A customer comes in and withdrawals over $10,000 from their deposit account. They then immediately go to the loan window and use the cash to make a loan payment. Is a CTR required since the cash never left the Bank?

Did they receive the physical currency?

customer makes a withdrawal over $10k and is given cash...customer takes this cash and goes to loan department and makes loan payment with same cash of over $10k...

yep, CTR all day long in my book. customer was given and took possession of cash...

"Same cash" - even if you knew that to be the case, they took possession of the currency. I agree - reportable twice.

This is one of those unusual cases where form trumps substance. Debiting a deposit account and offsetting that debit with a credit to loans is not reportable...but that's not what happened. Instead, the customer chose (for what reason?) to complicate things. When teller A counted out $10K+ and handed it to the customer, a reportable currency transaction occurred. The subsequent transaction (loan payment) can't unring the first CTR bell, and the cash payment on the loan is a second CTR bell.

If what Richard said is accurate a CTR is warranted. Why a simple debit and credit transaction wasn't performed is a good question.

As a follow-up to the responses to this question, would you treat this differently if both transactions were done at the same teller window. For example, Customer asked for and received the cash over $10k. Did not leave the teller window, but once the cash was counted out to him requested to make a loan payment with the entire amount. The teller made the loan payment and took all of the cash back. The teller has processed a cash out of over $10K and then a cash in of over $10K. Is a CTR needed in this situation?

The safest answer is "no", because that's what your books will reflect a year from now if your regulator happens to look back at these transactions.

I agree. The fact that the cash crossed the teller window and was in the customer's possession completes the cash-out transaction. When the cash crossed the teller window the second time, it's a separate transaction (cash-in) once it's back in the hands of the bank, even if it's clearly the same physical cash. Report both transactions on your CTR.

Would it have been more efficient to simply debit the deposit account and credit the loan account, so that no cash is involved? Of course it would. But that's not what happened.

Thanks for the responses Richard and John. As our system shows the time and teller and we could always verify that cash never left the building but had remained in front of the teller, we were not filing on these rare events. However based on these discussions I will update our procedures and begin filing CTRs for these situations when they occur. Thanks again for your insight.

Reviving this for an additional scenario:

Though we listed it as cash debit, the teller didn’t actually hand the $10,400.00 cash to the account holder - they used that amount to make an interest payment on her loans of $4739.40. Then handed $5,660.60 cash to the customer. An account debit for the interest would have been easier but that wasn't what the customer requested and didn't tell the teller they would be following up with the interest payment from those funds prior to completing the cash debit.

So the consensus is no CTR based on the fact the customer never had the 10400 cash in their hand? This doesn't happen often but I want to be sure I apply how we handle it consistently.

They withdrew $10,400 = CTR. It is the transaction which makes it reportable. I look at cash transactions $3,000.00 or more. I do not know if it physically touched the customer. Anything $10g or more prompts the CTR.

"A bank must electronically file a Currency Transaction Report (CTR) for each transaction in currency (deposit, withdrawal, exchange of currency, or other payment or transfer) of more than $10,000 by, through, or to the bank."
https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/06

"It is the transaction which makes it reportable."

That is a true statement and since the transaction did not actually involve more that $10,000 in physical currency being exchanged, it is not reportable.

Why wouldn't a "cash out" over $10,000 not prompt the CTR? It says they took possession the cash and then made a loan payment with part of it. What am I missing? If they told them they were putting it all in their SDB it technically didn't leave the bank, but you would still file.

Because it is just a paper ticket that says "cash out" and in this case, that ticket did not represent any physical currency.

The follow-up question was the following: "Though we listed it as cash debit, the teller didn’t actually hand the $10,400.00 cash to the account holder - they used that amount to make an interest payment on her loans of $4739.40. Then handed $5,660.60 cash to the customer. "

I believe you are reading the original post from almost a year ago.