Transfer and Reorganization of Bank Secrecy Act Regulations, 65806-65879 [2010-25914]
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65806
Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Rules and Regulations
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 103
31 CFR Chapter X
RIN 1506–AA92
Transfer and Reorganization of Bank
Secrecy Act Regulations
Financial Crimes Enforcement
Network (FinCEN), Department of the
Treasury.
ACTION: Final rule.
AGENCY:
FinCEN is issuing this final
rule to move the Bank Secrecy Act
(BSA) regulations to a new chapter in
the Code of Federal Regulations (CFR).
The new chapter contains the BSA
regulations, which are generally
reorganized by financial industry.
Moving the BSA regulations to a new
chapter and organizing the chapter by
financial industry creates a user-friendly
way to find regulations applicable to a
particular financial industry. This new
organization within the new chapter
also allows for the renumbering of the
BSA regulations in a manner that makes
it easier to find regulatory requirements
than under the numbering system
currently used in the existing
regulations. FinCEN also makes minor
technical changes to the BSA
regulations such as updating mailing
addresses and points of contact.
DATES: Effective Date: March 1, 2011.
FOR FURTHER INFORMATION CONTACT:
Regulatory Policy and Programs
Division, FinCEN (800) 949–2732 and
select option 6.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
On November 7, 2008, FinCEN
published a proposal to transfer and
reorganize its regulations as part of an
ongoing effort to increase the efficiency
and effectiveness of its regulatory
oversight.1 Moving the regulations to a
new chapter within Title 31 provides
FinCEN with the opportunity to
restructure its regulations so that they
can readily be identified as being
specific to a particular regulated
industry or as being generally applicable
to all regulated industries or covered
persons. FinCEN received eight public
comments on the Chapter X NPRM,
1 See
73 FR 66414 (November 7, 2008) (Transfer
and Reorganization of Bank Secrecy Act
Regulations) (referred to herein as the ‘‘Chapter X
NPRM’’).
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which will be discussed below in the
Section-by-Section Analysis.
Making the regulatory obligations
more clear in their structure and more
readily accessible to regulated
institutions facilitates compliance and
thereby advances the purposes of the
BSA. Additionally, the transfer of
FinCEN’s regulations allows for better
integration with the government-wide
eRulemaking program.
Since publication of the Chapter X
NPRM, FinCEN has further improved
public access to its rulemaking and nonrulemaking documents. On November
17, 2009, FinCEN issued a Final Rule
amending the procedures for publicly
issuing an administrative ruling relating
to the BSA.2 Since the effective date of
that Final Rule (December 17, 2009),
FinCEN posts administrative rulings
with precedential value on its Web site,
rather than publishing them in the
Federal Register. FinCEN believes that
posting administrative rulings with
precedential value on FinCEN’s Web
site will make those rulings easier to
find. All administrative rulings with
precedential value will be available by
mail to any person who makes a written
request that specifically identifies the
administrative ruling that is sought.
Subsequent to the publication of the
Chapter X NPRM, FinCEN published
several final rules, e.g., the
Administrative Ruling Final Rule. All
final rules that were published in the
timeframe between the Chapter X NPRM
and this Final Rule have been
incorporated into FinCEN’s regulations
in the Chapter X format.
II. Effective Date
The effective date of this Final Rule
will be March 1, 2011.
III. Section-by-Section Analysis
A. Technical Corrections
In the Chapter X NPRM, FinCEN
proposed to make non-substantive
technical corrections to the BSA
implementing regulations. These
corrections included updating titles and
offices to represent organizational
changes within the Treasury
Department and FinCEN, changing
mailing addresses, and updating names
of Federal government agencies. The
comments that FinCEN received relating
to the technical corrections were
comments or suggestions that would
substantively alter the BSA. Because
such comments are outside the scope of
2 See 74 FR 59096 (November 17, 2009) (Final
Rule for amending the Bank Secrecy Act
Regulations Administrative Ruling System)
(hereinafter, the ‘‘Administrative Ruling Final
Rule’’).
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this rulemaking, FinCEN did not make
any changes on the basis of those
comments.
