VIDEO: When is a CTR Required
In this Compliance Clip (video), Adam answers the question of what triggers a financial institution to submit a CTR or a Currency Transaction Report.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to answer the question of when the CTR is required. This, of course, is a BSA topic.
What is a CTR? A CTR is the acronym for a Currency Transaction Report and this is a report that financial institutions, banks, and credit unions are required to send to a division of the government, a division of the IRS called FinCEN, the Financial Crimes Enforcement Network, and they're required to send this form any time a customer, whether a business entity or an individual, brings in currency over a certain dollar threshold. These reports are required when large amounts of currency are going in or out of a bank or credit union.
Specifically, the requirement is that financial institutions are required for each aggregated transaction on any one business day to file a CTR whenever there is a transaction in currency or cash in the amount over $10,000. What we're talking about here is physical cash, currency, not wire transfers, not electronic transfers or ACH transfers, but actual physical cash or currency in amounts over $10,000. So a cash transaction of $1,000 does not trigger a CTR, but a cash transaction of $11,000 would. The threshold again is over $10,000. So even $10,000 doesn't trigger it, $10,000 a penny does. And it's in amounts over $10,000 and this includes not just deposits, but also withdrawals, exchanges, payments, and even transfers. So if I make a loan payment of $20,000 in cash, that would trigger a currency transaction report.
There are some exceptions to this. Some organizations and businesses have a large amount of currency on a regular basis, for example, gas stations. There may be some cash-intensive businesses that are always bringing in large amounts of currencies, and financial institutions can choose to exempt those, but those exemptions have to go through a very specific process.
This is the requirement for amounts over currency, over $10,000. This is what triggers a Currency Transaction Report.
It’s important to understand that consumers should not be avoiding Currency Transaction Reports because if they do that, that's considered to be illegal and it's considered to be something called suspicious activity. When that happens, financial institutions have to file a different type of report - a Suspicious Activity Report - when consumers specifically avoid filing a CTR. So if your tellers are dealing with a customer who says you know I need to avoid a CTR, it's best that your tellers help the customer understand that it's best for everybody if they make that transaction with the full amount that they want to provide. Instead of the customer trying to break up the transaction and bring in $8,000 on one day and $5,000 on another day for a total of $12,000, it's important to help your customers understand it's best to bring in all the money at one time. That's a difficult conversation to have and you're not allowed to tell your customers that you're actually filing a Suspicious Activity Report but it's important that your consumers know that it's okay to have a CTR file and that the CTR is really not a big deal at all.
So that is when a CTR is required. It's for currency transactions in amounts over $10,000, it's aggregated in one business day.
Now, business days, of course, on holidays can be extended, so you may have a holiday on a Monday, so on Saturday you may be on Tuesday's business day. Deposits that happened on Saturday will be aggregated on the holiday Monday. If you're open on the holiday Monday, and you take deposits, those deposits would also be aggregated on your business day on Tuesday. So it's an aggregation of any one business day not of a calendar day. So that is when CTRs are required.
That's really all I have for this Compliance Clip.