Not All Transactions By Phase II Entities Are CTR Exempt…

The Financial Crimes Enforcement Network (FinCEN) states that transactions exempt from generating a Currency Transaction Report (CTR) for Phase II entities are only those conducted through its exemptible accounts. This means that any deposits or withdrawals conducted through the account are exempt from generating a CTR–but what about change orders involving currency or a check drawn on a different financial institution?

If currency is brought in on behalf of the Phase II entity to be exchanged for other denominations of currency or coin, and the transaction does not go through the entity’s exemptible account, a CTR would need to be filed.

If a check drawn on another bank is brought in on behalf of the Phase II entity to be exchanged for currency and/or coin, and the transaction does not go through the entity’s exemptible account, a CTR would need to be filed.

Whether or not a CTR needs to be filed on a Phase II exemption depends on if the transaction creates a line-item entry in the exemptible account. Any reportable transaction not conducted through the exemptible account would not meet FinCENs definition of an exempt transaction, and therefore, a CTR would have to be filed.

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 exemptions or our financial institution advisory services, contact the expert listed below at PYA, (800) 270-9629.

Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

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