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#2269625 - 04/26/22 02:15 PM Exemptions - Aggregate w/Ben Owner
Lindsay Offline
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Joined: Feb 2020
Posts: 9
My question is: How are you handling exemptions for two entities with common ownership where one would not qualify on their own (less than 2 months and less than 5 reportable transactions)? Based on FinCEN guidance we aggregate the cash activity based on common beneficial ownership. Would the second entity qualify based on aggregation and then document as a risk based decision for the timing?

If this helps: Company A has qualifies for a Phase II exemption. Company B has been open less than two months and has cash activity, but has not met the reporting threshold on its own. Company B would not qualify at this time on its own. Both are owned by the same beneficial owner and as a result, we would link and aggregate cash activity.

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#2269627 - 04/26/22 02:36 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
RockChucker, CAMS Offline
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Joined: Jul 2013
Posts: 1,657
The Country
Hello Lindsay and welcome to BOL!
Legal entities such as an LLC or INC are separate entities from each other and from their "owners" and shouldn't be combined for CTR exemption purposes unless these entities comingle funds. That said, I am always impressed at the BOL contributors and their ability to see things I may have missed.
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#2269632 - 04/26/22 03:15 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
Lindsay Offline
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Joined: Feb 2020
Posts: 9
We have not observed co-mingling (yet).

If I am understanding you correctly (and I hope I am) - unless we have direct knowledge they are sharing employees, supplies, etc. We are safe from aggregating under common ownership.

I verify - only because they are a chain similar to that of a McDonald's where it isn't unreasonable they'd share supplies and employees for coverage.

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#2269637 - 04/26/22 04:08 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
RockChucker, CAMS Offline
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Joined: Jul 2013
Posts: 1,657
The Country
I would only look to see if they are comingling funds, not employees or office supplies.
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#2269640 - 04/26/22 05:28 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
Lindsay Offline
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Joined: Feb 2020
Posts: 9
I am going to throw a curveball... what if the deposits are brought to the bank by the same person. 1 conductor - 2 beneficiaries

- Appreciate your feedback.

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#2269643 - 04/26/22 06:03 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
There are no beneficiaries on a CTR. Someone can however conduct a transaction on behalf of someone else. If these are two actual separate entities and they are not commingling funds. then whoever is making the deposits for them is irrelevant to determining whether they qualify for an exemption.
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#2269646 - 04/26/22 06:36 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
Lindsay Offline
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Joined: Feb 2020
Posts: 9
Thanks!

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#2269671 - 04/26/22 07:41 PM Re: Exemptions - Aggregate w/Ben Owner Lindsay
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,684
Cape Cod
Common ownership is not, by itself, a reason to aggregate transactions at the ownership level unless there is commingling of assets or employees, etc., making it appear that the entities act as a unit rather than independently of one another.

I suggest you wait for the new entity to qualify for exemption on its own merits.

On the other hand, if the two entities are not being operated as separate entities (see my first paragraph), I would be VERY RELUCTANT to exempt either of them.
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