Aggregating CTRs for Beneficial Ownership

How will CTR aggregation change with the new CDD rule?

As the conversation about beneficial ownership continues, one topic has sparked a lot of interest: CTR aggregation. Many are wondering, Will the process change? Will we have to aggregate differently?

To help address these concerns, we’ve compiled a list of CTR aggregation questions and answers below. Don’t forget to check out the rest of our beneficial ownership resources, as well!

Q: Will the current process for CTR aggregation change with the new beneficial ownership rule? If so, how?

A: Yes, the process may change. The CTR aggregation rules themselves did not change. However, if the bank has knowledge that multiple transactions were conducted by or on behalf of the same person, they must be aggregated for CTR filing purposes. With the beneficial ownership rule, the bank will have more clarity into the owners and who may be benefiting from transactions. This knowledge could result in transactions being aggregated that may not have been before the new rule because the bank was not privy to this information.

Q: So I have to aggregate all transactions where business have mutual beneficial owners?

A: No. If you know that the businesses in question are operating independently from each other or independently from the primary owner, you are not required to aggregate. If the opposite is true and you are aware that the business are not operating independently of each other, you may determine it is appropriate to aggregate.

For example: John Smith is the only account owner for his sole proprietorship, Johnny Smith Apple Stand. After implementing the new beneficial ownership rule, the bank is made aware that John Smith also owns 30% of Sarah’s Shell Shack. Both businesses frequently deposit cash that aggregate to over $10,000 in one business day when combined. The bank has also been made aware that both businesses share a common manager and the businesses frequently pay each other’s expenses. Therefore, BSA Officer Betty may determine that aggregating the transactions of the entities would be appropriate for CTR filing purposes.

As you can see, the rules itself has not changed. However, the bank has more information at their disposal when determining whether or not to aggregate multiple transactions from separate entities.

Q: What is the proper way to complete a CTR on transactions involving multiple business entities?

A: According to the CTR FAQs from FinCEN,

“The requirement to file a CTR may be triggered by an individual depositing more than $10,000 into multiple business accounts. In that case, the filing should be completed with those entities on whose behalf the transaction(s) were conducted and on the individual who conducted the transaction (Part I). In a situation where multiple withdrawals involving several individuals have occurred throughout the day, common ownership may be relevant to a determination that aggregation is required. If multiple businesses are not operating separately and independently, the institution may reach the conclusion that their transactions should be aggregated. A CTR would be completed indicating those entities on whose behalf the transaction(s) were conducted and those individual(s) conducting the transaction(s). Each entity and individual would be listed in a respective Part I.”

Q: What questions should we be asking the vendors?

A: Talk to your vendors about whether their CTR system can filter out the beneficial owner TINs for which CTR Aggregation is not appropriate. It is important to ask your vendors if functionality will be available that will allow for institutions to “flag” accounts with similar ownership that are not operating independently for aggregation purposes within the system. This will be a time saver for you in the long run.

Another way to save time and streamline your beneficial ownership collection/storage is the Due Diligence Manager application. Not only does this tool allow you to gather what you need for beneficial ownership, but it also will become a comprehensive CIP, CDD and EDD tool. To learn more about Due Diligence Manager, CTR Manager and more, visit bankerstoolbox.com.