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#1606539 - 09/21/11 04:49 PM Directors Fees Paid in Cash
smash Offline
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If the Bank's Board Secretary comes and takes $20,000 in cash for directors fees, is that transaction reportable on a CTR? The trigger is "by the same person". The persons on whose behalf the transaction is conducted are the 12 directors, not the bank, which of course, is exempt. So I am seeing this as reportable. Tell me I am missing something obvious, because we have never reported this.

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#1606549 - 09/21/11 04:59 PM Re: Directors Fees Paid in Cash smash
ACBbank Offline
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If any one person deposits or withdrawals over $10,000, you have a reportable transaction. You're not missing anything.
Last edited by ACBbank; 09/21/11 05:03 PM. Reason: spelling
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#1606633 - 09/21/11 05:54 PM Re: Directors Fees Paid in Cash ACBbank
AnnRoy Offline
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Yes, definitely reportable and we filed a CTR with a Section A completed for each director and the bank personnel as the conductor.
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#1606642 - 09/21/11 06:01 PM Re: Directors Fees Paid in Cash smash
Elwood P. Dowd Offline
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Cash withdrawals by bank personnel for bank purposes have been addressed here before with differing conclusions. I suggest you call the Helpline and put a note in the file regarding your conversation...
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#1606696 - 09/21/11 06:32 PM Re: Directors Fees Paid in Cash Elwood P. Dowd
rlcarey Offline
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Why in the world would any bank pay thier directors in cash? This should all be going through accounting or HR for IRS income reporting, etc. This is not normal........
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#1606709 - 09/21/11 06:47 PM Re: Directors Fees Paid in Cash rlcarey
BC78a Offline
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I disagree about the need for the CTR the ultimate beneficiaries may be the Directors, but the immediate beneficiary is the Bank. The Bank needs cash to pay a bill and it goes down to the teller station and gets it.

If however, the person was cashing 12 individual checks, I would file the CTR
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#1606712 - 09/21/11 06:51 PM Re: Directors Fees Paid in Cash BC78a
Princess Romeo Offline

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Wouldn't the Bank fall under a Phase I Exemption?
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#1606715 - 09/21/11 06:55 PM Re: Directors Fees Paid in Cash rlcarey
Kathleen O. Blanchard Offline

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Originally Posted By: rlcarey
Why in the world would any bank pay thier directors in cash? This should all be going through accounting or HR for IRS income reporting, etc. This is not normal........

My thoughts exactly. Cut them each a check for proper record keeping.
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#1606732 - 09/21/11 07:08 PM Re: Directors Fees Paid in Cash rlcarey
Elwood P. Dowd Offline
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Quote:
Why in the world would any bank pay their directors in cash?


Because then any employee cashing one of the checks or processing a deposit (read all employees) would know how much directors are paid. wink
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#1606746 - 09/21/11 07:21 PM Re: Directors Fees Paid in Cash Princess Romeo
smash Offline
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It would...if you recognized the Bank as the party getting benefit of the funds being withdrawn and not the directors.

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#1606748 - 09/21/11 07:23 PM Re: Directors Fees Paid in Cash Elwood P. Dowd
ACBbank Offline
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I'm on board with Randy and Kathleen with questioning why a Director must be paid in cash.

On a separate note, are we saying that this transaction is exempt because the bank is benefitting? I don't know if I buy that. I would think the individual Directors are benefitting....?
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#1606754 - 09/21/11 07:28 PM Re: Directors Fees Paid in Cash ACBbank
Kathleen O. Blanchard Offline

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I suppose there is a view that the bank is cashing a check for its own purposes, being to purchase candy for the executives or to pay directors.

(I keeping having a sarcastic thought that a SAR should be filed for trying to hide the payments - if it were a customer doing this we would be getting questions here. ) whistle
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#1606755 - 09/21/11 07:29 PM Re: Directors Fees Paid in Cash Elwood P. Dowd
smash Offline
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And that's the reason...not wanting employees to know how much the directors make.
Last edited by smash; 09/21/11 07:30 PM.
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#1606765 - 09/21/11 07:33 PM Re: Directors Fees Paid in Cash Kathleen O. Blanchard
smash Offline
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Originally Posted By: Kathleen B
I suppose there is a view that the bank is cashing a check for its own purposes, being to purchase candy for the executives or to pay directors.

