Wrath. Greed. Sloth. Pride. Lust. Envy. Gluttony. They’re often referred to as “capital vices” due to their tendency to lead to other sins.
While financial institutions deal more with money than with morals, there are several mistakes with currency transaction reports that can reflect unfavorably on your entire BSA program. Though CTRs may sound easy in theory, in the real world they can quickly become confusing, and it is important to correct these mistakes before they lead to larger issues.
Take a look at this list to see if your institution is guilty of one or more of these “deadly CTR sins,” and find out what is needed for penitence:
Filing a Second Part I for an Unrelated Company
For example, if there is a part one filled out for one gas station, and another part one filled out for another gas station, but there is no established connection between the two, such as interrelated persons or an account association that establishes the connection as reportable, that’s a problem. If there is a relationship, that relationship should be made clear. Keep in mind that it generally must be more than merely same signers on both accounts, as separate business entities with common signers are not necessarily sufficiently connected for CTR reporting. However, your customer/member and related due diligence should establish whether the accounts are reportable on a combined or separate basis.
Checking Box 2a (“person conducting transaction on own behalf”) When Consumer is Withdrawing from a Business Account
We recommend that the institution not check box 2a for the consumer unless it has knowledge that the consumer was using the cash from the business for personal reasons. Instead we recommend checking box 2b “person conducting transaction for another.” If the institution has knowledge that this transaction was for personal use, this should be indicated within the support documentation.
Filing an Unnecessary Part I
This is common, and while it may seem better safe than sorry to do more than less, filling out an unnecessary Part I is also another chance to make a mistake and can be an area of criticism. One of the most common situations we see this with involves joint accounts. If Person A makes a withdrawal from a joint account with Person B, unless the institution has knowledge that the withdrawal was conducted on behalf of Person B, the institution would only file a Part I on Person A. Determining the beneficiary of the transaction is foundational to properly completed CTRs.
Inconsistent Filing Names
This is maybe not so much of an error as it is a practice that can lead to errors. While the institution can decide which CTR filing names to use, we recommend keeping all filing names consistent for recordkeeping and audit/examination purposes. So, for example, if you were to put the individual’s first and last name and then the date as in “John Smith 9/23/14,” you would want to make sure all CTRs follow this format. It is a good practice to add this kind of additional information, such as date and first name of the customer/member, to ensure that the filing names are easy to understand and track for recordkeeping and audit/examination purposes.
Recording the Incorrect Dollar Amount
This seems obvious, but it would surprise you how often hastily completed CTRs exhibit incorrect dollar amounts. Also, the amount should be rounded up the next dollar. That means a transaction amount of $10,000.01 would be rounded up all the way to $10,001.
Failing to Check the Multiple Transactions Box When Applicable
When a person or entity is making multiple cash deposits or withdrawals throughout the day, be sure to check the “Multiple Transactions” box. While this sounds easy, it is also easily forgotten.
Not Filing CTRs Within the Correct Timeframe
FinCEN requires CTRs to be filed within 15 days of the suspicious activity occurring, and they mean it. Also, remember that those are 15 calendar days, not business days.
While no single instance of these seven mistakes is likely to condemn your financial institution’s BSA program, accumulate enough of these kinds of errors and it can be indicative of a BSA program with deeper, more deadly problems.