Financial Crimes Enforcement Network; Expansion of Special Information Sharing Procedures To Deter Money Laundering and Terrorist Activity, 58926-58931 [E9-27447]
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Federal Register / Vol. 74, No. 219 / Monday, November 16, 2009 / Proposed Rules
per vessel per year. Therefore, if every
registered vessel in Monroe County
were previously discharging all waste
into the federal waters as opposed to
using a pumpout station, the annual
cost to Monroe County boaters
(assuming 1,080 vessels are affected) is
expected to be $140,400 to $561,600. It
should also be noted that pump out fees
may qualify as a business expense and
may be tax deductible for some vessel
owners, so the actual economic impact
may be less.
The elimination of vessel discharges
in the federal waters of the FKNMS may
have a positive socioeconomic impact
from improved water quality and
healthier reefs and the indirect effects
that has on the economy. For example,
the tourist-based economy of the Florida
Keys depends upon clean water and
abundant natural resources. If vessels
were allowed to continue to discharge
the impacted area, the sanctuary’s water
quality would decrease, which would
negatively impact the health and
quantity of the sanctuary’s unique
biological resources, and ultimately
impact the sanctuary as a tourist
destination.
For the reasons above, the Chief
Counsel for Regulation certified that this
rule, if adopted, would not have a
significant economic impact on a
substantial number of small entities.
John H. Dunnigan,
Assistant Administrator for Ocean Services
and Coastal Zone Management.
List of Subjects in 15 CFR Part 922
Administrative practice and
procedure, Coastal zone, Fish, Fisheries,
Historic preservation, Intergovernmental
relations, Marine resources, Monuments
and memorials, Natural resources,
Wildlife, Wildlife refuges, Wildlife
Management Areas, Sanctuary
Preservation Areas, Ecological Reserves,
Areas to be Avoided, State of Florida,
U.S. Coast Guard.
For the reasons above, NOAA
proposes to amend title 15, part 922 of
the Code of Federal Regulations as
follows:
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PART 922—NATIONAL MARINE
SANCTUARY PROGRAM
REGULATIONS
1. The authority citation for part 922
continues to read as follows:
Authority: 15 U.S.C. 1431 et seq.
2. Amend § 922.163 as follows:
a. By removing paragraph (a)(4)(i)(B);
b. By redesignating paragraphs
(a)(4)(i)(C) and (a)(4)(i)(D) as (a)(4)(i)(B)
and (a)(4)(i)(C), respectively;
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c. By adding a new paragraph
(a)(5)(vi) as follows:
§ 922.163
wide.
Prohibited activities—Sanctuary
(a) * * *
(5) * * *
(vi) Having a marine sanitation device
that is unlocked or that allows discharge
or deposit of sewage.
*
*
*
*
*
[FR Doc. E9–27453 Filed 11–13–09; 8:45 am]
BILLING CODE 3510–NK–P
DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506–AB04
Financial Crimes Enforcement
Network; Expansion of Special
Information Sharing Procedures To
Deter Money Laundering and Terrorist
Activity
AGENCY: Financial Crimes Enforcement
Network (‘‘FinCEN’’), Treasury.
ACTION: Notice of proposed rulemaking
and request for comments.
FinCEN is issuing this notice
of proposed rulemaking to amend the
relevant Bank Secrecy Act (‘‘BSA’’)
information sharing rules to allow
certain foreign law enforcement
agencies, and State and local law
enforcement agencies, to submit
requests for information to financial
institutions. The rule also clarifies that
FinCEN itself, on its own behalf and on
behalf of other appropriate components
of the Department of the Treasury, may
submit such requests. Modification of
the information sharing rules is a part of
the Department of the Treasury’s
continuing effort to increase the
efficiency and effectiveness of its antimoney laundering and counter-terrorist
financing policies.
DATES: Written comments are welcome
and must be received on or before
December 16, 2009.
ADDRESSES: Those submitting comments
are encouraged to do so via the Internet.
Comments submitted via the Internet
may be submitted at https://
www.regulations.gov/search/index.jsp,
Docket number Fincen–2009–0005, with
the caption in the body of the text,
‘‘Attention: Special Information Sharing
Procedures to Deter Money Laundering
and Terrorist Activity, RIN 1506–
XXXX.’’ Comments may also be
submitted by written mail to: Financial
Crimes Enforcement Network,
Department of the Treasury, P.O. Box
39, Vienna, VA 22183, Attention:
SUMMARY:
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Special Information Sharing Procedures
to Deter Money Laundering and
Terrorist Activity, RIN 1506–AB04.
Please submit comments by one method
only. All comments submitted in
response to this notice of proposed
rulemaking will become a matter of
public record; therefore, you should
submit only information that you wish
to make available publicly.
Inspection of comments: Public
comments received electronically or
through the U.S. Postal Service sent in
response to a ‘‘Notice and Request for
Comment’’ will be made available for
public review as soon as possible on
https://www.regulations.gov. All
comments received may be physically
inspected in the FinCEN reading room
located in Vienna, VA. Reading room
appointments are available weekdays
(excluding holidays) between 10 a.m.
and 3 p.m., by calling the Disclosure
Officer at (703) 905–5034 (not a toll free
call).
FOR FURTHER INFORMATION CONTACT: The
FinCEN regulatory helpline at (800)
949–2732 and select Option 3.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Provisions
On October 26, 2001, the President
signed into law the Uniting and
Strengthening America by Providing
Appropriate Tools Required to Intercept
and Obstruct Terrorism (‘‘USA
PATRIOT ACT’’) Act of 2001, Public
Law 107–56 (‘‘the Act’’). Title III of the
Act amends the anti-money laundering
provisions of the Bank Secrecy Act,
codified at 12 U.S.C. 1829b and 1951–
1959 and 31 U.S.C. 5311–5314 and
5316–5332, to promote the prevention,
detection, and prosecution of
international money laundering and the
financing of terrorism. Regulations
implementing the BSA appear at 31 CFR
part 103. The authority of the Secretary
of the Treasury (‘‘the Secretary’’) to
administer the BSA has been delegated
to the Director of FinCEN.
Of the Act’s many goals, the
facilitation of information sharing
among governmental entities and
financial institutions for the purpose of
combating terrorism and money
laundering is of paramount importance.
Section 314 of the Act furthers this goal
by providing for the sharing of
information between the government
and financial institutions, and among
financial institutions themselves. As
with many other provisions of the Act,
Congress has charged the U.S.
Department of the Treasury with
developing regulations to implement
these information-sharing provisions.
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Subsection 314(a) of the Act states in
part that:
[t]he Secretary shall * * * adopt
regulations to encourage further cooperation
among financial institutions, their regulatory
authorities, and law enforcement authorities,
with the specific purpose of encouraging
regulatory authorities and law enforcement
authorities to share with financial
institutions information regarding
individuals, entities, and organizations
engaged in or reasonably suspected based on
credible evidence of engaging in terrorist acts
or money laundering activities.
B. Overview of the Current Regulatory
Provisions Regarding the 314(a)
Program
On September 26, 2002, FinCEN
published a final rule implementing the
authority contained in section 314(a) of
the Act.1 That rule (‘‘the 314(a) rule’’)
allows FinCEN to require U.S. financial
institutions to search their records to
determine whether they have
maintained an account or conducted a
transaction with a person that a Federal
law enforcement agency has certified is
suspected based on credible evidence of
engaging in terrorist activity or money
laundering.2 Before processing a request
from a Federal law enforcement agency,
FinCEN also requires the requesting
agency to certify that, in the case of
money laundering, the matter is
significant, and that the requesting
agency has been unable to locate the
information sought through traditional
methods of investigation and analysis
before attempting to use this authority
(‘‘the 314(a) program’’).
Since its inception, the 314(a)
program has yielded significant
investigative benefits to Federal law
enforcement users in terrorist financing
and major money laundering cases.
Feedback from the requesters and
illustrations from sample case studies
consistently demonstrate how useful the
program is in enhancing the scope and
expanding the universe of
investigations. In view of the proven
success of the 314(a) program, FinCEN
seeks to broaden access to the program
as outlined in the following paragraphs.
