1. What is a CTR?
CTR stands for Currency Transaction Report. This is a report filed to the Financial Crimes Enforcement Network (FinCEN) by financial institutions regarding any withdrawals, deposits, payments, transfers or exchanges of currency in the value of $10,000 or more. CTR’s apply to transactions of cash, foreign bank notes, Federal Reserve notes and U.S. silver certificates.
2. What’s the Purpose of a CTR?
The purpose of a CTR is to enlist financial institutions in the fight against money laundering and other financial crimes. While transactions of $10,000 or more aren’t inherently suspicious, keeping tabs on large paper transactions helps the government scrutinize potential cases of money laundering and other criminal activity. Employees of financial institutions have the ability to mark a CTR with an SAR (Suspicious Activity Report) if there are other signs that the transaction may be tied to criminal activity.
3. Who Has to File CTRs?
All financial institutions are required to file CTRs. Broadly, this means banks and credit unions. But it’s important to know that websites like PayPal and Venmo are also beholden to regulations concerning CTRs and SARs.
4. What is FinCEN?
The motto at The Financial Crimes Enforcement Network (FinCEN) is “follow the money,” and that’s exactly what this organization does. The bureau of FinCEN is part of the U.S. Treasury Department. It is responsible for collecting data on financial transactions and is interested in tracking large or otherwise suspicious transactions because they may be connected to money laundering, fraud, terrorist financing and other crimes.
5. Do Financial Institutions File a CTR for Multiple Transactions Adding Up to $10,000 or More? What About Transactions of $9,999?
The point of a CTR is to notify FinCEN of suspicious transactions. While $10,000 is the standard amount, employees of financial institutions are obligated to issue an SAR for transactions that seem to be intentionally dodging a CTR. For instance, if an individual made a $5,000 deposit to his own personal account as well as a $5,000 deposit to his brother’s account, this activity would warrant a CTR.
In other words, it is the responsibility of the financial institution to look at transactions as part of a larger picture and to make adequate filings of CTR and SAR accordingly.
“Structuring” refers to when individuals regularly make transactions of just under $10,000 to avoid a CTR. This is an offense for which both the individual making the transaction and the financial institution’s employee could be punished (if the employee failed to file an SAR).
6. Do Financial Institutions Have to Tell Customers About CTRs?
No. If a member/customer asks, they will be told, but banks don’t need to be forthcoming about this information. Also, if a customer asks to do a transaction of $10,000 or more and then asks about CTRs, he or she cannot lower the amount for avoiding the CTR. The teller at the bank or credit union will need to deny any requests to lower the transaction amount as well as file both a CTR and an SAR in response to this request.
7. Don’t CTRs Violate Customers’ Financial Privacy?
Before the CTR was developed, it was the responsibility of individual tellers to call the police over suspicious transactions. This wasn’t the most efficient or secure way, but it was seen as necessary to protect customers’ financial privacy and protect financial institutions from liability.
However, in October of 1986, the Money Laundering Control Act was passed, making allowances for reporting transactions in the amount of $10,000 or more. The act stipulated that financial institutions will not be held liable for releasing suspicious transactions to FinCEN.
Today, rather than it being on the shoulders of each individual teller, CTRs are automatically filed for transactions of this size. It is, however, still the responsibility of bank and credit union employees to look out for other signs of suspicious activity, beyond just the amount. This is why CTRs, while auto-filed in most cases, also have an SAR check-box on them for bank and credit union employees to use.
8. How Do Financial Institutions File CTRs?
There are many software systems in use by financial institutions to meet the regulatory demands of CTR and SAR filing. Some institutions use custom software, while others use systems such as NICE Actimize, Oracle, DBI Financial Systems and American Bank Systems.