Put Back The $3,000 Log!

by Barbara E. Hurst

Over the past few months, we've addressed the problem of the $3,000 log. In May, 1990, Treasury published in the Federal Register a Final Rule requiring financial institutions to verify and record identifying information, and maintain a centralized chronological log of the sales of bank checks, draft, cashier's checks, money orders or traveler's checks for $3,000 or more in currency.

In October, 1994, Treasury rescinded the Rule, saying it was no longer necessary to maintain a centralized chronological log. We passed that on to you. Many of you have contacted this office asking for a copy of that rescinded rule, so you could get rid of the logs. However, many more of you figured that it "...wasn't broke so no need to fix it." That is, the system was already in place, the information was being recorded, it provided a good audit and compliance checking tool, so they just left it alone.

Good move.
FinCEN, in January, 2000, assessed civil money penalties on violations of the Bank Secrecy Act. One, against a small bank, (we'll call it The Bank) had a paragraph that read:
"Between June 1996 and September 1998, The Bank failed, at one of its branches, to keep certain information and records in connection with the issuance of cashier's checks and other monetary instruments purchased for $3,000 or more in currency as required by 31 CFR Section 103.29. The Bank failed to maintain records, for, among other things, the type of instrument sold, the serial number of the instrument, and the address of the instrument's purchaser. The Bank also, in some cases, failed to obtain and/or document verification of the purchaser's identification. The Bank failed to maintain the required records for cashier's checks purchased for $3,000 or more in currency by a corporate non-customer of the Bank."

I realize this is an election year, and I'll guarantee you'll not hear one of the politicians say what I'm about to. I've changed my position. I strongly suggest - Put the log back in your offices!

The only major change adopted by FinCEN in 1994 was the requirement of the chronological, centrally located log. You are still required, when selling official checks, etc. to depositors to "...obtain and maintain records of: the name of the purchaser; the date of purchase; and, the type(s), serial number, and the amount in dollars of each of the instrument(s) purchased...and...must verify that the purchaser is a deposit account holder and has been identified previously, or verify his or her identity and record the method of verification."

If the purchaser is not an account holder you need: name, address, social security or alien identification number and date of birth of the purchaser; the date of purchase; and the type(s), serial number and the amount in dollars of each of the instrument(s) purchased...and...must verify the purchaser's identity and record the method of verification and specific identifying information (e.g. state of issuance and number of driver's license)."

All this information has to be found in your office. Think - Just exactly where will you find it? The Bank referred to above didn't have it. The civil money penalty? $100,000.

If they had been maintaining a log in the office, the information may have been where it was supposed to be.

To be forewarned is to be forearmed.

Put the log back.

Copyright © 2000 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 10, No. 5, 5/00