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"Reasonable Effort"

Answered by: 
John Burnett

Question: 
I have searched and reviewed current postings and questions and have not yet seen anything about filing CTRs incomplete for multiple transactions. The argument is that per administrative ruling 92.2, issued by the Department of the Treasury on 11/16/1992, a bank must make a reasonable effort to retrieve the transactor information on all multiple transactions. I am speaking of transactions that are conducted each under 10, but at the end of the day the bank has knowledge they have aggregated over 10 and must be reported. We have many customers that go to different locations and make deposits and current policy states that we are to make every effort including calling the customer to see who brought in each transaction, even if under 10, and get all the reportable information. My ultimate concern is not only that it is lots of extra work for BSA, but for banking offices as well. How are we to know that the information being provided over the phone is even accurate? Is this “ruling” still in effect and what would be the definition of "reasonable effort"?
Answer: 

I detest shades of gray in regulations and rulings as do most compliance officers, but it is in shades of gray that we find that elusive "wiggle room" that we all hope for when being cited for an apparent violation. This "reasonable effort" ruling, as far as I know, is still in effect, although I have no direct knowledge of its enforcement. I can't define "reasonable effort" any more than I can define "beautiful" in terms with which everyone can agree. The only thing I can say with any certainty is that "no effort" is not "reasonable effort."

If you have business customers that routinely make multiple deposits, each under the filing trigger, first consider whether there are business reasons that explain such a pattern. The most obvious might be that multiple locations of a chain deposit into one account at several of your offices. If you get a reasonable business purpose for the deposit pattern you eliminate structuring as a concern.

Then, for those customers that are presenting this sort of pattern, consider whether your management should approach the businesses' management with the facts of the filing requirement and request cooperation in identifying the person or persons making the deposits. One suggestion might be to get a list of these transacting parties along with ID information for the CTR and then contact the business when you need to get a quick list of who needs to be included when you file a CTR. At minimum, I recommend that your institution consider for itself what a "reasonable effort" should include, document that as a procedure and follow it until you find the procedure inadequate.

First published on BankersOnline.com 4/02/07

First published on 04/02/2007

Filed under: 
Compliance
Security
Filed under compliance as: 
ID
IT
Management
Filed under security as: 
ID
IT
Management

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