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FinCEN: Batch e-Filing of CTRs and SARs

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By RICHARD B. KELSKY

We get a lot of requests from our customers, many of which end up in development projects and new software releases.
The most we have had in a long time relate to mandatory e-Filing of CTRs and SARs with FinCEN. When it comes to e-Filing, one request has come up way more often than others: “Batch Filing.”
By now, you are trying to adjust to FinCEN’s July 1, 2012 mandate for electronic filing of CTRs and SARs.
By now, having used e-Filing, you have discovered that just because the process incorporates “Adobe forms,” it does not mean that you can scan in a form and send it off to FinCEN — you cannot.
By now, you may have found that filling out forms one-at-a-time on-line is time-consuming and tedious, and can create errors. By now, you may want to switch to “Batch Filing.”

Discrete Filing

Back in late June (and since), many folks called our support center asking about the FinCEN registration process, followed by asking about how to use FinCEN e-Filing once they registered. Most check cashers have had only one choice (is one choice really a choice?): something called Discrete Filing.
What is Discrete Filing? It is the one-at-a-time, manual, on-line creation of a CTR or SAR filing on the FinCEN Website.
It is the process of going to the FinCEN site, logging in and selecting the Discrete Filing option. Under that option, you can choose between using the “legacy form” or the “new form.”
By the way, you can continue to use the “legacy form” until March 31, 2013, after which you will have to use the “new form” (http://goo.gl/r5FCB).
Once you log in, you fill in the form on the FinCEN site with the transaction and customer information. You can store certain recurring administrative entries for use on future forms, such as your company’s name, address, etc.
If you rarely file a CTR or SAR, Discrete Filing may be fine for you, but be very careful about making errors during the entry process, since the data has to be typed in by hand. If you file CTRs and SARs regularly, you’ll probably find yourself muttering “B-atch” fairly soon.
And don’t forget: If your state regulator requires that a copy of the form be filed with it, you still need to print out the form from your system and send it to the state.

Do You Want to Batch?

For those of you who have had enough of filling in forms one-at-a-time on-line, FinCEN has a next level of filing, called Batch Filing.
Last year, when FinCEN was seeking comments on the proposed implementation of both e-Filing and the new CTR and SAR forms, Scott K. McClain, regulatory counsel to FiSCA, provided comprehensive comments. One of the issues that he addressed was called “Technical Issues with Batch Filing Function.”
In his letter, McClain explained:
“FinCEN’s BSA E-Filing system supports discrete, computer to computer and batch filing functions. Based on our discussions with industry consultants and systems programmers, it appears that there are technical challenges in adapting existing point-of-sale systems to FinCEN’s batch filing function.
“More specifically, although FinCEN offered a recent Webinar to instruct financial institutions on the process to register for and utilize the electronic filing system, the final specifications for the batch filing function have not yet been made available to industry.
“We have been informed that FinCEN will make the new specifications available in December, 2011. Systems programmers and consultants, however, have indicated that due to the relative complexity of the programming specifications provided by FinCEN, and the fact that the final specifications have not yet been completed or made available to industry, additional time beyond the proposed June 30, 2012 date may be required to modify existing systems with respect to the batch filing function.
“Finally, in this regard, industry consultants and systems programmers have expressed concerns that it has been difficult to obtain technical information and get answers from FinCEN with respect to systems problems. In order to facilitate the industry’s transition to mandatory electronic filing, we would request that appropriately knowledgeable personnel at FinCEN be made available to provide timely technicalinformation to industry.”
While e-Filing became mandatory on July 1, 2012, submissions such as FiSCA’s resulted in the required use of the “new form” being pushed back to March 31, 2013, to allow for systems development.

Development to Reality

The development of the software behind integrated batch filing was complex and time-consuming.
The idea was to allow a user to generate CTRs and SARs in their POS system, and aggregate them in batches for automated electronic filing with FinCEN without having to enter, by hand, the information for each and every transaction and customer on the FinCEN “Discrete” e-Filing website.
We completed our development of the product, but in some ways, that was just the beginning.

What’s Involved in Going “Batch”?

After the software is installed, each MSB has to be separately approved by FinCEN for batch filing. This process involves the MSB’s registering for FinCEN’s batch filing test site, obtaining a “test” login from FinCEN, and sending sufficient successful batch test submissions for FinCEN to grant a “live” user batch login.
The good news is that by working with our customers, we figured out how to make the process relatively painless.
First, we realized how important it would be to guide each customer step-by-step through the test registration and test batch creation/submission process.
This would include both helping them to create and submit multiple test batches, and to understand the messages returned by the FinCEN system as well as the process of correcting submissions, until a “live” batch user login is granted.
Second, we created a user manual and trained our trainers on preparing and submitting “live” batches of CTRs and SARs, how to read and understand certain FinCEN communications, how to handle certain FinCEN requests for correction, how to handle corrected filings, and more.
These major steps took implementation of integrated Batch Filing from concept to reality.

I’d Choose to Batch

If you ask me, “Discrete or Batch?” my answer is clear and unequivocal: Integrated Batch Filing is a must-have. First and foremost, the time involved is substantially reduced. And since the data moves internally, there’s less chance of entry errors. You do all of your work off-line — on one or several CTRs or SARs — and add them to a CTR or SAR Batch.
When you are ready to send them in, you log on to the FinCEN Batch filing site, and send the file, then check your mailbox for confirmations of receipt and validation. Any detected errors can be corrected and the filing resubmitted.
Perhaps more important, my answer is based on customer comments.
Being in compliance is very important. Spending valuable hours typing on-line to get there is just a waste of your time. So today, if anyone asks you “Discrete or Batch?” there really is a choice.

Richard Kelsky is president of TellerMetrix, a provider of POS transaction, compliance, interface, electronic deposit and marketing software to check cashers, payday lenders and retail banks. He is also a New York and Connecticut Bar member, a Polytechnic Institute of New York University and New York Law School grad, a Certified Anti-Money Laundering Specialist and a frequent lecturer on business, legal, compliance and technology issues. He can be reached at rkelsky@tellermetrix.com.

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