We reciently had a BSA exam and we had several exempt forms with the incorrect date. The accounts were older and I can not for the life of me find the first date we could exempt. By older I mean we have dates of exemption in the 80s. Can anyone point me in the direction of where to find this or tell me the very first date that a company could have been exempt. I know it is the date of the first exempt transaction, but some of these accounts were opened doing reportable transactions before we could even exempt is what our auditor said.

The Phase I exemption process became available in September of 1997, Phase II, September of 1998. FinCEN Advisory #10

Initially, there was no DEP form and a modified CTR was to be used to notify the IRS of the exempt person. Your auditor's point is that a DEP dated prior to these time frames is obviously incorrect.

I'm not certain I understand what problem you are trying to remedy, but it should not go back more than five years in any cirumstance. Copies of your DEPs should be available from the IRS computing center, but there should also be documentation at your bank supporting the analysis.

Exemptions during the 70's were the norm and I don't recall any requirement for even a list. Exemptions in the 80's were under system #2 which required a list, but no filing. As Ken explains, system #2 was replaced in the late 90's by the Phase I/II system. If you are saying that the exemptions in question were not reinstated under these new rules (by filing a DEP form) during the phase-in periods, then they expired.

What happened was when we did our review the incorrect date was put on the exempt form. The date of exemption was put as the date the account was opened. Our auditor said that the date should be the date that we could first exempt them. In the case for these accounts it would have been the September 1998. Can I date the DEP back to the 80s? I believe I am confused.

Piano Man

The date that goes on the form is the date the exemption was actually issued. Depending on whether it is phase I or II, it cannot be before September, 1997 or September 1998 respectively.

Thanks Ken. I put the September 1998 Date on them because they were Phase II.

PM

The date that goes on the form is the date the exemption was actually issued; plugging in the September 1998 date will be just as wrong as dating it in the 1980's. You need to sit down with your auditor, document the error and agree on an approach that does not make it look like you are attempting to bury the problem.

We exempted the customer in the 80s or 90s. Our auditor told us that the date should not be any older than the 1998 date. So am I correct in stating that we need to find the date in 1998 that we sent in the new DEP form? I am sorry I am being such a pain. I just don't have much faith in our auditor sometimes.

pm