Bank Action for Cashier's Check and Deposit Transactions
Question
The manager of Main Street branch calls and relates the following information: John Smith purchased a cashier's check for $1,000 cash at 10:00 a. m. on
Tuesday. At 11:30 a. m. Mr. Smith returned and purchased a cashier's check for $2,500 cash and deposited traveler's checks totaling $9,000 into his checking account. At 4:00 p.m. Mr. Smith returned and deposited $8,000 cash into his checking account. This deposit was after normal banking hours, so it was recorded as of Wednesday's business date. What action should the bank take?
Answers
Explanations
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A. B. C. D.D
The bank should take action to comply with the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations. In this case, the bank should consider filing a Currency Transaction Report (CTR) and/or recording the transactions on the monetary instrument sales log.
A Currency Transaction Report (CTR) is a form that must be filed with the Financial Crimes Enforcement Network (FinCEN) by banks and other financial institutions for transactions involving currency (cash) in excess of $10,000 in a single business day. The purpose of the CTR is to detect and deter money laundering and other criminal activities.
In this case, the bank did not have a single transaction that exceeded the $10,000 threshold. However, the bank should still consider filing a CTR because the total of the transactions involving cash on Tuesday (i.e., $1,000 + $2,500 = $3,500) is close to the $10,000 threshold. The bank should also be aware that structuring (i.e., breaking up a larger transaction into smaller transactions to avoid the $10,000 reporting threshold) is illegal, and if the bank suspects that Mr. Smith is structuring his transactions, the bank should file a Suspicious Activity Report (SAR) with FinCEN.
In addition to the CTR, the bank should also consider recording the transactions on the monetary instrument sales log. This log is used to track the sale of monetary instruments (e.g., cashier's checks, traveler's checks, money orders) and is required under the BSA for transactions involving more than $3,000 in monetary instruments. In this case, the total of the monetary instrument transactions on Tuesday (i.e., $1,000 + $2,500 + $9,000 = $12,500) exceeds the $3,000 threshold, so the bank should record the transactions on the log.
Therefore, the correct answer is B. File a Currency Transaction Report (CTR) for $11,500. The bank should file a CTR for the total of the cash transactions on Tuesday ($1,000 + $2,500 = $3,500) and the cash deposit on Wednesday ($8,000), which brings the total to $11,500. The bank should also record the transactions on the monetary instrument sales log.
