FinCEN has issued a new ruling that will provide some relief from certain transaction reporting requirements for banks and other financial institutions using armored car services (ACS). FinCEN regulations require a financial institution (FI)—a term referring to the banking, broker-dealer, money service, and mutual funds businesses—to file a Currency Transaction Report (CTR) when it has knowledge that one or more transactions by or on behalf of any person result in either cash-in or cash-out totaling more than $10,000 during any business day. This obligation extends to transactions involving ACS.
Under a 2009 administrative ruling, it made no difference whether the ACS conducted transactions that debited or credited the account of an FI’s customer based on instructions from the FI, from the customer, or from a third party. FinCEN’s new ruling, issued July 12, 2013, has made modest changes its 2009 ruling.
The 2009 ruling required an FI
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to collect the name, date of birth, and identification information of the ACS employee making the delivery or pickup; and
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to complete a CTR indicating multiple transactions, if applicable, for each ACS employee who, on any business day, delivers or picks up cash in one or more transactions totaling more than $10,000 in the aggregate, and to list all customers included in the ACS transactions, regardless of the size of each customer’s contribution to the aggregate amount.
The industry has expressed concern about the practical difficulties of compliance with these requirements, especially in differentiating transactions conducted by a given ACS on behalf of an FI from transactions by the same ACS on behalf of a customer within the mandatory 15-day CTR filing period.
The new FinCEN ruling supersedes the 2009 ruling and grants a limited exception applicable only to reportable transactions conducted by an ACS to debit or credit the account of an FI’s customer pursuant to instructions received from the customer or from a third party (as opposed to similar transactions where the instructions came from the FI itself). The new ruling requires FIs to implement adequate procedures to determine the source of the instructions (FI, customer, or third party) and, armed with that information, to complete CTRs as follows:
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Deliveries and pickups on any given day will be aggregated with all other currency transactions performed on that same day on behalf of the same customer.
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An FI with knowledge that this aggregate exceeds $10,000 must file a CTR identifying the customer and all persons conducting transactions about whom the institution has obtained identifying information (including the ACS and, where applicable, third parties on whose instructions the ACS conducted transactions).
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Where the ACS has made deliveries or pickups in excess of $10,000 on any one business day, the FI satisfies the CTR identification requirement by simply filling in the ACS’s corporate information (corporate name, address, EIN, etc.); filling in the name of the ACS employee is not required.
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The FI’s reporting obligation is satisfied by filing CTRs aggregated by customer only.
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If, in spite of implementing adequate procedures, the FI is unable to determine within the 15 days allowed for CTR filing under whose instruction a specific ACS reportable transaction was conducted, the FI may satisfy its CTR obligation by identifying its customer and the corporate information of the ACS that conducted the transaction.
The new FinCEN ruling is effective immediately. FIs that need to modify their systems to file CTRs in accordance with the new ruling, however, have until September 30, 2013, to do so. The ruling does not affect an FI’s continuing obligation to file a suspicious activity report (SAR) if the institution knows, suspects, or has reason to suspect that a transaction is intended to circumvent any Bank Secrecy Act requirement or any other reporting requirement under federal law, or has no apparent lawful or legitimate business purpose.
