informational resource until the Administrative Committee of the Federal MLARS indicated that its views apply equally to funds transfers by banks and transmittals of funds by nonbank financial institutions. Director, Financial Crimes Enforcement Network. The term transmittal of funds includes a funds transfer and its counterpart in the context of nonbank financial institutions. The BSA requires each bank to establish a BSA/AML compliance program. This feature is not available for this document. 1693a(7)), as well as any other funds transfers that are made through an automated clearinghouse, an automated teller machine, or a point-of-sale system, are excluded from this definition. In one such case, during 2013, the defendant allegedly sent $1,500 to a co-defendant's financial account within the United States; the co-defendant was collecting money from his co-conspirators in support of an FTO fighter in Syria, ultimately transmitting those funds through money remitting businesses and intermediaries overseas. The term established customer is defined at 31 CFR 1010.100(p). (533,344 hours (31 CFR 1010.410(e)) + 663,558 hours (31 CFR 1010.410(f)). FinCEN: The FinCEN Resource Center at (800) 949-2732. The OFR/GPO partnership is committed to presenting accurate and reliable A funds transfers report must be delivered to FinCEN annually. Consistent with the FATF guidance, in May 2019, FinCEN issued guidance advising that CVC-based transfers effectuated by a nonbank financial institution may fall within the Recordkeeping and Travel Rules, on the grounds that such transfers involve the making of a transmittal order by the senderi.e., an instruction to pay a determinable amount of money to a recipienta criterion for application of the rules. [54] Threshold Changes to the Recordkeeping and Travel Rules, 4. 1. The term electronic fund transfer includes any transfer of funds that is initiated through an electronic terminal, telephone, computer, or magnetic tape, for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account (including a payroll card account). The Agencies welcome comment on all aspects of this proposed rule. 1693a(7)), as well as any other funds transfers that are made through an automated clearinghouse, an automated teller machine, or a point-of-sale system, are excluded from this definition. The new estimated total burden hours for OMB control number 1506-0059 would be 4,408,942 hours. Description of Recordkeepers: Financial institutions other than banks that conduct transmittals of funds in an amount between $250 and $3,000 that begin or end outside the United States. The following two sections lay out, respectively, (A) the potential benefits to national security and law enforcement from reducing the Recordkeeping Rule and Travel Rule thresholds for funds transfers and transmittals of funds that begin or end outside the United States, and (B) the potential effect these new requirements would have on the cost and efficiency of the payments system. . Under OMB control number 1506-0058, FinCEN estimates that the recordkeeping burden per recordkeeper to transmit information relating to traditional transmittals of funds of $3,000 or more is 12 hours a year. [39] FinCEN also reviewed a separate subset of 363 SARs filed by a money transmitter for the period between 2012 and 2018 that FinCEN determined to be potentially related to fentanyl trafficking. The threshold for the requirement to report suspicious transactions is $2,000. The proposed changes to the Recordkeeping Rule and Travel Rule would apply to all financial institutions regulated under the BSA. Therefore a reasonable minimum estimate for the burden of administering the proposed rule is approximately $79.58 million annually (3,315,844 hours multiplied by $24 per hour). The Agencies believe that most money transmitters are small entities. provide legal notice to the public or judicial notice to the courts. This proposed rule would amend both the Recordkeeping Rule and the Travel Rule. should verify the contents of the documents against a final, official To avoid the aforementioned reduction in the scope of transactions subject to the BSA, on December 6, 2012, the Board and FinCEN issued a Notice of Proposed Rulemaking (NPRM) to solicit comments on revising the regulations implementing the BSA by narrowing the exclusion from the definitions of funds transfer and transmittal of funds.[25] For the hearing impaired only, Telecommunication Device for the Deaf (TDD), (202) 263-4869. This overlap caused certain transactions to fall . As noted previously, in May 2019, FinCEN issued guidance advising that CVC-based transfers effectuated by a nonbank financial institution may fall within the Recordkeeping and Travel Rules, on the grounds that such transfers involve the making of a transmittal order by the senderi.e., an instruction to pay a determinable amount of money to a recipienta criterion for application of the rules. 3 For transmittals of funds effected through the Federal Reserve's Fedwire funds transfer system by a financial institution, only one of the items is required to be included in the transmittal order, if received with the sender's transmittal order, until such time as the bank that sends the order to the Federal Reserve Bank completes its conversion to the expanded Fedwire message format. However, because of the nature of the requirements contained therein, only banks (including credit unions), money transmitters, and other MSBs would be impacted. 