What Is a Currency Transaction Report (CTR)?
A currency transaction report (CTR) is a bank form used in the United States to help prevent money laundering. This form must be filled out by a bank representative whenever a customer attempts a currency transaction of more than $10,000. It is part of the banking industry's anti-money laundering (AML) responsibilities.
In order to prevent financial crimes, CTRs require institutions to verify the identity and Social Security Numbers of anyone attempting a large transaction, whether or not that person has an account with the institution.
- A currency transaction report (CTR) is used to report to regulators any currency transaction that exceeds $10,000.
- The CTR is part of anti-money laundering efforts to ensure that the money is not being used for illicit or regulated activities.
- Banks, government agencies, or public corporations are exempt from needing CTRs when they transact large amounts.
- A CTR may also be filed for smaller transactions if the customer appears to be deliberately avoiding the $10,000 threshold. This is known as structuring.
- Banks do not have to tell you when they file a CTR unless you ask. You can back out of the transaction, but that will result in a Suspicious Activity Report (SAR).
Understanding Currency Transaction Reports (CTRs)
The Bank Secrecy Act initiated the currency transaction report in 1970. However, not all transactions greater than $10,000 need to be reported with a CTR. Recent legislation has identified certain groups known as "exempt persons."
The three categories of "exempt persons" are:
- Any bank in the United States.
- Departments or agencies that fall under federal, state, or local governments, including any organization that exercises government authority.
- Any corporation whose stock is traded on the NYSE, Nasdaq, and American Stock Exchange (excluding stocks listed on the Emerging Company Marketplace and under the Nasdaq Small-Cap Issues heading).
History of Currency Transaction Reports
When the CTR was initially implemented, the judgment of a bank teller was the only thing that would lead to a suspicious transaction of less than $10,000 being reported to law enforcement. This was primarily due to the financial industry's concern about the right to financial privacy. On October 26, 1986, with the passage of the Money Laundering Control Act, the right to financial privacy ceased being an issue.
As part of the Act, Congress stated that a financial institution could not be held liable for releasing suspicious transactional information to law enforcement. As a result, the next version of the CTR had a suspicious transaction checkbox at the top. This was in effect until April 1996 when the Suspicious Activity Report (SAR) was introduced. CTRs were originally filed on form 104; they are now filed on form 112.
In addition to a CTR, banks are also required to file Suspicious Activity Reports for transactions that they suspect may involve money from illicit sources.
How Currency Transaction Reports Currently Work
When a customer initiates a transaction involving more than $10,000, most bank software will automatically create a CTR electronically and fill in tax and other customer information. CTRs since 1996 include an optional checkbox at the top of the bank employee believes the transaction to be suspicious using the SAR.
A bank is not obligated to tell a customer about the $10,000 reporting threshold unless the customer asks. A customer may decline to continue the transaction upon being informed, but this would still require the bank employee to file a CTR as well as a SAR.
Do not attempt to avoid a CTR by splitting your transaction into multiple transactions, or by making a transaction just under $10,000. Deliberately evading the CTR reporting threshold is a federal crime known as "structuring."
Once a customer presents or asks to withdraw more than $10,000 in currency, the decision to continue the transaction must continue without reduction to avoid the filing of a SAR. For instance, if a customer reneges on their initial request and instead requests the same transaction for $9,999, the bank employee must file a CTR anyway, along with a SAR.
Deliberately evading the $10,000 reporting threshold with multiple transactions, or transactions just under $10,000, is known as "structuring." Structuring is illegal under federal law, with strict penalties for both the customer and the bank employee.
Currency Transaction Report FAQs
What is a CTR in Banking?
A Currency Transaction Report, or CTR, is a mandatory report which must be filed for currency transactions that exceed $10,000, as part of the bank's anti-money laundering requirements.
Are Currency Transaction Reports Confidential?
Banks do not have to tell customers about CTRs unless the customer asks. This is distinct from a Suspicious Activity Report, which should not be disclosed to the customer.
Does a Currency Transaction Report Go to the IRS?
While Currency Transaction Reports are reported to the Financial Crimes Enforcement Network (FinCEN), the IRS can also use data from CTRs to enforce tax regulations, according to the U.S. Treasury.
When Should a Currency Transaction Report Be Filed?
CTRs must be filed whenever a customer makes a currency transaction exceeding $10,000, or for multiple transactions if the sum exceeds $10,000 in one day.