CTR for Endorser

Question/Issue

The office manager of a company comes into the Bank with her payroll check, an assistant's check and the owner's checks. Each check is payable to one of the individuals and has the endorsement of the payee on the back of the check. The office manager endorses the checks, cashes them, and brings the proceeds back to the owner and the assistant. The Bank files a CTR on the office manager as the last endorser. Her check and her assistant's checks average $450 each. The owner's checks are typically around $9,200 and $1,500.

Should the Bank add the owner's name and information to the CTR filing as the party who is benefiting from the transaction? Or should it follow its present rule and file only on the last endorser?

Response Summary

When the office manager cashes checks totaling more than $10,000 during a single business day, the Bank is required to aggregate those checks for the purpose of filing a CTR on the office manager. On days when the checks made payable to the owner exceed $10,000, making the owner a beneficiary on whose behalf the checks have been cashed, the Bank will be required to file a CTR and to complete the sections identifying both the person who conducted the transactions and the person on whose behalf the transactions were conducted.

Response Detail

Under FinCEn’s regulations implementing the Bank Secrecy Act, the Bank must aggregate multiple currency transactions if it has knowledge that the transactions are by or on behalf of any person and result in either cash-in or cash-out totaling more than $10,000 during any one business day [31 CFR §1010.313(b)].

In an example provided by FinCEN, if an individual made a cash deposit of $5,000 into his personal account and, later that same business day, made a cash deposit of $6,000 into his employer’s business account, the financial institution would be required to file a CTR. [FIN-2012-G001].

Similarly, if several employees of a business cash their payroll checks individually with a financial institution, resulting in an aggregate cash-out from the business’ account with the financial institution exceeding $10,000, no CTR would be filed because the financial institution would not be involved in a single cash transaction or multiple cash transactions, for which a duty to aggregate would arise, of more than $10,000. The cashing of the checks would be by or on behalf of each individual employee, rather than the business on the account of which the checks were drawn.

If several employees, however, endorsed their respective payroll checks and made them payable to one employee, who, in turn, cashed them at a financial institution for the purpose of distributing the proceeds back to the individual employees, a CTR would be required, because one person would be receiving more than $10,000 in currency. FinCEN, Answers to Frequently Asked Bank Secrecy Act (BSA) Questions, Q.13(a) & (b).

In this case, the office manager is typically cashing checks totaling more than $10,000 during a single business day. The Bank is required to aggregate those checks for the purpose of filing a CTR on the office manager. On some days, however, the checks made payable to the owner may also exceed $10,000. Since the owner is a beneficiary when these checks are cashed by the office manager, the Bank will be required to file a CTR on those days and complete the sections identifying both the person who conducted the transactions and the person on whose behalf the transactions were conducted.

This entry was posted on Friday, October 24th, 2014 at 6:04 pm.