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#56817 - 01/24/03 11:33 PM BSA: CTR Exemption Question
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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I have looked at just about every CTR post on the entire website and still am unsure. I have two supermarkets, each incorporated separately (closely held corporations), essentially same management at the top (one individual is really the principal for both companies). Accounts for one store have been at our bank for several years and that corporation is exempt for CTR filings. Customer wants to move accounts for second store to our bank. Does the waiting period apply?

If yes, how do I deal with requirement to aggregate "same management" companies? Am I missing something here?
Last edited by mbguard; 01/25/03 05:21 PM.
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General Discussion
#56818 - 01/25/03 12:01 AM Re: CTR Exemption Question
David Dickinson Offline
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David Dickinson
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Central City, NE
Good question. I believe that since each has a separate TIN, each must be separately considered for exemptions. I think you start all over on the waiting period. I would place a call to FinCEN to see if they could shed some light on this. Maybe someone has been down this road before.
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#56819 - 01/25/03 01:21 AM Re: CTR Exemption Question
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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I do plan to call Fincen Monday morning. I was just hoping some of you CTR experts could give some advice as I am the impatient sort. I will report what Fincen has to say.
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#56820 - 01/25/03 01:42 AM Re: CTR Exemption Question
thomasj Offline
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Pennsylvania
If it were me, I would treat them as seperate customers if they are seperate corporations and have different TINs. I would file the CTR's for the 12 months on the new customer and then exempt them. I would not worry about aggregating the two stores if they are seperate corporations - even if they are owned by the same individuals. That being said, I would make sure I was monitoring for any kind of "suspicious" activity.
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#56821 - 01/25/03 02:24 AM Re: CTR Exemption Question
Richard Insley Online
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Richard Insley
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Toano, VA
File CTRs on both companies and forget the exemption. If it's this much trouble to figure out and support, you're wasting more money trying to do the exemption than it would cost to file the CTRs.
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#56822 - 01/25/03 02:34 AM Re: CTR Exemption Question
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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I'd be perfectly happy to do that, Richard, but the EVP who deals regularly with this customer wants the add'l store exempted. It's not like we are sending them to the rack or anything; CTRs are not that onerous but the internal people involved are being silly. This is a perfectly legitimate business that I know from a prior bank 20 years ago, so that does not concern me. And we do monitor for suspicious activity and would spot if anything unusual were happening.

I also have known the EVP quite well for many years and told him that if he doesn't like the law he can call his congressman but I can't control it.

But I can at least check so he knows he got the right answer and can't complain about internal "customer service" from the compliance area that reports to me.
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#56823 - 01/25/03 03:57 AM Re: CTR Exemption Question
Anonymous
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"Silly," is the right word. Has your EVP ever heard of the concept of risk management?

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#56824 - 01/25/03 08:25 AM Re: CTR Exemption Question
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Let's just say it is not his strong point, of which he does have many. Others bring the balance. But I would like he and his staff to have the correct answer so this doesn't keep coming up over and over as they develop business.
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#56825 - 01/25/03 10:49 AM Re: CTR Exemption Question
Richard Insley Online
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Richard Insley
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Toano, VA
If you're forced to process a new exemption, I'm with others in this thread who advise that you treat the new store like any other new commercial customer--CTRs for a year and no aggregation with the "related" company.
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#56826 - 01/25/03 02:12 PM Re: CTR Exemption Question
Elwood P. Dowd Offline
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Next to Harvey
Now you have a chorus: Treat the store like any other new customer. Common ownership, management, personnel and even common driveways are irrelevant if the store is a second legal entity.

However, I think I used to work with your EVP. Unless his stripes have changed, he's going to say, "Show me where it says that!"

Exemptions are a grant of authority to make an exception. The regulations and FinCEN guidance on exemptions do not say what you cannot do, they say what you can do. If they do not say you can craft the exemption a certain way then you simply cannot. FinCEN advisory number 10 in Q & A 6 creates the only exception to the requirement that a Phase II exemption customer must have had a transaction account with you for 12 consecutive months. It talks about a situation where the customer left your bank briefly and then came back. That is an exception to the fact that the 12 months had to be consecutive, not to the fact that a 12 month history is a prerequisite. There are no exceptions to a 12 month history for a Phase II exemption.

It's always been a source of fascination to me that if you tell people they can do what they want, they never ask for a citation. It's only when you tell them the rules are not what they imagined them to be without reading them that they want to know where you came up with your answer.

Calling FinCEN is always a good idea, but telephone advice is often inconsistent and never binding. If they tell you the relationship with the sister company waives 12 month requirement, then its your turn to say, "Where does it say that?"
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#56827 - 01/25/03 03:44 PM Re: CTR Exemption Question
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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At least you are all saying what I said when this came up....can't do it. I did tell them if he did an IPO and took the company public I could possibly help.
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