TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK
The Department of the Treasury, Office of Financial
Enforcement, recently issued two Administrative Rulings, a policy
statement and a directive with regard to Bank Secrecy Act (BSA)
compliance. Summaries of these are set forth below. Additionally,
copies of the Administrative Rulings and the policy statement are
attached. Reserve Banks are requested to disseminate this
information to the examination staff and, in accordance with a
request from the Department of the Treasury, to all domestic and
foreign banking organizations supervised by the Federal Reserve.
The following Administrative Rulings issued by the
Department of the Treasury are with regard to: 1) the
identification of elderly or disabled patrons that conduct large
cash transactions or purchase monetary instruments with currency in
amounts between $3,000 and $10,000; and 2) proper completion of the
Currency Transaction Report (IRS Form 4789) for multiple
transactions:
The BSA requires financial institutions to verify and
record the identity of individuals conducting reportable
currency transactions. However, certain elderly or
disabled patrons do not possess identification documents
that would normally be accepted within the banking
community (e.g. drivers license, passport, state-issued
identification card). Administrative Ruling 92-1 (AD 92-1) allows for other methods of verification of
identification to be utilized. Financial institutions
must establish formal written procedures consistent with
AD 92-1 and, once implemented, there can be no exceptions
to the procedures.
The BSA requires financial institutions to report
currency transactions that exceed either $10,000 or an
exempted account's established limit. Multiple currency
transactions are treated as a single transaction when the
institution has knowledge that the transactions by or on
behalf of any person, conducted during any business day,
exceed either $10,000 or the exemption limit. When
reporting multiple transactions, item 3d of the CTR must
be checked and the information in item 48 of the CTR must
be provided. Administrative Ruling 92-2 explains the
procedures to be followed in completing a CTR for these
cases.
Exemption Policy For Retail Accounts In Which Retail and Money
Order Sale Proceeds Are Commingled
The Department of the Treasury has issued a policy
statement with regard to exemption procedures for retail accounts
in which retail and money order sale proceeds are commingled. The
policy statement amends the current policy that such accounts
cannot be exempted from the filing of CTRs.
In 1988, the Department of the Treasury exempted all
banks from the 15-day filing requirements of the BSA (31 C.F.R.
103.26(a)(1)(1987)) with respect to the filing of CTR's on magnetic
tape. For CTRs that are filed magnetically, banks must file the
CTRs with the IRS Detroit Computing Center within 25 days following
the date on which a reportable transaction occurs.
It is important to emphasize that this exemption applies
only to CTRs filed magnetically pursuant to an agreement between a
bank and the IRS. If for any reason a bank should withdraw from
the magnetic tape program or for any other reason file paper CTRs,
these CTRs must be filed within the 15-day period following the
reportable transaction (31 C.F.R. 103.27(a)(1)(1989)).
If you have any questions regarding these procedures, you
may call Richard Small, Special Counsel, at (202) 452-5235, or Dan
Soto, Senior Special Examiner, at (202) 728-5829.
Deputy Director
ATTACHMENTS MAY BE OBTAINED FROM FEDERAL RESERVE BANK
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