We recently acquired an institution with an indirect lending relationship with a car dealership and I need some help with a CTR situation!!

The car dealership continues to accept cash payments at their facility despite the previous institution claiming that they have tried unsuccessfully for many years to get them to stop. Therefore approximately 2-3 times per week they have an employee bring a bag full of loan payments to the bank, many of those being cash and occasionally exceeding $10,000.00 in one day. The previous institution has not filed CTRs in more than 10 years on this situation because at some time or other they received an exemption with FinCEN, but unfortunately can't produce any documentation of this exemption. They've always had a good BSA audits and exams so I believe that at some point this was the case. Here's where it gets messy...

This one CTR could have upwards of 50-100 individual benefactors, each with a $300.00 loan payment and the transactor being the only commonality. Clearly this is not a beneficial CTR in terms of law enforcement needs. After talking with FinCEN and my federal regulator they are both saying that if the employee were a courier we could apply the armored car ruling FIN-2013-R001. We feel that the employee is acting as a courier in this situation. Does anyone else have a similar situation and would be willing to offer some help?

Why the heck is there a middle man accepting car payments for indirect loans that the bank has purchased? These really has the making of a loan pyramid scheme by the auto dealer. This is not a good situation anyway you slice it. Payments should only be accepted by the bank. Sounds like you are operating a branch out of the auto-dealer location. You stop the payments at the auto dealer and you solve your problem.

When you do, you might also watch this whole thing unwind.

Try getting the word out to the borrowers that in order to have their loan payments posted promptly on receipt, they must be made at the bank or mailed to a specific mailing address.

Thank you for your responses. I have some concerns myself about the way this relationship has been handled and I'm addressing those, but in the meantime, I need to get a handle on this CTR situation. I also forgot to mention that my examiner is saying I need to have a backfiling determination. Any other thoughts?

Sounds like your examiner is already leading you by the hand on this issue. The dealership is conducting these transactions on behalf of every customer submitting a cash payment. Each customer is therefor required to be on the CTR. I'm not sure how this being delivered by an armored car changes that fact.

The dealership also appears to be a third party payment processor.

Maybe you should tell them you won't accept them anymore? Perhaps more effectively, tell the branch that has made this decision not to accept them anymore. I'll go out on a limb and guess that they always go to the same branch and that if they went to another and made the same request the teller would respond, "Say whut?"

This is a truly incredible fact situation. Since exemptions were established in 1987 there has never been an exemption available that would have covered this scenario. That's the most logical explanation for the fact it is undocumented. Take no comfort from the fact that it was never caught by examiners or auditors, that's never relevant; it's been caught now.

Yes, you need a backfiling determination. The enormous number of hours of research this will take...

Fortunately I think this has finally convinced the powers that be that we need to sell off this portfolio!! Hallelujah!! Unfortunately that doesn't help me in the present situation with a backfiling determination. Thank you all for your help.