At the most basic level, regulatory reporting is the process of collecting and submitting information to regulatory authorities. For the purposes of this series, we will focus on regulatory reports related to financial crimes in the United States, required by Financial Crimes Enforcement Network (FinCEN).
Remember, in the previous post Anti-Money Laundering: The Basics, we learned that
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- The Bank Secrecy Act in 1970 required banks to report cash transactions over $10,000 with the Currency Transaction Report.
- The Annunzio-Wylie Anti-Money Laundering Act in 1992 required a standard Suspicious Activity Report to be used to report activity that totals at least $5,000
Over the years, US regulations were expanded to incorporate all “financial institutions” which include banks, casinos and card clubs, money services businesses (MSBs), brokers or dealers in securities, mutual funds, insurance companies, futures commission merchants and introducing brokers in commodities, residential mortgage lenders and originators.
Starting July 1, 2012, these regulatory reports have been required to be filed electronically. FinCEN developed requirements for the type of file that must be submitted, the data that must be in the file and the layout of that data. Financial institutions can electronically submit reports through e-filing, or they can sign into the BSA e-filing system and manually complete the steps for submitting a report. Whether you are manually filing via FinCEN’s website or using SAS Anti-Money Laundering, the required fields are marked with an asterisk.
When I started in Anti-Money-Laundering, we were using PDF files and faxing them to FinCEN! We kept the fax confirmations in the paper files we kept with all of our investigation notes. File cabinet, after file cabinet lining the walls of the office.
Let’s start by looking at the Currency Transaction Report. The first step is identifying if the report amends a prior report, includes multiple persons or multiple transactions. The report is broken down into three parts.
Part I - Person(s) Involved in Transaction(s)
Section A – Person(s) on Whose Behalf Transaction(s) Is Conducted
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- This would be the information of the account holder where the transaction took place. This includes First, Middle and Last name of the person (or legal name of a business), Tax Identification Number, Date of Birth, Address, Identification, etc.
Section B - Individual(s) Conducting Transaction(s)
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- If the transaction was completed by someone other than the account holder, this would include the First, Middle and Last name of the person (or legal name of a business), Tax Identification Number, Date of Birth, Address, Identification, etc.
**There is a Part I completed for every transaction that occurred on a single day.
Part II - Amount and Type of Transaction(s).
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- This would include the total cash in and cash out as well as the amount of any foreign currency. There are check boxes for the type of activity, including wire transfers, currency exchanges, withdrawals, etc.
Part III - Financial Institution Where Transaction(s) Takes Place
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- This would include the name of the financial institution, the address, EIN, and routing number. IT would also have the name, title, and phone number of the person preparing the form.
As you can imagine, the requirement to keep up with the CTR requirement can be burdensome for a bank, especially for customers that have legitimate business reasons for large cash transactions. To assist, FinCEN does allow banks to "exempt" customers that meet certain requirements, for example other banks, government agency/government authority, publicly listed companies, etc. Banks are the only financial institution that are allowed to "exempt" customers from the Currency Transaction Reporting requirement and for every customer the bank wants to exempt, they must file a Designation of Exempt Person report.
The Designation of Exempt Person (DOEP) has four parts
Part I – Filing information
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- Here you indicate if this is: an Initial designation, Exemption amended or Exemption revoked and the effective date of the exemption. Any transaction past this date is not required to have a CTR filed.
Part II - Exempt Person Information
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- In this section, you identify the customer information which includes First, Middle and Last name of the person (or legal name of a business), Gender, Alternate names, Occupation (or type of business), Tax Identification Number, Date of Birth, Phone number, Email address, etc. As well as the type of exemption.
Part III - Filer Information
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- This section records the financial institution, holding company, agency, or other entity that is filing the report. It includes the name of the financial institution, the TIN, and who the regulator is.
Part IV
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- This section contains the name, title phone number and signature of the person who authorized the exemption.
With the newest release of SAS Anti-Money Laundering, LTS 2024.09 (November 2024), the CTR is available as a pre-configured regulatory report. It is integrated with the AML Case, associated workflows, and e-filing functionality (similar to the Suspicious Activity Report).
Check out the next post in the series, Regulatory Reports in SAS Anti-Money Laundering: Part 2
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