FinCEN Provides Guidance on CTR Exemptions

WASHINGTON-FinCEN provided a three-page guidance last week on the exemption of certain businesses from the required currency transaction report (CTR) filing for transactions involving more than $10,000. These transactions with non-listed businesses-those not on a major stock exchange-must meet certain criteria to be exempt, including doing frequent, high dollar business with a financial institution. The question FinCEN often receives about this requirement is `what is frequently?’ Congress did not define “frequently,” according to the agency. However, FinCEN wrote that it “interprets “frequently” to refer to the recurring or routine need by an institution’s established business customers to deposit or withdraw large amounts of currency (or engage in any other large currency transaction) in the ordinary course of carrying out business operations. “Many customers of depository institutions routinely conduct large currency transactions in the ordinary course of their business operations. Thus, the determination that such transactions are engaged in “frequently” is not difficult to make.” In less clear scenarios, the decision must be made on a case-by-case basis, “taking into account all facts and circumstances the depository institution has obtained in order to make a good faith determination regarding the customer’s eligibility for exemption.” FinCEN suggested reviewing information about the nature of the business operations and the reason behind the need for large currency transactions. Generally, for exemption, the customer should be conducting at least eight large transactions in a year, or approximately one every six weeks. For seasonal businesses, the determination should be made based on whether eight large currency transactions were conducted during the time the business is in operation. “FinCEN encourages depository institutions to use the exemption regulation to the fullest extent to exempt all eligible customers under the provisions set forth.Depository institutions that, in good faith, exempt customers.will not be subject to a civil money penalty for failure to file a CTR with respect to a large currency transaction by an exempted customer,” the guidance read.