Phase I Exemptions Permanently Exempted?

You'll find your answer in the Treasury regulations at 31 CFR 103.22(d). Phase I exemptions are those exemptions under 103.22(d)(2)(i) - (v). Exemptions under 103.22(d)(2)(vi) and (vii) are generall considered Phase II exemptions. One of the requirements for a Phase II exemption is that the business must "frequently engage in currency transactions in excess of $10,000". This is not a requirement for Phase I exemptions.

Under provisions of 103.22(d)(4), all exemptions must be reviewed annually to determine if the entity still qualifies for the exemption. But for a Phase I entity, disqualification will not occur based on any number of transactions, because that wasn't a requirement for exemption in the first place. That would only be true for Phase II exemptions. The institution must maintain some evidence of the annual review and continuing qualification of the entity for CTR exemption. In addition, under 103.22(d)(5), for Phase II exemptions only, the institution must submit a biennial filing to maintain the exemption.

First published on BankersOnline.com 4/21/08