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#2012325 - 05/06/15 01:31 PM NAICS Code completion
JoAnne Offline
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Michigan
My BSA Officer is telling me that she had a recommendation in a recent audit to complete the NAICS code for all persons involved in or conducting the transaction. (I see in the final report it is a "Best Practice recommendation"

When I read the March 2012 Guidance from FinCEN it says the NAICS code is NOT mandatory.

Based on the audit, my BSA Officer is requiring the branches to complete the NAICS Code for everyone on the CTR.

I am questioning a CTR that was completed for an individual cashing an Official Check. The individual's occupation is listed as Retired Factory Worker. The NAICS Code on the CTR is for "Fabricated Metal Product Manufacturing". BSA Officer is telling me that the NAICS Code for the individual is probably the Standard Occupational Classification Code (SOC) and not the NAICS Code, but she couldn't support that comment.

Questions:
1. Should they be using the SOC code (I can find no reference to SOC code in any of the FinCEN guidance)?
2. Should the NAICS code be completed for individuals just cashing a check?
3. Should the NAICS code be completed for all individuals conducting a transaction?
4. Would "Retired Factory Worker" in the Occupation field. with NAICS code left blank be sufficient in my scenario?

In other words, since the NAICS Code is not a "Critical" or mandatory field per FinCEN, how picky should I be when reviewing the CTRs for compliance?
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#2012332 - 05/06/15 01:43 PM Re: NAICS Code completion JoAnne
John Burnett Offline
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1. The SOC code should not be used.
2. An individual simply does not have an NAICS code as an individual. Businesses have such codes; individuals don't
3. See #2
4. Yes

I can see an argument for using an NAICS code when filing a CTR on a sole proprietor's business transaction. Otherwise, using a code for individuals is pointless to the point of being ridiculous.
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#2012341 - 05/06/15 02:10 PM Re: NAICS Code completion JoAnne
JoAnne Offline
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Michigan
Thank you John. You supported my line of thinking.
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#2013185 - 05/11/15 11:27 AM Re: NAICS Code completion JoAnne
Pat Patriot Act Offline
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Quote:

In other words, since the NAICS Code is not a "Critical" or mandatory field per FinCEN, how picky should I be when reviewing the CTRs for compliance?


Best practice recommendations are classified that way for a reason. Unless your CTR system interfaces with your core and takes NAICS from the CIFs on it, it's not worth your time to get that data. If you ARE taking NAICS from core CIFs, but data is frequently missing, then evaluate the overall completeness of that data field since it can effect other applications.
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#2013193 - 05/11/15 01:03 PM Re: NAICS Code completion JoAnne
BSA Smitten Offline
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Joined: Jul 2013
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Great Lakes
@ JoAnne

I too had the same recommendation from our auditing firm. My question to them was,"How do we go about using an NAICS code for individuals when they are meant and designed for entities/businesses? An idividual could work for a school but is an accountant. Which code would we use?"

It never went anywhere and they couldn't provide me with an answer or guidance, nor have our examiners said one word about it.
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#2013219 - 05/11/15 02:29 PM Re: NAICS Code completion JoAnne
John Burnett Offline
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Just remember that if you are pulling an NAICS code from your CIF, FinCEN only accepts certain codes in the CTR filing.
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#2013284 - 05/11/15 05:31 PM Re: NAICS Code completion BSA Smitten
Elwood P. Dowd Offline
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Quote:
It never went anywhere and they couldn't provide me with an answer or guidance


That's easy to understand. The 2012 Guidance mentioned, the CTR FAQ's, and the SAR FAQ's all indicate it remains your option to use the occupation or type of business box instead. Your auditor cannot support its assertion because it is blatantly incorrect.

By using the "short list" John mentioned, FinCEN dumbed it down to the point where it is worthless. Moreover, from the NAICS web site:

The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.

Individuals do not have a code; there is no matching them to either their employer or their occupation. Rather than being a "best practice," assigning an NAICS code to an individual is an indicia of ignorance.
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