15.3 Currency Reports, Aggregation and Exemptions

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1. Currency Transaction Reports (CTR, FinCEN Form 112)

Under 31 CFR § 1020.310, each financial institution must file a Currency Transaction Report (CTR) for each transaction in currency of more than $10,000 conducted by, or on behalf of, one person in one business day.

Definition of Currency and Scope

• Currency: The coin and paper money of the United States or any other country that is designated as legal tender and circulates customarily as a medium of exchange. Currency does not include bank checks, cashier's checks, traveler's checks, money orders, ACH transfers, or wire transfers.
• Reportable Events: Cash deposits, cash withdrawals, currency exchanges (e.g., cashing a check or exchanging foreign banknotes), cash loan payments, or ATM currency disbursements exceeding $10,000.

Aggregation Rules and System Requirements

Depository institutions must aggregate multiple currency transactions across all branches, accounts, and teller lines:

• Knowledge Standard: Under 31 CFR § 1020.310, multiple currency transactions must be treated as a single transaction if the financial institution has knowledge that they are conducted by or on behalf of the same person and result in either cash in or cash out exceeding $10,000 during a single business day.
• Separate Aggregation of Inflows and Outflows: Cash-in transactions (deposits, loan payments) are aggregated separately from cash-out transactions (withdrawals, check cashing). Cash inflows and outflows cannot be netted against each other. For example, a customer depositing $8,000 in cash and withdrawing $6,000 in cash on the same day has neither aggregate cash-in nor aggregate cash-out exceeding $10,000; no CTR is triggered.
• Transactor vs. Beneficiary: If an individual deposits $6,000 cash into their personal account and $5,000 cash into a corporate account on the same day, the total cash-in conducted by that single individual is $11,000, triggering a mandatory CTR naming the individual as the transactor and detailing both affected account beneficiaries.

Filing Deadlines and Electronic Transmission

• Filing Window: The CTR must be filed electronically via FinCEN's BSA E-Filing System within 15 calendar days following the date of the reportable transaction.
• Identification Verification: The institution must verify and record the identity of the individual conducting the transaction (transactor) and any person or entity on whose behalf the transaction is conducted (person on whose behalf conducted) using valid photo identification (such as a driver's license or passport) or existing account records.

Structuring Violations (31 U.S.C. 5324)

It is a federal crime under 31 U.S.C. § 5324 for any person to structure, assist in structuring, or attempt to structure transactions to evade BSA reporting thresholds. Common structuring techniques include conducting multiple cash deposits of $9,500 across different branches or consecutive days. When structuring is identified, the institution cannot alter CTR thresholds to report sub-$10,000 transactions on a CTR; instead, evaluate a SAR under the applicable suspicion and threshold requirements.

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2. CTR Exemption Framework (31 CFR § 1020.315)

To eliminate unnecessary administrative burdens generated by routine cash transactions of legitimate, well-established businesses, FinCEN established an administrative exemption framework under 31 CFR § 1020.315. Exempting an eligible customer relieves the bank from filing CTRs on reportable cash transactions conducted by that person.

Phase I Exempt Persons

Phase I exemptions apply to government entities, financial institutions, and publicly traded entities:

1. Any other depository institution operating in the United States.
2. Any department or agency of the United States, of any State, or of any political subdivision of a State.
3. Any entity established under federal, state, or political subdivision law that exercises governmental authority.
4. Any entity (other than a bank) whose common stock is listed on the New York Stock Exchange, the American Stock Exchange (NYSE American), or the NASDAQ Stock Market (excluding American Depository Receipts [ADRs]).
5. Any direct subsidiary of a listed entity where at least 51% of the subsidiary's common stock or analogous equity interest is owned by the listed parent.

Phase I Operational Rule: To exempt a listed public company or its 51% subsidiary, the bank must file a Designation of Exempt Person (DOEP, FinCEN Form 110) within 30 calendar days of the first exempt transaction. Depository institutions and government agencies/departments are exempt automatically; no DOEP filing is required for banks or government bodies.

Phase II Exempt Persons

Phase II exemptions cover private commercial businesses and payroll customers meeting rigorous transaction and operating criteria:

1. Non-Listed Commercial Businesses (§ 1020.315(e)(1)): Commercial enterprises that have maintained a transaction account at the bank for at least 2 consecutive months (or a shorter period if the bank conducts and documents a risk-based assessment proving legitimate business need), frequently engage in currency transactions exceeding $10,000, and are incorporated or organized under U.S. or state law.
2. Payroll Customers (§ 1020.315(e)(3)): Commercial enterprises that have maintained a transaction account for at least 2 consecutive months, regularly withdraw more than $10,000 in currency to pay their U.S. employees in cash, and are incorporated or organized under U.S. or state law. (Exemption applies strictly to currency withdrawals for payroll purposes).

Ineligible Businesses Under Phase II

Under 31 CFR § 1020.315(e)(8), certain businesses are legally ineligible for Phase II exemption, regardless of transaction history, legitimacy, or account tenure:

• Businesses engaged primarily in gaming of any kind (casinos, racetracks, sports wagering);

• Investment banking, financial advisory, or securities brokerage services;

• Real estate brokerages and title settlement agencies;

• Pawn shops, title pawn businesses, and collateralized lenders;

• Dealerships selling motor vehicles, vessels, boats, mobile homes, or aircraft;

• Auctioning of goods or merchandise;

• Chartering or operations of ships, buses, or aircraft;

• Wholesale distribution of liquor, tobacco products, or gaming equipment;

• Money Services Businesses (MSBs), check cashers, and currency exchangers.

• Exemptions: Review exemption eligibility and the required ongoing monitoring. FinCEN eliminated the former biennial Designation of Exempt Person renewal requirement; do not treat a biennial renewal as a current filing duty.

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3. Suspicious Activity Reports (SAR, 12 CFR § 21.11 / 31 CFR § 1020.320)

Under federal banking agency regulations (e.g., OCC 12 CFR § 21.11, FRB 12 CFR § 208.62, FDIC 12 CFR § 353.3) and FinCEN rules (31 CFR § 1020.320), every depository institution must file a SAR for any suspicious transaction relevant to a possible violation of law or regulation.