TCA’s January 21, 2020 “CTR 101 Webinar” highlighted one key change to the FinCEN CTR report – the evolving expectations on how to complete Part I Item 2. The original October 1, 2019 Notice published required a February 1, 2020 compliance date. The January 17, 2020 Notice extends the compliance date for files to September 1, 2020. Now that we know we have a few months to compliance, let’s talk about the changes.
The soon-to-be legacy instructions stated that, if an individual had more than one role in the transaction, you could only select one check box in Part I Item 2. For example, if John Doe deposited $6,000 to a personal account and $6,000 to John’s Pizza, then the choice would be 2a for person conducting transaction own behalf. According to the October notice, this results in CTRs being rejected due to a lack of role ‘2c’ and law enforcement not being to fully understand the nature of the transactions.
Effective September 1, 2020, if an individual has more than one role in the transaction, this individual will have multiple Part I’s created. The updated FinCEN instructions state:
Item 2: Select option 2a if the person recorded in Part I conducted the transaction(s) on his or her own behalf. Select option 2b if the person recorded in Part I conducted the transaction(s) on behalf of another person. Options 2a and 2b cannot be selected if box 4b‚ “If entity” is checked. Select option 2c if the transaction was conducted by another for the person recorded in Part I. If option 2d is selected because an armored car service under contract with the customer is involved in the transaction(s), the information on the armored car service, not the individual agent of that armored car service, will be recorded in Part I (see FIN-2013-R001). If box 2d is checked to indicate an armored car service under contract with the customer then box 4b, “If entity” must be checked. If more than one Item 2 option applies to a Part I person, a separate Part I section will be prepared on that person for each Item 2 option.”
Using the John Doe example from above, after September 1, 2020, a filer is required to report two Part I’s for John Doe. The first Part I for John Does would have Item 2a checked for person conducting on own behalf for the $6,000 deposit to the personal account and a second Part I for the deposit to the business account for John Doe with Item 2b for person conducting a transaction for another.
Below are TCA’s BSA Guru Tips to ensure you are ready:
- If you use a system to batch file CTRs, contact your vendor to know their timeline and how they will be training on any changes.
- If you discrete file, make sure old templates are updated to account for the new requirement.
- Update procedures to address these changes for Part I Item 2.
- Conduct staff training for anyone who assists with the preparation and filing of CTRs.
- Establish a timeline for compliance. You can comply earlier than September 1, 2020.
- Evaluate controls – Some information will now be duplicated in Part I, so this creates additional opportunity for typos.
For more information on CTRs, recordings are available of TCA’s CTR 101 webinar or contact TCA at [email protected] for more information about TCA’s BSA solutions – Independent Audit, Consulting, and custom training solutions!