Filing a CTR and Triggering MI Recordkeeping

Posted By: Texibus

Filing a CTR and Triggering MI Recordkeeping - 12/18/19 01:54 AM

Was hoping to get some opinion on this as I just had an incredibly confusing call with a FinCEN rep who I think directly contradicted guidance found in the FFIEC BSA/AML Exam book. I proposed a scenario to them regarding the purchase of a monetary instrument from member, see below:

Customer comes in with $10,200 in cash. Deposits cash into account, during the same trip purchases a Cashier's Check for $9,400 keeps the rest of the cash in the account. The way we process the transaction is the deposit is made and the check is withdrawn from the account.

My understanding is we would file a CTR and triggers recordkeeping requirements, even though the purchase of the instrument is noted on the CTR.

I could have sworn I saw another discussion on here from years ago that supported my interpretation, even though I know it seems redundant with the filing of CTR.

Appreciate y'all's advice!
Posted By: ColoradoAML

Re: Filing a CTR and Triggering MI Recordkeeping - 12/18/19 03:35 PM

My interpretation would be that a CTR is required, which as you said would indicate that $9,400 was used to purchase an MI, and that MI purchase recordkeeping would NOT be triggered. I agree that the language in the FFIEC manual may contradict my opinion.

FFIEC: "Under 31 CFR 1010.415 banks are required to verify the identity of persons purchasing monetary instruments for currency in amounts between $3,000 and $10,000, inclusive, and to maintain records of all such sales."

31 CFR 1010.415: "No financial institution may issue or sell a bank check or draft, cashier’s check, money order or traveler’s check for $3,000 or more in currency unless it maintains records of the following information, which must be obtained for each issuance or sale of one or more of these instruments to any individual purchaser which involves currency in amounts of $3,000–$10,000 inclusive"

My opinion is that the FFIEC manual is over-simplified, and the regulation appears to me to state that it's recordkeeping when the CURRENCY is within the recordkeeping range, which eliminates the redundancy.

What did the helpline say?

I'm very curious to hear others' opinions.
Posted By: Texibus

Re: Filing a CTR and Triggering MI Recordkeeping - 12/18/19 06:16 PM

I managed to get two different answers because, like a goof left both a voicemail and sent in an online submission. For the sake of simplicity, I'm going to use the word "log" to signify triggering the record keeping requirement because that's what the FinCEN reps used.

The first caller from FinCEN said that we weren't required to log the MI because the deposit was made and the check was withdrawn due to our policy. Depositing the cash first made it so we didn't have to log. If the amounts were in one cash transaction we would do both. I rephrased the purchase six different ways, got the same answer. However, this flies in the face of what's in the guidance because that's how financial institutions initially tried to work around the recordkeeping requirement. He did tell me that this was his and policy folks' interpretation, and if I need more formal guidance I should get an administrative ruling.

The second agent left voice mails confirming my interpretation, file a CTR noting the MI purchase and log the transaction. Glad I missed her calls, because at least I have a recording of the answer instead of notes.
Posted By: ColoradoAML

Re: Filing a CTR and Triggering MI Recordkeeping - 12/18/19 07:50 PM

I agree with your comments on the first response, it's completely contrary to other FinCEN guidance. In CTR FAQ #30, they explicitly consider a cash deposit used to fund an MI purchase as a cash purchase of an MI, and the added step of depositing the cash has no effect on the transaction. I really struggle to see why that logic would be different if the amount is less than $10,000.

The second answer at least seems clear, although that's not how I've interpreted it. I always understood the purpose of the upper limit of MI recordkeeping was in order to avoid the redundancy they seem to be requiring from you.
Posted By: TomS

Re: Filing a CTR and Triggering MI Recordkeeping - 12/18/19 08:29 PM

I agree with the second agent's interpretation. The cash deposit exceeded $10,000, which triggers a CTR, however, the cash amount used to purchase the cashiers check was less than $10,000, which triggers the MI recordkeeping requirement.
Posted By: BrianC

Re: Filing a CTR and Triggering MI Recordkeeping - 12/18/19 09:14 PM

TomS, that is a great breakdown of why both are required in this instance.
Posted By: Texibus

Re: Filing a CTR and Triggering MI Recordkeeping - 12/18/19 11:44 PM

Thanks folks! So do you think there is some guidance I can refer to? Just my humble interpretation of 31 CFR 1010.415 never seems to be enough.