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#778152 - 07/18/07 09:24 PM "Correspondent Banking"
Spenser Offline
Member
Joined: Apr 2006
Posts: 52
Washington state
I am the BSA officer for a medium-sized community bank. We have agreements with two large commercial banks, which allow our business customers, who are not near any of our branches, to make deposits into their branches. The deposited amounts are then transferred to our bank, via the Internet, and credited to our customers' accounts the following day. Our internal auditor listed as a 'finding' the fact that we can't be sure that a customer isn't depositing cash into one of our branches, and on the same day depositing cash at a "correspondent" bank branch, to a total of over $10,000. If each cash deposit was less than $10,001, neither bank would know that a CTR should have been filed. When we receive the deposit information, we see only a total, not a cash/check breakdown.

Does anyone else offer this service? And if so, do you have a way to mitigate the risk of missing a CTR? We would like to close this open finding. Can anyone offer some input?

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#778242 - 07/18/07 11:04 PM Re: "Correspondent Banking" Spenser
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Sounds like a similar issue that Credit Unions face with "shared" branching.

IMHO, only the cash at each institution should be the trigger for a CTR. Otherwise you have an awkward situation as to which institution to name on the CTR. The institution that received some of the cash, or the institution that received the rest of the cash. Remember, we aren't talking about branches of the same institution.

However, if you detect that your customer is "structuring" deposits between "correspondent" or "shared" branches in order to keep the amount at or below $10,000, then you should consider a SAR.

Frankly, all of this would go away if the government would recognize the futility of CTR's and SAR's for structuring, and just go with the idea that I proposed - a monthly report, similar to the tape to tape submission that banks do for loan histories to credit bureaus - and the report would contain accounts that have more than $10,000 in or $10,000 out in a month. Let's face it, any account that has more than $10,000 in a month will either have a CTR or a SAR for structuring, except for the PIA "Exempt" customers which require a whole 'nother round of monitoring.

Eliminate CTR's and structuring SAR's, just submit the report generated from the system for cash activity, and build in a tolerance of up to $1,000 for errors in amounts, and you will eliminate at least 50% of the non-productive tasks for BSA staff. Then you can spend your time looking for REAL criminal activity.

(now stepping off soapbox....)
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#779019 - 07/19/07 08:35 PM Re: "Correspondent Banking" Princess Romeo
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Well, I just got some clarification from NCUA on the shared branch issue.

Basically, the shared branch agreement states which institution is supposed to file the CTR. However, even if the receiving share branch receives the cash, the "home" Credit Union still has to ensure that the CTR was filed and filed correctly. Therefore, the share branch is supposed to FAX or send the CTR to the "home" Credit Union.

If a member deposits cash and different share branches throughout the day, the "home" CU is then responsible to file the CTR (multiple transaction) if the cash threshold is met.

If the share branch files the CTR and there are errors, the home Credit Union is responsible for filing an amended CTR.

If the home Credit Union suspects structuring, it should take appopriate action.

Of course, the issue remains that the data processing systems that support the share branch transaction reporting can be somewhat less than steller in the manner in which information is accessible to the home Credit Union, making it difficult to immediately determine the amount of cash in a mixed deposit. This is an issue that the NCUA is aware of, but so far it is up to the Credit Unions to try and push the issue with their processors.
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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