This probably a stupid question but I've never had this situation come up before.

Our bank is going to be handing out a small cash incentive to each employee. The cash was withdrawn from a general ledger account by a bank employee and the total was over $10,000.

103.22(b) says, "Each financial institution ... shall file a report of each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000, except as otherwise provided in this section."

Stupid Question: Do we file a CTR for this transaction or is it exempt because the bank itself is conducting the transaction?

Your bank is exempt.

We had almost the same situation and I called the FinCEN hotline. My call was returned and Betsy Mason wFinCEN said that a bank cannot exempt itself and a CTR was needed. She asked me to call her back in at the begining of the next week because she had escalated the question. When I called her back the next week she said that everyone agreed that a CTR should be filed.

Not BSA related, but the small cash incentives are added to the employee's W-2s - right?

I'm not sure I agree with the FinCEN opinion. So, if you follow that opinion, since each employee is going to benefit from the transaction, you need a Section A completed for each employee receiving part of the funds.

Thanks for the response.

That is what I was questioning, if a bank could exempt itself. 103.22(d) says you don't have to report transactions between the bank and an exempt person. The bank is an exempt person if it is conducting business with another bank. It doesn't specifically say that the bank's own transactions are exempt just because it is a bank.

How are you going to complete the CTR? The bank in Section A and the employee in Section B?

I was told to fill out section a on the bank, section b on the person that took the cash. Check other for transaction type and explain that it was for Christmas gifts and no one person recieved over $10k

Yes, we did think of that and it is being properly reported. It kind of takes the fun out of receiving the cash but everyone knows it will be taxed.

I thought about the whole "who's benefiting?" for Section A and that is it what I've trained the employees to question when completing a CTR but in reading the CTR instructions it says Section A should be completed on whose behalf the transaction was conducted. In this case wouldn't that be the bank? It is taking the money out to pay its employees an incentive.

Look at the definition of "transaction" in section 103.11(ii) of the regulation. It says "For purposes of Sec. 103.22, and other provisions of this part relating solely to the report required by that section, the term "transaction in currency" shall mean a transaction involving the physical transfer of currency from one person to another." When the bank gets its own money I don't see how it has transferred currency to another person.

Excellent point! I should have thought to look at the definition of "transaction". I didn't think it seemed right to file on the bank but I didn't see a way around it in 103.22.

Thanks!

The regulations that took effect on January 5, 2009 don't leave room for a situation where anyone would find it necessary to file a CTR on a bank, let alone themselves.

I don't think it was ever reportable, but the point is beyond argument now.