I have a customer who brought in a check for $6566, took $2930 in cash and purchased Cashiers check for $3636. Should this be record on the log? The cash was less than $3000 (taken out), however the cashiers check purchased is over $3000 (no cash exchanged). Is this only logged if the check for $6566 was cashed first and then the cashiers check was purchased?

I wouldn't log this. They did not purchase a MI with $3,000 or more in cash.

How about this:

1. Cash of $3,005 used to purchase $2,995 cashier's check and pay $10 fee.

2. Cash of $3,000.50 used to $2,980.50 purchase cashier's check, pay $10 fee and give $10 back to purchaser.

Do these go on the log?

1. Definitely.

2. Trying to split hairs, are we? I'd probably include it just to keep from having to explain why I didn't to an auditor or examiner. But I could argue that the cash purchase was for less than $3,000.

3. Before you ask this: If the cashier's check is for $2990 and there is a $10 fee, both paid for in cash, it is subject to the recordkeeping requirement, because it covers cash amounts from $3000 to $10,000, inclusive.

Thanks for the response, John. I wasn't sure if the $3,000-10,000 was for the amount of the purchase or the total amount of cash in.

I think the operative wording in 1010.415 is this: "each issuance or sale of one or more of these instruments to any individual purchaser which involves currency in amounts of $3,000–$10,000 inclusive...."

When it speaks of the issuance, it refers to the complete transaction, not just to the face value of the monetary instrument(s) purchased.

Subsequent to this question, I just joined an organization that doesn't allow cash purchases of monetary instruments and they only sell to customers of the bank.

They require that customers deposit the funds into their account and use a check from the account to facilitate the purchase however, they are still logging this on a monetary instrument log as a cash purchase. I know there was a lot of talk last year in my area that this circumvents the requirement so my question is would you still view this as a cash purchase and require the log to be completed? At my prior organization we did consider this to be a cash purchase and it wasn't recorded on a monetary instrument log but again could be conveyed as circumventing the requirements of the rule.

Yes

http://www.fincen.gov/statutes_regs/guidance/pdf/monetaryinstrumentsales3a.pdf

Okay, here's where I get a bit confused. We do not sell to non-customers. Our system collects ALL of the requisite recordkeeping information for ALL cashier's checks sold. We identify ones that 'require' recordkeeping by looking at the 'cash-in' for the transaction. These are on a monthly 'Monetary Instruments' report.

In those circumstances where the customer deposits the funds first and then purchases a cashier's check, no 'cash-in' would show and would not appear on the MI report, even though all of the information is there.

Is it necessary that we somehow identify those cashier's checks that would normally have a 'cash-in' such that they can be separately reported? (Hope that makes sense). We are in full compliance with recordkeeping, but would not be able to identify those specific transactions.

Based upon my link (guidance) you would need to somehow be able to determine if it was deposited first and then a MI. but if you can otherwise id it you would not need a log.

(Just my interpretation of the interpretation)

Boy, if I had a dollar every time a bank told me that. "Customer" of the bank is not the criteria for the abbreviated recordkeeping that must be maintained under 31 CFR 1010.415. It is "deposit accountholder".

That does not include:

Authorized signers on business accounts,
Loan only customers.
Trustees, guardians, custodians, etc.

True'dat rlcarey! Our policy states we do not sell MIs to non-accountholders but we will sell for cash if an accountholder brings the cash. however, we were recently cited for selling a MI to an authorized signer because they were not an accountholder.

...customers of bank customers...

It's a good idea to reword such a policy to allow for purchases by or on behalf of deposit accountholders.

To add another layer to this question:
The FI I work for allows the sale of MI to non-customers and does not require the sale of MI to go through an account. We have Name Prompts (for collection of Log information) set at $1,000 so we are sure to capture the required informaiton in the event of Multiple purchases taking the one customer over $3,000 when aggegated. We are now looking to remove the $1,000 prompt and only capture Log info at the require $3,000 mark. How do you comply with the "contemporaneous purchase" rule when selling to non-customers?

