I'd like to hear some opinions on the following situation.

We have a long time business customer, who for the past couple of years appeared to be structuring deposits to avoid reporting requirements. Numerous SARs were filed for structuring. After FinCEN came out with the CTR brochure, management decided to provide a copy to the customer. The customer basically admitted to structuring deposits and said they were told by someone long ago to keep deposits under $10,000. The "enlightened" customer is now making deposits in excess of $10,000 and the structuring has ended. The bank is very comfortable with the nature of the customer's business and the volume of cash involved.

My question is this: Can we now exempt them as a eligibile non-listed business after we have monitored for a period of time? Will we have trouble explaining to the regulators why we have exempted a customer who was subject to multiple SARs over the past few years?

If your monitoring of the customer's activity won't be hampered by the lack of CTR filings (some banks use actual CTR filings as part of their monitoring process), I don't see any reason not to exempt the business, assuming it qualifies. You probably could have exempted the customer even while still filing CTRs, even though it seems to be a contradiction.

Just make sure you keep an eye on the customer to ensure it doesn't have a relapse and revert to structuring, real or apparent.

I would agree with John. Lots of people are just wary of the gov't knowing anything about the cash they have- for whatever reason. So they structure not because they are doing something illegal, but because they are conspiratorial to a degree. If you've enlightened the customer and (s)he seems to have realized the whole thing was silly, I don't see why you couldn't exempt, considering the other requirements of course.

I wouldn't stop monitoring the customer, however.

Thanks for the opinions. Monitoring would obviously continue via the daily large currency transaction reports. From those, I could see if the customer again began structuring.