Question & Answer

Question: We've been keeping a log on all our customers, exempt or not, for cash transactions over $3,000. Under the Tier II, do we still have to fill out the log for over $3,000 cash transactions if we exempt accounts? And do we fill in an amount as a limit for those customers we do exempt?

Answer: The question is a little confusing, because it has not been necessary to keep "over $3,000 logs" for several years. When you were required to keep them, they were for the sale of official items, such as cashier's check, or teller's checks, or money orders, or traveler's checks when such items were purchased in amounts over $3,000. When the requirement for the log was removed, we were told that as long as there is soft or tissue copy somewhere where information could be retrieved, that was all that was necessary.

By the time the log was no longer required, we had pretty well trained our front line to keep the darn thing. And rather than retrain - many compliance officers figured if it wasn't broke, don't bother fixing it - they just let the logs stay in place for the sale of money orders, official checks and traveler's checks. It was a handy way of auditing and bookkeeping.

Keeping a log was never required for over $3,000 cash transactions across the window - that is deposited or withdrawn from an account. In today's banking world, that could quickly become cumbersome!If you are exempting a customer for over $10,000 cash activity under Tier II, there is no reason to record $3,000 cash transactions.

As for a limit on your exempt customers - there is none required. If they are exempt, they are exempt. However, that was what part of the KYC was all about. If you know your customer's normal transactions and amounts, and you know your customer, you'll know when they are depositing far more than normal. It might then become a suspicious transaction. You still would not fill out a CTR for that customer, but if the deposits far exceeded what was "normal", you'd file an SAR. Some consideration has to be given to seasonal increases - such as sales around the holidays. But then again, if you know your customer, you know what is normal and what is not.

Copyright © 1999 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 9, No. 3, 3/99