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C. Objectives of Proposed Changes
a. Allowing Certain Foreign Law
Enforcement Agencies To Initiate 314(a)
Queries
In order to satisfy the United States’
treaty obligation with certain foreign
governments, FinCEN is proposing to
extend the use of the 314(a) program to
1 Special Information Sharing Procedures to Deter
Money Laundering and Terrorist Activity, 67 FR
60579 (Sept. 26, 2002).
2 31 CFR 103.100.
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include foreign law enforcement
agencies. On June 25, 2003, the
Agreement on Mutual Legal Assistance
between the United States and the
European Union (EU) (hereinafter, the
‘‘U.S.–EU MLAT’’) was signed. Between
2004 and 2006, twenty-five bilateral
implementing agreements also were
signed by the United States and EU
Member States. In 2006, the U.S.–EU
MLAT, along with twenty-five bilateral
instruments, was submitted to the U.S.
Senate for its advice and consent to
ratification. An additional two bilateral
instruments, with Romania and
Bulgaria, were concluded and submitted
to the Senate in 2007, following those
countries’ accession to the EU. The
U.S.–EU MLAT and all twenty-seven
bilateral instruments were ratified by
the President on September 23, 2008,
upon the advice and consent of the U.S.
Senate.
Article 4 of the U.S.–EU MLAT
(entitled ‘‘Identification of Bank
Information’’) obligates a requested
Signatory State to search on a
centralized basis for bank accounts
within its territory that may be
important to a criminal investigation in
the requesting Signatory State. Article 4
also contemplates that Signatory States
may search for information in the
possession of a non-bank financial
institution. Under Article 4, a Signatory
State receiving a request may limit the
scope of its obligation to provide
assistance to terrorist activity and
money laundering offenses, and many
did so in their respective bilateral
instruments with the United States. In
addition, Article 4 makes clear that the
United States and the EU are under an
obligation to ensure that the application
of Article 4 does not impose
extraordinary burdens on States that
receive search requests. Certain EU
States are expected to accommodate
search requests from the United States
by querying a single centralized
database which identifies all bank
accounts within that State. In
negotiating the terms of Article 4, the
United States expressly envisioned that
EU member States would be able to
access the information sharing process
created by the implementation of
section 314(a) of the Act. Expanding
that process to include certain foreign
law enforcement requesters would
greatly benefit the United States by
granting law enforcement agencies in
the United States with reciprocal rights
to obtain information about matching
accounts in EU member States.
Foreign law enforcement agencies
would be able to use the 314(a) program
in a way analogous to how Federal
criminal law enforcement agencies
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currently access the program. Thus, a
foreign law enforcement agency, prior to
initiating a 314(a) query, would have to
certify that, in the case of a money
laundering investigation, the matter is
significant, and that it has been unable
to locate the information sought through
traditional methods of investigation and
analysis before attempting to use the
314(a) program. FinCEN also anticipates
that the foreign request will be screened
initially by a Federal law enforcement
´
official serving as an attache to the
requesting jurisdiction. The application
of these internal procedures will help
ensure that the 314(a) program is
utilized only in significant situations,
thereby minimizing the cost on
reporting financial institutions.
b. Allowing State and Local Law
Enforcement Agencies To Initiate 314(a)
Queries
By regulation, access to the 314(a)
program currently is only available to
Federal law enforcement agencies.
When the section 314(a) rule was
drafted, FinCEN considered expanding
the process to include requesters from
other types of law enforcement agencies.
However, because of uncertainty about
how the new information-sharing rules
would impact financial institutions,
FinCEN ultimately decided to defer
expansion beyond Federal law
enforcement agencies. FinCEN now has
the benefit of drawing upon six years of
experience in administering the section
314(a) rule. In that time, financial
institutions have made necessary
adjustments to comply with these rules
and have developed more efficient ways
to respond to section 314(a) requests.
Money laundering and terror-related
financial crimes are not limited by
jurisdiction or geography. Detection and
deterrence of these crimes require
information sharing across all levels of
investigative authorities, to include
State and local law enforcement, to
ensure the broadest United States
Government defense.
State and local law enforcement
investigations run the gamut of criminal
violations, to include money laundering
and to a lesser extent, terrorist
financing, and some of these
investigations could benefit from the
use of the 314(a) program. Access to the
314(a) program by State and local law
enforcement would provide them a
platform from which they could more
effectively and efficiently fill
information gaps, including those
connected with multi-jurisdictional
financial transactions, in the same
manner as Federal law enforcement
agencies. This expansion of the 314(a)
program, in certain limited
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circumstances, to include State and
local law enforcement authorities,
would benefit overall efforts to ensure
that all law enforcement resources are
made available to combat money
laundering and terrorist financing.
Therefore, the proposal would
broaden 314(a) access to allow State and
local law enforcement agencies to
submit 314(a) queries. As is the case
currently with requesting Federal
criminal law agencies, State and local
law enforcement, prior to initiating a
314(a) query, would have to certify that,
in the case of a money laundering
investigation, the matter is significant,
and that it has been unable to locate the
information sought through traditional
methods of investigation and analysis
before attempting to use the 314(a)
program. The application of these
internal procedures will help ensure
that the 314(a) program will be utilized
only in the most compelling situations,
thereby minimizing the cost incurred by
reporting financial institutions.
c. Clarifying That FinCEN, on Its Own
Behalf and on Behalf of Appropriate
Components of the Department of the
Treasury, May Initiate 314(a) Queries
FinCEN’s statutory mandate includes
working to identify possible criminal
activity to appropriate Federal, State,
local, and foreign law enforcement
agencies, and to support ongoing
criminal financial investigations and
prosecutions.3 FinCEN also routinely
assists the law enforcement community
through proactive analyses to discover
trends, patterns, and common activity in
the financial information contained in
BSA reports. FinCEN’s use of the 314(a)
program will greatly enhance the scope
and utility of its case support efforts
beyond the insights provided from the
BSA data, thereby delivering critical
information about significant criminal
activity on a timelier basis. Accordingly,
FinCEN would use the 314(a) program
to submit self-initiated 314(a) queries.
FinCEN assists law enforcement by
providing advanced or specialized
analysis of BSA data on significant
investigations involving offenses of
money laundering or terrorist financing.
These investigations often involve
multiple locations or are otherwise
linked to other investigations. A single
314(a) request issued by FinCEN could
more efficiently coordinate and
simultaneously support several
investigations, thereby eliminating the
need for separate requests from each
investigating agency or jurisdiction.
There also are instances in which
FinCEN’s analytical products will
3 See
31 U.S.C. 310.
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benefit from access to the 314(a)
program by providing a more complete
picture of financial transactions and
mechanisms, as well as
interrelationships among investigative
subjects and financial transactions or
entities. In addition, other appropriate
components of the Department of the
Treasury that provide analytical
support, such as the Department’s
counter-terrorist financing and money
laundering efforts, will be better
equipped to fulfill their missions when
given access to the 314(a) program. It is
anticipated that the findings from the
use of the 314(a) program will reveal
additional insights and overall patterns
of suspicious financial activities.
II. Section-by-Section Analysis
A. Section 103.90(a)
FinCEN proposes to amend 31 CFR
103.90(a) by changing the definition of
the term ‘‘money laundering’’ to include
activity that would be criminalized by
18 U.S.C. 1956 or 1957 if such activity
occurred in the United States. The
change would allow the term to be
applied to information requests by
foreign law enforcement agencies. State
and local law enforcement requesters
would be subject to the same definition
of money laundering that currently
applies to Federal law enforcement
agencies—i.e., activity that is
criminalized by 18 U.S.C. 1956 or 1957.
Thus, in the case of a significant money
laundering matter, a State or local law
enforcement agency seeking information
under the section 314(a) program would
have to certify that it is investigating
activity that would be criminalized
under 18 U.S.C. 1956 or 1957. Such
activity could include, for example,
conducting a financial transaction with
proceeds of murder, kidnapping, or
dealing in a controlled substance (as
defined in section 102 of the Controlled
Substances Act), which is punishable as
a felony under State law.4
B. Section 103.100(a)(4)
FinCEN proposes to add 31 CFR
103.100(a)(4), which would define a
‘‘law enforcement agency’’ to include a
Federal, State, local, or foreign law
enforcement agency with criminal
investigative authority, provided that
the foreign law enforcement agency is
from a jurisdiction that is a party to a
treaty that provides for, or in the
determination of FinCEN is from a
jurisdiction that otherwise allows, law
enforcement agencies in the United
States with reciprocal access to
4 See 18 U.S.C. 1956(c)(7) (defining the term
‘‘specified unlawful activity’’ to include, inter alia,
an offense listed in 18 U.S.C. 1961(1)).
