IBA Compliance Connection

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When an attorney deposits more than $10,000 cash into an Interest on Lawyer Trust Account (IOLTA) on behalf of one of their clients, are they required to provide identifying information for the client so that we can file a currency transaction report (CTR) with this information? Some attorneys have been hesitant or refused to give us their client’s information in such situations.

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Yes, we believe you should require an attorney to provide you with their client’s identity in such situations, since you must include this information in your CTR.

When FinCEN’s regulations require financial institutions to file a CTR, the institutions also must verify and record the identity of the individual presenting the transaction and “record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be effected.”

FinCEN also has issued an administrative ruling addressing the circumstance of an attorney depositing more than $10,000 on behalf of their clients into their law firm’s trust account (i.e., an IOLTA). The ruling provides that the bank should ask the attorney “to identify the clients on whose behalf the transaction is being conducted” and include the names of the clients and the law firm in their CTR.

Consequently, if an attorney refuses to provide the identity of a client or clients on behalf of whom a deposit exceeding $10,000 is being made, you may choose to refuse the deposit.

For resources related to our guidance, please see:

  • FinCEN Regulations, 31 CFR 1010.311 (“Each financial institution other than a casino shall file a report of each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000, except as otherwise provided in this section.”)
  • FinCEN Regulations, 31 CFR 1010.312 (“Before concluding any transaction with respect to which a report is required under § 1010.311, § 1010.313, § 1020.315, § 1021.311 or § 1021.313 of this chapter, a financial institution shall verify and record the name and address of the individual presenting a transaction, as well as record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be effected.”)
  • FinCEN Ruling FIN-1989-R005 (December 21, 1989) (“Dorothy Green, a partner at a law firm, makes a $50,000 cash deposit into the firm’s trust account. The bank knows that this is a trust account. The $50,000 represents cash received from three clients. . . . Dorothy Green’s cash deposit of $50,000 into the law firm’s trust account clearly is being done on behalf of someone else. The bank should ask Ms. Green to identify the clients on whose behalf the transaction is being conducted. Because Ms. Green is acting both on behalf of her employer and the clients, the names of the three clients and the law firm should be included on the CTR filed by the bank.”)
  • FinCEN Ruling FIN-1989-R005 (December 21, 1989) (“It is the responsibility of a financial institution to file complete and accurate CTRs. This includes providing identifying information about the person on whose behalf the transaction is conducted in Part II of the CTR. One way that a financial institution can obtain information about the true identity of the person on whose behalf the transaction is being conducted is to ask the person conducting the transaction whether he is acting for himself or on behalf of another person. Only if as a result of strong ‘know your customer’ or other internal control policies, the financial institution is satisfied that its record contain the necessary information concerning the true identity of the person on whose behalf the transaction is being conducted, may the financial institutions rely on those records in completing the CTR.”)