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Question & Answer

Question: "We have a question on Bank Secrecy. Assume that we have a well known customer named John Smith, who is president of the Smith Company. We have both the corporate and the personal account. The Smith Company account is exempt for $20,000. On one day, Mr. Smith deposits $27,000 in cash to the corporate account, and $9,000 in cash to his personal account. Do we add them together and file on both deposits? If so, on which one?"

Answer: We went to U.S. Dept of the Treasury, Office of Enforcement for the answer-and I'm going to relay to you their entire answer.

In the situation above, because his deposit into the corporate account exceeds the exemption amount, you add the corporate deposit and the personal deposit together and file for $36,000.

If his deposit into the corporate account had NOT exceeded the exemption-for instance, he deposited $18,000 in cash to the corporate account and $9,000 cash into his personal account, you do not file for either. You do not add them together.

If his deposit into the corporate account was $18,000 and his deposit into his personal account was $11,000, you DO NOT add the deposits together. You would file for $11,000, for being over the $10,000 limit.

I understand this is explained in administrative ruling 89-2 if you wish to research further.

Comment: "Regarding your answer last month in the Question Corner to the banker who said he was having a hard time convincing his people to fill out the log because nobody ever looks at them-I respectfully disagree. While there may be some merit to the argument that the IRS and other government law enforcement agencies may be able to make even better use of this information, it is currently being used in several ongoing investigations. Recently, Treasury has taken additional steps to ease its availability as well as to make law enforcement agencies aware of its existance and utility. Since the regulation's implementation, the federal regulatory agencies have closely examined financial institutions for compliance with the $3,000 Log Rule. In fact, there have been several referrals to Treasury of banks and other financial institutions which have failed to maintain these logs and civil penalties are being considered."

Pamela Johnson
Assistant Director for Bank Secrecy Compliance
Office of Financial Enforcement
Department of the Treasury

Copyright © 1992 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 3, No. 6, 11/92

First published on 11/01/1992

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