Skip to content
GeoDataVision
Thread Options
#599601 - 08/15/06 07:47 PM Toying with the idea of a Phase II exemption...
Dip Offline
Power Poster
Dip
Joined: Mar 2005
Posts: 6,298
San Diego, CA
So, my BSA mentor at the OCC suggested I might want to consider exempting one of the bank's frequent CTR filers, just to try it out, see how it works, learn....etc.

I have decided on the customer, a sole prop, who would be the best to exempt and matches all the requirements for an exemption, not to mention I have been to the business several times and the volume of cash is very legitimate.

Doign this iwll make more work for me, but I will learn in the process and broaden my knowledge. What are y'all opinions on this? Is it worth it? Any tips on gettign started?
_________________________
Dabbling in banking, law, accounting...the life of a trustee.

Return to Top
BSA/AML/CIP/OFAC Forum
#599602 - 08/15/06 09:51 PM Re: Toying with the idea of a Phase II exemption..
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,082
Toano, VA
  • First you compute the cost of filing one additional CTR for the proposed exempt person.
  • Next, you estimate (based on past filing frequency and your expectations for the business' cash sales) the number of CTRs you expect to file during a typical year.
  • Next, you determine the number of hours required to document the exemption plus the maintenance hours spent training, auditing, recertifying, and defending this exemption.
  • Next, you estimate the total cost of filing CTRs (estimated annual number X cost per item) and the cost of creating the exemption (# hours X fully loaded cost of staff and management time.)
  • Finally, you compare costs and ask yourself whether the potential savings are worth the hassle and additional risk.

Unless you expect to save A LOT of money, spend your time on something that has a better risk/reward ratio.
_________________________
...gone fishing.

Return to Top
#599603 - 08/15/06 11:22 PM Re: Toying with the idea of a Phase II exemption..
Dip Offline
Power Poster
Dip
Joined: Mar 2005
Posts: 6,298
San Diego, CA
...even though FinCEN says to exempt as often as we can?
_________________________
Dabbling in banking, law, accounting...the life of a trustee.

Return to Top
#599604 - 08/15/06 11:56 PM Re: Toying with the idea of a Phase II exemption..
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,916
Galveston, TX
"...even though FinCEN says to exempt as often as we can? "

Richard forgot to make sure you factor in possible fines when you screw up your Phase II exemption process or the cost of going back several years and back-filing. I have yet to visit a bank that has had Phase II exemptions and not identified at least one problem that caused the bank to perform, at the very least, back-filing. Some of these banks have very talented staff and overall good programs, but one detail or another can get you.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#599605 - 08/15/06 11:57 PM Re: Toying with the idea of a Phase II exemption..
GuitarDude Offline
Power Poster
GuitarDude
Joined: Nov 2004
Posts: 5,924
So Cal
FinCEN does not have a federal regulator just itching to find violations!

All of the work required for Phase II exemptions only makes less paperwork for them, not us, IMHO.
_________________________
I've just writed a wrong.

Return to Top
#599606 - 08/16/06 10:19 AM Re: Toying with the idea of a Phase II exemption..
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,082
Toano, VA
Quote:

...even though FinCEN says to exempt as often as we can?


Any time FinCEN wants to cut the volume of useless CTRs, it can amend the regulations. (Notice that FinCEN hasn't put any concessions on the table since Phase II went into effect?) Meanwhile, you're hearing the company line when FinCEN and your regulator encourage you to use Phase II.

The purpose of exemptions is to save time and money. You're making a sucker bet unless you know your costs and can see enough savings to justify the risks that Randy identified.

If you're suffering from the high cost of filing CTRs, focus on filing process improvements first. Time and energy spent here will reduce both risk and cost.
_________________________
...gone fishing.

Return to Top
#599607 - 08/16/06 02:24 PM Re: Toying with the idea of a Phase II exemption..
Angel Eyes Offline
Power Poster
Angel Eyes
Joined: May 2001
Posts: 4,599
I am no expert dip....just my two cents, what the gentleman say above is all true and correct. But working in the trenches I can say that the time it takes us to fill out a CTR everyday (very manual process at our institution) that for us filing exemptions has been a very positive move. Once you have a system in place for monitoring the exempt customer, ensuring their eligibility etc the process can run quite smoothly. My examiners have been complementary of our processes and we have never had to "defend" (I think that was the term used above) any of our exemptions.

Return to Top
#599608 - 08/16/06 02:54 PM Re: Toying with the idea of a Phase II exemption...
Kelsey D Offline
Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
I agree with Jennifer, especially if you have quite a few that you can exempt. We have exempted almost 20 Phase II customers, which has definitely saved time and money for the bank. However, if I was at a bank that was thinking about Phase II exemptions for the first time and there was only one or two that were eligible, I'd be hesitant on exempting them. Like the others said, you have to consider the cost and risk involved in your situation.

Return to Top
#599609 - 08/16/06 03:28 PM Re: Toying with the idea of a Phase II exemption...
Ice Man Offline
Gold Star
Joined: Jul 2002
Posts: 325
Texas
We recently Phase II Exempted those repetitive customers we file CTRs on. ALthought the documentation requirement is there, we actually cut our CTR filings by almost 40%.

Return to Top
#599610 - 08/16/06 03:39 PM Re: Toying with the idea of a Phase II exemption...
Dip Offline
Power Poster
Dip
Joined: Mar 2005
Posts: 6,298
San Diego, CA
yeah, we only have about 3 customers who comprise about 98% of our CTR filings. the one i want to do is very low risk. it's a bakery/restaurant in a ritzy area that does very well. i've pnly been at this bank for 3 months, but i know without looking back that the volume of ctr's for this place will probably triple during the holidays, making the phase II pay off during those months. i think i will go for it...but AFTER our occ exam, which is in a month
_________________________
Dabbling in banking, law, accounting...the life of a trustee.

Return to Top

Moderator:  Andy_Z