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.

If any one person deposits or withdrawals over $10,000, you have a reportable transaction. You're not missing anything.

Yes, definitely reportable and we filed a CTR with a Section A completed for each director and the bank personnel as the conductor.

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...

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........

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

Wouldn't the Bank fall under a Phase I Exemption?

My thoughts exactly. Cut them each a check for proper record keeping.

Because then any employee cashing one of the checks or processing a deposit (read all employees) would know how much directors are paid.

It would...if you recognized the Bank as the party getting benefit of the funds being withdrawn and not the directors.

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....?

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. )

And that's the reason...not wanting employees to know how much the directors make.

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.

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

I just find this to be an odd practice.

I worked at a bank that paid in cash (total was below $10,000), all Fees was reported on a 1099.

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.

Agreed. The bank could take out cash for any purpose.

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.

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.

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.

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.





*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.

You must have the Batman phone to the Commissioner! I called and had to leave a message. You call and get an immediate response.


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

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.