WASHINGTON (4/24/08)--The Financial Crimes Enforcement Network (FinCEN) Wednesday announced a plan intended to simplify current requirements for credit unions and other depository institutions to exempt their eligible customers from currency transaction reporting. CTRs are mandated by the Bank Secrecy Act, are required of credit unions, banks and thrifts each time more than $10,000 in cash comes into or moves out of the financial institution, but there are exceptions. For instance, current rules allow financial institutions to exempt large transactions made by other depository institutions, government agencies, and public companies that are listed on a major exchange referenced in the FinCEN rule. However, to qualify for the exemption, the financial institution must file and renew annually an exemption form. Under some of the proposed changes, depository institutions would:
* No longer be required to file exemption forms for, or to annually review, customers that are depository institutions, government agencies, or entities acting with governmental authority; * No longer be required to biennially renew a designation of exempt person filing for otherwise eligible Phase II customers; * No longer be required to wait 12 months before designating otherwise eligible Phase II customers for exemption. Instead, depository institutions would be able to institute a risk-based approach to determine how much time to maintain an account before an initial Phase II exemption could be provided to the customer. FinCEN is considering an alternative proposal which would set a length of time to consider Phase II entities, but reduce it to two months; and * Require institutions to notify FinCEN when a customer's exempt status has been revoked.
According to the document FinCEN has submitted for publication in the Federal Register
, much of its proposal is based on recommendations from a Government Accountability Office report released in February. GAO requested input from CUNA prior to releasing its recommendations. That report concluded CTRs were useful to law enforcement agencies and should not be significantly curtailed, which backs up what FinCEN has argued. However, the report also said changes to the exemption system could help lighten the burden faced by credit unions, banks and thrifts responsible for filing the information.