32. The authority citation for part 1020 continues to read as follows: Authority: (5) Verification. However, even if the proposed rule produced very small reductions in the probability of a major terrorist attack, the benefits would exceed the costs. The proposed revision would replace the general reference to the EFTA contained in the exception to the definitions of transmittal of funds and funds transfer, by a more specific reference to section 903(7) of the EFTA, the section of the EFTA containing the definition of electronic fund transfers, which are the transactions that are currently excluded from the recordkeeping and travel rules. Section 1073 of the Dodd-Frank Act, signed into law on July 21, 2010, added a new Section 919 to the EFTA, creating new protections for consumers who send remittance transfers. Although the Agencies have not adopted this alternative at this time, this proposed rule requests comment on the benefits and drawbacks of waiving the requirement to obtain a social security number or EIN below some threshold. 28, 2018), aff'd, 781 F. App'x 168 (4th Cir. 10. Finally, the FATF has indicated that records of smaller-value transactions are valuable to law enforcement, particularly with respect to terrorist financing investigations. A transmittor's financial institution will be deemed to be in compliance with the provisions of paragraph (f)(1) of this section if it: (A) Includes in the transmittal order, at the time it is sent to the receiving financial institution, the information specified in paragraphs (f)(1)(iii) through (v), and the information specified in paragraph (f)(1)(vi) of this section to the extent that such information has been received by the financial institution, and. You may do so by calling (202) 452-3684. This proposed rule would define money in 31 CFR 1010.100(ll) and (eee) to make explicitly clear that both payment orders and transmittal orders include any instruction by the sender to transmit CVC or any digital asset having legal tender status to a recipient. (B) Provides the information specified in paragraphs (f)(2)(i), (ii) and (vii) of this section, to the extent that such information has been received by the intermediary financial institution, to a financial institution that acted as an intermediary financial institution or recipient's financial institution in connection with the transmittal order, within a reasonable time after any such financial institution makes a request therefor in connection with the requesting financial institution's receipt of a lawful request for such information from a Federal, State, or local law enforcement or regulatory agency, or in connection with the requesting financial institution's own Bank Secrecy Act compliance program. The Regulatory Flexibility Act (RFA) (5 U.S.C. informational resource until the Administrative Committee of the Federal 2 For transmittals of funds effected through the Federal Reserve's Fedwire funds transfer system by a financial institution, only one of the items is required to be included in the transmittal order, if received with the sender's transmittal order, until such time as the bank that sends the order to the Federal Reserve Bank completes its conversion to the expanded Fedwire message format. [28] . Estimated transactions in Bitcoin alone were approximately $366 billion dollars in 2019 and $312 billion through in 2020 through August. Based on Call Report data as of December 31, 2012, approximately 3,660 insured depository institutions had total domestic assets of $175 million or less. Authority delegations (Government agencies). This could inhibit law enforcement from promptly investigating and mapping illicit networks. At the same Start Printed Page 72814time, FinCEN issued the travel rule, which requires banks and nonbank financial institutions to include certain information on funds transfers and transmittals of funds sent to other banks or nonbank financial institutions.[11]. 599. [50] The Regulatory Flexibility Act (5 U.S.C. [49] Similarly, should the beneficiary's bank or recipient's financial institution deliver the proceeds to the beneficiary or recipient in person, the bank or nonbank financial institution must verify the identity of the beneficiary or recipientand collect and retain various items of information identifying the beneficiary or recipientif the beneficiary or recipient is not an established customer. CR ELH-16-009, 2018 WL 1521876, at *17-18 (D. Md. A remittance transfer provider or provider is any person that provides remittance transfers for a consumer in the normal course of its business, regardless of whether the consumer holds an account with such person. 47. (20 Edge Act institutions, 15 agreement corporations, and 168 foreign banking organizations). A14: No. Use the PDF linked in the document sidebar for the official electronic format. that agencies use to create their documents. The BSA consists of two parts: Title I Financial Recordkeeping and Title II Reports of Currency and Foreign Transactions. (3) To what extent would the burden of the proposed rule be reduced if the Agencies issued specific guidance about appropriate forms of identification to be used in conjunction with identity verification, including in regards to whether there are circumstances in which verification may be done remotely and what documents are acceptable as proof? The proposed modification would reduce this threshold from $3,000 to $250 for funds The Electronic Fund Transfer Act (EFTA)[7] Of course, it is difficult to quantify the contribution of a particular rule to a reduction in the risk of a terrorist attack. In addition, the originator's bank or transmittor's financial institution must retain the following information if it receives that information from the originator or transmittor: (a) Name and address of the beneficiary or recipient; (b) account number of the beneficiary or recipient; and (c) any other specific identifier of the beneficiary or recipient. On January 3, 1995, the Agencies jointly issued a recordkeeping rule (the Recordkeeping Rule) that requires banks and nonbank financial institutions to collect and retain information related to funds transfers and transmittals of funds in amounts of $3,000 or more. As explained in n. 6, supra, the Board