IRS Delays Use of New Magnetic Currency Transaction Reports

WASHINGTON - Banks can forget about filing the new currency transaction report magnetically, at least until the first of the year.

The Internal Revenue Service's Computing Center in Detroit still does not have the capability to magnetically receive the updated form, which was put into use Oct. 1. It likely won't be ready until January.

"Apparently, Detroit just got caught not ready to go," said Charles A. Intriago, editor of the monthly newsletter, Money Laundering Alert.

He said banks didn't find this out until just before the deadline.

Up to 600 banks, mainly large ones, will be affected. About 65% of the 5.7 million currency transaction reports filed in the first six months of 1995 were entered magnetically.

But John Byrne, senior federal counsel at the American Bankers Association, said that "with huge projects like this, there are always going to be delays that are beyond your control."

The new CTR form drops the suspicious-activity reporting box, which was eliminated in favor of a new suspicious-activity report form. That form also has been beset with delays.

Apparently the heavily technical nature of CTR magnetic filing has caused the slowdown. To prevent banks from having to type in the same information every time a CTR is filed, the IRS is creating a filing program coded to fit with banks' current information systems.

The process is a lengthy one, said Pamela J. Johnson, assistant director for compliance at the Treasury Department's Financial Crimes Enforcement Network. But Ms. Johnson said the system for accepting the filings magnetically should be operational by the first of the year.

"Some people have said, 'Why didn't you just delay the CTR?'" Ms. Johnson stated, adding: "That's not necessary. We're just in a muddy period between here and Jan. 1. But there's a light at the end of the tunnel."

Regulators are advising banks to continue filing the old - instead of the new - currency forms magnetically until Jan. 1. Before then, as long as a bank files either the new form on paper or the old form magnetically, the government will accept it.

But Mr. Intriago said there should never have been a delay, since the Detroit office - the only one in the country that can accept the CTRs magnetically - participated in developing the new CTR.

The least the agencies could have done is give the banks some advance warning, he said.

"We thought that it would be ready," Mr. Intriago said. "And from talking with banks, it wasn't until the last minute that they were told they could not file these magnetically on Oct. 1. It was nothing that the banks received ample warning about."

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