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#2247810 - 01/19/21 06:29 PM CTR annual review of exempt customers procedure
Sophia Offline
New Poster
Joined: Jan 2021
Posts: 2
Hello! This is my first post here, and I apologize if this question has been asked / answered in the past.

2021 will be the first time that I am completing the annual review for customers that are exempt from CTR's, and I am wondering what other FI's procedures look like. Currently for Phase 2 customers our procedure is a bit repetitive, and I am looking to change this.

In the past, and for Phase 2 exempt customers only, the BSA officer would reach out to the branch and have them complete an exempt customer monitoring checklist. This checklist has the banker acknowledge that the exempt customer's activity has remained the same since the last review, and they sign off on it. The BSA officer would also send a similar form to the customer. This form would have the customer acknowledge that their activity has remained the same and that the nature of their business has not changed (among many other things). On top of this, the BSA office would do an individual review of the customer's activity by obtaining proof that 5 CTR's were generated but excluded, look at risk factors and cash activity from the previous year - current.

I am looking to simplify this process by keeping everything in the BSA department, and would like to not involve the customer or the branch. Can anyone share what their annual review process for Phase 2 customers looks like? Is it similar? Do you also include the branch and the Phase 2 exempt customer in your review?

Any information, tips, guidance is extremely helpful and greatly appreciated!!

Thank you so much!

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#2247814 - 01/19/21 06:58 PM Re: CTR annual review of exempt customers procedure Sophia
ColoradoAML Offline
Gold Star
Joined: Mar 2018
Posts: 270
We don't involve the frontline unless we detect something has changed that we can't reconcile. We effectively conduct an EDD on the customer similar to that we conduct on a high-risk customer, and draw conclusions regarding the nature of their business. If we find any evidence that they're engaged in prohibited activity, we verify that the amount is less than 50%. The only prohibited activity we currently have in our exemptions, or frankly that I could envision exempting period, are lottery sales, which are generally easy to identify and put values on without engaging the customer.

Our exemptions are reviewed in every exam and we've never been criticized, although my understanding is that many banks have a much more streamlined review process than ours.

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#2247816 - 01/19/21 07:03 PM Re: CTR annual review of exempt customers procedure Sophia
rlcarey Offline
10K Club
Joined: Jul 2001
Posts: 78,584
Galveston, TX
Welcome smile

At a minimum, I believe that you have to verify that they still qualify based on cash transaction volumes over $10,000 and that they remain properly organized to do business in your State. Whether or not you need to reverify that 50% of their revenues are eligible for exemption might be more based on the type of customer you are dealing with. If it is questionable, then you should reverify that with the customer or via other information available internally. Getting the branch involved in any of this is probably a waste of time and approaching the customer is going to be more of a risk base call based on the amount of information you have on hand.
The opinions expressed here should not be construed to be those of my employer:

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#2247842 - 01/19/21 09:49 PM Re: CTR annual review of exempt customers procedure Sophia
Sophia Offline
New Poster
Joined: Jan 2021
Posts: 2
Thank you so much for your input! I was reading through FINCEN's rules, and they were not very helpful. I had a feeling I would get better answers here smile. I will certainly be using your recommendations!

Thank you again smile!

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