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#547316 - 05/12/06 04:15 PM Negotiable Instrument Log
JW Offline
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Joined: Nov 2005
Posts: 269
Indiana
Log it or not?

Customer comes in w/ $4,000 cash and deposits into checking. Then wants to debit checking for cashier's check for $4000. I would say yes, because cash walked in the door and negotiable instrument walked out both over $3000. Any thoughts?

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#547317 - 05/12/06 04:41 PM Re: Negotiable Instrument Log
devsfan Offline
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Joined: Jun 2004
Posts: 1,927
NYC
Yes

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#547318 - 05/12/06 05:04 PM Re: Negotiable Instrument Log
nemsi Offline
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Joined: Nov 2005
Posts: 383
We do not log if the money is deposited first. As I understand it, the log is used as a means of recording the transaction. Once the funds are deposited we have a record identifying the individual, amount, date, etc..so I say no but am anxious to hear what others are doing.

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#547319 - 05/12/06 05:09 PM Re: Negotiable Instrument Log
Kathleen O. Blanchard Offline

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If your system tracks for you, you are covered as long as the info is retrievable. If you still need to track these manually so that you can retrieve the info if requesed, then yes, you should log this.
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#547320 - 05/12/06 05:11 PM Re: Negotiable Instrument Log
MagicCity Offline

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MagicCity
Joined: Apr 2003
Posts: 3,003
Fort Lauderdale, Florida
From the reg:

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 regulations prohibits a bank from instituting such a policy.
However, FinCEN takes the position 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.

RECORDKEEPING AND RETENTION REQUIREMENTS
Under 31 CFR 103.29, a bank's records of sales must contain, at a minimum, the following information:
If the purchaser has a deposit account with the bank:
o Name of the purchaser.
o Date of purchase.
o Types of instruments purchased.
o Serial numbers of each of the instruments purchased.
o Dollar amounts of each of the instruments purchased in currency.
o Specific identifying information, e.g., state of issuance and number on driver's license.
If the purchaser cannot provide the required information at the time of the transaction or through the bank's own previously verified records, the transaction should be refused. The records of monetary instrument sales must be retained for five years and be available to the appropriate agencies upon request.

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#547321 - 05/12/06 05:14 PM Re: Negotiable Instrument Log
MagicCity Offline

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MagicCity
Joined: Apr 2003
Posts: 3,003
Fort Lauderdale, Florida
I think keeping the log regardless of whether it was a direct purchase, or deposited into the account first, is so much easier.
At the end of the day, when you are asked for your Negotiable Instruments purchased with cash, you have it in one place.

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#547322 - 05/12/06 05:14 PM Re: Negotiable Instrument Log
PJ Offline
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Joined: Sep 2005
Posts: 115
You may want to consider aggregation issues also.

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#547323 - 05/12/06 06:17 PM Re: Negotiable Instrument Log
banker1976 Offline
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Joined: Nov 2005
Posts: 346
Mid-Atlantic
Since you may be aware of the transaction, you would need to complete the log. I would see a transaction like this on my daily cash report. I would then look to see what encompassed the transaction and if it was cash to purchase cashier's check, we log it on a Monetary Sales Log.

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#547324 - 05/12/06 06:55 PM Re: Negotiable Instrument Log
nemsi Offline
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Joined: Nov 2005
Posts: 383
Thanks to all of you. I do see the transaction on the daily cash report. Banker1976 you offer a great solution to recording the transaction on a log at the time it's identified. Since monetary instruments are only sold to bank customers we would have ID info on the system. The customer depositing cash immediately prior to a purchase is a rare occurrence for us. However it is a needed enhancement to our BSA procedures. I sure am glad to have this resource (BOL)and I use it daily!

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#547325 - 05/12/06 07:23 PM Re: Negotiable Instrument Log
Dip Offline
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Dip
Joined: Mar 2005
Posts: 6,298
San Diego, CA
the regulaators allow banks to NOT fill in the NIL for depsoit account holders if they deposit the cash first (reduce burden on the bank). however, cd and loan customers who may also purchase negotiables dont have the option to deposit first, in which case you would need to complete the NIl for them for purchases between $3000 and $10000.
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#547326 - 05/12/06 08:26 PM Re: Negotiable Instrument Log
nemsi Offline
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Joined: Nov 2005
Posts: 383
dip,that's what we have done in the past. if the cash is deposited prior to purchase, the MIL was not completed. If cash was used for purchase the MIL was completed along with bank's required documetation and officer approval- that took care of CD and Loan customers. It appears now that what we've been doing may not be enough.

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#547327 - 05/12/06 08:39 PM Re: Negotiable Instrument Log
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,923
Galveston, TX
Quote:

the regulators allow banks to NOT fill in the NIL for deposit account holders if they deposit the cash first (reduce burden on the bank).




How do you track them??? If you can't specifically identify these transactions at a later date that is in direct contradiction of the FinCEN directives.

Realize that you are required to maintain the sale of monetary instrument sales records in a manner that you can produce them on request. It is not just a matter of having all the information required somewhere within your databases.
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#547328 - 05/13/06 04:49 PM Re: Negotiable Instrument Log
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Whether the customer deposits the cash into their account first, or purchases the Monetary Instrument(s) directly with cash, you still need to comply with the recordkeeping rules.

While there is no longer an "official" requirement to keep a log, most institutions have found it's easier to keep the log than to try to recreate all transactions subject to the recordkeeping rules. The 314a searches really drove that point hom.

From the BSA Exam Manual:

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 position 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.

http://www.fincen.gov/monetaryinstrumentsales3a.html
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