ABA Banking Journal - September/October 2015 - (Page 34)

> ABA COMPLIANCE CENTER INBOX Q: cTr Filing: Am I wrong to Be concerned? We are working with a vendor that is using FinCEN's 2012 guidance (www.fincen.gov/statutes_ regs/guidance/html/FIN-2012-G001.html) to establish automated CTR reporting. The system is set up to ensure that financial institutions are capturing the complexities of related parties and transparency of cash transactions for potential aggregation consideration and CTR reporting. I see a risk of inaccurate CTR reporting if the system aggregates cash transactions that were conducted on the same day, based solely on the fact that two customers that conducted the transactions on the same day have an account together. The vendor is arguing that the risk of error for incorrectly including a particular conductor/beneficiary in the aggregation is an acceptable risk as long as the CTR was filed in a timely manner. In my opinion, the system creates the potential for over-filing CTRs and aggregating transactions for CTR reporting that are unrelated, which does not meet the accuracy requirements for CTR reporting. Am I wrong to be concerned? No, you should be concerned, but in your scenario, filing the CTR when one is not required is fundamentally a vendor issue. The question of over-filing has been debated for some time. On one hand, some believe that filing a CTR that isn't needed is not a problem. However, there are those-which include some examiners-who believe that filing a CTR that isn't needed implies that proper procedures to ensure accuracy are lacking. To some extent, it will depend on how frequently the error occurs and what steps the bank has in place to identify and correct the discrepancy. The calibration of systems is something that should be adjusted and updated periodically. If the vendor is unwilling or unable to tweak the system to report correctly, one solution is for there to be a second review by a human being who can make the determination regarding the validity of the CTR. Although examiners stress automated systems for tracking and reporting, I don't believe that the expectation is that system logic should supplant human logic and common sense. While it's important that the system flag accounts to ensure aggregation is done when needed, you might ask the vendor if there's a way to identify 34 ABA BANKING JOURNAL | sEpTEmBEr/OcTOBEr 2015 the ones where you have concerns so that there can be a human review before the CTR is filed. Related to the issue of filing a CTR when it's not needed is the added steps which must be taken to ensure that the form meets standards for precision and completeness. If a CTR is filed, then it must be as complete and as accurate as possible, even if the CTR wasn't needed. (Response provided June 2015) Q: 12 U.S.C. 83 addresses loans secured by bank stock. It says: "Loans by bank on its own stock (a) General prohibition. No national bank shall make any loan or discount on the security of the shares of its own capital stock. (b) Exclusion: For purposes of this section, a national bank shall not be deemed to be making a loan or discount on the security of the shares of its own capital stock if it acquires the stock to prevent loss upon a debt previously contracted for in good faith. AMENDMENTS 2000-Pub. L. 106-569 amended section catch line and text generally. Prior to amendment, the text reads as follows:"No association shall make any loan or discount http://www.fincen.gov/statutes_regs/guidance/html/FIN-2012-G001.html

Table of Contents for the Digital Edition of ABA Banking Journal - September/October 2015

CHAIRMAN'S VIEW
UPFRONT
PICTURE THIS
ECONOMIC OUTLOOK
POISED AND PROACTIVE ON THE FARM
MEETING CUSTOMERS WHERE THEY ARE
INVESTING IN STRONG RURAL COMMUNITIES
ABA COMPLIANCE CENTER INBOX
OPERATIONS
BANKS IN INSURANCE
REAL ESTATE LENDING
BOARD MATTERS
INVESTOR PERSPECTIVE
LEGAL BRIEFS
FROM THE STATES
COMPLIANCE
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - September/October 2015

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