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information comparable to that
obtainable under section 103.100. The
addition of foreign law enforcement
agencies would enable the United States
to be compliant with its obligations
under the U.S.–EU MLAT, thereby
providing law enforcement agencies in
the United States with the benefit of
reciprocal access to information in EU
member States. The U.S.–EU MLAT,
and 27 bilateral instruments with EU
Member States implementing its terms,
require each EU member State to be able
to search for the kind of information
covered by 31 CFR 103.100 and to
promptly report to the requesting State
the results of such a search.
The addition of State and local law
enforcement agencies would provide a
platform for such agencies to deal more
effectively with multi-jurisdictional
financial transactions in the same
manner as Federal law enforcement
agencies. Access to the 314(a) program
would provide State and local law
enforcement agencies with another
resource to aide in discovering the
whereabouts of stolen proceeds.
C. Section 103.100(b)(1)
FinCEN proposes to amend section
103.100(b)(1) to make conforming
changes to reflect the addition of State
and local law enforcement agencies, and
foreign law enforcement agencies, as
potential requesters of information.
These other categories of law
enforcement agencies would be subject
to the same standard now applicable to
Federal law enforcement agencies—in
particular, the requirement to certify
that each individual, entity, or
organization about which the law
enforcement agency is seeking
information is engaged in, or is
reasonably suspected based on credible
evidence of engaging in, terrorist
activity or money laundering. To further
ensure that financial institutions are not
overwhelmed by information requests,
FinCEN has, since 2003, adopted an
additional operating procedure that
requires Federal law enforcement
agencies to further certify that, in the
case of a money laundering
investigation, the matter is significant.
FinCEN intends to apply that same
standard to State, local and certain
foreign law enforcement agencies.
D. Section 103.100(b)(2)
FinCEN proposes to add new 31 CFR
103.100(b)(2) which would clarify that
FinCEN may request directly, on its own
behalf and on behalf of appropriate
components of the Department of the
Treasury, whether a financial institution
or a group of financial institutions
maintains or has maintained accounts
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for, or has engaged in transactions with,
specified individuals, entities, or
organizations. Such information
requests shall be for the purpose of
conducting analyses to deter and detect
terrorist financing activity or money
laundering. Adding FinCEN, itself and
acting on behalf of other appropriate
Treasury components, as a requester of
information will increase the value of
analytical support to law enforcement.
III. Administrative Matters
A. Executive Order 12866
It has been determined that this
proposed rule is a significant regulatory
action for purposes of Executive Order
12866 because it raises a novel policy
issue. However, a regulatory impact
analysis is not required.
B. Unfunded Mandates Act of 1995
Statement
Section 202 of the Unfunded
Mandates Reform Act of 1995
(‘‘Unfunded Mandates Act’’), Public
Law 104–4 (March 22, 1995), requires
that an agency prepare a budgetary
impact statement before promulgating a
rule that may result in expenditure by
that State, local, and tribal governments,
in the aggregate, or by the private sector,
of $100 million or more in any one year.
If a budgetary impact statement is
required, section 202 of the Unfunded
Mandates Act also requires an agency to
identify and consider a reasonable
number of regulatory alternatives before
promulgating a rule. FinCEN has
determined that it is not required to
prepare a written statement under
section 202.
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C. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601 et seq.), FinCEN
certifies that these proposed regulation
revisions will not have a significant
economic impact on a substantial
number of small entities. The proposed
revisions would allow certain other
agencies to submit 314(a) requests, but
would not change the substance of the
search and reporting requirements.
Thus, FinCEN estimates that any impact
resulting from the proposal will not be
significant.
D. Paperwork Reduction Act
The collection of information
contained in this proposed rule is being
submitted to the Office of Management
and Budget for review in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)). Comments on
the collection of information should be
sent to: Desk Officer for the Department
of the Treasury, Office of Information
and Regulatory Affairs, Office of
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Management and Budget, Paperwork
Reduction Project (1506), Washington,
DC 20503 at the following e-mail
address: oira_submission@omb.eop.gov,
with a copy to the Financial Crimes
Enforcement Network by mail or the
Internet at the addresses previously
specified. As an alternative, comments
may be submitted to OMB by fax to
(202) 395–6974. Comments on the
collection of information should be
received by January 15, 2010. In
accordance with the requirements of the
Paperwork Reduction Act of 1995, 44
U.S.C. 3506(c)(2)(A), and its
implementing regulations, 5 CFR part
1320, the following information
concerning the collection of information
is presented to assist those persons
wishing to comment on the information
collection.
The collection of information in this
proposal is in 31 CFR 103.100. The
information will be used by Federal,5
State, and local law enforcement
agencies, as well as certain foreign law
enforcement agencies, and FinCEN and
other appropriate components of the
Department of Treasury, in the conduct
of investigating money laundering and
terrorist financing activity. The
collection of information is mandatory.
International Requests: FinCEN
estimates that there would be no more
than 60 requests for research submitted
to the 314(a) program by foreign law
enforcement agencies annually.6
State and Local Requests: While there
are more than 18,000 State and local law
enforcement agencies, FinCEN estimates
that the number of cases that would
meet the stringent 314(a) submission
criteria would be relatively low. The
majority of significant money
laundering and terrorist financing
related cases are worked jointly with
Federal investigators and are thus
already eligible for 314(a) request
submission. FinCEN estimates that there
would be no more than 50 State and
5 The requirement in section 103.100(b)(2),
concerning reports by financial institutions in
response to a request from FinCEN on behalf of a
Federal law enforcement agency, is not a collection
of information for purposes of the Paperwork
Reduction Act. See 5 CFR 1320.4(a)(2).
6 These calculations were based on previous
requests for information. A review of incoming
requests from European Union countries revealed
an average of about 350 cases per year from 2006–
2008. Of these, approximately 75% (an average of
269) were money laundering and/or terrorism
related, however, the majority were not identified
as complex cases. Conversations with FinCEN
personnel responsible for European Union
indicated not more than 10% of the money
laundering and/or terrorism related cases would be
significant enough to meet 314(a) use criteria,
however, it is anticipated that there may be
additional requests that would be submitted outside
of the normal Financial Intelligence Unit channels.
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local cases per annum of 314(a) requests
that meet submission criteria.
FinCEN and appropriate components
of the Department of the Treasury
Requests: FinCEN estimates that the
314(a) program would be used by
FinCEN and other appropriate
Department components in fewer than
10 cases per annum. Taking into
consideration the estimated number of
potential use cases that would fit
recommended internal 314(a) criteria,
FinCEN does not believe that this
expansion would be a significant strain
on existing program resources.
Description of Recordkeepers:
Covered financial institutions as defined
in 31 CFR 103.100.
Estimated Number of Recordkeepers:
On an annual basis, there are
approximately 20,134 covered financial
institutions, consisting of 15,106
commercial banks, savings associations,
and credit unions, 4,793 securities
broker-dealers, 139 future commission
merchants, 79 trust companies, and 17
life insurance companies.
Estimated Average Annual Burden
Hours per Recordkeeper: FinCEN
estimates 120 search requests 7 per year
associated with the recordkeeping
requirement in this proposed rule and 9
subjects (including aliases) per request,
resulting in an estimated 1,080 subjects
per year. The estimated average burden
associated with searching each subject
is 4 minutes per subject. FinCEN
therefore estimates that each
recordkeeper will, on average, spend
approximately 4,320 minutes, or
roughly 72 hours per year to comply
with the recordkeeping requirement in
this proposed rule.
Estimated Total Annual
Recordkeeping Burden: 1,449,648
annual burden hours (20,134
recordkeepers × 72 average annual
burden hours per recordkeeper).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid OMB control number.
Records required to be retained under
the Bank Secrecy Act must be retained
for five years.
