Rule2021-24602
Orders Imposing Additional Reporting and Recordkeeping Requirements
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 15, 2021
Effective
November 15, 2021
Issuing agencies
Treasury DepartmentFinancial Crimes Enforcement Network
Abstract
FinCEN is issuing this final rule to update its regulation to reflect amendments to the underlying statute concerning the authority of FinCEN to issue orders imposing additional reporting and recordkeeping requirements on financial institutions and nonfinancial trades or businesses in a geographic area.
Full Text
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<title>Federal Register, Volume 86 Issue 217 (Monday, November 15, 2021)</title>
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[Federal Register Volume 86, Number 217 (Monday, November 15, 2021)]
[Rules and Regulations]
[Pages 62914-62916]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-24602]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB56
Orders Imposing Additional Reporting and Recordkeeping
Requirements
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Final rule.
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SUMMARY: FinCEN is issuing this final rule to update its regulation to
reflect amendments to the underlying statute concerning the authority
of FinCEN to issue orders imposing additional reporting and
recordkeeping requirements on financial institutions and nonfinancial
trades or businesses in a geographic area.
DATES: Effective Date: November 15, 2021.
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section
at (800) 767-2825 or electronically at <a href="https://www.fincen.gov/contact">https://www.fincen.gov/contact</a>.
SUPPLEMENTARY INFORMATION:
I. Background
The Currency and Foreign Transactions Reporting Act of 1970, as
amended, is the legislative framework commonly referred to as the Bank
Secrecy Act (BSA).\1\
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\1\ The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1960,
31 U.S.C. 5311-5314 and 5316-5336, and notes thereto, with
implementing regulations at 31 CFR chapter X.
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In 1988, the Anti-Drug Abuse Act amended the BSA, codified in
relevant part at 31 U.S.C. 5326, to authorize the Secretary to impose
additional reporting and recordkeeping requirements on domestic
financial institutions in a geographic area.\2\ This grant of authority
to the Secretary did not require the promulgation of an implementing
regulation, and therefore was, and continues to be, self-executing.
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\2\ Public Law 100-69, Title VI, Sec. 6185(c) (Nov. 18, 1988)
(codified at 31 U.S.C. 5326).
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Nevertheless, in 1989, Treasury issued a regulation incorporating
the terms of Section 5326 that were in effect at that time. The
regulation mirrored the statute, with the addition of certain
clarifying and procedural language. See 54 FR 33675 (Aug. 16, 1989)
(now codified at 31 CFR 1010.370).\3\ For example, the regulation
substituted ``and/or'' for ``and'' in the first paragraph to make
clear, consistent with the statute, that the Secretary could impose
reporting or recordkeeping requirements upon a finding that such
requirements are necessary, but need not do both. The regulation also
interpreted the statutory phrase ``geographic area'' to mean ``any area
in one or more States of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the United States Virgin Islands,
Guam, the Commonwealth of the Northern Mariana Islands, American Samoa,
the Trust Territory of the Pacific Islands, the territories and
possessions of the United States, and/or political subdivision or
subdivisions thereof . . . .'' In addition, the regulation specified
certain procedures, including that the Secretary would direct any order
to the Chief Executive Officer of a reporting financial institution and
would prescribe certain information in the order.
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\3\ The original regulation was codified at 31 CFR 103.26. In
2011, FinCEN transferred its regulations from 31 CFR part 103 to 31
CFR chapter X.
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In subsequent years, Section 5326 was amended three times in a
manner that expanded the Secretary's authority. In 1992, the Annunzio-
Wylie Anti-Money Laundering Act amended Section 5326 by, among other
things, prohibiting financial institutions from disclosing the
existence of an order to any person except as prescribed by the
Secretary.\4\
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\4\ Public Law 102-550, Title XV, Sec. 1562 (Oct. 28, 1992) (now
codified at 31 U.S.C. 5326(c)).
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In 2001, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (``USA PATRIOT Act'') extensively amended the BSA, including
Section 5326 by adding ``nonfinancial trade or business'' after
``financial institution'' where that phrase appears, thereby
authorizing the Secretary to issue orders to nonfinancial trades or
businesses in addition to financial institutions. The Act also amended
Section 5326 to extend the maximum period for an order (unless renewed)
from 60 days to 180 days.\5\
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\5\ Public Law 107-56, Title III, Secs. 353(d), 365(c)(2)(B)
(Oct. 26, 2001) (now codified at 31 U.S.C. 5326(d)).
