Currency Transaction Reporting

FFIEC BSA/AML Examination Manual 1 February 2021

CURRENCY TRANSACTION REPORTING

Objective: Assess the bank’s compliance with the BSA regulatory requirements for currency

transaction reporting.

Regulatory Requirements for Currency Transaction Reporting

This section outlines the regulatory requirements for banks found in 31 CFR Chapter X

regarding reports of transactions in currency. Specifically, this section covers:

• 31 CFR 1010.310

• 31 CFR 1010.311

• 31 CFR 1010.312

• 31 CFR 1010.313

• 31 CFR 1010.314

Filing Obligations

A bank must electronically file a Currency Transaction Report (CTR) for each transaction in

currency

(deposit, withdrawal, exchange of currency, or other payment or transfer) of more than

$10,000 by, through, or to the bank.

These currency transactions need not be reported if they

involve “exempt persons,” a group which can include commercial customers meeting specific

criteria for exemption.

Refer to the Transactions of Exempt Persons section for more

information.

Identification Required

A bank must verify and record the name and address of the individual presenting a transaction,

as well as record the identity, account number, and Social Security or taxpayer identification

number, if any, of any person or entity on whose behalf such a transaction is conducted.

Verification of the identity of an individual who indicates that he or she is an alien or is not a

resident of the United States must be made by passport, alien identification card, or other official

document evidencing nationality or residence (e.g., a provincial driver’s license with indication

of home address). Verification of identity in any other case must be made through a document,

other than a bank signature card, that is normally acceptable as a means of identification when

cashing checks for nondepositors (e.g., a driver’s license or credit card). A bank signature card

may be relied upon only if it was issued after documents establishing the identity of the

individual were examined and notation of the specific information was made on the signature

31 CFR 1010.100(m) defines currency as coin and paper money of the United States or any other country that is

designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the

country of issuance. Effective July 1, 2012, FinCEN mandated electronic filing of certain BSA reports, including

the CTR.

77 Fed. Reg. 12367. Forms to be used in making reports of currency transactions may be obtained from

BSA E-Filing System (31 CFR 1010.306(e)).

31 CFR 1010.311.

31 CFR 1020.315.

Currency Transaction Reporting

FFIEC BSA/AML Examination Manual 2 February 2021

card. In each instance, the specific identifying information (e.g., the driver’s license number)

used in verifying the identity of the customer must be recorded on the report. The mere notation

of “known customer” or “bank signature card on file” on the report is prohibited.

Aggregation of Currency Transactions

For the purposes of currency reporting requirements, a bank includes all of its domestic branch

offices

and, therefore, branch office transactions must be aggregated. Multiple currency

transactions resulting in either cash in or cash out totaling more than $10,000 during any one

business day must be treated as a single transaction, if the bank has knowledge that they are

conducted by or on behalf of any person. Deposits made at night or over a weekend or holiday

must be treated as if received on the next business day following the deposit.

To comply with

regulatory requirements, management must ensure that systems or practices appropriately

aggregate currency transactions throughout the bank and report currency transactions subject to

the BSA requirement to file CTRs.

Types of currency transactions subject to reporting requirements individually or by aggregation

include, but are not limited to: deposits and withdrawals, automated teller machine (ATM)

transactions, denomination exchanges, loan payments, currency transactions used to fund

individual retirement accounts (IRAs), purchases of certificates of deposit, funds transfers paid

for in currency, monetary instrument purchases, certain transactions involving armored car

services,

and currency to or from prepaid access.

In cases where multiple businesses share a common owner, FinCEN guidance

states that the

presumption is that separately incorporated entities are independent persons. This FinCEN

guidance indicates that the currency transactions of separately incorporated businesses should

not automatically be aggregated as being on behalf of any one person simply because those

businesses are owned by the same person. It is up to the bank to determine, based on

information obtained in the ordinary course of business, whether multiple businesses that share a

common owner are, in fact, being operated independently depending on all the facts and

circumstances. Consistent with this FinCEN guidance, if the bank determines that the businesses

are independent, then the common ownership does not require aggregation of the separate

transactions of these businesses.

However, if the bank determines that these businesses (or one or more of the businesses and the

private accounts of the owner) are not operating separately or independently of one another or

their common owner (e.g., the businesses are staffed by the same employees and are located at

the same address, the bank accounts of one business are repeatedly used to pay the expenses of

another business, or the business bank accounts are repeatedly used to pay the personal expenses

31 CFR 1010.312.

31 CFR 1010.313(a).

31 CFR 1010.313(b).

For additional information on CTR filing requirements for transactions conducted through armored car services,

refer to FinCEN (July 12, 2013), FIN-2013-R001 “

Treatment of Armored Car Service Transactions Conducted on

Behalf of Financial Institution Customers or Third Parties for Currency Transaction Report Purposes.”

FinCEN (March 16, 2012), FIN-2012-G001 “Currency Transaction Report Aggregation for Businesses with

Common Ownership.”

