Question: Bank XYZ has a Phase II Exemption customer that is no longer eligible for the CTR Exemption since they haven’t had 5 or more transactions over the CTR threshold in 2020. What do they need to do?
Answer: Bank XYZ would need to start filing CTRs as appropriate and cease treating them as exempt. There is no need to backfile CTRs.
“Customers no longer eligible for exemption
Question: What should a bank do if, during its annual review of a listed business or Phase II customer, it discovers that the customer no longer meets all the criteria for exemption?
Answer: During the annual review of a Phase II exempt customer, a bank may conclude that a customer is no longer eligible for exemption (for example, if an exempt non-listed business customer conducted only four reportable currency transactions during the year under review). At the time the customer’s ineligibility is discovered, the bank should document its determination of ineligibility and cease to treat the customer as exempt. The bank is not required to back file CTRs with respect to a designated Phase II customer that had met the eligibility requirements in a preceding year but was subsequently found to be ineligible during the bank’s timely completion of its annual review.”
Guidance on Determining Eligibility for Exemption from Currency Transaction Reporting Requirements:
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