That's misleading. I did BSA and compliance work for a small bank in Kansas City. Currency Transaction Reports only apply to cash deposits. Electronic deposits do not qualify under this rule. Additionally, CTRs are a reporting mechanism, not an investigation mechanism. There are other things that are done for investigations, such as Suspicious Activity Reports (SARs), Financial Crimes Enforcement Network (FinCEN), as well as periodic account reviews that are used to detect illicit activity.
There could be several reasons outside what I describe above for withholding the full amount. But I think the primary function is to make sure fraud doesn't occur. Essentially, what people do is that they will open an account at a bank and deposit a check for a relatively small amount, lets say $1,000. When the check is deposited, the "customer" withdraws the entire amount made available to them, lets say $200. Later, the bank discovers that the deposited check was invalid because the bank account where the check originated from doesn't have enough money to cover the deposited check at account opening. Thus, the bank looses the $200 that was withdrawed by the "customer."
At my bank, we hired a full time BSA person from another bank in Kansas City. They had a big problem with the above happening at their bank. Despite repeated attempts by the compliance staff to stop the fraud, the bank wanted to continue to allow full withdrawal amount of deposited checks in order to grow their customer base.
www.mybanktracker.com
