A currency transaction report is a bank form used in the United States to help prevent money laundering. The form must be filled out by a bank representative who has a customer requesting to deposit or withdraw a currency transaction greater than $10,000.
Breaking Down Currency Transaction Report (CTR)
The Bank Secrecy Act initiated the currency transaction report in 1970. However, not all transactions greater than $10,000 need to reported with a CTR. Recent legislation has identified certain groups known as "exempt persons."
The three categories of "exempt persons" are:
1. Any bank in the United States.
2. Departments or agencies that fall under federal, state, or local governments, including any organization that exercises government authority.
3. 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. The CTR form was once officially form 104; however, it is now form 112.
How Currency Transaction Reports Currently Work
When a bank processes a transaction involving more than $10,000, most bank software will automatically create a CTR electronically and fill in tax and other customer information automatically. CTRs since 1996 include an optional checkbox at the top of the bank employee believes the transaction to be suspicious or fraudulent, commonly called a SAR, or Suspicious Activity Referral.
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 about the CTR, but this would require the bank employee to file a SAR. 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 CTR. For instance, if a customer reneges on their initial request and instead requests the same transaction for $9,999, the bank employee should deny such a request and continue the transaction as originally requested by filing a CTR. This sort of attempt is known as structuring, and is punishable by federal law against both the customer and the bank employee. Habitual transactions just under the $10,000 threshold may also attract scrutiny and the filing of a SAR.