Exemptions from the Requirement to Report Transactions in Currency - Phase II

Attached is a final rule issued by the Department of the Treasury’s Financial Crimes Enforcement Network amending the Bank Secrecy Act (BSA) regulations. This amendment simplifies the process that permits credit unions and other financial institutions to exempt transactions by certain members from the BSA’s large currency transaction requirements. Credit unions have until July 1, 2000 to phase in compliance with the simplified procedures, although you may adopt the procedures for members beginning on October 21, 1998.

The new rule is aimed at exemption of transactions of non-public companies, especially smaller businesses. It permits credit unions and other depository institutions to exempt transactions by any domestic business that has routine needs for large amounts of currency by simply filing a form stating that the business is exempt, so long as the business has been a member (customer) of the credit union (institution) for one year. (Transactions by certain categories of businesses may not be exempted.)

The rule thus eliminates earlier cumbersome and costly rules that required a great deal of paperwork before an exemption could be approved and limited the exemption to certain “permissible currency ranges” outside of which reporting was still required. The exemption will not alter the credit union’s obligations to report any suspicious transactions, including currency transactions of the members that are exempted from routine reporting.

The exemption of the businesses covered by the new rule must be renewed every two years, but a proposed requirement that credit unions include information about a member’s total currency transactions on the renewal form has been eliminated as unduly burdensome and unnecessary. Credit unions must simply indicate that they have maintained a system of monitoring the transactions in the account for reportable suspicious activity.

The new rule supplements earlier changes (restated in the new rule) that eliminated from reporting all transactions in currency between depository institutions and (i) other banks operating in the United States; (ii) government departments and agencies, and other entities that exercise governmental authority; (iii) companies listed on the major national stock exchanges; and (iv) subsidiaries of such listed companies. Together these new procedures should permit credit unions and other depository institutions to significantly decrease the volume of currency transactions reports, since the rules now permit easy exemption of the transactions of most commercial ventures.

Any questions about the final rule or its implementation should be directed to your respective NCUA regional office.