(I keeping having a sarcastic thought that a SAR should be filed for trying to hide the payments - if it were a customer doing this we would be getting questions here. ) whistle


Yes, but it's not a check being cashed. It's a GL debit. And these are reported as income to the directors on 1099's or whatever the appropriate form is. There's nothing suspicious being done under the table here.

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#1606775 - 09/21/11 07:43 PM Re: Directors Fees Paid in Cash smash
Kathleen O. Blanchard Offline

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As I said, I was being sarcastic, not expecting a SAR to be filed!

I just find this to be an odd practice.
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#1606784 - 09/21/11 07:49 PM Re: Directors Fees Paid in Cash Kathleen O. Blanchard
BC78a Offline
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I worked at a bank that paid in cash (total was below $10,000), all Fees was reported on a 1099.
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#1606787 - 09/21/11 07:51 PM Re: Directors Fees Paid in Cash Kathleen O. Blanchard
Princess Romeo Offline

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I would argue that the cash withdrawal is for the benefit of the Bank since it has an obligation it must satisfy - not unlike if you have a customer who withdraws cash to pay employees. You don't include the individual employees on the CTR.
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#1606790 - 09/21/11 07:54 PM Re: Directors Fees Paid in Cash Princess Romeo
Kathleen O. Blanchard Offline

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Agreed. The bank could take out cash for any purpose.
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#1606796 - 09/21/11 07:58 PM Re: Directors Fees Paid in Cash Princess Romeo
smash Offline
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Originally Posted By: Princess Romeo
I would argue that the cash withdrawal is for the benefit of the Bank since it has an obligation it must satisfy - not unlike if you have a customer who withdraws cash to pay employees. You don't include the individual employees on the CTR.



Yes, however, it would not qualify as a Phase II payroll exemption because the withdrawal does not come from an exemptible transaction account. It comes from a general ledger account.

In the spirit of the regulation, I don't think they (law enforcement/FinCEN) really care about these transactions.

The crux of this post for me:
On whose behalf is the transaction conducted? The Bank or the directors? If the bank, slam dunk! Bank is exempt. I will call the helpline and post their response here.

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#1606828 - 09/21/11 08:29 PM Re: Directors Fees Paid in Cash smash
ACBbank Offline
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Originally Posted By: smash
Originally Posted By: Princess Romeo
I would argue that the cash withdrawal is for the benefit of the Bank since it has an obligation it must satisfy - not unlike if you have a customer who withdraws cash to pay employees. You don't include the individual employees on the CTR.



Yes, however, it would not qualify as a Phase II payroll exemption because the withdrawal does not come from an exemptible transaction account. It comes from a general ledger account.

In the spirit of the regulation, I don't think they (law enforcement/FinCEN) really care about these transactions.

The crux of this post for me:
On whose behalf is the transaction conducted? The Bank or the directors? If the bank, slam dunk! Bank is exempt. I will call the helpline and post their response here.


That's your best bet.
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#1606830 - 09/21/11 08:31 PM Re: Directors Fees Paid in Cash smash
califgirl Offline
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Originally Posted By: smash
And that's the reason...not wanting employees to know how much the directors make.


If that's a real problem, either 1) the directors are getting paid way too much or 2) the employees have not been properly instructed as to confidentiality of all bank business.
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#1606831 - 09/21/11 08:31 PM Re: Directors Fees Paid in Cash smash
Elwood P. Dowd Offline
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Smash,
My point that this discussion produces differing results has been well supported. I reiterate my suggestion that you call the Helpline and put a note in the file. (Field examiners may have differing opinions as well.)

I called the Helpline a few minutes ago and they confirmed that the transaction is on behalf of the bank and no CTR is necessary as the bank is an exempt person. (Unless more than 10K is withdrawn on behalf of a single director.) I'm going to sleep on that last part.