On April 14, 2010, FinCEN issued a
final rule to include mutual funds
within the general definition of
‘‘financial institution’’ in the BSA
regulations.3 In that rule, FinCEN
finalized two definitions of the term
‘‘mutual fund,’’ one for the general
definition section and the other for the
anti-money laundering program rules
for mutual funds.4 Although the two
definitions contain minor textual
differences, they were not intended to
and do not have substantive
distinctions. Similarly, there are textual
differences between those two
definitions and the definition of mutual
fund used for the regulations
implementing the Customer
Identification Program requirements for
mutual funds. Again, the textual
differences were not intended to and do
not signify substantive distinctions.
Therefore, in order to be consistent and
eliminate the textual anomalies within
the various definitions for mutual fund
that are currently within Part 103, the
text of the definition of mutual fund
from the Part 103 Customer
Identification Programs for Mutual
Funds will now be used as the
definition of mutual fund in Chapter X
for all purposes, except as provided in
the regulatory text for the special
measures provisions of Subpart F of the
General Provisions Part.
B. Restructuring and Numbering Logic
As discussed in the Chapter X NPRM,
FinCEN is restructuring its regulations
to make them more accessible for
covered individuals and financial
institutions. Chapter X is comprised of
a General Provisions Part and separate
financial institution specific Parts for
those financial institutions subject to
FinCEN regulations. The General
Provisions Part (Part 1010) contains
regulatory requirements that apply to
more than one type of financial
institution, and in some cases,
individuals. The financial institution
specific Parts contain regulatory
requirements specific to a particular
type of financial institution. Each Part,
whether general or specific, contains
similarly titled and ordered Subparts.
For consistency across all Parts and to
facilitate ease of reference, FinCEN has
renumbered its regulations so that the
same numbering format is used for the
regulations in each Subpart.
3 See 75 FR 19241 (April 14, 2010) (Final Rule
defining Mutual Funds as Financial Institutions).
4 See Id.
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The comments received by FinCEN
were generally supportive of FinCEN’s
effort to organize the BSA implementing
regulations into an easier to follow
format. Some commenters noted that the
renumbering format could serve to
minimize any misunderstanding
regarding whether a particular industry
has a specific regulatory requirement.
One commenter noted the structure of
Chapter X is problematic because users
would be required to refer to both the
industry-specific Part, as well as the
General Provisions Part to determine
regulatory requirements. Some
commenters noted that a potential
problem with the structure of Chapter X
and the location of the definitions is
that it would require users to flip back
and forth between Parts to confirm both
the definitions and requirements. While
there will be some cross-referencing
between Parts for financial institutions,
FinCEN concluded that the structure of
Chapter X is best for identifying the
current regulatory requirements for each
type of financial institution and any
future regulatory changes.
Some commenters requested that all
definitions be placed in the General
Provisions Part, thus limiting the need
for cross-referencing. FinCEN
considered this suggestion while
drafting this Final Rule but ultimately
found the approach unworkable because
it created large sub-categories of
definitions that diluted the contextual
distinction that applies to certain
defined terms. For example, the
definition for ‘‘account,’’ as one
commenter noted, has several different
meanings. The reason for these
definitional differences lies not only
with the products and services the
covered institution offers, but also with
the specific regulatory obligations
involved. Placing all definitions of
‘‘account’’ in the General Definitions
Subpart of Part 1010, as requested by
the commenter, would require several
sub-definitions to reference the
applicable regulations. So in the case of
the term ‘‘account,’’ by removing
‘‘account’’ from the definition section in
the rules implementing Section 312 of
the USA PATRIOT Act and placing
them in the General Definitions Subpart
of Part 1010, the needed context as to
why the definition is different is lost.
While there may be some crossreferencing of definitions with the
implementation of Chapter X, keeping
the definitional structure as proposed
helps provide context as to why words
are defined differently.
Many of the comments FinCEN
received on the Chapter X NPRM were
substantive in nature or suggested
changes that would alter industry
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regulatory requirements. One
commenter suggested removing dates in
the regulations that were perceived as
no longer relevant, such as the dates in
the Civil Penalties provisions of the
previous 31 CFR 103.57. While some
dates in the regulations appear to be so
long-standing as to be obsolete, they still
represent substantive differences in
compliance obligations and
corresponding penalties. All comments
to the Chapter X NPRM that requested
a substantive change, or would result in
a substantive change, are considered
outside the scope of this rulemaking and
have not been incorporated into this
Final Rule.
