Currency Transaction Reports have been around since the Money Laundering Control Act of 1986, and along with its stricter Suspicious Activity Report progeny implemented in 96, have greatly contributed to a financial institution’s compliance workload. Some argue they’re ineffective and that time spent filing FinCEN Form 104s could be better applied somewhere else, but in a recent Sheshunoff™ webinar, AML expert Nelson Everhardt explained why CTRs are important.
Mr. Everhardt is also an author and responsible for the BSA and AML programs for us. We extracted a short segment from his latest certification program and made it available below. If you experience issues with the video, continue reading for further details and the full transcript.
Serious crooks are well aware of illegal tactics such as Placement, Structuring, Smurfing, Integration, Layering, etc… and will use them in creative ways to get around CTR requirements. That is one of the biggest reasons to enforce and refine CTRs in your institution; you wouldn’t want to make it money laundering any easier.
- All BSA compliance exams take CTRs into consideration, usually starting with them;
- Failing to file CTRs or filing them improperly raises warning flags;
- Automated systems can translate into significant gains in quality
The audio used in the video above was taken from Mr. Everhardt’s latest BSA Certification program, where he explains in detail how CTRs are incorporated into your risk assessment and overall BSA / AML compliance program, amongst many other fundamental procedures. You can see more resources and training sessions at the Sheshunoff™ store and follow them on Twitter or Google+ for exclusive offers and updates.
Why are CTRs important? If you think about it, if your grandmother sells her car for $11,000 -- She never had a currency transaction that exceeded that before, but she doesn’t drive anymore. So she sells her car for $11,000, and she puts that money into the bank. Well, is she a crook? Is she a criminal? Well, no. The answer to that is no.
So filling out CTRs is more about compliance than it is suspicion although they can be suspicious. If you don’t fill out on the grandmother, then it’s a serious violation. So it’s more about compliance. Are they used? Yes, they are used. I think the regulators in law enforcement probably back into these things. Hopefully, they find out a lot of information from our Suspicious Activity Reports, and then they can start going through the trail.
A lot of banks and a lot of people in the industry question, “Why do we spend so much time with CTRs when really what it’s all about is suspicion.” Here’s the reason. You know, there is a regulation. There is a rule. There is an expectation that we’re going to fill out CTRs. We’re going to do that correctly. And so that makes it very, very important. You’ll be hard-pressed to find an examination around BSA that goes into detail at all where the regulators don’t sample CTRs. So they are important. You need to consider them important.
To me, they’re one of those things that’s easy picking because they’re black and white. You either filled out the form properly, or you filled it out improperly. You put all the information in. You left something out. You didn’t file it on time, or you did file it on time. So to me, although it’s a lot of work, you need to take the steps to get them out the door right.
About the Speaker:
Nelson F. Everhardt is a former Senior Vice President and Corporate Compliance Executive for Bank of America where he directed a global BSA/AML compliance Program. He is also President of Everhardt & Associates, LLC, an independent consulting firm specializing in proactive compliance solutions to the Financial Services Industry. As an expert on anti-money laundering compliance programs, software solutions and regulatory topics including fraud, Nelson has consulted with top financial institutions-both large and small and leading software providers. He is a frequent speaker at global industry and government conferences, including a recent United Nations Forum in Vienna, Austria. In addition to leading our BSA Certification Program, Mr. Everhardt has partnered with Sheshunoff to develop Internet-based, business-specific AML training programs.
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