Bank Secrecy Basics, Part 2

You will find an occasional slight difference in the instructions given by the Bank Secrecy Act itself, and the Currency Transaction Form (CTR). The CTR instructions were amended along with the form in 1995. The BSA regulation was written before that time. When there is a conflict between the various provisions of a regulation or between the regulation and the CTR instructions, you should always follow the most up-to-date regulation or instruction.

The first time we run into this small problem is in the matter of required identification. Section 103.28 of the BSA Reg says that before you complete any transaction with respect to which a report is required, a financial institution shall verify and record the name and address of the individual presenting a transaction, as well as record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be effected.

The CTR, on the other hand says that acceptable identification information obtained previously and maintained in the financial institution's records may be used. For example, if documents verifying an individual's identity were examined and recorded on a signature card when an account was opened, you may rely on that information to complete the CTR. The form does agree with the Reg, however, in that you must mark down the actual identification information such as the driver's license number, passport number, military number, etc., and not just record "known customer" or "bank signature card on file" or some such notation.

Acceptable Identification
As far as the acceptable identification itself, the CTR says acceptable forms of identification include a driver's license, military and military/dependent identification cards, passport, state issued identification card, cedular card (foreign), non-resident alien identification cards, or any other identification document which contain name and preferably address and a photograph and are normally acceptable by financial institutions as a means of identification when cashing checks for persons other than established customers.

Interestingly, the Reg suggests that a credit card might be a means of identification. The CTR does not even mention credit cards - perhaps knowing we will not accept them as a means of identification for either cashing checks or opening accounts, except in rare cases where the credit card has a photo of the individual.

Of course, ATM cards do not meet the regulatory criteria, as we would not accept only a ATM card to cash a check for a noncustomer.

Elderly or Disabled
Occasionally we deal with people who do not have any of the acceptable forms of identification. FinCEN recognized that fact and quickly issued Administrative Ruling 92-1, titled "Cash Transactions With An Elderly Or Disabled Person Without Acceptable Identification."

An "elderly" person, or a "disabled" person, is an individual who has either maintained a satisfactory account relationship with the financial institution or has been personally known by an employee of the institution for an extended period of time. An "elderly" person, due to age and circumstances, does not possess a state driver's license or other form of normally acceptable identification for cashing a check for a non accountholder. A "disabled" person, due to physical incapacity or mental disorder, also does not possess a state driver's license or other form of normally acceptable identification for cashing a check for a non accountholder.

Before concluding the transaction for the "elderly" or "disabled" person, the individual must produce at least two forms of identification. These forms may be:

1. social security card
2. Medicare card
3. Medicaid card
4. an insurance card other than a Medicare or Medicaid card.

If possible, secondary identification documents should be requested and must contain both the name and address of the "elderly" or "disabled" person. Such identification documents may include, but need not be limited to:

1. organization membership card
2. voter's registration card
3. utility bill
4. real estate tax bill.

You might also consider as secondary identification a federal tax return, union card, police identification card, or other documents containing name and address.

If you conduct business with an elderly or disabled person and use any of the above, on Item 14 or 25 (whichever applies) "Method Used to Verify Identity", write the word "Elderly" or "Disabled" and list the types of the two pieces of ID produced by the person.

Transactions by Law Enforcement
On very rare occasions you may be asked to conduct a transaction for over $10,000 cash for a federal, state, or local law enforcement officer who is doing the transaction in the performance of official duties, and solely on behalf of the agency which employs the officer. You have several options for handling the transaction.

1. File a Designation of Exempt Person form, and thus make the law enforcement agency an exempt person.
2. Prepare and file a CTR on which all items are fully completed in accordance with the CTR instructions. Editor's note: I would be less than honest if I didn't tell you this is the least attractive of your choices!
3. Prepare and file a CTR with modified identification of the law enforcement officer who conducted the transaction. This has been addressed by the Department of Treasury and FDIC. Their instructions, if you choose to file the modified CTR, are all in Part I, Section B: in Item 19 - record the TIN of the officer's agency in lieu of the officer's social; in Items 18,20,21 and 22, record the officer's agency address in lieu of the officer's home address; and in Item 25 record the word "official badge" or "official credential" on 25d, the agency name in Item 25e, and the badge or credential number in Item 25f.

As you may realize by now, the easiest route is to exempt the agency of the law enforcement officer conducting the transaction. Please note, however, this applies only for the purposes of CTR filing. It does not apply to the sale of negotiable instruments.

...to be continued

Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 11, 11/01