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Exempting Public Utility Co - Phase I or II?

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Question: 
Our bank has a local utility company that has regularly been making CTR reportable deposits from cash payments for utility services they provide. If our bank decides to exempt them from CTR reporting, we feel they would be considered as a Phase II Exemption. However, since they are a public utility (although local) could they instead be considered Phase I (government entity) instead? We want to make sure to document this properly if we decide to exempt the company.
Answer: 

Public utilities are not necessarily government departments or agencies. The term "municipal" would better indicate ownership by a city, town or state. In most cases public utilities are actually private corporations or subsidiaries of larger corporations. You may find that the utility in question is actually qualified as a Phase I exemptible customer based on being a subsidiary of a listed company.

Even a municipal utility, though, would probably not qualify for Phase I treatment under the governmental agency exception. In order to qualify, an agency would have to exercise governmental authority such as the power to tax, to take property by eminent domain, or police powers. I don't see a municipal utility company doing any of those things. See http://www.bankersonline.com/regs/103/103-22.html 31 CFR Section 103.22(d)(5)(ii).

First published on BankersOnline.com 2/15/10

First published on 02/15/2010

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