Request for Comments: We
specifically invite comments on: (a)
Whether the proposed recordkeeping
requirement is necessary for the proper
performance of the mission of the
Financial Crimes Enforcement Network,
and whether the information shall have
practical utility; (b) the accuracy of our
7 Estimated requests per annum subject to the
Paperwork Reduction Act include 10 from FinCEN,
50 from State/local enforcement, and 60 from
foreign law enforcement agencies, for a total of 120
requests.
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estimate of the burden of the proposed
recordkeeping requirement; (c) ways to
enhance the quality, utility, and clarity
of the information required to be
maintained; (d) ways to minimize the
burden of the recordkeeping
requirement, including through the use
of automated collection techniques or
other forms of information technology;
and (e) estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to maintain the information.
List of Subjects in 31 CFR Part 103
Administrative practice and
procedure, Authority delegations
(Government agencies), Banks and
banking, Currency, Foreign banking,
Foreign currencies, Gambling,
Investigations, Law enforcement,
Penalties, Reporting and recordkeeping
requirements, Securities, Taxes.
Proposed Amendments to the
Regulations
For the reasons set forth above in the
preamble, FinCEN proposes to amend
31 CFR part 103 as follows:
PART 103—FINANCIAL
RECORDKEEPING AND REPORTING
OF CURRENCY AND FINANCIAL
TRANSACTIONS
1. The authority citation for part 103
continues to read as follows:
Authority: 12 U.S.C. 1829b and 1951–1959;
31 U.S.C. 5311–5314 and 5316–5332; title III,
sec. 314, Public Law 107–56, 115 Stat. 307.
2. Section 103.90(a) is revised to read
as follows:
§ 103.90
Definitions.
pwalker on DSK8KYBLC1PROD with PROPOSALS
*
*
*
*
*
(a) Money laundering means an
activity criminalized by 18 U.S.C. 1956
or 1957, or an activity that would be
criminalized by 18 U.S.C. 1956 or 1957
if it occurred in the United States.
*
*
*
*
*
3. Section 103.100 is amended by—
a. Adding new paragraph (a)(4);
b. Revising paragraph (b)(1);
c. Redesignating paragraphs (b)(2)
through (4) as paragraphs (b)(3) through
(5);
d. Adding new paragraph (b)(2);
e. Revising newly redesignated
paragraph (b)(3)(i);
f. Revising newly redesignated
paragraph (b)(3)(iv)(B)(1);
g. Revising newly redesignated
paragraph (b)(3)(iv)(B)(2);
h. Revising newly redesignated
paragraph (b)(3)(iv)(C);
i. Revising newly redesignated
paragraph (b)(4); and
j. Revising newly redesignated
paragraph (b)(5).
VerDate Nov<24>2008
16:16 Nov 13, 2009
Jkt 220001
The revisions read as follows:
§ 103.100 Information sharing between
government agencies and financial
institutions.
(a) * * *
(4) Law enforcement agency means a
Federal, State, local, or foreign law
enforcement agency with criminal
investigative authority, provided that in
the case of a foreign law enforcement
agency, such agency is from a
jurisdiction that is a party to a treaty
that provides for, or in the
determination of FinCEN is from a
jurisdiction that otherwise allows, law
enforcement agencies in the United
States reciprocal access to information
comparable to that obtainable under this
section.
(b) Information requests based on
credible evidence concerning terrorist
activity or money laundering—(1) In
general. A law enforcement agency
investigating terrorist activity or money
laundering may request that FinCEN
solicit, on the investigating agency’s
behalf, certain information from a
financial institution or a group of
financial institutions. When submitting
such a request to FinCEN, the law
enforcement agency shall provide
FinCEN with a written certification, in
such form and manner as FinCEN may
prescribe. At a minimum, such
certification must: State that each
individual, entity, or organization about
which the law enforcement agency is
seeking information is engaged in, or is
reasonably suspected based on credible
evidence of engaging in, terrorist
activity or money laundering; include
enough specific identifiers, such as date
of birth, address, and Social Security
number, that would permit a financial
institution to differentiate between
common or similar names; and identify
one person at the agency who can be
contacted with any questions relating to
its request. Upon receiving the requisite
certification from the requesting law
enforcement agency, FinCEN may
require any financial institution to
search its records to determine whether
the financial institution maintains or
has maintained accounts for, or has
engaged in transactions with, any
specified individual, entity, or
organization.
(2) Requests from FinCEN. FinCEN
may solicit, on its own behalf and on
behalf of appropriate components of the
Department of the Treasury, whether a
financial institution or a group of
financial institutions maintains or has
maintained accounts for, or has engaged
in transactions with, any specified
individual, entity, or organization.
Before an information request under this
PO 00000
Frm 00016
Fmt 4702
Sfmt 4702
section is made to a financial
institution, FinCEN or the appropriate
Treasury component shall certify in
writing in the same manner as a
requesting law enforcement agency that
each individual, entity or organization
about which FinCEN or the appropriate
Treasury component is seeking
information is engaged in, or is
reasonably suspected based on credible
evidence of engaging in, terrorist
activity or money laundering. The
certification also must include enough
specific identifiers, such as date of birth,
address, and Social Security number
that would permit a financial institution
to differentiate between common or
similar names, and identify one person
at FinCEN or the appropriate Treasury
component who can be contacted with
any questions relating to its request.
(3) Obligations of a financial
institution receiving an information
request—(i) Record search. Upon
receiving an information request from
FinCEN under this section, a financial
institution shall expeditiously search its
records to determine whether it
maintains or has maintained any
account for, or has engaged in any
transaction with, each individual,
entity, or organization named in
FinCEN’s request. A financial
institution may contact the law
enforcement agency, FinCEN or
requesting Treasury component
representative, or U.S. law enforcement
´
attache in the case of a request by a
foreign law enforcement agency, which
has been named in the information
request provided to the institution by
FinCEN with any questions relating to
the scope or terms of the request. Except
as otherwise provided in the
information request, a financial
institution shall only be required to
search its records for:
*
*
*
*
*
(iv) * * *
(B)(1) A financial institution shall not
disclose to any person, other than
FinCEN or the requesting Treasury
component, the law enforcement agency
on whose behalf FinCEN is requesting
information, or U.S. law enforcement
´
attache in the case of a request by a
foreign law enforcement agency, which
has been named in the information
request, the fact that FinCEN has
requested or has obtained information
under this section, except to the extent
necessary to comply with such an
information request.
(2) Notwithstanding paragraph
(b)(3)(iv)(B)(1) of this section, a financial
institution authorized to share
information under § 103.110 may share
information concerning an individual,
E:\FR\FM\16NOP1.SGM
16NOP1
Federal Register / Vol. 74, No. 219 / Monday, November 16, 2009 / Proposed Rules
entity, or organization named in a
request from FinCEN in accordance
with the requirements of such section.
However, such sharing shall not
disclose the fact that FinCEN has
requested information concerning such
individual, entity, or organization.
(C) Each financial institution shall
maintain adequate procedures to protect
the security and confidentiality of
requests from FinCEN for information
under this section. The requirements of
this paragraph (b)(3)(iv)(C) shall be
deemed satisfied to the extent that a
financial institution applies to such
information procedures that the
institution has established to satisfy the
requirements of section 501 of the
Gramm-Leach-Bliley Act (15 U.S.C.
6801), and applicable regulations issued
thereunder, with regard to the
protection of its customers’ nonpublic
personal information.
*
*
*
*
*
(4) Relation to the Right to Financial
Privacy Act and the Gramm-LeachBliley Act. The information that a
financial institution is required to report
pursuant to paragraph (b)(3)(ii) of this
section is information required to be
reported in accordance with a federal
statute or rule promulgated thereunder,
for purposes of subsection 3413(d) of
the Right to Financial Privacy Act (12
U.S.C. 3413(d)) and subsection 502(e)(8)
of the Gramm-Leach-Bliley Act (15
U.S.C. 6802(e)(8)).
(5) No effect on law enforcement or
regulatory investigations. Nothing in
this subpart affects the authority of a
Federal, State or local law enforcement
agency or officer, or FinCEN or another
component of the Department of the
Treasury, to obtain information directly
from a financial institution.
Dated: November 9, 2009.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement
Network.