C. Removal of Appendices to 31 CFR
Part 103
In the Chapter X NPRM, FinCEN did
not publish the Appendices in 31 CFR
Part 103. In the preamble to the Chapter
X NPRM, FinCEN proposed to publish
those Appendices that would be
transferred to Chapter X in a subsequent
notice of proposed rulemaking. After a
further review of the Appendices,
FinCEN determined that it was not
necessary to issue a second notice of
proposed rulemaking for the
Appendices located in 31 CFR Part 103.
This is because, as described in more
detail below, FinCEN has determined
that none of the Appendices will need
to be included in Chapter X; instead, the
material contained in the Appendices
that is still required by the regulations
will be made available on FinCEN’s
Web site. The following is a description
of the disposition of each 31 CFR Part
103 Appendix:
Appendix A to 31 CFR Part 103
As part of the Administrative Ruling
Final Rule, certain administrative
rulings contained in Appendix A to 31
CFR Part 103 (proposed as Appendix D
to Chapter X) have been posted on
FinCEN’s Web site and others were
formally rescinded.5 As stated in the
preamble to the Administrative Ruling
Final Rule, some of the administrative
rulings included in Appendix A to 31
CFR Part 103 remain FinCEN’s
interpretation of the applicable rules
and maintain their precedential value;
therefore, those rulings have been
posted to the FinCEN Web site. Because
FinCEN has chosen to post
administrative rulings on its public Web
site, FinCEN will not be publishing the
proposed Appendix D to Chapter X in
this Final Rule. In the Administrative
Ruling Final Rule, FinCEN did not
5 See 74 FR 59096, 59097 (November 17, 2009).
See also https://www.fincen.gov/statutes_regs/
rulings/.
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65807
indicate whether Administrative Ruling
88–2 would be posted on the FinCEN
public Web site or rescinded.
Administrative Ruling 88–2 has been
posted on the FinCEN public Web site.
The disposition of this particular ruling
was inadvertently omitted from the
Administrative Ruling Final Rule.
Appendix B to 31 CFR Part 103
The requirement for a financial
institution to provide FinCEN with the
certification currently found in
Appendix B to 31 CFR Part 103
(Certification for Purposes of Section
314(b) of the USA PATRIOT Act and 31
CFR 103.110) prior to sharing
information under 31 CFR 103.110 (new
31 CFR 1010.540) was replaced in
September 2002 with a requirement to
provide notice to FinCEN prior to such
information sharing.6 Although the
certification requirement was replaced
with a notice requirement, the
Certification contained at Appendix B to
31 CFR Part 103 was not removed from
the CFR. FinCEN’s removal of the
Certification in this Final Rule is a
technical correction, rather than a
substantive change. The Certification
contained at Appendix B to 31 CFR Part
103 will not be transferred to Chapter X
and the Certification will not be made
available on FinCEN’s public Web site.
As indicated above, financial
institutions providing notice to FinCEN
prior to sharing information under new
31 CFR 1010.540 shall continue to do so
using the notice that is currently
provided on FinCEN’s public Web site.7
Appendix C to 31 CFR Part 103
For similar reasons, FinCEN is
removing Appendix C to 31 CFR Part
103 (proposed Appendix E to Chapter
X). The interpretative guidance
contained within Appendix C to 31 CFR
Part 103 are posted on FinCEN’s public
Web site and will not be published in
the CFR.8
Appendix A to Subpart H of 31 CFR Part
103
Appendix A to Subpart H of 31 CFR
Part 103 contains the Notice for
Purposes of Subsection 314(b) of the
USA Patriot Act and 31 CFR 103.110.
This Notice is currently available on the
FinCEN public Web site and will not be
published in the Code of Federal
Regulations as part of Chapter X.
6 See 67 FR 60579, 60580 (September 26, 2002)
(Final Rule for Special Information Sharing
Procedures to Deter Money Laundering and
Terrorist Activity).
7 See https://www.fincen.gov/statutes_regs/patriot/
section314b.html.
8 See https://www.fincen.gov/statutes_regs/
guidance/2000_2004.html.
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Financial institutions that are required
to provide notice to FinCEN for
purposes of the new 31 CFR 1010.540
can access the notice via the FinCEN
Web site. This notice will be made
available by mail to any financial
institution that specifically requests a
paper copy of the notice.
