The federal government is preparing to exempt thousands of additional businesses from currency transaction report requirements.
The Treasury Department wants to free banks from filing the reports on retailers, franchisees, and wholesale companies that have been customers at least a year. Draft rules will be released this summer for at least a 90- day comment period.
"If there is a legitimate need for currency and there is no reason to believe they are using the money for illegitimate purposes, then they should be exempted," Pamela Johnson, assistant director of the Financial Crimes Enforcement Network, said Tuesday.
Fincen, a Treasury unit, began rewriting the currency transaction report rules two years ago to eliminate thousands of unnecessary reports that are filed on legitimate businesses.
The Treasury already has issued an interim rule exempting publicly traded companies from the reporting requirement. That interim rule, which has reduced the number of reports filed by 20%, is expected to be finalized within a month, Ms. Johnson said in a speech at the American Bankers Association's annual compliance conference.
To take advantage of the new exemption, banks would file a single CTR annually for each company and they would report to regulators an annual estimate of how much cash each customer used each year.
John J. Byrne, the ABA's senior federal counsel, said the requirements are too burdensome. Noting that banks already file 70,000 suspicious- activity reports a year, Mr. Byrne said, "Law enforcement is overreaching."
When he asked the 300 bankers at the conference whether they would support the rule, fewer than 10 hands went up. About 60 bankers indicated that they would oppose the rule. The rest were undecided.
Also at the conference, a senior Federal Reserve Board official said he expects the banking agencies will jointly adopt know-your-customer rules this summer. Richard Small, the Fed's special counsel, said the rules would require bankers to establish policies to confirm their customers' identities. Examiners then would evaluate how well a bank follows its own rules, he said.
