Currency Transaction Report (CTR): Use in Banking and Triggers

What Is a Currency Transaction Report (CTR)?

A currency transaction report (CTR) is a bank form used in the U.S. to help prevent money laundering. This form must be filled out by a bank representative whenever a customer attempts a currency transaction of more than $10,000. It is part of the banking industry's anti-money laundering (AML) responsibilities.

In order to prevent financial crimes, CTRs require institutions to verify the identity and Social Security numbers of anyone attempting a large transaction, whether or not that person has an account with the institution.

Understanding Currency Transaction Reports (CTRs)

The Bank Secrecy Act initiated the currency transaction report in 1970. However, not all transactions greater than $10,000 need to be reported with a CTR. Since then, legislation has identified certain groups known as "exempt persons."

The three categories of "exempt persons" are:

1. Any bank in the U.S.
2. Departments or agencies that fall under federal, state, or local governments, including any organization that exercises government authority.
3. Any corporation whose stock is traded on the New York Stock Exchange (NYSE), Nasdaq, and American Stock Exchange (excluding stocks listed on the Emerging Company Marketplace and under the Nasdaq Small-Cap Issues heading).

History of Currency Transaction Reports

When the CTR was initially implemented, the judgment of a bank teller was the only thing that would lead to a suspicious transaction of less than $10,000 being reported to law enforcement. This was primarily due to the financial industry's concern about the right to financial privacy. On Oct. 27, 1986, with the passage of the Money Laundering Control Act, the right to financial privacy ceased being an issue.

As part of the act, Congress stated that a financial institution couldn't be held liable for releasing suspicious transactional information to law enforcement. As a result, the next version of the CTR had a suspicious transaction checkbox at the top. This was in effect until April 1996 when the suspicious activity report (SAR) was introduced. CTRs originally were filed on Form 104; they are now filed on Form 112.

How Currency Transaction Reports Work

When a customer initiates a transaction involving more than $10,000, most bank software will automatically create a CTR electronically and fill in tax and other customer information. CTRs since 1996 include an optional checkbox at the top if the bank employee believes the transaction to be suspicious, as indicated by filling out the SAR.

A bank isn't obligated to tell a customer about the $10,000 reporting threshold unless the customer asks. A customer may decline to continue the transaction upon being informed, but this would still require the bank employee to file a CTR as well as a SAR.

Once a customer presents or asks to withdraw more than $10,000 in currency, the decision to continue the transaction must continue without reduction to avoid the filing of a SAR. For instance, if a customer reneges on their initial request and instead requests the same transaction for $9,999, the bank employee must file a CTR anyway, along with a SAR.

Such structuring is illegal under federal law, with strict penalties for both the customer and the bank employee.

The Bottom Line

A currency transaction report (CTR) is used by banks to report to regulators any currency transaction greater than $10,000. The CTR is part of anti-money laundering efforts that aim to ensure that the money isn't being used for illicit or regulated activities. However, banks, government agencies, or public corporations are exempt from needing to have CTRs filed when they transact large amounts.

Along with a CTR, banks are also required to file suspicious activity reports (SARs) for transactions that they think may involve money from illicit sources.