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Compliance Determining ineligible revenues for CTR exemptions
WASHINGTON (5/27/09)—It is not always easy to determine if a business member can qualify for a Phase II Currency Transaction Report (CTR) exemption when that member engages some “ineligible” business activities. But according to Financial Crimes Enforcement Agency guidance (FIN-2009-G001), a business “may qualify for an exemption as a non-listed business provided that no more than 50% of its annual gross revenues are derived from one or more ineligible business activities.” For instance, imagine a situation where a federal credit union has a business account related to a small “full-service” real estate company that handles real estate sale/purchase transactions, does title searches, provides real estate brokerage services, and so on. The business engages in a number of large cash transactions during each month that require currency transaction reporting. To determine if the business member qualifies for a CTR exemption, the credit union must make a “reasonable determination” that the member derives no more than 50% of its annual gross revenues from ineligible business activities. To make this determination, the credit union could take into account member certifications regarding annual gross revenues, review the business’ audited financial statements, or review the business’ most recent tax returns. If the business' gross annual revenues derived from the real estate brokerage business activity is less than half the total, then the business should qualify for the exemption. For more on this and other compliance topics, visit the Credit Union National Association’s Compliance Challenge using the link below.
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