[FR Doc. E9–27447 Filed 11–13–09; 8:45 am]
BILLING CODE 4810–02–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
pwalker on DSK8KYBLC1PROD with PROPOSALS
33 CFR Part 117
[Docket No. USCG–2009–0840]
RIN 1625–AA09
Drawbridge Operation Regulation; Port
of Coos Bay Railroad Bridge, Coos
Bay, North Bend, OR
AGENCY:
Coast Guard, DHS.
VerDate Nov<24>2008
16:16 Nov 13, 2009
Jkt 220001
ACTION:
Notice of proposed rulemaking.
SUMMARY: The Coast Guard proposes to
modify the drawbridge operation
regulation for the Port of Coos Bay
Railroad Bridge, Coos Bay, mile 9.0, at
North Bend, Oregon by deleting the
requirement for special sound signals
used in foggy weather and to change the
name of the owner. This rule is
necessary to make the sound signals
used at the bridge consistent with other
bridges in the area and to eliminate the
unnecessary special sound signals.
DATES: Comments and related material
must reach the Coast Guard on or before
January 15, 2010.
ADDRESSES: You may submit comments
identified by the Coast Guard docket
number USCG–2009–0840 using any
one of the following methods:
(1) Federal eRulemaking Portal:
https://www.regulations.gov.
(2) Fax: 202–493–2251.
(3) Mail: Docket Management Facility
(M–30), U.S. Department of
Transportation, West Building Ground
Floor, Room W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590–
0001.
(4) Hand delivery: Same as mail
address above, between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays. The telephone number
is 202–366–9329.
To avoid duplication, please use only
one of these methods. See the ‘‘Public
Participation and Request for
Comments’’ portion of the
SUPPLEMENTARY INFORMATION section
below for instructions on submitting
comments.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this proposed
rule, call Austin Pratt, Chief, Bridge
Section, Waterways Management
Branch, Thirteenth Coast Guard District,
telephone 206–220–7282, e-mail
address william.a.pratt@uscg.mil. If you
have questions on viewing or submitting
material to the docket, call Renee V.
Wright, Program Manager, Docket
Operations, telephone 202–366–9826.
SUPPLEMENTARY INFORMATION:
58931
rulemaking USCG–2009–0840, indicate
the specific section of this document to
which each comment applies, and
provide a reason for each suggestion or
recommendation. You may submit your
comments and material online (https://
www.regulations.gov), or by fax, mail or
hand delivery, but please use only one
of these means. If submit a comment
online via https://www.regulations.gov, it
will be considered received by the Coast
Guard when you successfully transmit
the comment. If you fax, hand deliver or
mail your comment, it will be
considered received by the Coast Guard
when it is received at the Docket
Management Facility. We recommend
that you include your name and a
mailing address, an e-mail address, or a
phone number in the body of your
document so that we can contact you if
we have questions regarding your
submission.
To submit your comment online, go to
https://www.regulations.gov, click on the
‘‘submit a comment’’ box, which will
then become highlighted in blue. In the
‘‘Document Type’’ drop down menu
select ‘‘Proposed Rules’’ and insert
‘‘USCG–2009–0840’’ in the ‘‘Keyword’’
box. Click ‘‘Search’’ then click on the
balloon shape in the ‘‘Actions’’ column.
If you submit your comments by mail or
hand delivery, submit them in an
unbound format, no larger than 81⁄2 by
11 inches, suitable for copying and
electronic filing. If you submit them by
mail and would like to know that they
reached the Facility, please enclose a
stamped, self-addressed postcard or
envelope. We will consider all
comments and material received during
the comment period and may change
the proposed rule in view of them.
Public Participation and Request for
Comments
We encourage you to participate in
this rulemaking by submitting
comments and related materials. All
comments received will be posted,
without change, to https://
www.regulations.gov and will include
any personal information you have
provided.
Viewing Comments and Documents
To view comments, as well as
documents mentioned in this preamble
as being available in the docket, go to
https://www.regulations.gov, click on the
‘‘read comments’’ box, which will then
become highlighted in blue. In the
‘‘Keyword’’ box insert ‘‘USCG–2009–
0840’’ and click ‘‘Search’’. Click the
‘‘Open Docket Folder’’ in the ‘‘Actions’’
column. You may also visit either the
Docket Management Facility in Room
W12–140 on the ground floor of the
DOT West Building, 1200 New Jersey
Avenue, SE., Washington, DC 20590,
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
We have an agreement with the
Department of Transportation to use the
Docket Management Facility.
Submitting Comments
If you submit a comment, please
include the docket number for this
Privacy Act
Anyone can search the electronic
form of all comments received into any
PO 00000
Frm 00017
Fmt 4702
Sfmt 4702
E:\FR\FM\16NOP1.SGM
16NOP1
]]>Agencies
[Federal Register Volume 74, Number 219 (Monday, November 16, 2009)]
[Proposed Rules]
[Pages 58926-58931]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-27447]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506-AB04
Financial Crimes Enforcement Network; Expansion of Special
Information Sharing Procedures To Deter Money Laundering and Terrorist
Activity
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Notice of proposed rulemaking and request for comments.
-----------------------------------------------------------------------
SUMMARY: FinCEN is issuing this notice of proposed rulemaking to amend
the relevant Bank Secrecy Act (``BSA'') information sharing rules to
allow certain foreign law enforcement agencies, and State and local law
enforcement agencies, to submit requests for information to financial
institutions. The rule also clarifies that FinCEN itself, on its own
behalf and on behalf of other appropriate components of the Department
of the Treasury, may submit such requests. Modification of the
information sharing rules is a part of the Department of the Treasury's
continuing effort to increase the efficiency and effectiveness of its
anti-money laundering and counter-terrorist financing policies.
DATES: Written comments are welcome and must be received on or before
December 16, 2009.
ADDRESSES: Those submitting comments are encouraged to do so via the
Internet. Comments submitted via the Internet may be submitted at
https://www.regulations.gov/search/index.jsp, Docket number Fincen-2009-
0005, with the caption in the body of the text, ``Attention: Special
Information Sharing Procedures to Deter Money Laundering and Terrorist
Activity, RIN 1506-XXXX.'' Comments may also be submitted by written
mail to: Financial Crimes Enforcement Network, Department of the
Treasury, P.O. Box 39, Vienna, VA 22183, Attention: Special Information
Sharing Procedures to Deter Money Laundering and Terrorist Activity,
RIN 1506-AB04. Please submit comments by one method only. All comments
submitted in response to this notice of proposed rulemaking will become
a matter of public record; therefore, you should submit only
information that you wish to make available publicly.
Inspection of comments: Public comments received electronically or
through the U.S. Postal Service sent in response to a ``Notice and
Request for Comment'' will be made available for public review as soon
as possible on https://www.regulations.gov. All comments received may be
physically inspected in the FinCEN reading room located in Vienna, VA.
Reading room appointments are available weekdays (excluding holidays)
between 10 a.m. and 3 p.m., by calling the Disclosure Officer at (703)
905-5034 (not a toll free call).
FOR FURTHER INFORMATION CONTACT: The FinCEN regulatory helpline at
(800) 949-2732 and select Option 3.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Provisions
On October 26, 2001, the President signed into law the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (``USA PATRIOT ACT'') Act of 2001,
Public Law 107-56 (``the Act''). Title III of the Act amends the anti-
money laundering provisions of the Bank Secrecy Act, codified at 12
U.S.C. 1829b and 1951-1959 and 31 U.S.C. 5311-5314 and 5316-5332, to
promote the prevention, detection, and prosecution of international
money laundering and the financing of terrorism. Regulations
implementing the BSA appear at 31 CFR part 103. The authority of the
Secretary of the Treasury (``the Secretary'') to administer the BSA has
been delegated to the Director of FinCEN.
Of the Act's many goals, the facilitation of information sharing
among governmental entities and financial institutions for the purpose
of combating terrorism and money laundering is of paramount importance.
Section 314 of the Act furthers this goal by providing for the sharing
of information between the government and financial institutions, and
among financial institutions themselves. As with many other provisions
of the Act, Congress has charged the U.S. Department of the Treasury
with developing regulations to implement these information-sharing
provisions.
[[Page 58927]]
Subsection 314(a) of the Act states in part that:
[t]he Secretary shall * * * adopt regulations to encourage
further cooperation among financial institutions, their regulatory
authorities, and law enforcement authorities, with the specific
purpose of encouraging regulatory authorities and law enforcement
authorities to share with financial institutions information
regarding individuals, entities, and organizations engaged in or
reasonably suspected based on credible evidence of engaging in
terrorist acts or money laundering activities.
