Purchase and Sale of Certain Monetary Instruments Recordkeeping

Category: Data Security , The Bottom Line , Digital Banking
Author: NXTsoft

As announced in FDIC Financial Institution Letter FIL-45-2021 dated June 23, 2021, the FDIC has updated the Monetary Instruments Section of the FFIEC BSA/AML Exemption Manual. As a result, a brief review may be prudent.

Regulatory requirements for banks regarding recordkeeping for purchases and sales of certain monetary instruments are covered in:

  • 31 CFR 1010.415

The purchase or exchange of monetary instruments can conceal the source of illicit proceeds. Criminals have been known to purchase monetary instruments with currency in smaller increments in order to avoid providing identification or to circumvent BSA requirements, such as Currency Transaction Report (CTR) filings. Once converted from currency into monetary instruments, criminals typically deposit these instruments in accounts with other banks or negotiate them at nonbank financial institutions to facilitate the movement of illicit funds through the financial system.

A bank may not issue or sell a bank check or draft, cashier’s check, money order, or traveler’s check for $3,000 or more in currency, unless it maintains records of certain information. The following information must be obtained for each issuance or sale of one or more of these instruments to any individual purchaser which involves currency in amounts of $3,000 to $10,000, inclusive:

  • If the purchaser has a deposit account with the bank 

− Name of the purchaser  

− Date of purchase  

− Types of instruments purchased

 − Serial numbers of each of the instruments purchased  

− The amount in dollars of each of the instruments purchased  

− Specific identifying information, as applicable

  • If the purchaser does not have a deposit account with the bank:

   – Name and address of the purchaser  

– Social Security or alien identification number of the purchaser

– Date of birth of the purchaser

– Date of purchase

– Types of instruments purchased

– Serial numbers of each of the instruments purchased

– The amount in dollars of each of the instruments purchased                                        

– Specific identifying information (e.g., state of issuance and number on driver’s license) for verifying the purchaser’s identityProtect every API connection

Contemporaneous Purchases

Contemporaneous purchases of the same or different types of instruments totaling $3,000 or more must be treated as one purchase. Multiple purchases during one business day totaling $3,000 or more must be aggregated and treated as one purchase if an individual employee, director, officer, or partner of the bank has knowledge that the purchases have occurred.

Record Retention

Banks must retain the records of monetary instrument sales for five years, and the records must be made available to the Secretary of the Treasury upon request.

Indirect Currency Purchases of Monetary Instruments

If a deposit accountholder first deposits currency into their deposit account to purchase monetary instruments in amounts between $3,000 and $10,000, FinCEN guidance states that the transaction is still subject to the recordkeeping requirements of 31 CFR 1010.415. This requirement to maintain records on indirect currency purchases of monetary instruments applies whether the transaction is conducted in accordance with a bank’s established policy or at the request of the customer. Generally, when a bank sells monetary instruments to deposit accountholders, the bank already maintains most of the information required by 31 CFR 1010.415 because of BSA requirements to collect customer information.

Hopefully, this review of Monetary Instrument Sale recordkeeping is of benefit.

July 29, 2021
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