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In 2017, the Countering America's Adversaries Through Sanctions Act
further amended Section 5326. This Act amended Section 5326's original
title (``Records of certain coin and currency
[[Page 62915]]
transactions'') by striking out the phrase ``coin and currency'' before
``transactions.'' The Act also replaced the reference to any ``coins,''
``currency,'' and ``monetary instrument'' with the word ``funds,''
thereby making clear that a transaction need not involve only coin,
currency, or monetary instruments to be covered under an order. The
section was also amended to change the Secretary's required finding
that an order be ``necessary to carry out the purposes of this subtitle
or to prevent evasions thereof.'' In replacing ``and'' with ``or,''
this amendment thereby required one such finding, but not both.\6\
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\6\ Public Law 115-44, Title II, Sec. 275(a) (Aug. 2, 2017)
(codified at 31 U.S.C. 5326).
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The elements of the regulation that incorporated the terms of the
statute in 1989 were not intended to limit the Secretary's authority
under the statute. Accordingly, as subsequent amendments described
above have expanded the Secretary's authority, FinCEN has understood
the authority to be coextensive with the statute. To avoid any
potential confusion regarding FinCEN's authority under the statute,
this final rule updates the regulation to reflect the subsequent
statutory amendments. This rule does not materially amend the other
provisions in the regulation, except for one amendment to FinCEN's
procedure for directing orders to chief executive officers. The rule
amends that procedure to conform it to the amended statute by adding
``nonfinancial trades or businesses'' after ``financial institution''
in the paragraph where the procedure is described.
II. Section-by-Section Analysis
A. Section 1010.370 Section Title
The section heading is changed from ``Reports of certain domestic
coin and currency transactions'' to ``Reports of certain domestic
transactions'' to align with the statutory Section Title.
B. Section 1010.370(a)
Paragraph (a) has been divided into three parts: (a)(1), (2), and
(3). The revised paragraph (a)(1) contains the language in current
Sec. 1010.370(a), but with the following additions and substitutions
of terms that are reflected in 31 U.S.C. 5326(a): ``chapter or to'' is
substituted for ``chapter and to''; ``, or any domestic nonfinancial
trade or business or group of domestic nonfinancial trades or
businesses,'' is added after ``group of domestic financial
institutions''; ``transfer of funds (as the Secretary may describe in
such order)'' is substituted for ``transfer of United States coins or
currency (or such other monetary instruments as the Secretary may
describe in such order)''; and ``or group of domestic financial
institutions, or domestic nonfinancial trade or business or group of
domestic nonfinancial trades or businesses'' is added after ``such
financial institution'', and further adds ``nonfinancial trade or
business'' after ``financial institution'' to clarify FinCEN's
procedure for directing orders to chief executive officers, if any.
Paragraphs (a)(2) and (3) reflect the language set forth in 31
U.S.C. 5326(b).
C. Section 1010.370(b)
Paragraph (b) contains the language in current Sec. 1010.370(b),
but substitutes ``funds'' for ``currency'' and ``currency and/or
monetary instruments'' to reflect the use of the term ``funds''
throughout 31 U.S.C. 5326.
D. Section 1010.370(d)(1)
Paragraph (d)(1) contains the language in current Sec.
1010.370(d)(1), but replaces ``60 days'' with ``180 days,'' to reflect
the language in 31 U.S.C. 5326(d).
E. Section 1010.370(e)
New paragraph (e) reflects the nondisclosure language that is set
forth in 31 U.S.C. 5326(c).
III. Administrative Procedure Act
The Administrative Procedure Act (APA) (codified in relevant part
at 5 U.S.C. 553), generally requires that agencies give interested
persons an opportunity to participate in a rulemaking by the submission
of comments, except when, among other reasons, the agency is amending
its own ``rules of agency organization, procedure, or practice'' or the
agency finds good cause that notice and public procedure are
``impracticable, unnecessary, or contrary to the public interest.''
Likewise, the APA requires a delayed effective date for a rule except
under certain conditions, including rules of agency procedure, and as
provided by the agency for good cause found and published with the
rule.
FinCEN finds that public procedure is unnecessary, as this final
rule merely updates the regulation to reflect the terms set forth in
the underlying statute in order to avoid any potential confusion
regarding FinCEN's statutory authority under Section 5326. Because the
final rule conforms the regulation to the statute and reflects no
discretionary or substantive determination, public procedure would not
inform this rule. For similar reasons, FinCEN also finds that a delayed
effective date is unnecessary. Because FinCEN understands its authority
to be coextensive with the statute, this update to the regulation does
not alter FinCEN's authority and merely provides clarity to the public.
In conforming the regulation to the statute, this rule also adds
the phrase ``nonfinancial trades or businesses'' after ``financial
institution'' in the provision relating to FinCEN's procedure for
directing orders to chief executive officers. This update does not
change the procedure specified in the regulation, but only updates it
to reflect the statute's inclusion of ``nonfinancial trades or
businesses.'' FinCEN finds that public procedure and a delayed
effective date are unnecessary for this amendment because it amends a
rule of agency procedure, and in any event, merely conforms that rule
to the statute.