Currency Transaction Reporting

FFIEC BSA/AML Examination Manual 3 February 2021

of the owner), the bank may determine that aggregating the businesses’ transactions is

appropriate because the transactions were made on behalf of a single person. Consistent with

this FinCEN guidance, once the bank determines that the businesses are not independent of each

other or of their common owner, then the transactions of these businesses should be aggregated

going forward.

There are other BSA requirements that may aid banks in determining when transactions are “by

or on behalf of” the same person, such as the requirement to identify the beneficial owners of

legal entity customers.

To the extent this beneficial ownership information helps the bank

determine that certain transactions had no apparent purpose other than to avoid triggering a CTR

filing, the bank would need to consider whether filing a suspicious activity report (SAR) would

be appropriate.

Refer to the Beneficial Ownership Requirements for Legal Entity Customers

section for more information.

Structured Transactions – CTR Requirements

Structuring transactions occurs when a person, acting alone or in conjunction with, or on behalf

of, other persons, conducts or attempts to conduct one or more transactions in currency, in any

amount, at one or more financial institutions, on one or more days, in any manner, for the

purpose of evading the CTR requirements.

Under the BSA, no person shall, for the purpose of evading a CTR reporting requirement:

• Cause or attempt to cause a bank to fail to file a CTR.

• Cause or attempt to cause a bank to file a CTR that contains a material omission or

misstatement of fact.

• Structure, assist in structuring, or attempt to structure any transaction with one or more

domestic financial institutions.

Refer to Appendix G: Structuring for additional information. When a bank suspects that a person

is structuring transactions to evade CTR filing, it must file a SAR.

Additionally, evading BSA

reporting and recordkeeping requirements can result in civil and criminal penalties under the

BSA.

Id.

FinCEN (May 11, 2016), “Customer Due Diligence Requirements for Financial Institutions: Final Rules,” 81 Fed.

Reg. 29398, 29409 (May 11, 2016).

Id. See also 12 CFR 208.62, 211.5(k), 211.24(f) and 225.4(f) (Federal Reserve); 12 CFR 353.3 (FDIC); 12 CFR

748.1(c) (NCUA); 12 CFR 21.21 and 12 CFR 163.180 (OCC).

31 CFR 1010.100(xx).

31 CFR 1010.314. In addition to CTRs, this regulation also applies to other currency reporting requirements, such

as Form 8300 or CMIR requirements, reporting or recordkeeping requirements imposed through a geographic

targeting order, or recordkeeping requirements for funds transfers, transmittals of funds, and purchases of monetary

instruments.

31 CFR 1020.320(a)(2)(ii).

31 CFR 1010 Subpart H.

Currency Transaction Reporting

FFIEC BSA/AML Examination Manual 4 February 2021

Filing and Record Retention

All CTRs must be filed through FinCEN’s BSA E-Filing System.

Certain fields in the CTR

are marked as “critical” for technical filing purposes; this means the BSA E-Filing System does

not accept filings in which these fields are left blank. For these items, FinCEN filing instructions

state that the bank must either provide the requested information or check “unknown.”

FinCEN expects that banks will provide the most complete filing information available,

consistent with existing regulatory expectations, regardless of whether the individual fields are

deemed critical for technical filing purposes.

If the bank receives correspondence from

FinCEN identifying data quality errors, it should follow any required actions that FinCEN

outlines in the correspondence. FinCEN has also issued several administrative rulings and other

guidance on filing and completing CTRs.

A completed CTR must be electronically filed with FinCEN within 15 calendar days after the

date of the transaction.

The bank must retain copies of CTRs for five years from the date of the

report.

The bank may retain copies in either electronic format or paper copies.

FinCEN’s BSA E-Filing System allows for tracking of filings. Users will receive

acknowledgement notifications and other correspondence from FinCEN through the system

regarding their filings. Examiners should consider reviewing correspondence from FinCEN’s

BSA E-Filing System to aid in their assessment of the bank’s reporting of currency transactions.

CTR Backfiling and Amendment

If the bank becomes aware, either through self-identification or through an examination, that it

has failed to file CTRs on reportable transactions, or filed CTRs with errors, the bank must begin

complying with CTR requirements. The bank may contact FinCEN’s Resource Center to request

a determination on whether to backfile unreported transactions or amend CTRs filed with

errors.

In most cases, the bank can submit late CTRs and/or amended CTRs without the need

to contact FinCEN for a backfiling or amendment determination. FinCEN has indicated,

however, that in certain situations, the bank should consider contacting FinCEN (for example, if

31 CFR 1010.306(a)(3).

FinCEN (April 2020), “FinCEN Currency Transaction Report (CTR) Electronic Filing Requirements.”

FinCEN (March 29, 2012), FIN-2012-G002 “Filing FinCEN’s new Currency Transaction Report and Suspicious

Activity Report.”

FinCEN (Oct. 3, 2019), “Frequently Asked Questions Regarding the FinCEN Currency Transaction Report.”

