Answer:
by Randy Carey:
There is no requirement to exempt anyone. A bank usually exempts all eligible customers as to not to be liable for errors on any CTRs that they may have otherwise been required to file.
Answer:
by Richard Insley:
I'm the original advocate for dumping exemptions and filing on all large CTs. That was during the '90s. As a result of too many stories with unhappy endings, the American Bankers Association lobbied Congress to revise that part of the BSA. As the legislation took shape, the familiar Phase I and II system was created. After the reforms were enacted, FinCEN implemented those changes--more or less as they exist today.
Phase I "exemptions" are better described as "exclusions"...because these customers' transactions are exempted automatically by the regulation. Bankers make no judgements--only confirm the corporate or governmental identification of the customers. For Phase I customers, there's no risk of "failure to file" violations, and therefore no reason to file "abundance of caution" CTRs.
Phase II customers place banks at risk. Improper designations or inadequate reviews/renewals leave the bank exposed to "failure to file" violations and penalties. If a customer is marginally qualified and has relatively few CTs during the year, you might conclude (like I did in the '90s) that the risk of errors and cost of exemption administration is greater than the cost of highly automated CTR filings. In these cases, the decision would be based on cost-saving and ease of administration, not a regulatory requirement.
Answer:
by John Burnett:
If you do remove some of those marginally qualified customers from your exemption lists, be sure to communicate fully with your affected branches, where staff will not fully appreciate the background efforts in exemption maintenence, if branch personnel will be the people who have to complete the CTRs (or a data-gathering form that goes elsewhere in the bank for CTR filing). There might be some refresher training for branches that will have to reawaken their old CTR-input or data gathering skills.
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