District Circular Letters

July 27, 2000

BANKING SUPERVISION AND REGULATION:
NEW REPORTING PROCEDURES TO
EXEMPT SOME CURRENCY TRANSACTIONS
OVER $10,000

To State Member Banks, Bank
Holding Companies, U.S. Branches
and Agencies of Foreign Banks,
and Others Concerned,
in the Twelfth Federal Reserve District

Revised Guidelines for Reporting Currency Transactions Over $10,000 (SR 00-12)

The Department of Treasury’s revised exemption procedures allow financial institutions to exempt transactions of certain businesses from the requirement to report transactions in currency in excess of $10,000. These procedures were effective July 1, 2000. After July 1, 2000, only exemptions granted pursuant to the new exemption procedures will be valid. The adoption of the final rules that set forth the new exemption procedures is an attempt to encourage financial institutions to take the necessary steps to significantly reduce repetitive currency reporting on these types of transactions. While the new exemption procedures have significantly simplified the exemption process, should reduce the burden to financial institutions and, if used, will reduce the number of Currency Transaction Report (CTR) filings, the exemption procedures are not mandatory.

The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) began the implementation of the new exemption rules with the publication of a final rule for "Phase I" exemptions in the Federal Register on September 8, 1997. This was followed by the publication of a final rule for "Phase II" exemptions in the Federal Register on September 21, 1998. Together, the final rules for Phase I and Phase II now form the new rules that must be followed for any exemptions from the CTR requirements after July 1, 2000.

Under these new rules, transactions involving customers that fall within one of the classes of exempt persons defined by these rules may be exempt from CTR requirements. The new procedures eliminate the requirement that financial institutions determine whether the daily transactions of a customer exceed a predetermined exemption amount and also eliminate the requirement that financial institutions obtain signed exemption statements from each exempt customer. Under the new procedures, a financial institution seeking to exempt transactions of a customer, as defined in Phase I, from the CTR requirements need only make a one-time filing of a "Designation of Exempt Person" form that identifies the exempt customer and the exempting financial institution. For financial institutions seeking to exempt transactions of a customer, as defined in Phase II, from the CTR requirements, a "Designation of Exempt Person" form must be filed every two years.

In exempting customers under the new exemption procedures, a financial institution must take prudent steps to ensure that the customer meets the definition of an "exempt person."

Additional Information

SR 00-12 and associated documents are available for viewing and printing on the Internet at http://www.federalreserve.gov /boarddocs/srletters/.

For additional information about the revised guidelines, please contact our Banking Supervision and Regulation Department in our Los Angeles branch, at (213) 683-2735

FEDERAL RESERVE BANK OF SAN FRANCISCO