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Federal Deposit Insurance Corporation

Division of Supervision

550 17th Street NW, Washington, DC 20429

Bank Secrecy Act Compliance
FIL-120-98
November 16, 1998
TO:

CHIEF EXECUTIVE OFFICER

SUBJECT:

New Currency Transaction Reporting Exemption Rule

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The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has
announced a final rule that represents the second part of its effort to significantly reduce the
number of times depository institutions must report large currency transactions. The rule further
simplifies the way banks can exempt large currency transactions by retail and other businesses
from the reporting requirements.

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The new rule is aimed at exemption of non-public companies, especially smaller businesses,
which represent a majority of reports filed. It permits banks to exempt a domestic business that
has a routine need for large amounts of currency by simply filing a form stating the business is
exempt, as long as the business has been a bank customer for one year. The new rule does not
allow for exemption of certain categories of businesses, such as real estate brokers, automobile
dealers, and money transmitters, and it does not exempt banks from reporting suspicious
activity involving exempted entities.
The rule applies to all depository institutions, banks, thrifts, and credit unions, but not to other
financial institutions. Banks have until July 1, 2000, to phase in compliance with the simplified
procedures, although they may adopt the procedures beginning October 21, 1998. The
exemption of the businesses covered by the new rule must be renewed every two years, but a
proposed requirement that banks include information about a customer's total currency
transactions on the renewal form has been eliminated as unduly burdensome and unnecessary.
Banks must simply indicate they have maintained a system of monitoring the transactions in the
account for reportable suspicious activity.

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A copy of the Federal Register notice containing the new rule is attached. If you have any
questions, please contact your FDIC Division of Supervision Regional Office.
Nicholas J. Ketcha Jr.
Director

Attachment:

Federal Register, Sept. 21, pages 50147-50159.
Distribution: FDIC Supervised Banks (Commercial and Savings)
NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC's
Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (800-2766003 or (703) 562-2200).