Don't you just love BSA? So, lets say you have some long standing customers that either own convenience stores, restuarants, soda shops, etc. And, you know they sell state lottery tickets. And, they have no loans with you. They do transact cash enough to be exempt, however. How are you treating the sale of lottery tickets? Are you asking these customers to prove that they don't get 50% of bus. receipts from lottery ticket sales?

Trees we have several long standing customers who are convenience stores, locally owned- most are exempt. Normally the same individuals have owned these stores for decades. They have a separate lottery account and we can see the deposits/ debits,we simply ask them during the annual review process what percentage of their revenue comes from the sale of lottery tickets. That may not work for everybody but it works for us.

Do you ask them to document their response or do you simply record "customer confirmed 24% of sales revenue comes from lottery ticket sales".....

We simply document the customer's response. We use an annual review form for all the Phase II's- routine info such as what percentage of annual revenue comes from check cashing,lottery etc. We are a small bank, small town and offer relatively low risk products and services. I'm sure that it is much more complicated in high risk areas, etc.

Hmmmm. Annual review. We perform an annual review to see if they have been respecting account agreements, etc. and that there are no strange trans.going through their accounts, no change in ownership. All of this from docs. on hand. i am uncomfortable going to a legacy account customer, with only a DDA, and start asking for questions about their sales vol...is anyone using some rule of thumb approach. For example, take deposits to the account over 3 months, take lottery related ACH trans., see what % these are for total deposits and, well, you see where I want to go. See anything wrong with that?

I would think that would work but what do i know. Common sense tells me that with the small $ amount the store gets for lottery sales that if that represents 50% of their annual revenue they're out of business.

Trees, what runs through their lottery account is what they are paying the state, not what the store is getting paid. I don't think your approach would be accurate.

Georgina Plum; So, if I see what the percentage diff is, then gross the lottery trans, then it would work?

If the business has any ineligible activities, the regulators are looking for more than just a statement from the depositor or some off-the-cuff analysis. This would include financial statements or other financial records from the customer. Any statement from the customer has to collaborated. Read this - and based on recent regulator experience - not too liberally:

http://www.fincen.gov/statutes_regs/guidance/pdf/fin-2009-g001.pdf

And that additional required documentation / proof is exactly why we do not even consider exempting convenience stores or liquor stores. Yes that means we have to file a lot of CTRs but they are much easier to file than to analyze and maintain all of the documenation to support the exemption of one that sells gas, lottery tickets, money orders, has an ATM machine, etc.