A currency transaction report (CTR) is a report made by U.S. financial institutions aiming to prevent money laundering.
Every bank must fill out a CTR report electronically and file it with the Financial Crimes Enforcement Network (FinCEN) whenever a customer attempts to withdraw, deposit, transfer, or exchange more than $10,000 (i.e., $10,000.01 or more) in cash in one day—over one or multiple transactions. In some cases, a CTR may also be filed for smaller transactions, particularly if a customer seems to be deliberately avoiding the $10,000 threshold (sometimes called “structuring”).
History of the Currency Transaction Report
Financial institutions didn’t have to use the CTR until 1970 when President Richard Nixon signed the Bank Secrecy Act (BSA) into law. The BSA was established to stop criminals from using the banking system to hide their "ill-gotten gains" or launder money. The law was strengthened over the years, including after the September 11, 2001 terrorist attacks.
What Purpose Does a Currency Transaction Report Serve?
A CTR protects the banking industry from threats caused by people committing financial crimes. The goal of the anti-money laundering regulation is to deter criminals who try to hide the money they obtained illegally.
This law also applies to cryptocurrency businesses. For example, if a cryptocurrency ATM operator's client tries to purchase bitcoin with more than $10,000 in cash from one of their machines, the operator must file a CTR. In addition, if that business person also operates a cryptocurrency exchange, and a client tries to sell more than $10,000 worth of bitcoin in one day, they must file a cryptocurrency CTR.
How Does a Currency Transaction Report Work?
Whenever a bank's customer initiates a transaction of more than $10,000, the institution's banking software will automatically generate a currency transaction report. Generally, the software will autofill the relevant customer data and tax information on the form. If there are signs that a transaction of more than $10,000 may be suspicious, a bank employee can mark a CTR so that it triggers a suspicious activity report (SAR).
A financial institution doesn’t have to tell a customer if their transaction triggers a CTR, but the bank officer must disclose that information if the customer asks. Although the customer can cancel the transaction when they're alerted to the CTR requirement, it's too late to prevent the bank from reporting it. If the customer refuses to complete the transaction or modifies it so that it amounts to less than $10,000, the bank must file a suspicious activity report with FinCEN.
However, these entities are exempt from this requirement:
- An agency or department of a local, state, or federal government.
- A U.S. bank.
- Certain corporations with stocks traded on the New York Stock Exchange, Nasdaq, and the American Stock Exchange.
Compliance refers to the regulations, laws, and guidelines governing businesses and financial institutions.
- 1What is SOC 2?
- 2What is Section 314(b)?
- 3Financial Crimes Enforcement Network (FinCEN)
- 4Customer Due Diligence
- 5Customer Identification Program
- 6What is Section 314(a)?
- 7Suspicious Activity Report
- 8Politically Exposed Person
- 9Specially Designated Nationals
- 10What is a Currency Transaction Report?
- 11What is OFAC?
- 12What is the Bank Secrecy Act (BSA)?
- 13What is PCI DSS Certification?
- 14What is AML Compliance?
- 15Office of the Comptroller of the Currency (OCC)
- 16Personal Identifiable Information (PII)
- 17Compliance Risk Management?
- 18What is Know Your Customer (KYC)?
- 19Know Your Business (KYB)