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BSA and The Beatles -- a Training ExercisePractice Makes Perfect

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-- A Training Exercise

by Elena Little

Editor's Note: This made me chuckle. Somehow, the use of the clever references to The Beatles makes this exercise fun! Use this exercise from Elena to help your employees understand when a CTR is required and how to complete it for particular transactions. Need a CTR form for this exercise? Click here.

  1. On Monday morning (10-23-01) at 9:30am John Lennon deposits $7525. cash into an account named, Paul McCartney DBA Yellow Submarine, Inc. John is a salesman for the company with no ownership interest in the business. At 11:45, Paul, the owner of Y.S.I. deposits $4,000.00 cash into the same account. Is a CTR required? If not, why? If so, complete the attached form.

    Answer:
    A CTR is required if the bank has knowledge that both of these transactions have taken place. The multiple persons box should be checked at the top of the form, and Section B should be filled out for both John and Paul. NOTE: Although there is no regulatory mandate for aggregation, banks with aggregation capabilities in their systems are required to use them. Examiners may also consider a bank's lack of such a capability when evaluating the overall efficacy of the bank's AML program.

  2. Friday (10-27-01) morning teller #2 receives a call from the secretary at Abbey Road Enterprises, requesting a $10,000. change order. At 1:30, Ringo Starr, office manager comes in to pick up the change. He gives the teller a bundle of checks made payable to Abbey Road Enterprises, and endorsed by the owner, George Harrison. The checks total $10,000. As he starts to leave the bank with the money, he remembers that he wanted to cash his payroll check from Sergeant Peppers Health Club, where he works weekends. The paycheck is in the amount of $137.00. Is a CTR required? If not, why? If so, complete the attached form.

    Answer:
    The exemption mentioned does not apply since this was really a "cash-back" transaction. Since one individual is walking out of the door with currency exceeding 10,000.00, the answer would be yes. A CTR should be filled out for $10,137.00. The multiple transactions box should be checked at the top of the form, and Section A should be filled out for both Abbey Road Enterprises, and Ringo.

  3. Strawberry Fields Bakery is one of the largest employers in town ever since they started selling baked goods on their web page. Wednesday (10-25-01) is payday, and at 4:00 pm, employees fill the lobby of the drive-in bank. After the rush is over, teller 4 realizes that she has cashed $4900. worth of checks on SFB?s payroll account. Teller 7 adds the checks she cashed for employees and her total is $5300. Is a CTR required? If not, why? If so, complete the attached form.

    Answer:
    BOL User Diane Rowlings points to a letter by Peter G Djinis, Director, Office of Financial Enforcement at FinCEN, as supplying the answer here. The letter states:
    "When several employees of a business cash payroll checks issued by that business, each employee, as the payee on the check, is conducting a transaction in [and] on his own behalf with the financial institution. The company, as drawer of the payroll checks, is not conducting these transactions for their employees. Therefore, the financial institution should not file a Form [104], (CTR) on the aggregated cashings of the company's payroll checks that occur during the same day. Nor should it exempt cashings of the company's payroll checks by the company's employees, as these transactions do not fall within the provision of 31 C.F.R. 103.22 (b) (iv). That exemption pertains only to an individual employer who withdraws currency to pay his employees in cash. Instead, a financial institution should file a CTR only if an individual employee cashes checks for himself or others that when aggregated exceed $10,000 during the same business day.

  4. Rocky Raccoon, a distributor for the Gideon Bible Company, has just returned from a promotional sales trip. During the trip, he sold bibles door to door for $15.00 each. (10-26-01) He had extraordinary luck, and has $11,135. in small bills. He doesn?t trust banks too much, and he doesn?t want to carry all those bills. He decides to exchange the small bills for large ones, thinking they will fit under the mattress in his hotel room a little better. Is a CTR required? If not, why? If so, complete the attached form.

    Answer:
    This one is pretty simple. A CTR needs to be filed. Part II number 33 Currency Exchange should be marked.

