We've recently exempted a Phase II business entity that routinely does currency exchanges/change orders. I understand that exemptions covers deposits to and withdrawals from the account(s). What is so unique about this company and its operations is that it is under common ownership with two other companies. CTRs that have been filed in the past are aggregate totals from all three businesses and usually include change orders for one or more of the stores. Here's my question: do we still aggregate the currency exchanges of the now exempt business entity in with the remaining two businesses that are commonly owned? I believe we do, but this is the first time I've encountered this situation.

If they are co-mingling assets, how you justified the original exemption is beyond me. But the answer is yes.

The common ownership designation was established by my predecessor at the recommendation of our external auditors, but it does make sense to me. There are three convenience stores owned and operated by the same family--who reside together under one roof. While the stores are separate corporate entities, the players are intertwined and co-mingling could be occurring. Fast forward to the exemption process. The business that is now exempt is the lead store; it is more cash intensive and does more business in general due to its location. The activity at the other two stores, if analyzed independently, would not quite meet the transaction threshold requirement for exemption purposes (yet). Even if we should not have treated these companies as having common ownership, there would still be aggregation for CTR purposes because the same parties are transacting on behalf of all entities. So now my question involves the exemption process; how should we look at these businesses in order to determine if they qualify?

If you are treating them as comingling entities for CTR filing and aggregation, I would ask you how can you exempt one of them as that means you are not sure that all the cash they are depositing belongs to or benefits that specific company?? It is one of those "you can't have your cake and eat it too" scenarios.

the players are intertwined and comingling could be occurring.

Common ownership is not an issue. Could they be comingling or are they comingling. What makes you think that they are? Are they writing checks back and forth between the companies, are there other unexplained transfers, or is anything else present in the following bulletin, etc.?

https://www.fincen.gov/resources/statute...sinesses-common

Unless there is something that suggests comingling was occurring that they could point too, your external auditors were way off base.

Bad decision based on really bad advice.

The guidance rlcarey linked explains the rule; i.e. you do not aggregate based on common ownership alone. That guidance references earlier guidance that sets out the exception to the rule; i.e. if the entities are not being operated as separate entities their cash should be aggregated for CTR purposes.

Your facts do not suggest that the entities are not being operated separately. The fact that their transactions are being conducted by the same person is the only reason their transactions would be aggregated for CTR purposes.

There is absolutely nothing that says the activities of multiple entities can be aggregated for exemption purposes. You evaluate whether the entities meet the definition of an exempt person one at a time.

I knew there had to be more to this story; please pardon the omission. There is evidence of co-mingling funds, e.g. lead store paying bills for the other stores, online transfers between the accounts--hence the recommendation. I just stepped into this position, but I am the one who granted the exemption for the lead store. I want to be sure that all things considered I can look at them separately for exemption purposes. I certainly do not want an ineligible exemption on my watch! Thanks.

OK. You are beginning to make a case for treating these business with common ownership as not operating independently of one another. If you decide to treat them that way, you should drop the exemption and start filing based on aggregated cash activity among the businesses. At the same time, you should probably ratchet up your AML risk level assignment for the combined businesses and start some more aggressive monitoring of their activity.