Appendix A and Appendix B to Subpart
I of 31 CFR Part 103
FinCEN is also removing Appendix A
to Subpart I of 31 CFR Part 103 and
Appendix B to Subpart I of 31 CFR Part
103.9 The forms contained in Appendix
A to Subpart I of 31 CFR Part 103 and
Appendix B to Subpart I of 31 CFR Part
103 will be provided to the public via
FinCEN’s Web site in a manner that will
be more easily accessible and usable
than being printed in the CFR.
D. Chapter X Distribution Table
For convenience, FinCEN is providing
a table summarizing the distribution of
the 31 CFR Part 103 provisions to the
final layout of Chapter X as follows:
DISTRIBUTION TABLE
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31 CFR Part 103 Section
31 CFR Parts 1000–1099 (Chapter X) Section
103.11 .......................................................................................................
103.12 .......................................................................................................
103.15(a)–(g) ............................................................................................
103.16(a) ..................................................................................................
103.16(b)–(i) .............................................................................................
103.17(a)–(h) ............................................................................................
103.18(a)–(f) .............................................................................................
103.19(a)–(h) ............................................................................................
103.20(a)–(f) .............................................................................................
103.21(a)–(g) ............................................................................................
103.22(a) ..................................................................................................
103.22(b)(1) ..............................................................................................
103.22(b)(2)(i)–(iii) ....................................................................................
103.22(c)(1)&(2) .......................................................................................
103.22(c)(3) ..............................................................................................
103.22(d)(1) Sentences 1 and 3 ..............................................................
103.22(d)(1) Sentence 2 ..........................................................................
103.22(d)(2)–(9) ........................................................................................
103.23(a)–(d) ............................................................................................
103.24 .......................................................................................................
103.25(a)–(e) ............................................................................................
103.26(a)–(d) ............................................................................................
103.27(a)(1) ..............................................................................................
103.27(a)(2) ..............................................................................................
103.27(a)(3)&(4) .......................................................................................
103.27(b)–(e) ............................................................................................
103.28 .......................................................................................................
103.29(a)–(c) ............................................................................................
103.30(a)–(c) ............................................................................................
103.30(d)(1)(i)–(iv) ....................................................................................
103.30(d)(2) ..............................................................................................
103.30(d)(3) ..............................................................................................
103.30(e) ..................................................................................................
103.31 .......................................................................................................
103.32 .......................................................................................................
103.33(a)–(d) ............................................................................................
103.33(e) ..................................................................................................
103.33(f)&(g) .............................................................................................
103.34(a)&(b) ............................................................................................
103.35(a)&(b) ............................................................................................
103.36(a)–(c) ............................................................................................
103.37(a)–(c) ............................................................................................
103.38(a)–(d) ............................................................................................
103.39 .......................................................................................................
103.41(a)–(f) .............................................................................................
103.51 .......................................................................................................
103.52(a)&(b) ............................................................................................
103.53(a)–(f) .............................................................................................
103.54 .......................................................................................................
103.55(a)–(c) ............................................................................................
103.56(a)–(g) ............................................................................................
103.57(a)–(h) ............................................................................................
103.58 .......................................................................................................
103.59(a)–(d) ............................................................................................
103.60(a)–(c) ............................................................................................
103.61 .......................................................................................................
103.62(a)–(c) ............................................................................................
9 Appendix A to Subpart I of 31 CFR Part 103
(proposed as Appendix B to Chapter X) is the
Certification Regarding Correspondent Accounts.
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1010.100.
1010.301.
1024.320(a)–(g).
Deleted.
1025.320(a)–(h).
1026.320(a)–(h).
1020.320(a)–(f).
1023.320(a)–(h).
1022.320(a)–(f).
1021.320(a)–(g).
Deleted.
1010.311.
1021.311(a)–(c).
1010.313(a)&(b).
1021.313.
1020.315(a).
1010.315.
1020.315(b)–(i).
1010.340(a)–(d).
1010.350.
1010.360(a)–(e).
1010.370(a)–(d).
1010.306(a)(1).
Deleted.
1010.306(a)(2)&(3).
1010.306(b)–(e).
1010.312.
1010.415(a)–(c).
1010.330(a)–(c).
1021.330(a)–(d).
1010.330(d)(2).
1010.330(d)(1).
1010.330(e).
1010.401.
1010.420.
1010.410(a)–(d).
1020.410(a).