  5. Lucy Sky, owner of Marmalade Diamond Co. is standing in the lobby with a large canvas bag, obviously in a hurry. (10-24-01) One of the largest Diamond Distributors in the country, Marmalade stock is selling quickly on the New York Stock Exchange. When Lucy approaches teller #3, she dumps the contents of the bag on the counter, and $18,500. in cash spills out. Lucy wants the money deposited as follows: $5,000. Into Marmalade's operating account, $3,000. into their payroll account, and $10,500. into her personal account. She gets irate when the teller asks for information to complete a CTR. She is late for her train, and says that she never has to fill out those forms because her business is listed on the Stock Exchange. Is a CTR required? If not, why? If so, complete the attached form.

    Answer:
    A CTR should be filed. Section A would contain Lucy Sky's personal information, and Section B (e.) conducted on own behalf should be marked.

    The amount of the cash in would be $10,500.00. The two business deposits are not included because the stock is traded on the NYSE and your bank has filed a Designation of Exempt Person on the business, but Lucy's personal account is not included in that exemption.

  6. John Lennon, a salesman for Yellow Submarine, Inc. comes into the bank (10-28-01) and wants to withdraw $15,000. cash from a joint account that he has with his fiancée, Lucy Sky. He and Lucy are planning a trip, and against the teller's advice, he decides to take cash instead of travelers' checks. Is a CTR required? If not, why? If so, complete the attached form.

    Answer:
    No question about this one. John withdraws $15,000.00 cash, and a CTR is completed. Section A contains John's information, and Section B (e.) Conducted on own behalf is marked.

Use the following information to complete the required CTRs.

Paul J. McCartney
DBA Yellow Submarine, Inc.
1000 North Ave. 20786
Erie, PA 20787
Acct. # 01-01-011
Tax ID # 98-7654321
DOB: 1-2-50
Submarine Manufacturer

John L. Lennon
100 Dakota Ln.
Erie, PA 20787
Acct. # 11-11-111
SS # 321-21-3211
DOB: 2-3-50

Abbey Road Enterprises
2000 South Ave.
Erie, PA 20787
Acct. # 22-22-222
Tax ID #87-6543219
Crosswalk Paint Company
Ringo P. Starr
200 Baltic Ave
Erie, PA 20787
Acct. #02-02-022
SS # 654-54-6544
DOB: 3-4-50
Strawberry Fields Bakery
3000 East Ave.
Erie, PA 20787
Acct. # 33-33-333
Tax ID #76-5432198
Bakery
George A. Harrison
300 St. James Place
Erie, PA 20787
Acct. # 03-03-033
SS # 987-87-9877
DOB: 4-5-50
Rocky Q. Raccoon
4000 West Ave.
Erie, PA 20787
Acct. # 44-44-444
SS # 654-32-1987
DOB: 5-6-50
Gideon Bible Company
400 Park Place
Erie, PA 20787
Acct. # 04-04-044
Tax ID #36-9258147
Bible Printing Co.
Lucy D. Sky
100 Dakota Ln.
Erie, PA 20787
Acct. # 55-55-555
SS # 543-21-9876
6-7-50 Marmalade Diamond Co./Operations Acct.
500 Boardwalk
Erie, PA 20787
Acct. # 05-05-055
Tax ID # 25-8147369
Diamond Distributor
Marmalade Diamond Co./ Payroll Acct.
500 Boardwalk
Erie, PA 20787
Acct.# 05-05-056
Tax ID # 25-8147369
Diamond Distributor
John Lennon & Lucy Sky
100 Dakota Ln.
Erie, PA 20787
Acct. # 06-06-066
SS #321-21-3211

Elena Little
I enjoyed writing this quiz. I LOVE music, and I thought this would make it interesting. As for a bio..hmmm...In 1986 I graduated from Midwestern State University in Wichita Falls, TX with a degree in Business, and then because of all the Okie Jokes I told, God said "You are going to Live in Checotah, Oklahoma" (which I now love by the way). I started working for Peoples National Bank in 1991, as a teller. After 6 years, I moved into Compliance, which is where I am now, and will probably die. On the personal side, I LOVE reading, HAVE to have music playing at all times, and crawl all over the Web when I can. I'm married with 4 children and a Schnauzer named Echo-Echo.

First published on BankersOnline.com 8/27/01

First published on 08/27/2001

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