The regulation clearly indicates that multiple purchases per business day should be combined for the purpose of this recordkeeping requirement when the FI has knowledge of them. In general, examiners take a dim view of FIs with the capability of aggregating who disable that capability or ignore its alerts or reports.

My guess is that the person who put in the $1,000 prompt is not involved in this decision.

It was probably added as a thoughtful attempt to mitigate the perceived risks in selling monetary instruments to non customers. Removing it allows those risks to go back up to their natural levels.

Pardon me for resurrecting this thread, but I'd like to modify the circumstances above to see what you all think.

Cash of $3,000.50 deposited into a DDA. Customer then withdraws $2,995 from DDA to purchase an official/cashier check. Assume that any check fee does not push the total to $3,000 or above. Should it go on the MIL?

nope

John, I've always been in the "exclude the fee" camp. My interpetation of "inclusive" is that it means greater than or equal to $3,000 and less than or equal to $10,000. In addition, the counterargument is that the fee is a separate transaction from the purchase. Is that incorrect?

My use of "inclusive" is addressed at the dollar range of the transaction, to include transactions of $3,000 and $10,000.

I look at the fee paid as part of the transaction. For example, the individual purchases a $2,995.00 cashier's check, for which there is a $10 fee, and hands over $3,005.00.

But if you have consistently used only the face amount of the monetary instruments in determining whether to create the record, and haven't had problems with that approach, I'd say that practice is working for you.

Customer deposits $10,000.00 in cash at 11:30am.

Customer withdraws $15,500.00 at 2:30pm and purchases two official checks in the amounts of $11,500.00 and $4,000.00. Customer presents $20 in cash to cover the $10 fee per official check.

CTR is being filed for $10,020.00.

What are the FI's recordkeeping responsibilities with regard to the monetary instrument purchases?

None

Same scenario with $10,000.00 in cash deposited in the morning, but the subsequent withdrawal in the afternoon is for $7,000.00 to purchase official checks in the amounts of $3,000.00 and $4,000.00. Same $20.00 presented to cover fees.

Again, CTR filed for $10,020.00

Still no recordkeeping requirements for the monetary instrument purchases?

(rlcarey:) "Boy, if I had a dollar every time a bank told me that. "Customer" of the bank is not the criteria for the abbreviated recordkeeping that must be maintained under 31 CFR 1010.415. It is "deposit accountholder".
That does not include:
Authorized signers on business accounts,
Loan only customers.
Trustees, guardians, custodians, etc."

If it is our bank's policy to CIP authorized signors, etc. on deposit accounts, we would have all the required information as noted below for "if the purchaser has a deposit account with the bank"...actually we have the required information for loan customers also since CIP came into effect...so I am not sure why the abbreviated recordkeeping for "customers" (as opposed to noncustomers) would be an issue for abbreviated recordkeeping. And yes, I get it, it is written as deposit account holder in the law/guidance so we must follow it...just wondering maybe the law/guidance should be updated if the records are maintained via the bank's CIP.

Per FFIEC Manual:

Recordkeeping and Retention Requirements

Under 31 CFR 1010.415, a bank’s records of sales must contain, at a minimum, the following information:
•If the purchaser has a deposit account with the bank: ◦Name of the purchaser.
â—¦Date of purchase.
â—¦Types of instruments purchased.
â—¦Serial numbers of each of the instruments purchased.
â—¦Dollar amounts of each of the instruments purchased in currency.
â—¦Specific identifying information, if applicable.109

•If the purchaser does not have a deposit account with the bank: ◦Name and address of the purchaser.
â—¦Social Security or alien identification number of the purchaser.
â—¦Date of birth of the purchaser.
â—¦Date of purchase.
â—¦Types of instruments purchased.
â—¦Serial numbers of each of the instruments purchased.
â—¦Dollar amounts of each of the instruments purchased.
◦Specific identifying information for verifying the purchaser’s identity (e.g., state of issuance and number on driver’s license).

If the purchaser cannot provide the required information at the time of the transaction or through the bank’s own previously verified records, the transaction should be refused. The records of monetary instrument sales must be retained for five years and be available to the appropriate agencies upon request.