NEWS: The League and Corporate Central Credit Union today filed a joint letter with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). We asked FinCEN for a ruling on an issue of importance to many credit unions statewide: Whether credit unions must file Currency Transaction Reports (CTRs) for deliveries and deposits of cash to CU branches and ATMs via Thillens, Inc., an armored car service that Corporate Central contracts to provide.
We have heard of one recent OCU exam that cited a credit union for failing to file CTRs for these Thillens deliveries.
Concerns first arose in 2021, when the Wisconsin Bankers Association asked FinCEN for a ruling that banks had no obligation to file CTRs for deliveries from Thillens. FinCEN denied the bankers’ request.
However, The League and Corporate Central see key differences between the way Thillens delivers to banks vs. Thillens deliveries under Corporate Central’s “Corporate Cash” program. Corporate Central emailed FinCEN with an informal request for clarification last year, pointing out the differences, but never received a reply. That prompted today’s formal joint request for an administrative ruling.
The “Corporate Cash” program
Corporate Central’s “Corporate Cash” program uses various armored car services to transport cash to/from member credit unions, but Corporate Central’s agreement with Thillens is unique in two key ways:
- First, Corporate Central’s agreements with other armored carriers call for transport of cash from/to a Federal Reserve Bank to fulfill currency orders. The model that Thillens uses to fulfill currency orders is through a relationship that Thillens has with their federally insured bank partner, FifthThird.
- Second, the Thillens’ agreement provides that Corporate Central will settle for all the currency that is prepared for delivery to, or currency that is returned by, a member credit union. Corporate Central debits or credits the member credit union’s account at Corporate Central, and then Corporate Central settles with Thillens’ account at FifthThird for the aggregate amount of all the credit union members’ orders, via an ACH debit or credit initiated by FifthThird.
Thillens is registered as a Money Service Business (MSB) with FinCEN. For at least a decade, Thillens has voluntarily filed a CTR for the transportation of currency to or from each branch credit union location where deliveries over $10,000 are made as part of the Corporate Cash program.
State bankers’ requests
The Wisconsin Banker’s Association filed a request for an administrative ruling from FinCEN in April of 2021, and the Illinois Bankers Association appears to have filed a similar request at about the same time. Both asked that bankers in their states be exempt from filing CTRs for Thillens cash delivered. FinCEN denied both requests with simultaneous and nearly identical letters. FinCEN wrote:
Pursuant to 31 CFR § 1010.311, depository institutions such as the Banks are required to file a report of each deposit, withdrawal, exchange of currency or other payment or transfer by, through, or to such financial institution, which involves transactions in currency of aggregate amounts in excess of $10,000. Exemptions from the requirement for banks to file CTRs are listed at 31 CFR § 1020.315. None of these exemptions appears to apply to the situation described in the Request.
FinCEN appeared to focus on the fact that Thillens does not transport cash from/to a Federal Reserve Bank to fulfill currency orders. Instead, it fulfills currency orders through a relationship with FifthThird Bank.
FinCEN added that bankers were not required to backfile CTRs for prior Thillens cash deliveries.
The Corporate Cash program is different
The League and Corporate Central wrote to FinCEN to point out some key differences that, we hope, will result in Thillens’ deliveries to credit unions being exempt from CTR filings. Our letter to FinCEN summed up the distinctions:
Individual credit unions do not have contracts with Thillens under the Corporate Cash program. Rather, each credit union contracts with Corporate Central, which debits/credits that credit union’s Corporate Central account for cash deliveries. In other words, credit unions as FRFIs [federally regulated financial institutions] are contracting directly with another FRFI, Corporate Central, for cash deliveries. And they pay for those deliveries via drawdowns from their own accounts at Corporate Central. Corporate Central then settles with Thillens. Corporate Central maintains the only direct contractual relationship with Thillens, which simply provides the necessary ACS [armored car service]. Currency is delivered under Corporate Central’s direction to the credit union branch and ATM/ITM locations only and for the purpose of such credit union’s domestic operations only. No credit union vendor relationships are serviced under the Corporate Cash program.
By contrast, the banks separately contract with Thillens, an MSB, for their cash deliveries. In other words, they do not contract with another FRFI, as the credit unions do. The banks direct their deliveries independently, too. As described in FinCEN’s May 26, 2021 responses to the Wisconsin and Illinois Bankers Associations, “Thillens provides additional services to each bank, including delivery to and pickup from locations designated by each Bank, and armored guard support.” There are no ‘additional services’ provided under Corporate Central’s Corporate Cash program. And the banks pay for their deliveries differently, too. FinCEN described it this way: “… each Bank pays for currency purchased through wire drawdowns from an account designated by each Bank, and each Bank’s account is credited for currency sales…” In the Corporate Central Corporate Cash program the debit or credit for currency deliveries is directly to the account of the FRFI (credit union) that is receiving currency, from or to the FRFI (Corporate Central).
The League and Corporate Central strongly believe that those differences warrant an exemption from CTR filings by credit unions when Thillens delivers cash and coin under the Corporate Cash program. The Corporate Cash model fits neatly into some technical regulatory exemptions for armored car services, though the bankers’ arrangements did not.
We also stressed that Thillens has already been filing voluntary CTRs on all transactions over $10,000 for its customers, including regulated credit unions and banks, for over a decade. “Requiring Corporate Central and/or its member credit unions in the Corporate Cash program to file additional CTRs would be redundant and unnecessary,” we wrote.
Our letter concludes by asking that if FinCEN disagrees with our positions, it at least 1) allows credit unions to designate Thillens or Corporate Central as their agents to file CTRs on their behalf, 2) does not require backfiling of CTRs for prior Thillens cash deliveries to credit unions, and 3) provides clear instructions on how CTR forms should be completed for Thillens cash deliveries under the Corporate Cash program.
In the meantime
There’s no telling how long it may take FinCEN to respond to our joint request. In the meantime, what should credit unions do if they get cash deliveries from Thillens via the Corporate Cash program? The answer is not totally clear, but the safest course seems to be to start filing CTRs for Thillens cash deliveries going forward, at least until FinCEN replies to us. Corporate Central recently wrote to its member credit unions, telling them:
We recently met with the State Regulator and discussed the matter again and were informed that to date this issue has not been the subject of State examinations however moving forward the OCU examinations may look for CTR filings for currency transactions under the Corporate Cash program where Thillens, specifically, is the armored carrier. They indicated to us that in our communication to members regarding this matter, if a credit union has not filed CTRs on these transactions previously, that they should reach out to Department of Financial Institutions – Office of Credit Unions for guidance.
Since then, we have learned of one recent OCU exam finding, instructing a credit union to file CTRs for all Thillens cash deliveries going forward and suggesting that it contact FinCEN for guidance on whether backfiling is needed.