separately promulgated subpart B to Regulation S, which cross-references the requirements of 31 CFR 1020.410(a) and 1010.410(e). Estimated Total Additional Annual Burden Hours: 2,108,400 hours. These markup elements allow the user to see how the document follows the Recordkeeping requirements for banks are set forth in 31 CFR 1020.410(a). The authority citation for part 1010 continues to read as follows: Authority: The Board has not identified any Federal rules that duplicate, overlap, or conflict with the final rule. 3507(d). On February 7, 2012, CFPB adopted a final rule to implement Section 919, with an original effective date of February 7, 2013, which was later postponed to October 28, 2013. Information related to a funds transfer may be subject to the Bank Secrecy Act's suspicious activity reporting requirements, however, which became effective on April 1, 1996. These SARs referenced approximately 78,000 transmittals of funds, over 82% of which began or ended outside the United States. An initial regulatory flexibility analysis (IRFA) was included in the proposal in accordance with Section 3(a) of the Regulatory Flexibility Act, 5 U.S.C. The FATF is an international, inter-governmental task force whose purpose is the development and promotion of international standards and the effective implementation of legal, regulatory, and operational measures to combat money laundering, terrorist financing, the financing of proliferation, and other related threats to the integrity of the international financial system. B. authorizes the Secretary of the Treasury (Secretary) to require financial institutions to keep records and file reports that have a high degree of usefulness in criminal, tax, or regulatory proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.[2] In the absence of clarification, some entities may not be aware of or may choose not to comply with the Recordkeeping Rule and the Travel Rule when engaging in transactions involving CVC. (1) An instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank or foreign bank to pay, a fixed or determinable amount of money to a beneficiary if: (i) The instruction does not state a condition to payment to the beneficiary other than time of payment; (ii) The receiving bank is to be reimbursed by debiting an account of, or otherwise receiving payment from, the sender; and. These can be useful [15] Counts are subject to sampling, reprocessing and revision (up or down) throughout the day. Most recently amended July 21, 2020 Regulation E protects consumers when they use electronic fund and remittance transfers. (6) Exceptions. Treasury Order 180-01 (Jan. 14, 2020). The Board and FinCEN (collectively, the Agencies) are issuing this proposed rule to modify the threshold in the rule implementing the Start Printed Page 68006Bank Secrecy Act (BSA) requiring financial institutions to collect and retain information on certain funds transfers and transmittals of funds. Federal Register provide legal notice to the public and judicial notice 1829b and 1951-1959; 31 U.S.C. headings within the legal text of Federal Register documents. 1-26, and the regulations promulgated thereunder. The mean and median dollar-value of transmittals of funds mentioned in these SARs were approximately $588 and $283, respectively. 11. Members are also governed by the anti-money laundering rule in FINRA Rule 3310. CVC is therefore a type of value that substitutes for currency. See 31 CFR 1010.100(ff)(5)(i)(A). A funds transfer is a series of transactions beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order (31 CFR 1010.100(w)). Estimated Number of Recordkeepers: 11,072 financial institutions. 1:17CR-00144, Indictment 2 (E.D. FinCEN understands that banks, including credit unions, currently engage in very few, if any, funds transfers involving CVC. [57] In 2006, the Agencies solicited public comment on the potential benefits and burdens of reducing the threshold for the Recordkeeping Rule and Travel Rule requirements. . The FATF further states that countries may adopt a de minimis threshold of no higher than USD/EUR 1,000 for cross-border wire transfers, below which the name and account numbers of the originator and beneficiary should be collected and transmitted but need not be verified for accuracy unless there is a suspicion of money laundering or terrorist financing. An Originator creates a Payment Order to pay money to a specific Beneficiary. 16. These SARs referenced approximately 1.29 million underlying transmittals of funds, approximately 99 percent of which began or ended outside the United States (only approximately 17,000 of the approximately 1.29 million transactions included within its terrorist-financing analysis dataset involved domestic-only transactions). [18] The Agencies believe there has been an increase in the ability of small institutions to rely on third-party vendors to reduce their costs of handling compliance with a revised threshold. FinCEN: The FinCEN Regulatory Support Section at 1-800-767-2825 or electronically at frc@fincen.gov. Territories, Rural Energy Co-ops, and More to Access Tax Credits for Building a Clean Energy Economy Washington, D.C. As part of the Biden-Harris Administration's Investing in America agenda, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) today released . provide legal notice to the public or judicial notice to the courts. Federal Register. Estimated Average Annual Burden Hours per Recordkeeper: The estimated average burden hours will vary depending on the number of transmittals of funds conducted by banks, credit unions, and money transmitters between $250 and $3,000 that begin or end outside the United States. The requirements of this final rule, like the existing requirements, apply to all financial institutions subject to the Bank Secrecy Act, regardless of size.
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