B. Overview of the Current Regulatory Provisions Regarding the 314(a)
Program
On September 26, 2002, FinCEN published a final rule implementing
the authority contained in section 314(a) of the Act.\1\ That rule
(``the 314(a) rule'') allows FinCEN to require U.S. financial
institutions to search their records to determine whether they have
maintained an account or conducted a transaction with a person that a
Federal law enforcement agency has certified is suspected based on
credible evidence of engaging in terrorist activity or money
laundering.\2\ Before processing a request from a Federal law
enforcement agency, FinCEN also requires the requesting agency to
certify that, in the case of money laundering, the matter is
significant, and that the requesting agency has been unable to locate
the information sought through traditional methods of investigation and
analysis before attempting to use this authority (``the 314(a)
program'').
---------------------------------------------------------------------------
\1\ Special Information Sharing Procedures to Deter Money
Laundering and Terrorist Activity, 67 FR 60579 (Sept. 26, 2002).
\2\ 31 CFR 103.100.
---------------------------------------------------------------------------
Since its inception, the 314(a) program has yielded significant
investigative benefits to Federal law enforcement users in terrorist
financing and major money laundering cases. Feedback from the
requesters and illustrations from sample case studies consistently
demonstrate how useful the program is in enhancing the scope and
expanding the universe of investigations. In view of the proven success
of the 314(a) program, FinCEN seeks to broaden access to the program as
outlined in the following paragraphs.
C. Objectives of Proposed Changes
a. Allowing Certain Foreign Law Enforcement Agencies To Initiate 314(a)
Queries
In order to satisfy the United States' treaty obligation with
certain foreign governments, FinCEN is proposing to extend the use of
the 314(a) program to include foreign law enforcement agencies. On June
25, 2003, the Agreement on Mutual Legal Assistance between the United
States and the European Union (EU) (hereinafter, the ``U.S.-EU MLAT'')
was signed. Between 2004 and 2006, twenty-five bilateral implementing
agreements also were signed by the United States and EU Member States.
In 2006, the U.S.-EU MLAT, along with twenty-five bilateral
instruments, was submitted to the U.S. Senate for its advice and
consent to ratification. An additional two bilateral instruments, with
Romania and Bulgaria, were concluded and submitted to the Senate in
2007, following those countries' accession to the EU. The U.S.-EU MLAT
and all twenty-seven bilateral instruments were ratified by the
President on September 23, 2008, upon the advice and consent of the
U.S. Senate.
Article 4 of the U.S.-EU MLAT (entitled ``Identification of Bank
Information'') obligates a requested Signatory State to search on a
centralized basis for bank accounts within its territory that may be
important to a criminal investigation in the requesting Signatory
State. Article 4 also contemplates that Signatory States may search for
information in the possession of a non-bank financial institution.
Under Article 4, a Signatory State receiving a request may limit the
scope of its obligation to provide assistance to terrorist activity and
money laundering offenses, and many did so in their respective
bilateral instruments with the United States. In addition, Article 4
makes clear that the United States and the EU are under an obligation
to ensure that the application of Article 4 does not impose
extraordinary burdens on States that receive search requests. Certain
EU States are expected to accommodate search requests from the United
States by querying a single centralized database which identifies all
bank accounts within that State. In negotiating the terms of Article 4,
the United States expressly envisioned that EU member States would be
able to access the information sharing process created by the
implementation of section 314(a) of the Act. Expanding that process to
include certain foreign law enforcement requesters would greatly
benefit the United States by granting law enforcement agencies in the
United States with reciprocal rights to obtain information about
matching accounts in EU member States.
Foreign law enforcement agencies would be able to use the 314(a)
program in a way analogous to how Federal criminal law enforcement
agencies currently access the program. Thus, a foreign law enforcement
agency, prior to initiating a 314(a) query, would have to certify that,
in the case of a money laundering investigation, the matter is
significant, and that it has been unable to locate the information
sought through traditional methods of investigation and analysis before
attempting to use the 314(a) program. FinCEN also anticipates that the
foreign request will be screened initially by a Federal law enforcement
official serving as an attach[eacute] to the requesting jurisdiction.
The application of these internal procedures will help ensure that the
314(a) program is utilized only in significant situations, thereby
minimizing the cost on reporting financial institutions.
b. Allowing State and Local Law Enforcement Agencies To Initiate 314(a)
Queries
By regulation, access to the 314(a) program currently is only
available to Federal law enforcement agencies. When the section 314(a)
rule was drafted, FinCEN considered expanding the process to include
requesters from other types of law enforcement agencies. However,
because of uncertainty about how the new information-sharing rules
would impact financial institutions, FinCEN ultimately decided to defer
expansion beyond Federal law enforcement agencies. FinCEN now has the
benefit of drawing upon six years of experience in administering the
section 314(a) rule. In that time, financial institutions have made
necessary adjustments to comply with these rules and have developed
more efficient ways to respond to section 314(a) requests.
Money laundering and terror-related financial crimes are not
limited by jurisdiction or geography. Detection and deterrence of these
crimes require information sharing across all levels of investigative
authorities, to include State and local law enforcement, to ensure the
broadest United States Government defense.
State and local law enforcement investigations run the gamut of
criminal violations, to include money laundering and to a lesser
extent, terrorist financing, and some of these investigations could
benefit from the use of the 314(a) program. Access to the 314(a)
program by State and local law enforcement would provide them a
platform from which they could more effectively and efficiently fill
information gaps, including those connected with multi-jurisdictional
financial transactions, in the same manner as Federal law enforcement
agencies. This expansion of the 314(a) program, in certain limited
[[Page 58928]]
circumstances, to include State and local law enforcement authorities,
would benefit overall efforts to ensure that all law enforcement
resources are made available to combat money laundering and terrorist
financing.
Therefore, the proposal would broaden 314(a) access to allow State
and local law enforcement agencies to submit 314(a) queries. As is the
case currently with requesting Federal criminal law agencies, State and
local law enforcement, prior to initiating a 314(a) query, would have
to certify that, in the case of a money laundering investigation, the
matter is significant, and that it has been unable to locate the
information sought through traditional methods of investigation and
analysis before attempting to use the 314(a) program. The application
of these internal procedures will help ensure that the 314(a) program
will be utilized only in the most compelling situations, thereby
minimizing the cost incurred by reporting financial institutions.
c. Clarifying That FinCEN, on Its Own Behalf and on Behalf of
Appropriate Components of the Department of the Treasury, May Initiate
314(a) Queries
FinCEN's statutory mandate includes working to identify possible
criminal activity to appropriate Federal, State, local, and foreign law
enforcement agencies, and to support ongoing criminal financial
investigations and prosecutions.\3\ FinCEN also routinely assists the
law enforcement community through proactive analyses to discover
trends, patterns, and common activity in the financial information
contained in BSA reports. FinCEN's use of the 314(a) program will
greatly enhance the scope and utility of its case support efforts
beyond the insights provided from the BSA data, thereby delivering
critical information about significant criminal activity on a timelier
basis. Accordingly, FinCEN would use the 314(a) program to submit self-
initiated 314(a) queries.
---------------------------------------------------------------------------
\3\ See 31 U.S.C. 310.
---------------------------------------------------------------------------
FinCEN assists law enforcement by providing advanced or specialized
analysis of BSA data on significant investigations involving offenses
of money laundering or terrorist financing. These investigations often
involve multiple locations or are otherwise linked to other
investigations. A single 314(a) request issued by FinCEN could more
efficiently coordinate and simultaneously support several
investigations, thereby eliminating the need for separate requests from
each investigating agency or jurisdiction.
There also are instances in which FinCEN's analytical products will
benefit from access to the 314(a) program by providing a more complete
picture of financial transactions and mechanisms, as well as
interrelationships among investigative subjects and financial
transactions or entities. In addition, other appropriate components of
the Department of the Treasury that provide analytical support, such as
the Department's counter-terrorist financing and money laundering
efforts, will be better equipped to fulfill their missions when given
access to the 314(a) program. It is anticipated that the findings from
the use of the 314(a) program will reveal additional insights and
overall patterns of suspicious financial activities.
