We have a customer with several different locations, but the same type of business and it is an all cash business. The volume of small bills is high, so instead of him depositing the cash in one of our offices, our operations department has made an arrangement with a larger bank in the area that takes the cash (from an armored car delivery) and credits a GL "Due From Bank" We then debit the account and credit the customer.
This saves us from dealing with all the cash and sending it out to the larger bank anyway. Right now we are filing the CTR's for this customer (cannot exempt, because accounts are to new). There was some debate about who was responsible for filing CTR's, since we are not receiving the actual cash I thought that the other bank was repsonsible, on the other hand, it is our customer and the larger bank is a providing us and the customer a convenience.
It bothers me though, when I complete the CTR that I don't know the acutal where and when & number of the cash transactions. I just use the branch of account that is processing the credit to the customer, and the amounts are in lump sums. Should we be requesting this info from the FI? It seems to me that the CTR's are inaccurate.
My operations manager says there may be more arrangements made like this. Is this a common practice? Does anybody else do this?

It's the responsibility of the bank receiving the cash to file the CTR (if required). They can also create the exemption, if the customer is eligible. You should not be filing CTRs for this, because you haven't had a cash transaction.

Hmmmm... The larger bank is accepting this cash on your behalf, and the funds are credited to a due from account, so I'm assuming that they don't have an account with your customer's name on it at all. Would the large bank have to file CTR's? Transactions with other banks are exempt. Or would they have to file on the customer anyway? If not, would that then mean that the transactions never get reported? Opinions?

The money is transferred via armored car, right? Does that make a difference?

I agree with Jim, the bank that is actually receiving the cash is responsible for filing the CTR.

Does FinCEN have guidance on this exact situation? If not, I'd request it.

Normally, the bank engaged in a cash transaction reports the transaction. What's described here, though, is more like the armored carrier scenario (carrier picks up and delivers cash as agent of bank or customer; carrier is not required to file CTRs; bank of deposit must obtain necessary CTR details from agent & file CTRs--even if bank never sees the cash). The large bank in this situation is performing the same kind of delivery service as an armored carrier and does not have any kind of customer relationship with the cash-generating business. Viewed from the future, how would a federal agent be able to review records & CTRs and trace the activity of this customer unless the bank of account files the CTRs?

Richard is correct.

A bank in the southeast had this same situation, and in February they were forced to file CTRs on the customer for the past five years. (The bank hired us to help with the forensic work.)

The BSA Officer had always said "You only have to file CTRs when the cash enters or leaves your vault." Once the Examiners learned of the transactions, they strongly disagreed--and a sizable fine is anticipated.

Regards,
Wayne Barnett, President
Wayne Barnett Software
877-945-4344
www.barnettsoftwre.com