1010.410(e)&(f).
1020.410(b)&(c).
1023.410(a)&(b).
1021.410(a)–(c).
1022.410(a)–(c).
1010.430(a)–(d).
1010.440.
1022.380(a)–(f).
1010.980.
1010.940(a)&(b).
1010.950(a)–(f).
1010.960.
1010.970(a)–(c).
1010.810(a)–(g).
1010.820(a)–(h).
1010.830.
1010.840(a)–(d).
1010.850(a)–(c).
1010.920.
1010.930(a)–(c).
Appendix B to Subpart I of 31 CFR Part 103
(proposed as Appendix C to Chapter X) is the
Recertification Regarding Correspondent Accounts
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for Foreign Banks. These Appendices will not
appear in Chapter X.
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DISTRIBUTION TABLE—Continued
31 CFR Part 103 Section
31 CFR Parts 1000–1099 (Chapter X) Section
103.63(a)–(c) ............................................................................................
103.64(a) ..................................................................................................
103.64(b)(1) ..............................................................................................
103.64(b)(2) ..............................................................................................
103.64(b)(3) ..............................................................................................
103.64(b)(4) ..............................................................................................
103.64(b)(5) ..............................................................................................
103.71 .......................................................................................................
103.72(a)–(c) ............................................................................................
103.73(a)&(b) ............................................................................................
103.74(a)–(c) ............................................................................................
103.75(a)–(c) ............................................................................................
103.76 .......................................................................................................
103.77 .......................................................................................................
103.80 .......................................................................................................
103.81(a)–(e) ............................................................................................
103.82 .......................................................................................................
103.83(a)&(b) ............................................................................................
103.84 .......................................................................................................
103.85 .......................................................................................................
103.86(a)–(d) ............................................................................................
103.87(a)&(b) ............................................................................................
103.90(a) ..................................................................................................
103.90(b) ..................................................................................................
103.90(c) ...................................................................................................
103.90(d) ..................................................................................................
103.100(a)(1) ............................................................................................
103.100(a)(2) ............................................................................................
103.100(a)(3) ............................................................................................
103.100(a)(4) ............................................................................................
103.100(b) ................................................................................................
103.110(a)(1) ............................................................................................
103.110(a)(2)&(3) .....................................................................................
103.110(b)–(d) ..........................................................................................
103.120(a)(1) ............................................................................................
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103.120(a)(2) ............................................................................................
103.120(a)(3) ............................................................................................
103.120(a)(4) ............................................................................................
103.120(b) ................................................................................................
103.120(c)(1)&(2) .....................................................................................
103.120(d) ................................................................................................
103.121(a)(1) ............................................................................................
103.121(a)(2) ............................................................................................
103.121(a)(3) ............................................................................................
103.121(a)(4) ............................................................................................
103.121(a)(5) ............................................................................................
103.121(a)(6) ............................................................................................
103.121(a)(7) ............................................................................................
103.121(a)(8) ............................................................................................
103.121(b)–(d) ..........................................................................................
103.122(a)(1) ............................................................................................
103.122(a)(2) ............................................................................................
103.122(a)(3) ............................................................................................
103.122(a)(4) ............................................................................................
103.122(a)(5) ............................................................................................
103.122(a)(6) ............................................................................................
103.122(a)(7) ............................................................................................
103.122(a)(8) ............................................................................................
103.122(a)(9) ............................................................................................
103.122(b)–(d) ..........................................................................................
103.123(a)(1) ............................................................................................
103.123(a)(2) ............................................................................................
103.123(a)(3) ............................................................................................
103.123(a)(4) ............................................................................................
103.123(a)(5) ............................................................................................
103.123(a)(6) ............................................................................................
103.123(a)(7) ............................................................................................
103.123(a)(8) ............................................................................................
103.123(a)(9) ............................................................................................
103.123(a)(10) ..........................................................................................
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1010.314(a)–(c).
1021.210(b).
1021.100(a).
1021.100(b).
1021.100(c).
1021.100(d).
1021.100(e).
1010.911.
1010.912(a)–(c).
1010.913(a)&(b).
1010.914(a)–(c).
1010.915(a)–(c).
1010.916.
1010.917.
1010.710.
1010.711(a)–(e).
1010.712.
1010.713(a)&(b).
1010.714.
1010.715.
1010.716(a)–(d).
