Like many other community banks, the $139 million-asset Cattaraugus County Bank in Little Valley, N.Y., devotes a healthy amount of resources to currency-transaction reports.
The 500 to 750 it files each year with the Internal Revenue Service about business customers' cash deposits and withdrawals take about 250 hours to prepare - "that's half of a part-time employee," said Sal Marranca, the bank's president and chief executive officer.
And these are customers the 103-year-old bank knows well. They own mom-and-pop businesses such as gas stations, bars, and restaurants; they have been on a first-name basis with Cattaraugus employees for years.
"I don't want to say it's unnecessary, but there has to be a more efficient way to do it," Mr. Marranca said.
For Cattaraugus - and thousands of other community banks struggling to keep up with ever-expanding compliance obligations - help could soon be on the way.
Banks must now file every time a customer withdraws or deposits more than $10,000 in cash. But an amendment the House Financial Services Committee approved in mid-November to a regulatory-relief bill would exempt banks from filing on "seasoned business customers" that make regular withdrawals or deposits of that size.
The bill cleared the committee on a 67-0 vote.
Law enforcement agencies use the reports to spot money laundering. Bankers acknowledge the need but say a single customer may make multiple deposits or withdrawals in excess of $10,000 in any given month, so many filings are redundant.
Reducing the work load, they say, could be an important first step in their battle to ease regulatory requirements for banks.
"The provision will result in significant burden reductions and should eliminate CTR reporting for 60% to 90% of filings for many institutions," said Richard Riese, the director of the Center for Regulatory Compliance at the American Bankers Association.
But though community bankers say they are grateful that Congress is considering such a provision, some remain skeptical that it would meaningfully reduce banks' regulatory burden.
In particular, some worry that "seasoned business customer" will be defined too narrowly. "The devil is always in the details," Mr. Marranca said. "The question is: Will their definition of 'seasoned business customer' be the same as mine?"
Mr. Riese is among the optimists.
"No one's playing a game here," he said. "This is the language that Financial Crimes Enforcement Network has proposed in working with the Hill in order to respond to Congress' concerns that there has been an insufficient benefit to the large volume of CTR filings."
Any confusion over which customers would qualify for the exemption has occurred "because everyone is looking at 'seasoned' and not looking at the language of the legislation," Mr. Riese said.
A "seasoned business customer" would have to meet three criteria: be eligible to do business in the United States, maintain an account at a depository institution for a year, and have engaged in multiple cash transactions that exceed $10,000 in that account.
Fincen says filings of currency-transaction reports rose 7.2% last year, to 13.6 million, and are expected to rise 4.1% this year, to nearly 14.2 million - even though banks can request exemptions and often get them.
Daniel Blanton, the president and CEO of the $824 million-asset Georgia Bank and Trust Co. in Augusta., said banks would benefit from the CTR provision of the regulatory-relief bill even if there were initial confusion about who would qualify for the exemption.
"It's still a lot more relief than we had before," Mr. Blanton said, "so when the dust settles, we still come out on top."
Georgia Bank filed about 4,500 of the reports last year, and the bill would have made 30% to 40% of them unnecessary, Mr. Blanton said. "That's significant," he said.
Among those not convinced is Anna Rentschler, a bank secrecy and anti-money-laundering compliance officer at the $114 million-asset First National Bank of Audrian County in Mexico, Mo. "The jury's still out," she said.
Ms. Rentschler said that First National filed 219 currency-transaction reports this year through October. Though about half were for longtime business customers, she said, obtaining exemptions for them might be just as burdensome as filing the reports.
"I'm afraid it might be six of one and a half dozen of the other," she said.
But Mr. Riese said the legislation has been worded to avoid the kind of "compliance hurdles" that have hampered similar regulatory-relief efforts in the past.
"This is intended to avoid past compliance complexities of the past exemption process by prescribing three straightforward conditions for being a seasoned business customer," he said. "I don't think you could get a bill that's any clearer in terms of its intent."
Though the bill made it out of committee, it has not reached the House floor, and a companion bill in the Senate has not even been introduced.
But Floyd Stoner, the American Bankers Association's executive director for congressional relations, said he is optimistic that a regulatory-relief bill with a currency-report provision can be enacted late next year or early in 2007, before the current Congress' term ends.
"We're at halftime, and we are very pleased with the progress we've made," Mr. Stoner said. "And now we're focusing our attention on the Senate."
