Saturday, December 16, 2017

New FinCEN Guidance for CTR Aggregation for Businesses with Common Ownership (FIN – 2012 –G001)

Posted by OnCourse Staff May 25, 2012 3:12pm

Photo Credit: Stuart Miles

The Financial Crimes Enforcement Network has issued guidance as of March 16, 2012 to clarify for currency transaction reporting purposes, the aggregation of multiple transactions conducted by businesses with common ownership. According to Currency Transaction Reporting (“CTR”) requirements under the Bank Secrecy Act (“BSA”), institutions are required to aggregate multiple transactions ““if the financial institution has knowledge that [the multiple transactions] are by or on behalf of any person and result in either cash in or cash out totaling more than $10,000 during any one business day”. The guidance suggests that while multiple businesses may share common ownership, it is presumed that the incorporated entities operate independently.  Therefore, the currency transactions of independent entities should not be automatically aggregated for currency transaction reporting purposes.

FinCEN has further stated that although the currency transactions of independent entities should not be automatically aggregated, it is the responsibility of Financial Institutions to determine that the entities are in fact operating as separate independent parties. The following factors may be considered for determining whether the businesses are not operating separately or independently of one another or their common owner:

  • The businesses are staffed by the same employees and are located at the same address
  • The bank accounts of one business are repeatedly used to pay the expenses of another business
  • The business bank accounts are repeatedly used to pay the personal expenses of the owner – the financial institution may determine that aggregating the businesses’ transactions is appropriate because the transactions were made on behalf of a single person

The institution must do its due diligence to understand the relevant facts for determining if any of the above factors apply to its customer base. When it is determined that the businesses are operating independently, the transactions should not be aggregated for currency transaction reporting. Accordingly, once it is determined that the businesses are not operating independently of each other or their common owner, and then the transactions should be aggregated for currency transaction reporting.

Once it is determined that they are in fact not operating independently, the institution should consider linking related businesses within the core system (if applicable). If such linking within the core system is not possible, the institution may consider maintaining a manual listing of related businesses. This will ensure that such businesses are reviewed and applicable transactions are aggregated for currency transaction reporting purposes.

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