1010.717(a)&(b).
1010.505(b).
1010.505(c).
1010.505(a).
1010.505(d).
Deleted.
1010.520(a)(1).
Deleted.
1010.520(a)(2).
1010.520(b).
Deleted.
1010.540(a)(1)&(2).
1010.540(b)–(d).
1020.100(d)(1).
1023.100(e)(1).
1010.100(r).
1010.100(tt).
Deleted.
1020.210.
1023.210(a)&(b).
1026.210(b)(1)&(2).
1021.210(a).
1020.100(a).
1020.100(b).
1020.100(c).
Deleted.
1020.100(d)(2).
1010.100(yy).
1010.100(iii).
1010.100(iii).
1020.220(a)–(c).
1023.100(a).
1023.100(b).
1023.100(c).
1023.100(d).
Deleted.
1023.100(e).
Deleted.
Deleted.
Deleted.
1023.220(a)–(c).
1026.100(a).
Deleted.
1026.100(b).
1026.100(c).
1026.100(d).
Deleted.
1026.100(e).
1026.100(f).
1026.100(g).
1026.100(h).
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DISTRIBUTION TABLE—Continued
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31 CFR Part 103 Section
31 CFR Parts 1000–1099 (Chapter X) Section
103.123(a)(11) ..........................................................................................
103.123(a)(12) ..........................................................................................
103.123(a)(13) ..........................................................................................
103.123(b)–(d) ..........................................................................................
103.125(a)–(e) ..........................................................................................
103.130(a) ................................................................................................
103.130(b)&(c) ..........................................................................................
103.131(a)(1) ............................................................................................
103.131(a)(2) ............................................................................................
103.131(a)(3) ............................................................................................
103.131(a)(4) ............................................................................................
103.131(a)(5) ............................................................................................
103.131(a)(6) ............................................................................................
103.131(a)(7) ............................................................................................
103.131(a)(8) ............................................................................................
103.131(b)–(d) ..........................................................................................
103.135(a)(1) ............................................................................................
103.135(a)(2) ............................................................................................
103.135(a)(3) ............................................................................................
103.135(a)(4) ............................................................................................
103.135(a)(5) ............................................................................................
103.135(a)(6) ............................................................................................
103.135(b)&(c) ..........................................................................................
103.137(a)(1) ............................................................................................
103.137(a)(2) ............................................................................................
103.137(a)(3) ............................................................................................
103.137(a)(4) ............................................................................................
103.137(a)(5) ............................................................................................
103.137(a)(6) ............................................................................................
103.137(a)(7) ............................................................................................
103.137(a)(8) ............................................................................................
103.137(a)(9) ............................................................................................
103.137(a)(10) ..........................................................................................
103.137(a)(11) ..........................................................................................
103.137(a)(12) ..........................................................................................
103.137(b)–(e) ..........................................................................................
103.140(a)(1) ............................................................................................
103.140(a)(2) ............................................................................................
103.140(a)(3) ............................................................................................
103.140(a)(4) ............................................................................................
103.140(a)(5) ............................................................................................
103.140(a)(6) ............................................................................................
103.140(a)(7) ............................................................................................
103.140(b)–(d) ..........................................................................................
103.170(a)–(d) ..........................................................................................
103.175(a) ................................................................................................
103.175(b) ................................................................................................
103.175(c) .................................................................................................
103.175(d) ................................................................................................
103.175(e) ................................................................................................
103.175(f) .................................................................................................
103.175(g) ................................................................................................
103.175(h) ................................................................................................
103.175(i) ..................................................................................................
103.175(j) ..................................................................................................
103.175(k) .................................................................................................
103.175(l) ..................................................................................................
103.175(m) ...............................................................................................
103.175(n) ................................................................................................
103.175(o) ................................................................................................
103.175(p) ................................................................................................
103.175(q) ................................................................................................
103.175(r) .................................................................................................
103.175(s) .................................................................................................
103.175(t) .................................................................................................
103.176(a)–(g) ..........................................................................................
103.177(a)–(f) ...........................................................................................
103.178(a)–(e) ..........................................................................................
103.185(a)–(f) ...........................................................................................
103.186(a)(1) ............................................................................................
103.186(a)(2) ............................................................................................
103.186(a)(3) ............................................................................................
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Deleted.
Deleted.
Deleted.
