Common Forms Used by Banks Relating to the Bank Secrecy Act
The Bank Secrecy Act (BSA) of 1970 places requirements on financial institutions which are meant to assist the government in detecting and preventing money laundering and underlying crimes. Perhaps the most commonly known requirement under the BSA is that financial institutions must keep records of and file reports for currency transactions exceeding $10,000.00. The report filed for each transaction over $10,000.00 is called a currency transaction report (CTR). The BSA further requires financial institutions to report suspicious activity when there is reason to believe a customer is attempting to structure transactions in order to avoid the CTR filing requirement. This form is known as a suspicious activity report (SAR). All CTRs and SARs are sent to government agencies for review.
But what if you run a cash-intensive business? For example, you have cash receipts each day that total $9,000. You go to the bank on Monday and make a $9,000 cash deposit. You go to the bank on Tuesday with another $9,000 cash deposit. The pattern continues for the next few days. Will the bank be required to file a SAR because you are making daily deposits just under the CTR threshold? To avoid this problem, there is a special form called, FinCEN 110, that the bank can file for “exempt persons.” Under 31 CFR 103.22, a business is generally eligible for exemption from the CTR filing requirements if (1) it has maintained a transaction account at the bank for at least two months, (2) it frequently engages in transactions in currency with the bank in excess of $10,000, and (3) is incorporated or organized under the laws of the United States or a state. There are a few other more particularized requirements, but in general, if the business meets these criteria, the bank has discretion to file Form 110.
This blog is intended for informational purposes only, and should not be considered legal advice.