We have a contractor that provides farm workers to various farms and pays them in cash. They have regular cash orders that are picked up by an employee and occasionally, one of the owners picks up the cash. We file a CTR once or twice a month, but there are many transactions for exactly $9,000 (couple times a week). I asked the branch about this and they said that when the owner sends an employee to pick up the cash its a "lower amount."

I believe the owner structures the transactions that are picked up by employees to avoid a CTR. It's likely because the employee(s) object to their name being provided on the form. I've asked the branch operations about this and haven''t heard back yet.

We have filed numerous SARs on this customer for the $9,000 transactions. What bothers me is that this activity is likely never going to stop. We have provided the owner with FinCEN's brochure and we file CTRs nearly every month.

Thoughts?

Close the account or deal with the continuing SAR filing.

When you file your CTRs do you include all of the employees who are benefiting from the transaction since you know it is for payroll? I would save yourself the headache and close the account also.

Me too.

Provide the owner with a copy of the FinCEN pamphlet and either:
1) have a face to face conversation where you tell him/her to stop it or
2) close the account.

Your third choice, not offered here, would be to file SARs in perpetuity...

[censored]. Can anyone point me to the guidance on cash withdrawals for payroll. I was so concerned with the transaction pattern that this had not entered my mind.

bcompliance,

On second thought, I don't actually think we are required to enter the names of the beneficiaries on the CTR. I believe this is only true when one person presents multiple checks payable to various individuals. For example, the office manager cashes the employees checks so that they don't have to take time off to go to the bank (or they are unbanked).

The checks being used for payroll are payable to "cash."

So, I need to know if I should be indicating "Conducted on Own Behalf," since the transactor walks away with the cash. Or do we indicate the transaction was conducted on behalf of the business (who uses the cash to pay their employees)?

if you know they are being cashed for payroll, you know they are being conducted on someone else's behalf....

if the Bank says we won't allow this any more it will stop, or the account will be closed and they can go elsewhere. But, if you are waiting on the customer to stop it on their own, not going to happen.

If a business entity cashes a check in order to pay its employees in cash, you need to identify the individual conducting the transaction. You will show the business entity as the person on whose behalf the transaction was conducted. You will not identify anyone else.

Thanks Ken for clarifying that. When you consider that there is a provision in the regulation to exempt companies that make withdrawals for payroll purposes, it makes sense.

When you consider that there is a provision in the regulation to exempt companies that make withdrawals for payroll purposes, it makes sense.

I thought about that after I posted. Sometimes I'm happy with being wrong.

And in this case, the "someone else" is the employer. You don't know whom the employer is paying in cash, but you know the employer is the one whose transaction is being completed by the employee or whoever else shows up to cash that check.

In this sort of scenario, when it's truly a cash payroll (employees get a payroll record and cash, but no check), the bank doesn't name the individual employees being paid. It only needs to identify the conductor of the check-cashing transaction and the employer.

If you believe those $9,000 transactions conducted by the employee are structured so that the runner doesn't have to provide personal info, you have an obligation to file a SAR. I would identify the employer as the subject of the SAR in such cases. And I agree with the suggestions above that your options are to continue filing SARs, get the employer to stop the structuring (which could mean showing up himself rather than send a runner who wants to be secretive), or close the account.

I will just put in my two cents and observe, in light of the massive Equifax hack, you are probably going to see more employees, couriers, etc, refuse to provide their identifying information. Honestly, I think FinCEN should rethink the whole "conductor" situation and think about a more sensible plan for non-account owners who are making a deposit to a single account, especially if the account belongs to their employer. Think of the Armored Car scenario and apply it a bit more broadly - perhaps getting a certification from the account owner about how they will be making cash deposits, and agreeing to be the "proxy" for any non-account holder who deposits more than $10,000 in cash.

Otherwise we have a universal conflict between Bank Secrecy Act and the desire of people to maintain some semblance of control over information that could be misused to ruin them, especially when they feel cornered by the necessity of staying employed vs. fearing that someone will be stealing their identity. One has to wonder about the security of the CTR database. Or the SAR database for that matter.

I am a firm believer in the First Amendment, Princess, but I really don't think things have gotten that bad. FinCEN could reconsider the requirements, someday long after you and I have retired. By then the whole concept of currency may be gone. In the meantime, we in the trenches have to enforce the rules we are given.