Okay... here's the scenario:

Non-customer comes in with a check drawn on our bank for $13,000.

He then purchases two cashier checks for $2,000 each and takes the rest of the $13,000 in cash.

We figure that even though he's essentially cashing a $13,000 check, he really only leaves the premises with $9,000, so we proceed as if he's under the CTR threshold.

However, we considered the monetary instruments as purchased with a reportable amount of cash and completed the monetary instrument log.

Is this the correct way to have handled this??

I agree that you do not file a CTR and you show in your MI log the purchase of the 2 checks. I would then monitor the 2 checks that he walked out of the branch with to see when/where/how they are negotiated to see if he structured the transaction to avoid a CTR (as he likley did).

If no cash was exchanged (which is sounds like there wasn't except for the $9,000 cash out) ...

then neither a CTR or MIL (for cash purchases) should be completed.

I agree with newbsa. The MILs were not purchased with cash, but rather a negotiable instrument. I do, however, believe the transaction was structured and would do what devsfan suggested and monitor the 2 checks.

I agree with newbsa. But I do recommend following up on the two cashier's checks to see if you can make a definite case for structuring, in which case you should file a SAR.

Anybody taking bets that he cashed the $2000 checks at another branch thirty minutes later?

I'll take that bet! We don't have any branches.

If the check was made out to the customer and not the bank then I would interpret that as bought with cash. He would have had to cash the check in order to purchase the cashiers checks in my opinion.

Who were the cashiers checks made out to? I would assume to him and if so then I would definetely call that structuring and file a SAR.

This one sounds fishy enough to me to file a SAR anyways.

That's kind of how I saw it, too. The fact of the matter is that we had the information we needed to go ahead and complete a log entry for the purchase of monetary instruments in excess of $3,000 in cash, so we did that.

I'd rather be safe than sorry and not end up in an argument with examiners about what the correct thing to do was. I can honestly see arguments for both cases.

I've turned the information over to our SAR committee. And, no, the cashier checks were not made out to the same guy. I don't know what ultimately they'll decide, seems as if they're leaning toward not filing... which is probably fine if they document why not... as for me, I'd have filed. Again, better to be safe than sorry.

And that is precisely why I don't gamble!!

I disagree. You can only buy something with cash - if you have cash. Definitely file a SAR - but you could get written up for reporting something that didn't really happen.

I think you did the right thing.

I still think that just because he never had possession of the cash that it could be construed as a cash transaction. Here's an example.

I saw a report where an examiner found a violation on a monetary instrument sale when the customer used a credit card advance to purchase the instrument. The examiner viewed it as two seperate transactions. One in which there was a cash advance for $3,500 and then that cash was used to purchase the instrument. I don't necessarily agree with that one because that cash is easily trackable but that was the examiners interpretation nonetheless and the bank had a violation cited.

I've also seen more examples of violations from lack of documentation and reporting than overdocumentating. In my opinion, it looks much worse to be documented for the latter.