IV. Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, the
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do
not apply.
V. Executive Order 12866
This final rule is not a significant regulatory action under
section 3.f. of Executive Order 12866.
VI. Paperwork Reduction Act
The collection of information contained in this rule has been
reviewed and approved by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), and has
been assigned OMB Control Number 1506-0056. An agency may not conduct
or sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid OMB control number.
List of Subjects in 31 CFR Part 1010
Administrative practice and procedure, Banks, Banking, Currency,
Foreign banking, Foreign currencies, Investigations, Penalties,
Reporting and recordkeeping requirements, Terrorism.
Authority and Issuance
For the reasons set forth in the preamble, part 1010 of chapter X
of title 31 of the Code of Federal Regulations are amended as follows:
PART 1010--GENERAL PROVISIONS
0
1. The authority citation for part 1010 is revised to read:
Authority: 12 U.S.C. 1829b and 1951-1960; 31 U.S.C. 5311-5314
and 5316-5336; title III, sec. 314, Pub. Law 107-56, 115 Stat. 307;
sec. 701, Pub. L. 114-74, 129 Stat. 599.
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2. Section 1010.370 is amended by revising the section heading and
[[Page 62916]]
paragraphs (a), (b), and (d)(1) and adding paragraph (e) to read as
follows:
Sec. 1010.370 Reports of certain domestic transactions.
(a)(1) If the Secretary of the Treasury finds, upon the Secretary's
own initiative or at the request of an appropriate Federal or State law
enforcement official, that reasonable grounds exist for concluding that
additional recordkeeping and/or reporting requirements are necessary to
carry out the purposes of this chapter or to prevent persons from
evading the reporting/recordkeeping requirements of this chapter, the
Secretary may issue an order requiring any domestic financial
institution or group of domestic financial institutions, or any
domestic nonfinancial trade or business or group of domestic
nonfinancial trades or businesses, in a geographic area, and any other
person participating in the type of transaction, to file a report in
the manner and to the extent specified in such order. The order shall
contain such information as the Secretary may describe concerning any
transaction in which such financial institution or group of domestic
financial institutions, or domestic nonfinancial trade or business or
group of domestic nonfinancial trades or businesses is involved for the
payment, receipt, or transfer of funds (as the Secretary may describe
in such order) the total amounts or denominations of which are equal to
or greater than an amount which the Secretary may prescribe.
(2) The Secretary may, by regulation or order, require any
depository institution (as defined in section 3(c) of the Federal
Deposit Insurance Act)--
(i) To request any financial institution or nonfinancial trade or
business (other than a depository institution) which engages in any
reportable transaction with the depository institution to provide the
depository institution with a copy of any report filed by the financial
institution or nonfinancial trade or business under the Title 31
provisions of the Bank Secrecy Act with respect to any prior
transaction (between such financial institution or nonfinancial trade
or business and any other person) which involved any portion of the
funds which are involved in the reportable transaction with the
depository institution; and
(ii) If no copy of any report described in paragraph (a)(2)(i) of
this section is received by the depository institution in connection
with any reportable transaction to which paragraph (a)(2)(i) applies,
to submit (in addition to any report required under this subchapter
with respect to the reportable transaction) a written notice to the
Secretary that the financial institution or nonfinancial trade or
business failed to provide any copy of such report.
(3) For purposes of paragraph (a)(2) of this section, the term
reportable transaction means any transaction involving funds (as the
Secretary may describe in the regulation or order) the total amounts or
denominations of which are equal to or greater than an amount which the
Secretary may prescribe.
(b) An order issued under paragraph (a) of this section shall be
directed to the Chief Executive Officer of the financial institution or
nonfinancial trade or business and shall designate one or more of the
following categories of information to be reported: Each deposit,
withdrawal, exchange of funds or other payment or transfer, by, through
or to such financial institution specified in the order, which involves
all or any class of transactions in funds equal to or exceeding an
amount specified in the order.
* * * * *
(d)(1) No order issued pursuant to paragraph (a) of this section
shall prescribe a reporting period of more than 180 days unless renewed
pursuant to the requirements of paragraph (a).
* * * * *
(e) No financial institution or nonfinancial trade or business or
officer, director, employee, or agent of a financial institution or
nonfinancial trade or business subject to an order under this section
may disclose the existence of, or terms of, the order to any person
except as prescribed by the Secretary.
Dated: November 5, 2021.
Himamauli Das,
Acting Director, Financial Crimes Enforcement Network.
[FR Doc. 2021-24602 Filed 11-12-21; 8:45 am]
BILLING CODE 4810-02-P
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