the customer, but in regards to the recent FINCen ruling on knowledge of cash used for the purchase of Monetary Instruments, I'd say log it.

Back to the original question, some banks have correctly concluded that it is not necessary to resurrect the log. BSA regulations require banks to keep the following information when they sell official checks for $3,000 to $10,000 in currency if the purchaser has a deposit account with the financial institution:
(A) The name of the purchaser;
(B) The date of purchase;
(C) The type(s) of instrument(s) purchased;
(D) The serial number(s) of each of the instrument(s) purchased; and
(E) The amount in dollars of each of the instrument(s) purchased.

(The bank must verify that the customer is a deposit account holder or verify the customer's identity.) If the purchaser of an official check is listed as the remitter, all of that information appears on the face of the instrument. A bank that retains register copies including that information meets the record retention requirements. The same mechanical analysis can be applied to travelers check sales, depending on what records of those sales the bank retains.

All the FinCEN letter indicated was that when the cash is first deposited to the customer's account and the funds are then used to purchase a monetary instrument the record retention requirement still exists. There was no suggestion that banks should reinstitute the requirement for a log that was officially removed from the regulation several years ago. The "log" is simply a method for keeping the information. If the bank has the information and can locate it using other methods, it does not need the log.

On the second question, I agree with John & JacFSB - there never was cash on the counter. However, John notes correctly that some systems would identify this as a false positive - you might be looking these transactions up routinely if you do not log them.

Would there be any issue with a policy that doesn't limit the cash purchase from $3,000 to $10,000 but rather that states any cash of $3,000 or more must be deposited before purchasing a monetary instrument? Anything over $10,000 would be reported on a CTR, but as a deposit to the checking rather than as the purchase of a negotiable instrument.