If you have a field examiner who knows otherwise based only on divine inspiration and you say "Someone said it on BOL" (a citation to authority I've been offered several times) it won't mean anything. Call FinCEN & write down who you spoke with and what they told you.

P.S. All three of the banks where I worked paid directors in cash. However, that was a long time ago. It's an outmoded practice and you might as well get rid of it.
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#1606835 - 09/21/11 08:34 PM Re: Directors Fees Paid in Cash smash
Princess Romeo Offline

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Originally Posted By: smash
Originally Posted By: Princess Romeo
I would argue that the cash withdrawal is for the benefit of the Bank since it has an obligation it must satisfy - not unlike if you have a customer who withdraws cash to pay employees. You don't include the individual employees on the CTR.



Yes, however, it would not qualify as a Phase II payroll exemption because the withdrawal does not come from an exemptible transaction account. It comes from a general ledger account.

In the spirit of the regulation, I don't think they (law enforcement/FinCEN) really care about these transactions.

The crux of this post for me:
On whose behalf is the transaction conducted? The Bank or the directors? If the bank, slam dunk! Bank is exempt. I will call the helpline and post their response here.


I never said Phase II - I was just using the concept of withdrawing cash to pay an obligation. The obligor benefits because the obligation is discharged.

Quote:
Phase I CTR Exemptions (31 CFR 103.22(d)(2)(i)Ė(v))*

FinCENís rule identifies five categories of Phase I exempt persons:

A bank, to the extent of its domestic operations.
A federal, state, or local government agency or department.
Any entity exercising governmental authority within the United States.
Any entity (other than a bank) whose common stock or analogous equity interests are listed on the New York Stock Exchange or the American Stock Exchange or have been designated as a NASDAQ National Market Security listed on the NASDAQ Stock Market (with some exceptions).
Any subsidiary (other than a bank) of any "listed entity" that is organized under U.S. law and at least 51 percent of whose common stock or analogous equity interest is owned by the listed entity.


Quote:
Banks do not need to file a Designation of Exempt Person form for Phase I-eligible customers that are banks, federal, state, or local governments, or entities exercising governmental authority. Nevertheless, a bank should take the same steps to assure itself of a customerís initial eligibility for exemption, and document the basis for the conclusion, that a reasonable and prudent bank would take to protect itself from loan or other fraud or loss based on misidentification of a personís status. Exemption of a Phase I entity covers all transactions in currency with the exempted entity, not only transactions in currency conducted through an account.


*This was a cut and paste from the On-Line BSA Exam Manual which, apparently, has not been updated with the new Chapter X citations.
Last edited by Princess Romeo; 09/21/11 08:39 PM.
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#1606844 - 09/21/11 08:45 PM Re: Directors Fees Paid in Cash Elwood P. Dowd
smash Offline
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Originally Posted By: Ken_Pegasus

I called the Helpline a few minutes ago and they confirmed that the transaction is on behalf of the bank and no CTR is necessary as the bank is an exempt person. (Unless more than 10K is withdrawn on behalf of a single director.) I'm going to sleep on that last part.

You must have the Batman phone to the Commissioner! I called and had to leave a message. You call and get an immediate response. smile
Originally Posted By: Ken_Pegasus

P.S. All three of the banks where I worked paid directors in cash. However, that was a long time ago. It's an outmoded practice and you might as well get rid of it.


If I tell them I have to file a CTR every month now, it might just go away!! smile smile

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#1606861 - 09/21/11 09:05 PM Re: Directors Fees Paid in Cash califgirl
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Originally Posted By: califgirl
Originally Posted By: smash
And that's the reason...not wanting employees to know how much the directors make.


If that's a real problem, either 1) the directors are getting paid way too much or 2) the employees have not been properly instructed as to confidentiality of all bank business.



I am with this one, although from what I have seen and risks involved in many community banks they may get paid to little.
Give them a check and let the directors decide where to deposit or cash it. If the director has an issue with accepting a check drawn on the bank it may say someting about the condition of the bank.
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