To File or Not to File: A CTR Refresher
Occasionally, the compliance team receives questions about interesting transactions conducted by members and whether a Currency Transaction Report (CTR) is required. Credit unions take their BSA/AML requirements seriously and are sometimes tempted to file a CTR for a transaction that “feels off” but does not actually trigger reporting obligations. Let’s take a look at some examples of transactions that do not trigger the CTR requirements, although they may leave us feeling a little uneasy.
Example 1: Natalie Non-member comes into ABC Credit Union with an on us check for $13,150.00. She uses the check to purchase four cashier's checks in the amounts of $1,000.00, $1,900.00, $4,500.00 and $750.00. She takes the balance in cash.
Explanation: No CTR is filed. In this example, the teller did not give the non-member more than $10,000 in cash, nor did the teller accept more than $10,000 in cash from the non-member. Had Natalie cashed the on-us check, the CTR threshold would have been met and a report would be required. However, because she used the funds to buy cashier’s checks and took the remainder (which was not more than $10,000) in cash, she did not trigger the reporting requirements.
Example 2: Mike Member brings $9,000 in cash to deposit into his credit union account. He then requests a cash advance from his line of credit to deposit an additional $1,500 into the same account.
Explanation: No CTR is filed. Here, Mike only deposited $9,000 in cash, which is below the CTR threshold. Some may be tempted to add the “cash advance” deposit of $1,500, but this was not a transaction made with currency, as defined in FinCEN’s rules. Although the term “cash advance” seems to suggest otherwise, the transfer was made using credit that was available to be transferred from Mike’s line of credit, but was not a cash transaction.
Example 3: Kate Customer has a checking account with $20,000 in it. She comes into XYZ Credit Union and deposits $9,500 in cash into the account making the total $29,500. She then asks to purchase a cashier's check for $29,000 using the funds from her checking account.
Explanation: No CTR is filed. In this case, Kate deposited $9,500 in cash, which does not reach the CTR threshold. She then uses the funds in her checking account to purchase a cashier’s check, which is not a transaction involving cash.
For a better understanding of why none of these examples triggered a CTR, let’s look at the regulation. Section 1010.311 provides the filing obligations for reports of transactions in currency:
“Each financial institution other than a casino shall file a report of each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000, except as otherwise provided in this section. In the case of the U.S. Postal Service, the obligation contained in the preceding sentence shall not apply to payments or transfers made solely in connection with the purchase of postage or philatelic products.”
Since the CTR filing obligation is only triggered by transactions of more than $10,000 in currency (defined in the FFIEC BSA/AML Exam Manual as coin and paper money of the United States or any other country as long as it is customarily accepted as money in the country of issue), the threshold is not met by deposits of large checks, purchases of checks or money orders, or fund transfers from lines of credit.
However, if any of the above transactions left a bad taste in your mouth, there are ways to document this. If criminal activity is suspected relating to a transaction (or series of transactions), a credit union may want to determine whether or not to file a Suspicious Activity Report (SAR). For example, if a credit union has reason to believe a person is structuring transactions, a SAR is required. Structuring occurs when someone conducts transactions with the purpose of evading CTR or other BSA/AML reporting requirements. Structuring is not the only situation in which a SAR might be filed, and credit unions should consider all the surrounding facts and circumstances in determining whether a transaction is suspicious. Guidance in the BSA/AML Manual encourages credit unions to be alert and aware of possible suspicious activity that may warrant the filing of a SAR.
About the Author
Loran Jackson joined NAFCU as Regulatory Compliance Counsel in April 2019 and was named Senior Regulatory Compliance Counsel in February 2021. In her role, she provides daily compliance assistance to member credit unions on a variety of topics. She also writes articles for NAFCU publications and presents at NAFCU conferences