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#1146202 - 03/17/09 03:14 PM Exemption Account Level or Business Relationship?
2old2care Offline
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I have worked at banks where an exemption for a business included all deposit relationships for that business. I have also worked for banks where the exemption is at the account level, thus a business may have three transaction accounts but only one is considered exempt from CTR reporting. I would like to know how most banks handle the exemption process for multiple accounts. Your input wopuld be greatly appreciated.

Below is and excerpt from the FINCEN:
[url=http://www.fincen.gov/news_room/rp/advisory/pdf/advis10.pdf][/url]


Question #13

Is a bank required to treat all transaction accounts of a customer as a single account for purposes of determining the qualification of that customer as an exempt person?

No. A bank may, but is not required to, treat all transaction accounts of a customer as a single account for purposes of determining whether that customer qualifies as an exempt person, as defined by 31 CFR 103.22(d)(2). Treatment of multiple accounts as a single account must, if adopted, be continued. For example, a bank that chose to treat all of a customer’s transaction accounts as a single account would combine the transaction history of the accounts to apply the requirement that a business must frequently
engage in transactions in currency in excess of $10,000 in order to be treated as non-listed business customer, but it would then be required to exempt all such accounts, not simply one of them. Whatever treatment a bank adopts for multiple accounts, the ineligible business activity rule described in Q&A #9 above applies on a customer-wide basis (gross revenues per year).

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#1146296 - 03/17/09 04:30 PM Re: Exemption Account Level or Business Relationship? 2old2care
compliancemom Offline
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The Bank I worked for previously had many exemptions and when we exempted a new customer, we included every deposit account. Convenience was our reason for exempting them in the first place. Having to monitor an exempted account under the previous rules while continuing to file CTRs on the same customer wouldn't be worth the exemption effort.
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#1146325 - 03/17/09 04:59 PM Re: Exemption Account Level or Business Relationship? compliancemom
John Burnett Offline
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There are cases in which you'd want to exclude an account. For example, if an otherwise qualified business uses an account strictly for receipts of payments collected on behalf of others (as might be the case if a grocery store accepts payments on utility bills), transactions in that account would not meet the requirements to be included under an exemption for the grocery store.
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#1146328 - 03/17/09 05:02 PM Re: Exemption Account Level or Business Relationship? John Burnett
smash Offline
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Can you explain further? Why? If no more than 50% of revenues...

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#1146369 - 03/17/09 05:27 PM Re: Exemption Account Level or Business Relationship? smash
BrendaC Offline
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Be very careful in how you manage exemptions for sole proprietors. We generally exempted qualifying accounts by TIN. If you do that for a sole proprietor, you will also exempt the proprietor's personal accounts. For SPs, you will definitely want to exempt on account level.

Also, make sure your system can recognize accounts that do not qualify for exemption (such as savings accounts). Only DDAs and MMDAs can be exempted.
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#1146516 - 03/17/09 07:28 PM Re: Exemption Account Level or Business Relationship? BrendaC
J2C Offline
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Our system exempts them based on account level. So, I have to review them periodically to make sure they are all added to the exemption list if necessary.
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#1146621 - 03/17/09 08:47 PM Re: Exemption Account Level or Business Relationship? smash
John Burnett Offline
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Originally Posted By: smash
Can you explain further? Why? If no more than 50% of revenues...


31 CFR Part 103, subsection 103.22(d)(6)
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#1146722 - 03/18/09 08:55 AM Re: Exemption Account Level or Business Relationship? 2old2care
Elwood P. Dowd Offline
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The previous exemption system focused on exempting individual accounts. One of the advantages touted for implementing the current system was that it recognized "exempt persons" rather than exempt accounts. However, based on the excerpt from FinCEN Advisory #10 which you quote, the bank can choose to narrow the scope of the exemption and consider only those accounts that it included in its review as exempt.

John and Brenda have noted circumstances where carving out some accounts operated by the customer is wise (lottery, utility payments, etc.) and some where it is required (personal accounts for a sole proprietor). Outside of those it makes more sense to include all of the customer's transaction accounts in your review and it's my opinion that is what most bank's do.
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#1184692 - 05/15/09 06:10 PM Re: Exemption Account Level or Business Relationship? Elwood P. Dowd
Wore Out Offline
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I wanted to bring this up again. I have a situation where we have a company XYZ that has several other companies affiliated with it (restaurant locations). Each company has it's own TAX ID number and account number; however, they are all part of the same XYZ organization (not phase I by the way).

The majority of their transactions are conducted by two individuals for all companies at the same time and we've been filing CTR's where appropriate. By definition, they are eligible for exemption.

Would I simply want to list the XYZ company and their tax ID number on 110 and put the other compnay names as DBA? And in my file document the separate tax ID number's?
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#1184703 - 05/15/09 06:19 PM Re: Exemption Account Level or Business Relationship? Wore Out
Elwood P. Dowd Offline
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Yours is a different issue. There are several "persons" involved in your example, not just one. Please verify that each of those affiliates not only has it's own EIN, but according to your records, is also a different legal entity.

Assuming that is correct, as long as they are being operated as separate legal entities you cannot consolidate their reporting or exemptions just because they are commonly owned. If you are aggregating currently it is justified by the fact that the transactions are being conducted by the same person because they are not on behalf of the same person.

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#1184854 - 05/15/09 07:57 PM Re: Exemption Account Level or Business Relationship? Elwood P. Dowd
Wore Out Offline
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Thanks Ken.
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