Risk-Based Evaluation for CTR Exemption

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Question:

Our bank is beginning to pick up business accounts from one of the other banks in our area, and we'd like to set up Phase II CTR exemptions for several of them without having to wait two months. Can we use the risk-based assessment method to speed up the process?

Answer:

The risk-based assessment method may work for you, but you need to make sure that it's provided for in your bank's BSA/AML policies and procedures first. It will also require that you have an assessment method in place that is designed to help you form a reasonable belief that a customer has a legitimate business purpose for conducting frequent (otherwise reportable) transactions in currency. That, of course, will require at least some familiarity with the business and its operations.

The risk-based assessment can be substituted for the two-month experience period normally required by the regulation, but it cannot take the place of the requirement that the customer's activity must include frequent reportable transactions (at least five) before the customer can be considered qualified. In some cases, that activity will occur quickly. In others, it may take close to the two months that you are trying to compress by using the risk-assessment. Use of the risk-assessment method necessarily involves some front-end effort to develop, and may or may not be worth that effort, depending on the specifics of your bank's situation.

First published on BankersOnline.com 5/24/10