We have an account (gas station) that we have qualified for an exemption based upon their deposit activity... recently they have been coming in to the bank with small bills and requested to exhange for large bills (amount of exchange over $10,000), when asked why this need.. we were told the vendor they purchase cigarette for deals only in cash...

My question is becuase they are exempt is the exchange of currency also exempt? Thanks

Read Sec. 103.22(d) of the BSA regs...especially the part about filing SARs should the occasion arise.

I beleive I have found the answer. For a Phase II Exempt Person only those transaction conducted througha transaction or money market account that is used for business puroposes of a designaed esempt person are exempt. Because this is an exchange instead of processed through an account the exchange of currency is reportable for that otherwise exempt customer.

Thank you.

Yes, you have found the answer on the CTR filing.

However, exchanging small bills for large is an emblem of money laundering, particularly on this scale. Whatever your processs is for considering the filing of Suspicious Activity Reports, it should begin now.

All these cigarettes your customer is buying have been fully taxed and are legal, right?

Oh my, the account manager has a hard time following my suggestions..I believe I will just file..or at least put the account on a watch list for the BSA committee Thanks again

I would remove the customer from your exemption list and file an SAR. It's too bad your manager is not cooperating.