II. Section-by-Section Analysis
A. Section 103.90(a)
FinCEN proposes to amend 31 CFR 103.90(a) by changing the
definition of the term ``money laundering'' to include activity that
would be criminalized by 18 U.S.C. 1956 or 1957 if such activity
occurred in the United States. The change would allow the term to be
applied to information requests by foreign law enforcement agencies.
State and local law enforcement requesters would be subject to the same
definition of money laundering that currently applies to Federal law
enforcement agencies--i.e., activity that is criminalized by 18 U.S.C.
1956 or 1957. Thus, in the case of a significant money laundering
matter, a State or local law enforcement agency seeking information
under the section 314(a) program would have to certify that it is
investigating activity that would be criminalized under 18 U.S.C. 1956
or 1957. Such activity could include, for example, conducting a
financial transaction with proceeds of murder, kidnapping, or dealing
in a controlled substance (as defined in section 102 of the Controlled
Substances Act), which is punishable as a felony under State law.\4\
---------------------------------------------------------------------------
\4\ See 18 U.S.C. 1956(c)(7) (defining the term ``specified
unlawful activity'' to include, inter alia, an offense listed in 18
U.S.C. 1961(1)).
---------------------------------------------------------------------------
B. Section 103.100(a)(4)
FinCEN proposes to add 31 CFR 103.100(a)(4), which would define a
``law enforcement agency'' to include a Federal, State, local, or
foreign law enforcement agency with criminal investigative authority,
provided that the foreign law enforcement agency is from a jurisdiction
that is a party to a treaty that provides for, or in the determination
of FinCEN is from a jurisdiction that otherwise allows, law enforcement
agencies in the United States with reciprocal access to information
comparable to that obtainable under section 103.100. The addition of
foreign law enforcement agencies would enable the United States to be
compliant with its obligations under the U.S.-EU MLAT, thereby
providing law enforcement agencies in the United States with the
benefit of reciprocal access to information in EU member States. The
U.S.-EU MLAT, and 27 bilateral instruments with EU Member States
implementing its terms, require each EU member State to be able to
search for the kind of information covered by 31 CFR 103.100 and to
promptly report to the requesting State the results of such a search.
The addition of State and local law enforcement agencies would
provide a platform for such agencies to deal more effectively with
multi-jurisdictional financial transactions in the same manner as
Federal law enforcement agencies. Access to the 314(a) program would
provide State and local law enforcement agencies with another resource
to aide in discovering the whereabouts of stolen proceeds.
C. Section 103.100(b)(1)
FinCEN proposes to amend section 103.100(b)(1) to make conforming
changes to reflect the addition of State and local law enforcement
agencies, and foreign law enforcement agencies, as potential requesters
of information. These other categories of law enforcement agencies
would be subject to the same standard now applicable to Federal law
enforcement agencies--in particular, the requirement to certify that
each individual, entity, or organization about which the law
enforcement agency is seeking information is engaged in, or is
reasonably suspected based on credible evidence of engaging in,
terrorist activity or money laundering. To further ensure that
financial institutions are not overwhelmed by information requests,
FinCEN has, since 2003, adopted an additional operating procedure that
requires Federal law enforcement agencies to further certify that, in
the case of a money laundering investigation, the matter is
significant. FinCEN intends to apply that same standard to State, local
and certain foreign law enforcement agencies.
D. Section 103.100(b)(2)
FinCEN proposes to add new 31 CFR 103.100(b)(2) which would clarify
that FinCEN may request directly, on its own behalf and on behalf of
appropriate components of the Department of the Treasury, whether a
financial institution or a group of financial institutions maintains or
has maintained accounts
[[Page 58929]]
for, or has engaged in transactions with, specified individuals,
entities, or organizations. Such information requests shall be for the
purpose of conducting analyses to deter and detect terrorist financing
activity or money laundering. Adding FinCEN, itself and acting on
behalf of other appropriate Treasury components, as a requester of
information will increase the value of analytical support to law
enforcement.
III. Administrative Matters
A. Executive Order 12866
It has been determined that this proposed rule is a significant
regulatory action for purposes of Executive Order 12866 because it
raises a novel policy issue. However, a regulatory impact analysis is
not required.
B. Unfunded Mandates Act of 1995 Statement
Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded
Mandates Act''), Public Law 104-4 (March 22, 1995), requires that an
agency prepare a budgetary impact statement before promulgating a rule
that may result in expenditure by that State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 202 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. FinCEN has determined that it
is not required to prepare a written statement under section 202.
C. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.), FinCEN certifies that these proposed regulation revisions will
not have a significant economic impact on a substantial number of small
entities. The proposed revisions would allow certain other agencies to
submit 314(a) requests, but would not change the substance of the
search and reporting requirements. Thus, FinCEN estimates that any
impact resulting from the proposal will not be significant.
D. Paperwork Reduction Act
The collection of information contained in this proposed rule is
being submitted to the Office of Management and Budget for review in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)). Comments on the collection of information should be sent to:
Desk Officer for the Department of the Treasury, Office of Information
and Regulatory Affairs, Office of Management and Budget, Paperwork
Reduction Project (1506), Washington, DC 20503 at the following e-mail
address: oira_submission@omb.eop.gov, with a copy to the Financial
Crimes Enforcement Network by mail or the Internet at the addresses
previously specified. As an alternative, comments may be submitted to
OMB by fax to (202) 395-6974. Comments on the collection of information
should be received by January 15, 2010. In accordance with the
requirements of the Paperwork Reduction Act of 1995, 44 U.S.C.
3506(c)(2)(A), and its implementing regulations, 5 CFR part 1320, the
following information concerning the collection of information is
presented to assist those persons wishing to comment on the information
collection.
The collection of information in this proposal is in 31 CFR
103.100. The information will be used by Federal,\5\ State, and local
law enforcement agencies, as well as certain foreign law enforcement
agencies, and FinCEN and other appropriate components of the Department
of Treasury, in the conduct of investigating money laundering and
terrorist financing activity. The collection of information is
mandatory.
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\5\ The requirement in section 103.100(b)(2), concerning reports
by financial institutions in response to a request from FinCEN on
behalf of a Federal law enforcement agency, is not a collection of
information for purposes of the Paperwork Reduction Act. See 5 CFR
1320.4(a)(2).
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International Requests: FinCEN estimates that there would be no
more than 60 requests for research submitted to the 314(a) program by
foreign law enforcement agencies annually.\6\
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\6\ These calculations were based on previous requests for
information. A review of incoming requests from European Union
countries revealed an average of about 350 cases per year from 2006-
2008. Of these, approximately 75% (an average of 269) were money
laundering and/or terrorism related, however, the majority were not
identified as complex cases. Conversations with FinCEN personnel
responsible for European Union indicated not more than 10% of the
money laundering and/or terrorism related cases would be significant
enough to meet 314(a) use criteria, however, it is anticipated that
there may be additional requests that would be submitted outside of
the normal Financial Intelligence Unit channels.
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State and Local Requests: While there are more than 18,000 State
and local law enforcement agencies, FinCEN estimates that the number of
cases that would meet the stringent 314(a) submission criteria would be
relatively low. The majority of significant money laundering and
terrorist financing related cases are worked jointly with Federal
investigators and are thus already eligible for 314(a) request
submission. FinCEN estimates that there would be no more than 50 State
and local cases per annum of 314(a) requests that meet submission
criteria.
FinCEN and appropriate components of the Department of the Treasury
Requests: FinCEN estimates that the 314(a) program would be used by
FinCEN and other appropriate Department components in fewer than 10
cases per annum. Taking into consideration the estimated number of
potential use cases that would fit recommended internal 314(a)
criteria, FinCEN does not believe that this expansion would be a
significant strain on existing program resources.
Description of Recordkeepers: Covered financial institutions as
defined in 31 CFR 103.100.
Estimated Number of Recordkeepers: On an annual basis, there are
approximately 20,134 covered financial institutions, consisting of
15,106 commercial banks, savings associations, and credit unions, 4,793
securities broker-dealers, 139 future commission merchants, 79 trust
companies, and 17 life insurance companies.
