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#538327 - 04/26/06 03:38 PM Monetary Instrument Log
Dlynn58 Offline
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Joined: Mar 2006
Posts: 788
Texas
When our customer come in to purchase a cashiers check with cash, we require them to deposit it into their account and in turn, we debit their account through our automated check system for the cashiers check. We have been told by different sources that we did not have to record that transaction on the monetary instrument log since it was deposited in the account. The previous bank where I worked says you do even though the customer deposited the cash. (Both banks are on the same system.) I have looked at different threads, but can't find anything on this. I have heard so many contradictions, that I am doubting the procedures we have in place. Thanks for any help.

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#538328 - 04/26/06 03:48 PM Re: Monetary Instrument Log
I. Wannano Offline
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Joined: Sep 2004
Posts: 56
Oregon
Without looking anything to substantiate my opinion, here it is...
It's still a cash purchase regardless of how your bank has you process it. By having them deposit it then turn around and sell a money order or cc and NOT record on the log...isn't that "circumventing the system"?

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#538329 - 04/26/06 04:05 PM Re: Monetary Instrument Log
Silent Valley Offline
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Joined: Mar 2004
Posts: 64
Texas
If the amount of currency involved is $3,000 to $10,000 inclusive, you must comply with the record keeping requirements whether the cash is accepted for the purchase or if the cash is deposited in an account. FinCen announced this Nov 2002. I would send you a link, but I am computer challenged.
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#538330 - 04/26/06 04:10 PM Re: Monetary Instrument Log
PJ Offline
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Posts: 115
It is still covered per the exam procedures:


INDIRECT CURRENCY PURCHASES OF MONETARY INSTRUMENTS
Banks may implement a policy requiring customers who are deposit accountholders and who want to purchase monetary instruments in amounts between $3,000 and $10,000 with currency to first deposit the currency into their deposit accounts. Nothing within the BSA, or its implementing regulations prohibits a bank from instituting such a policy.

However, FinCEN takes the position61 that when a customer purchases a monetary instrument in amounts between $3,000 and $10,000 using currency that the customer first deposits into the customer's account, the transaction is still subject to the recordkeeping requirements of 31 CFR 103.29. This requirement applies whether the transaction is conducted in accordance with a bank's established policy or at the request of the customer. Generally, when a bank sells monetary instruments to deposit accountholders, the bank will already maintain most of the information required by 31 CFR 103.29 in the normal course of its business.

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#538331 - 04/26/06 04:18 PM Re: Monetary Instrument Log
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Is it possible that the bank that says you don't have to record on the log because you deposited it into the account actually means they don't have to keep a log because by depositing the funds into the account they now can track those transactions electronically, hence no need for log.

That is one reason some banks require that the funds be deposited...it eliminates the need for a manual, paper log.
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#538332 - 04/26/06 04:38 PM Re: Monetary Instrument Log
Al Miller Offline
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Al Miller
Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
Another reason to require the deposit is that the transaction is now recognized as a cash transaction in Account Analysis.
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#538333 - 04/26/06 07:58 PM Re: Monetary Instrument Log
RFitzpatrick Offline
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RFitzpatrick
Joined: Apr 2002
Posts: 424
Pacific NW
I know we were looking at requiring currency be deposited to avoid the log just about the same time FinCEn came out with their advisory saying these were still subject to recordkeeping. Here is the FinCEn advisory on the issue:

FinCEN Monetary Instruments
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#538334 - 04/27/06 01:14 AM Re: Monetary Instrument Log
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,912
Galveston, TX
KB - Just curious?

If the cash trail goes to the account holder's account, how do these systems tell what monetary instruments the customer actually bought with cash?

You have to be able to separate these cash purchases from other types of purchases, i.e. withdrawal from checking of previously deposited funds.

I have not seen a teller/deposit system that could do this correctly yet and I was curious which ones you have seen?
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#538335 - 04/27/06 01:44 AM Re: Monetary Instrument Log
Kathleen O. Blanchard Offline

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In ITI (and in Atchley's monetary instrument AML module) there is an indicator for a cash purchase. The teller system creates the check so all of that data is there, and it is also required for other cash purchases (money orders, etc.)

The data, however, (the montary instrument specific data) was trapped at the branch level, it didn't upload (explain that one to me). However, each branch had a macro to run on Friday night that uploaded the data, which was then pulled together for BSA reporting.

Until ITI upgraded their purchase module, we were still tweaking the reports to get it right. I believe the bank has started using Atchley's monetary instrument purchase module now, which does track it all.

However, it also was the only way we got the cash correct for CTR purposes! Otherwise, we "lost" it. Before we started this (depositing the cash) we had no way to know if a customer was going from branch to branch purchasing monetary instruments for cash on the same day.
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HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
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#538336 - 04/27/06 10:25 AM Re: Monetary Instrument Log
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
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Next to Harvey
Dlynn,
Requiring cash to be deposited as the prelude to selling a monetary instrument is an acceptable practice, but it does not alter the bank's requirements for keeping information.

The centralized log requirement was removed from the regulation several years ago. Within any specific financial institution the use of a log is a procedural, not a legal requirement; some banks don't use logs or at least they don't use them for transactions that are run through an account.

FinCEN issued guidance on the effects of depositing the cash to an account and purchasing the check with a debit to that account a few years ago. That guidance was reiterated without change in the more recently published examination procedures.

Any bank that sells a monetary instrument for cash above the threshold amount must keep certain information. How it keeps the information is up to the bank. If the cash is first deposited to a customer's account and then the account is debited to pay for the monetary instrument, the bank must still keep the same information.

If you are questioning your procedures, run a few test cases to see if you could locate the information on cash sales vs. what the examination manual calls indirect sales.

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