BSA—Who Can Be CTR Exempt: Phase I vs. Phase II

MoneyUnder Bank Secrecy Act (BSA) regulations, there are essentially two groups of entities that can be exempt from filing a currency transaction report (CTR) under Phase I and Phase II. For this reason, the Financial Crimes Enforcement Network (FinCEN) has established guidelines for determining who fits in each phase.

Phase I defines an exempt entity as a bank, credit union, any government entity, and any publicly traded company listed on a major stock exchange. Franchises, or those companies not actually owned by the publicly traded company, are not exempt under Phase I.

Phase II defines an exempt entity as a non-listed business or payroll customer as long as certain criteria are met.

A non-listed business is one that is not publicly traded on a major stock exchange. In order to be eligible for exemption, the company must maintain a transaction account for two months, have at least eight large currency transactions over a year, and must be eligible to do business within the United States.

A payroll customer is one that withdraws funds from his or her account to pay employees in cash. In order to be eligible for exemption, the payroll customer must maintain a transaction account for two months, regularly withdraw $10,000 in currency, and be eligible to do business within the United States.

FinCEN also identified certain non-listed business activities that are ineligible for CTR exemption if the activities create more than 50% of its gross revenues:

  • Auctioning of goods
  • Chartering or operating ships, buses, or aircraft
  • Engaging in gaming of any kind, such as selling lottery tickets
  • Engaging in investment advisory or investment banking services
  • Engaging in union activities
  • Operating a pawn brokerage
  • Operating real estate brokerage, title insurance activities, or real estate closings
  • Practicing law, accounting, or medicine
  • Purchasing or selling a motorized vehicle of any kind
  • Serving as a financial institution, such as a check-cashing company

PYA’s audit team is well-versed in Bank Secrecy Act compliance, helping financial institutions ensure they meet all regulatory requirements.

If your organization has questions about CTR exemption, contact the expert listed below at PYA, (800) 270-9629.

Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

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