Letter to FinCEN on Information Collection Requirements relating to Currency Transaction Reports

Dear Director Gacki:

The American Bankers Association (ABA) appreciates the opportunity to comment on the Paperwork Reduction Act (PRA) request published by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN seeks renewal, without change, of the existing information collection requirements relating to currency transaction reports (CTRs) filed by financial institutions using the electronic version of FinCEN Form 112.

I. Summary of the Comment

We appreciate FinCEN's effort to update the CTR PRA burden estimate, but the current burden estimate—approximately 8 minutes per CTR—relies on many mistaken assumptions, substantially underestimating the time and money banks must expend to meet this nearly 80-year-old, deceptively complicated, and increasingly outdated reporting requirement. Banks are required by regulation to file CTRs on the vast majority of fiat currency transactions of more than $10,000. FinCEN both overestimates the availability of the requested information and underestimates the time, processes, and resources necessary for CTR compliance.

Over time, this requirement has simultaneously grown more complex for banks to administer and divorced from its original purpose: to identify unusually large currency transactions that exceed the legitimate and customary conduct of a bank’s customers, and produce information highly useful to combat financial crime. 80 years after the inception of this threshold, $10,000 is no longer an unusually large transaction. If adjusted for inflation, the $10,000 reporting threshold would be nearly $170,000 today.

As a consequence of keeping the $10,000 threshold, CTR reports have proliferated exponentially and have consumed an increasing percentage of bank BSA compliance resources. FinCEN reports that banks filed over 20.5 million CTRs in 2022 alone—reports that are no longer inherently tied to combating financial crime. Moreover, CTR Form 112 includes requests for information that exceed BSA program and CTR regulatory requirements, are burdensome for banks to collect and report, and may even conflict with other legal requirements.

By underestimating the burden associated with CTR reporting, FinCEN obscures a bad policy outcome – that is, requiring banks to allocate BSA compliance resources without consideration of risk. In practice, banks must abandon a risk-based approach to BSA compliance and report on every transaction in this category (including the ordinary transactions that a bank expects, and understands to have a lawful purpose) that happen to involve a certain amount of fiat currency. Those transactions that do not appear to have a lawful purpose will trigger a second action: a suspicious activity report (SAR) filing. Thus, for the very same transaction, the bank must file two duplicative reports, a SAR which focuses on the suspicious nature of the transaction, and a CTR, which does not. This duplication as well as requiring reporting on law-abiding customers conducting ordinary and lawful transactions cannot be "highly useful" to combatting financial crime.

In addition, FinCEN’s estimate grossly understates the burden imposed by the information collection. To provide initial feedback to FinCEN on its PRA burden estimate, ABA conducted a brief survey of member banks. The survey was open for four days in March 2024, and even during this exceptionally short window, 145 banks nationwide—ranging from small community banks, to regional mid-size banks, to some of the largest multinational banks—responded, and we share relevant survey data in our comments below. We learned, for example, that in 2023, over a quarter of all respondents spent between 25% and 50% of all their BSA compliance costs on CTR filings. Those are resources that cannot be devoted to suspicious activity. But because having accurate data on CTR burden is essential to policy discussions regarding ways to promote the efficiency and effectiveness of BSA and anti-money laundering (AML) compliance, we urge FinCEN to conduct a comprehensive survey of banks in order to revise its estimate and to inform long overdue policy discussions about the need to modernize the CTR rules.

Download the comment letter to read the full text.