We have a customer who frequently makes cash deposits into three different accounts at the same time and at the same banking center. These deposits, when aggregated, total over $10k with none of the three over $10k individually. Two of these accounts are under the customer’s social security number and one is under an EIN.

Would we be able to exempt the account with the EIN even though no deposits total over $10k into that specific account? CTRs are being generated which list the deposits in all three accounts but I was not sure if an account could be exempted even if CTRs are filed but when the deposits are below the reporting threshold.

I believe according to the regulation, one of the requirements for exemption is that the commercial enterprise frequently engages in transactions in currency with the bank in excess of $10,000. So, while CTRs are being filed that include the business, the business is not eligible to be considered for an exemption.

Never rely on TINs to make BSA related decisions. They were obtained by bank personnel and are often unreliable as to the identity of the owner or the purpose of the account.

The account with the EIN, corporation, partnership, LLC, sole proprietorship, what? The two accounts with an SSN, consumer accounts?

The account with the EIN is a LLC and the two with SSNs are sole proprietorships.

If we did exempt the two accounts with SSNs, how would we handle the CTR for the EIN account? By not filing on the two SSN accounts, we would not reach the $10,000 threshold on the third account.

You cannot combine activity in those accounts in an attempt to qualify them for exemption, because the LLC is a separate entity in spite of its common ownership. The LLC has to stand on its own record of cash activity, and it appears that it doesn't receive more than $10,000 in any one business day, so it can't pass the cash activity threshold test for an exemption.

But, because the same individual makes the deposits you have to aggregate the cash activity of that individual for the purposes of determining whether a CTR has to be filed.

Doug's response remains solid; the additional information would not change it. You are only filing CTR's because the transactions are conducted by the same person; there is no basis for an exemption.

We have come to find that the deposits made in the SSN accounts do total over $10k which would allow us to exempt these accounts.

How do we handle the third deposit made at the same time into the EIN account which is not able to be exempted? Would we still need to list the deposits made in the two SSN accounts? If so, there would be no reason to exempt the two SSN accounts as that information would have to be obtained and reported with the CTR for the EIN account.

The easy answer first. If you are able to exempt the sole proprietorship (SP) accounts but not the LLC account, when cash deposits are made to all three accounts on the same day, you ignore the deposits to the exempted accounts when aggregating the cash amounts, and only file a CTR if the cash deposits to the non-exempt account trigger a filing by themselves.

As to the exemptions for the SP accounts, you would combine the activity in those two accounts (since they are owned by the same person) to determine whether the cash activity satisfied the "frequent" reportable transaction requirement. SP customers can be exempted notwithstanding the fact that they are not separate entities (see 31 CFR 1020.315(e)(7)). Of course, you also need to satisfy yourself that they don't derive more than half their gross revenues from one or more of the "ineligible businesses" listed in 1020.315(e)(8).

ETA: And, of course, none of the owner's personal accounts are covered by an exemption. If he or she happens to deposit more than $10K in one day to his/her personal account(s), you'd have a CTR to file.

Doug, Ken and John....thank you for your responses. It is appreciated.

Personally, I have never been comfortable with exempting sole proprietorship accounts, even if the regulations seem to allow it. Anyone can apply for an EIN and anyone can file an assumed name certificate with the county. The question remains, does that rise to the level of "is incorporated or organized under the laws of the United or a state, or is registered as and eligible to do business within the United States or a state."

Additionally, the business should be carried on the bank's books under the individual's SSN and any personal activity would have to be excluded from the exemptions. I would think that would be a tracking nightmare.

Focus on the "exempt person," not the accounts. Nothing says you have to create Phase II exemptions, and very likely the administrative cost of such an exemption will exceed any savings realized from a reduction in CTR filing volume. Small, closely-held business ventures are poor candidates for Phase II exemptions.