Money Laundering, Terrorism & Financial Institutions
Published by Civic Research Institute,

USA PATRIOT Act Monitor New Release: Recordkeeping Not Avoided By Deposit Policy 12/3/2002

Some banks, thrifts, and credit unions requiring that customers seeking to purchase with currency cashier's checks or other monetary instruments in amounts between $3,000 and $10,000 must first deposit the currency into an account. A debit is then made to the customer's account to pay for the monetary instrument, and some institutions apparently believe that such a procedure avoids the recordkeeping requirements of 31 CFR 103.29.
Not so, FinCEN indicated in a release now posted on the agency's website and attached hereto. According to the release:

"FinCEN takes the position that when a customer purchases a monetary instrument between $3,000 and $10,000 using currency that the customer first deposits into the customer's account, the transaction is still subject to the recordkeeping requirements of §103.29. This is true whether the transaction is conducted in this manner as required by a financial institution's established policy, or at the request of the customer. FinCEN anticipates that, in selling monetary instruments to deposit account holders, a financial institution will already maintain most of the information required by §103.29 in the normal course of its business, and therefore the requirement to fully comply with the regulation should not be overly burdensome."

As an example, the release notes that when a customer wanting to purchase a cashier's check for $4,000 must, under bank policy, first deposit the cash into an account, the bank must still create the records required by 31 CFR 103.29.
FinCEN's opinion appears inconsistent with Advisory # 15 in the Bank Secrecy Act Examination Manual (at § 103), which states:

"If the institution's stated policy is not to sell monetary instruments for cash to nondepositaccount-holders in amounts between $3,000 and $10,000 inclusive, and where the institution requires deposit-holders to buy monetary instruments only through the use of their deposit accounts (e.g. debit memo, check, etc.), the institution is not required to separately maintain the information pursuant to Section 103.29. However, the institution must have adequate controls and proper training in place to ensure that if a transaction is completed that inadvertently does not comply with the stated policy (i.e. teller mistakenly sells $5,000 in traveler's checks to nondeposit-account-holder for cash), the required information will be properly recorded on whatever records or systems that the bank chooses (e.g. on the copy of the instrument purchased)."

Unfortunately, the FinCEN release makes no reference to the BSA Exam Manual.


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