Estimated Average Annual Burden Hours per Recordkeeper: FinCEN
estimates 120 search requests \7\ per year associated with the
recordkeeping requirement in this proposed rule and 9 subjects
(including aliases) per request, resulting in an estimated 1,080
subjects per year. The estimated average burden associated with
searching each subject is 4 minutes per subject. FinCEN therefore
estimates that each recordkeeper will, on average, spend approximately
4,320 minutes, or roughly 72 hours per year to comply with the
recordkeeping requirement in this proposed rule.
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\7\ Estimated requests per annum subject to the Paperwork
Reduction Act include 10 from FinCEN, 50 from State/local
enforcement, and 60 from foreign law enforcement agencies, for a
total of 120 requests.
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Estimated Total Annual Recordkeeping Burden: 1,449,648 annual
burden hours (20,134 recordkeepers x 72 average annual burden hours per
recordkeeper).
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB control number. Records required to be
retained under the Bank Secrecy Act must be retained for five years.
Request for Comments: We specifically invite comments on: (a)
Whether the proposed recordkeeping requirement is necessary for the
proper performance of the mission of the Financial Crimes Enforcement
Network, and whether the information shall have practical utility; (b)
the accuracy of our
[[Page 58930]]
estimate of the burden of the proposed recordkeeping requirement; (c)
ways to enhance the quality, utility, and clarity of the information
required to be maintained; (d) ways to minimize the burden of the
recordkeeping requirement, including through the use of automated
collection techniques or other forms of information technology; and (e)
estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to maintain the information.
List of Subjects in 31 CFR Part 103
Administrative practice and procedure, Authority delegations
(Government agencies), Banks and banking, Currency, Foreign banking,
Foreign currencies, Gambling, Investigations, Law enforcement,
Penalties, Reporting and recordkeeping requirements, Securities, Taxes.
Proposed Amendments to the Regulations
For the reasons set forth above in the preamble, FinCEN proposes to
amend 31 CFR part 103 as follows:
PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND
FINANCIAL TRANSACTIONS
1. The authority citation for part 103 continues to read as
follows:
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314
and 5316-5332; title III, sec. 314, Public Law 107-56, 115 Stat.
307.
2. Section 103.90(a) is revised to read as follows:
Sec. 103.90 Definitions.
* * * * *
(a) Money laundering means an activity criminalized by 18 U.S.C.
1956 or 1957, or an activity that would be criminalized by 18 U.S.C.
1956 or 1957 if it occurred in the United States.
* * * * *
3. Section 103.100 is amended by--
a. Adding new paragraph (a)(4);
b. Revising paragraph (b)(1);
c. Redesignating paragraphs (b)(2) through (4) as paragraphs (b)(3)
through (5);
d. Adding new paragraph (b)(2);
e. Revising newly redesignated paragraph (b)(3)(i);
f. Revising newly redesignated paragraph (b)(3)(iv)(B)(1);
g. Revising newly redesignated paragraph (b)(3)(iv)(B)(2);
h. Revising newly redesignated paragraph (b)(3)(iv)(C);
i. Revising newly redesignated paragraph (b)(4); and
j. Revising newly redesignated paragraph (b)(5).
The revisions read as follows:
Sec. 103.100 Information sharing between government agencies and
financial institutions.
(a) * * *
(4) Law enforcement agency means a Federal, State, local, or
foreign law enforcement agency with criminal investigative authority,
provided that in the case of a foreign law enforcement agency, such
agency is from a jurisdiction that is a party to a treaty that provides
for, or in the determination of FinCEN is from a jurisdiction that
otherwise allows, law enforcement agencies in the United States
reciprocal access to information comparable to that obtainable under
this section.
(b) Information requests based on credible evidence concerning
terrorist activity or money laundering--(1) In general. A law
enforcement agency investigating terrorist activity or money laundering
may request that FinCEN solicit, on the investigating agency's behalf,
certain information from a financial institution or a group of
financial institutions. When submitting such a request to FinCEN, the
law enforcement agency shall provide FinCEN with a written
certification, in such form and manner as FinCEN may prescribe. At a
minimum, such certification must: State that each individual, entity,
or organization about which the law enforcement agency is seeking
information is engaged in, or is reasonably suspected based on credible
evidence of engaging in, terrorist activity or money laundering;
include enough specific identifiers, such as date of birth, address,
and Social Security number, that would permit a financial institution
to differentiate between common or similar names; and identify one
person at the agency who can be contacted with any questions relating
to its request. Upon receiving the requisite certification from the
requesting law enforcement agency, FinCEN may require any financial
institution to search its records to determine whether the financial
institution maintains or has maintained accounts for, or has engaged in
transactions with, any specified individual, entity, or organization.
(2) Requests from FinCEN. FinCEN may solicit, on its own behalf and
on behalf of appropriate components of the Department of the Treasury,
whether a financial institution or a group of financial institutions
maintains or has maintained accounts for, or has engaged in
transactions with, any specified individual, entity, or organization.
Before an information request under this section is made to a financial
institution, FinCEN or the appropriate Treasury component shall certify
in writing in the same manner as a requesting law enforcement agency
that each individual, entity or organization about which FinCEN or the
appropriate Treasury component is seeking information is engaged in, or
is reasonably suspected based on credible evidence of engaging in,
terrorist activity or money laundering. The certification also must
include enough specific identifiers, such as date of birth, address,
and Social Security number that would permit a financial institution to
differentiate between common or similar names, and identify one person
at FinCEN or the appropriate Treasury component who can be contacted
with any questions relating to its request.
(3) Obligations of a financial institution receiving an information
request--(i) Record search. Upon receiving an information request from
FinCEN under this section, a financial institution shall expeditiously
search its records to determine whether it maintains or has maintained
any account for, or has engaged in any transaction with, each
individual, entity, or organization named in FinCEN's request. A
financial institution may contact the law enforcement agency, FinCEN or
requesting Treasury component representative, or U.S. law enforcement
attach[eacute] in the case of a request by a foreign law enforcement
agency, which has been named in the information request provided to the
institution by FinCEN with any questions relating to the scope or terms
of the request. Except as otherwise provided in the information
request, a financial institution shall only be required to search its
records for:
* * * * *
(iv) * * *
(B)(1) A financial institution shall not disclose to any person,
other than FinCEN or the requesting Treasury component, the law
enforcement agency on whose behalf FinCEN is requesting information, or
U.S. law enforcement attach[eacute] in the case of a request by a
foreign law enforcement agency, which has been named in the information
request, the fact that FinCEN has requested or has obtained information
under this section, except to the extent necessary to comply with such
an information request.
(2) Notwithstanding paragraph (b)(3)(iv)(B)(1) of this section, a
financial institution authorized to share information under Sec.
103.110 may share information concerning an individual,
[[Page 58931]]
entity, or organization named in a request from FinCEN in accordance
with the requirements of such section. However, such sharing shall not
disclose the fact that FinCEN has requested information concerning such
individual, entity, or organization.
(C) Each financial institution shall maintain adequate procedures
to protect the security and confidentiality of requests from FinCEN for
information under this section. The requirements of this paragraph
(b)(3)(iv)(C) shall be deemed satisfied to the extent that a financial
institution applies to such information procedures that the institution
has established to satisfy the requirements of section 501 of the
Gramm-Leach-Bliley Act (15 U.S.C. 6801), and applicable regulations
issued thereunder, with regard to the protection of its customers'
nonpublic personal information.
* * * * *
(4) Relation to the Right to Financial Privacy Act and the Gramm-
Leach-Bliley Act. The information that a financial institution is
required to report pursuant to paragraph (b)(3)(ii) of this section is
information required to be reported in accordance with a federal
statute or rule promulgated thereunder, for purposes of subsection
3413(d) of the Right to Financial Privacy Act (12 U.S.C. 3413(d)) and
subsection 502(e)(8) of the Gramm-Leach-Bliley Act (15 U.S.C.
6802(e)(8)).
(5) No effect on law enforcement or regulatory investigations.
Nothing in this subpart affects the authority of a Federal, State or
local law enforcement agency or officer, or FinCEN or another component
of the Department of the Treasury, to obtain information directly from
a financial institution.
Dated: November 9, 2009.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
[FR Doc. E9-27447 Filed 11-13-09; 8:45 am]
BILLING CODE 4810-02-P
