Under the Bank Secrecy Act, financial institutions must maintain appropriate records and file reports involving certain currency transactions. The Act prescribes regulations that mandate the reporting of specific activities, including using wire transfers to send and receive money. Financial institutions use the Currency Transaction Reports and Suspicious Activity Reports as the primary means to meet the requirements of the Act.
General Requirements
Sending and receiving money via wire transfers falls under currency transaction. Thus, banks must record information about its customers when they process wire transfers. Information they record includes the customer's name, physical address, birthdate and Social Security number. If the customer is a non-resident, the bank must record a taxpayer identification number.
The bank also needs to make note of the documentation used to verify the customer's identity. A mere mention that the bank knows the individual is insufficient. The report must include the sender's account number and the amount and type of transaction. It also must include the country of origin and the U.S. Dollar equivalent of the foreign currency on the transaction date.
Transaction Aggregation
Banks must file currency transaction reports for wire transfers greater than $10,000. If several wire transfers are processed for the same person, the bank must treat these as a single transaction, and must report the transfers if their sum exceeds $10,000. However, if these transactions are for multiple businesses owned by one person, the transactions aren't aggregated. This is because of the presumption that incorporated businesses are independent persons, so each business is treated separately.
Phase I Exemptions
Some organizations may quality for exemption from currency transaction reporting. These entities fall under either the Phase I or Phase II exemption categories. Phase I exemptions are granted to banks to the extent of their domestic operations. Government agencies and entities that exercise governmental authority within the U.S. also qualify.
Banks must file a report on the Bank Secrecy Act e-filing system to exempt eligible companies. This report is due within 30 days of the bank's first transaction with the exempt company.
Phase II Exemptions
Even if a company doesn’t meet the criteria for Phase I exemptions, it might still be eligible for CTR exemptions. These companies include payroll customers and non-listed businesses. Eligible non-listed businesses include companies that conduct large dollar transaction with an exempt bank. Only the domestic operations of these companies qualify for exemption. Also, they must be U.S. companies or registered to conduct business in the United States. Payroll customers are companies that withdraw money to pay U.S. employees. They also must be U.S. corporations.
