ABA Banking Journal - March 2011 - (Page 37)
ABA COMPLIANCE CENTER | INBOx
Does common ownership mandate BSA aggregation?
Q. For Bank Secrecy Act reporting purposes are we required to aggregate transactions conducted on behalf of separate businesses that are owned or controlled by the same individuals? Each business has its own business address, its own Employer Identification Number [EIN], and transactions are conducted by separate individuals. A. A key question is what, other than ownership, do these entities have in common? According to the Federal Financial Institutions Examination Council’s BSA exam manual (http://tinyurl. com/4spk8bk), multiple currency transactions totaling more than $10,000 during any one business day are treated as a single transaction if the bank has knowledge that they are by or on behalf of the same person. If each business entity has its own EIN, then each is a separate “person.” You have already stated that there is no common conductor, so you need to find some other reason to aggregate their deposits. For example, let’s say that you, your brother, and sister all lived at the same residence with your mom, and all had separate bank accounts. If each of you went to the bank to deposit $5,000 in cash, the bank would not aggregate your deposits based only on the fact that you have the same mother or that you lived at the same address. It is no different with businesses. So, in your situation, we suggest considering aggregating any entities that are d/b/a, such as if ABC Real Estate Holding were a DBA under ABC Real Estate. We would aggregate any with the same EIN. We would aggregate any with a common conductor. Other than that, we can see no basis for aggregation. That being said, if this activity raises any red flags, and you believe that deposits are being structured to avoid filing of Currency Transaction Reports, you should file a Suspicious Activity Report. For SAR purposes, you can file on each business separately and cross reference the others in the narrative, or pick one and list all the rest in the narrative. (Answer provided 2/9/2011) Addressing excess MMDA activity Q. If we charge an excess activity fee for exceeding the Regulation D transaction limits of six, can we just allow the excess activity to continue and keep the account open? A. No. Although an excess transaction fee is a good deterrent, the fee is not all that is needed. Charging a fee does not alleviate your obligation to monitor transactions and to convert or close the account when they exceed the six-per-month (or statement cycle) limits. (Answer provided 2/9/2011) Mohos, TIL, and state law Q. Is the early truth-in-lending notice required on loans secured by mobile homes if a mobile home is considered personal property and not “real” property under our state law? A.Yes. It is true that Regulation Z excludes credit for property over $25,000 not secured by real property or a dwelling. However, a mobile home considered personal property under state law is considered a dwelling under Reg Z. Section 226.2(a) (19) of Reg Z classifies a dwelling as: “… a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.” [Emphasis added.] The Commentary to this section adds that: “Mobile homes, boats, and trailers are dwellings if they are in fact used as residences, just as are condominium and cooperative units.” (Answer provided February 2011) Is Regulation O retroactive? Q. Let’s say an existing customer of the bank has an outstanding loan at our bank and is hired as an Executive Officer. Is the preexisting loan then subject to the individual Reg O limits? A.Yes and no. If the loan was made prior to the customer becoming an “insider,” and was made in good faith with no contemplation of the individual becoming an insider, then it is considered a “non-conforming loan” and will not be cited as a violation even if it exceeds individual lending limits established by Regulation O. However, no new loans may be made, and existing loans may not be renewed, except in compliance with Regulation O. In addition, the preexisting loan would be counted for other triggers and limits under Reg O. In short, you may not simply ignore preexisting loans. See OCC Interpretative Letter #1096 (http:// tinyurl.com/4pykh98) for additional clarification. (Answer provided February 2011)
Find more answers online at www.ababj.com/blog/461.html
Leslie Callaway, CRCM, ABA Compliance Project Manager, and Mark Kruhm, CRCM, ABA Senior Compliance Analyst, and other ABA experts, answer ABA member questions here and in the online edition of Inbox at ababj.com. Member banks may submit questions to: compliance@aba. com. Disclaimer: Our answers do not provide, nor are they intended to substitute for, professional legal advice. Answers were current as of date shown at the end of each item.
march 2011 | ABA BANKING JOURNAL |
Table of Contents for the Digital Edition of ABA Banking Journal - March 2011
ABA Banking Journal - March 2011
ABA Community Banking: Got the Blues? Try a Little Reinvention
Pass the Aspirin
Put Your Capital to Work
Still Waiting in the Wings
Surveys & Trends
ABA Banking Journal - March 2011