Reasons for Not Using the Phase II Exemption Process

42.	Prior to 2006, did your institution ever file a Phase II exemption?
	1.		Yes
	2.		No
	3.		Don't know

43.	How important are the following factors in the decision of your financial institution NOT to exempt a customer eligible for the Phase II exemption?

		Very great importance	Great importance	Moderate importance	Some importance	Little or no importance	Don't know
	a. Difficulty determining exemption eligibility
	b. Difficulty determining whether companies derive more than 50 percent of their gross income from ineligible business activities
	c. Lack of clear understanding of the exemption process
	d. Annual review is time consuming
	e. Biennial recertification is time consuming
	f. Concern that examiners will find that exemptions were not filed correctly
	g. It is easier to file CTRs then to go through the exemption process
	h. Other factor- Please describe below.

	i. If you mentioned another factor, please describe it.

44.	For 2006, how many, if any, additional Phase II exemptions might your institution have filed had it chosen to file exemptions for ALL eligible customers?
	1.		None
	2.		A few
	3.		Some
	4.		A lot
	5.		Not able to estimate

45.	In your opinion, can the Phase II exemption process be changed (either by statute, by regulation, or by using more efficient processes) to reduce any burdens associated with it without increasing the risk of not detecting money laundering or other illegal activities?
	1.		Yes, the burden can be reduced without increasing risk
	2.		No (Click to go to Question 49.)
	3.		Not sure

46.	If the following changes could be made without increasing the risk of not detecting money laundering or similar illegal activities, to what extent, if at all, would each of these changes to the Phase II exemption process, reduce the burden of filing exemptions?

		Greatly reduce	Moderately reduce	Reduce little or not at all	Don't know	Not applicable
	a. Modifying the CTR filing rules to eliminate the biennial recertification for Phase II customers
	b. Change the Phase II recertification from every 2 years to every 3 years
	c. Allow additional types of businesses (such as Money Services Businesses or check cashers) to be eligible for the Phase II exemption
	d. Have FinCEN develop a Web based training manual that would provide instructions on the exemption rules and information on how to conduct biennial (Phase II) recertification
	e. Eliminate the requirement to determine whether companies such as supermarkets that also cash checks, derive more than 50 percent of their gross income from ineligible business activities

47.	How much, if at all, would each of the following changes increase the likelihood of your institution using the exemption process?

		Greatly increase	Moderately increase	Increase little or not at all	Don't know	Not applicable
	a. Modify the CTR filing rules to eliminate the biennial recertification for Phase II customer
	b. Change the Phase II recertification from every 2 years to every 3 years
	c. Allow additional types of businesses (such as money services businesses or check cashers) to be eligible for the Phase II exemption
	d. Have FinCEN develop a Web based training manual that would provide instructions on the exemption rules and information on how to conduct the biennial (Phase II) recertification
	e.Eliminate the requirement to determine whether companies such as supermarkets that also cash checks, derive more than 50 percent of their gross income from ineligible business activities

48.	What else could be done, if anything, to encourage your institution to file Phase II exemptions for all eligible customers?

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Full Report: GAO-08-355

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