FinCEN (February 10, 2020), FIN-2020-R001 “FinCEN CTR (Form 112) Reporting of Certain Currency

Transactions for Sole Proprietorships and Legal Entities Operating Under a “Doing Business As” (“DBA”) Name.”

FinCEN (March 29, 2012), FIN-2012-G002 “Filing FinCEN’s new Currency Transaction Report and Suspicious

Activity Report.” FinCEN (August 23, 2001), FinCEN Ruling 2001-2 “Currency Transaction Reporting:

Aggregation.” FinCEN (April 2020), “FinCEN Currency Transaction Report (CTR) Electronic Filing

Requirements.”

31 CFR 1010.306(a)(1). Effective July 1, 2012, FinCEN mandated electronic filing of certain BSA reports,

including the CTR. 77 Fed. Reg. 12367. Forms to be used in making reports of currency transactions may be

obtained from BSA E-Filing System (31 CFR 1010.306(e)).

31 CFR 1010.306(a)(2).

Direct all inquiries to the FinCEN Resource Center by calling (800) 767-2825 or (703) 905-3591 or by e-mailing

FRC@fincen.gov

Currency Transaction Reporting

FFIEC BSA/AML Examination Manual 5 February 2021

the bank is instructed to by its regulator,

if it is unclear whether the circumstances require

backfiling or amending CTRs, or if the bank wants to request regulatory relief from submitting

some or all of the CTRs). Once FinCEN provides a backfiling or amendment determination, the

bank should follow the instructions for backfiling or amending CTRs on FinCEN’s website.

Examiner Assessment of the CTR Process

Examiners should assess the adequacy of the bank’s policies, procedures, and processes (internal

controls) related to the bank’s reporting of currency transactions. Specifically, examiners should

determine whether these internal controls are designed to mitigate and manage ML/TF and other

illicit financial activity risks and comply with CTR requirements. In addition to reviewing

correspondence from FinCEN’s BSA E-Filing System, examiners may review other information,

such as recent independent testing or audit reports, to aid in their assessment of the bank’s

reporting of currency transactions.

Examiners should also consider general internal controls concepts, such as dual controls,

segregation of duties, and management approval for certain actions, as they relate to the bank’s

reporting of currency transactions. For example, employees who complete CTRs generally

should not also be responsible for the decision to file the reports. Other internal controls may

include BSA compliance officer or other senior management approval for staff actions that

override currency aggregation systems and review of exception reports for those overrides.

Examiners should determine whether the bank’s internal controls for reporting of currency

transactions are designed to assure ongoing compliance with CTR requirements and are

commensurate with the bank’s size or complexity and organizational structure. More

information can be found in the Assessing the BSA/AML Compliance Program - BSA/AML

Internal Controls section of this Manual.

FinCEN encourages a bank to notify its regulator if the bank identifies an issue with CTR reporting involving a

systemic issue or a large number of filings.

See “Instructions for Backfiling or Amending Currency Transaction Reports” on FinCEN’s website.

Currency Transaction Reporting Examination and Testing Procedures

FFIEC BSA/AML Examination Manual 6 February 2021

CURRENCY TRANSACTION REPORTING EXAMINATION

AND TESTING PROCEDURES

Objective: Assess the bank’s compliance with BSA regulatory requirements for the reporting of

currency transactions.

1. Review the bank’s policies, procedures, and processes that address the preparation, filing,

and retention of CTRs. Determine whether the bank adequately addresses the requirements

for preparing, filing, and retaining CTRs.

2. Review correspondence that the bank has electronically received from FinCEN’s BSA E-

Filing System. Determine the significance of any errors reported by FinCEN and whether

management has taken corrective action, when necessary.

3. Review the information technology sources, systems, and processes the bank uses to identify

transactions that may be required to be reported in a CTR. Determine whether the bank

appropriately aggregates currency transactions, including throughout bank branch offices.

4. Determine whether the bank’s internal controls are designed to assure ongoing compliance

with CTR requirements and are commensurate with the bank’s size or complexity and

organizational structure. This may include reviewing processes for overriding currency

aggregation systems.

5. Select a sample of filed CTRs (electronic format or paper copies) to determine whether:

• CTRs are filed in accordance with FinCEN instructions for currency transactions

identified by the information technology sources, systems, and processes the bank uses.

• CTRs are filed within 15 calendar days after the date of the transaction(s).

• CTRs filed contain accurate and complete information. Determine whether management

has taken corrective action when errors are identified internally or by FinCEN’s BSA E-

Filing System.

• Any discrepancies exist between the bank’s records of CTRs and the CTRs reflected in

the BSA reporting database.

• The bank retains copies (electronic format or paper copies) of CTRs for five years from

the date of the report.

6. On the basis of examination and testing procedures completed, form a conclusion about the

adequacy of policies, procedures, and processes the bank has developed to meet BSA

regulatory requirements associated with reporting of currency transactions.