Cash Deposits Just Below the CTR Threshold Across Branches
At a savings bank branch in Incheon, a 68-year-old retired schoolteacher, Ms. Choi, makes cash deposits of KRW 9.5 million on five consecutive business days. The deposits go into three accounts: her own, her nephew's, and her granddaughter's. On day three, the granddaughter's account also receives KRW 9.9 million in cash at a different branch of the same bank. Total cash deposited is KRW 142.5 million. Ms. Choi says she sold inherited jewelry and is helping family. She declines to provide a purchase contract, saying the buyer paid cash. She has been a customer for 11 years and normally deposits her pension. The branch's CTR system aggregates cash by account, not by customer across branches, so no report is generated automatically. A teller notices the pattern and asks the branch AML officer whether to treat each deposit as separate and whether to file anything. The bank's policy says CTRs are due for 'cash transactions of KRW 10 million or more per business day'.
1. Is each KRW 9.5 million deposit outside the CTR obligation, or must the bank aggregate? Explain how the CTR rule should be applied to these facts.
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The bank should not treat each deposit as automatically outside the CTR rule. Under the Korean CTR regime, cash transactions of KRW 10 million or more are aggregated by customer and business day, not merely by account, and the aggregation should capture transactions across branches of the same institution. On day three, the granddaughter's account received KRW 9.9 million at another branch; if those funds are for Ms. Choi or she controls the accounts, the day-three aggregate is KRW 19.4 million and a CTR is due. If each relative is genuinely a separate customer, each account may be tested separately, but the bank must first determine who the customer is and whether the relatives are nominal holders. The system limitation is not a defence: the AML officer should manually aggregate, review the five-day pattern, and correct the configuration. The pattern of repeated amounts just below KRW 10 million is also a classic structuring indicator that must be assessed for STR purposes.
2. Should the bank file a suspicious transaction report? What timing, documentation, and tipping-off issues arise?
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Yes, the facts support filing an STR. The deposits are structured just below the CTR threshold, spread across relatives' accounts and branches, and the customer's explanation of an undocumented cash jewellery sale is weak. The bank does not need proof of criminal proceeds; reasonable suspicion is enough. The STR should be filed with the Korean FIU without delay under the Specific Financial Information Act, and the bank should not wait for the CTR analysis to be finalised. The AML officer should document the pattern, the account relationships, the customer's statements, the missing sale contract, and the branch system limitation. Staff must not tell Ms. Choi or the relatives that a report is being made or that the deposits triggered it. The bank should continue monitoring and consider whether to restrict further cash deposits while the review is open. A CTR should be filed separately if aggregation crosses the threshold; an STR does not replace a CTR.
3. What should the branch AML officer do in the next 24 hours, and what should be avoided?
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Within 24 hours, the AML officer should escalate to the compliance function, preserve the deposit slips and CCTV where permitted, pull all accounts linked to Ms. Choi and the relatives across branches, manually aggregate the cash by customer and day, and prepare both the STR and any required CTR. The officer should interview staff for factual observations but should not confront the customer with the structuring analysis. The bank should decide whether to pause further cash deposits pending review, using a documented policy basis rather than an informal branch instruction. It should avoid closing the account immediately without compliance approval, because closure can alert the customer and destroy monitoring value. It should also avoid recording the case as a mere CTR-system gap; the root cause includes weak cross-branch aggregation and possible nominal account use. A senior compliance approval and a written record of the decisions are essential.