1026.220(a)–(c).
1022.210(a)–(e).
Deleted.
1024.210(a)&(b).
1024.100(a).
1024.100(c).
1010.100(r).
1024.100(d).
1010.100(gg).
1010.100(iii).
1010.100(yy).
1010.100(iii).
1024.220(a)–(c).
1028.100(e).
1028.100(d).
1028.100(a).
1028.100(f).
1028.100(b).
1028.100(c).
1028.210(a)&(b).
1025.100(a).
Deleted.
Deleted.
1025.100(b).
1025.100(c).
1025.100(d).
1025.100(e).
1025.100(f).
1025.100(g).
1025.100(h).
Deleted.
Deleted.
1025.210(a)–(d).
1027.100(a).
1027.100(b).
1027.100(c).
1027.100(d).
1027.100(e).
Deleted.
1027.100(f).
1027.210(a)–(c).
1010.205(a)–(d).
1010.100(c).
1010.605(a).
1010.605(b).
1010.605(c).
1010.605(d).
1010.605(e).
Deleted.
1010.605(f).
1010.605(g).
1010.605(h).
1010.605(i).
1010.605(j).
1010.605(k).
1010.605(l).
1010.605(m).
1010.605(n).
1010.605(o).
1010.605(p).
Deleted.
Deleted.
1010.610(a)–(g).
1010.630(a)–(f).
1010.620(a)–(e).
1010.670(a)–(f).
1010.651(a)(2).
1010.651(a)(3).
1010.651(a)(1).
Sfmt 4700
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65811
DISTRIBUTION TABLE—Continued
31 CFR Part 103 Section
31 CFR Parts 1000–1099 (Chapter X) Section
103.186(b) ................................................................................................
103.187(a)(1) ............................................................................................
103.187(a)(2) ............................................................................................
103.187(a)(3) ............................................................................................
103.187(a)(4) ............................................................................................
103.187(b) ................................................................................................
103.188(a)(1) ............................................................................................
103.188(a)(2) ............................................................................................
103.188(a)(3) ............................................................................................
103.188(a)(4) ............................................................................................
103.188(b) ................................................................................................
103.192(a)(1) ............................................................................................
103.192(a)(2) ............................................................................................
103.192(a)(3) ............................................................................................
103.192(a)(4) ............................................................................................
103.192(b) ................................................................................................
103.193(a)(1) ............................................................................................
103.193(a)(2) ............................................................................................
103.193(a)(3) ............................................................................................
103.193(a)(4) ............................................................................................
103.193(b) ................................................................................................
Appendix A to Subpart H .........................................................................
Appendix A to Subpart I ...........................................................................
Appendix B to Subpart I ...........................................................................
1010.651(b).
1010.652(a)(2).
1010.652(a)(3).
1010.652(a)(4).
1010.652(a)(1).
1010.652(b).
1010.653(a)(1).
1010.653(a)(2).
1010.653(a)(3).
1010.653(a)(4).
1010.653(b).
1010.654(a)(1).
1010.654(a)(2).
1010.654(a)(3).
1010.654(a)(4).
1010.654(b).
1010.655(a)(1).
1010.655(a)(2).
1010.655(a)(3).
1010.655(a)(4).
1010.655(b).
Deleted. Notice is available on FinCEN’s public Web site.
Deleted. Certification will be available on the FinCEN public Web site.
Deleted. Re-certification will be available on the FinCEN public Web
site.
Deleted. Administrative Rulings with precedential value have been
posted on the FinCEN public Web site.
Deleted. Certification will no longer be available.
Deleted. Interpretive guidance will be posted on the FinCEN public
Web site.
Appendix A to Part 103 ............................................................................
Appendix B to Part 103 ............................................................................
Appendix C to Part 103 ............................................................................
IV. Regulatory Matters
A. Executive Order 12866
It has been determined that this
rulemaking is not a significant
regulatory action for purposes of
Executive Order 12866. Accordingly, a
regulatory impact analysis is not
required.
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B. Unfunded Mandates Reform Act of
1995
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 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 and has concluded that on
balance the rule provides the most costeffective and least burdensome
alternative to achieve the objectives of
the rule.
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C. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (RFA) (5 U.S.C. 602 et seq.), FinCEN
certifies that this final regulation likely
will not have a significant economic
impact on a substantial number of small
entities. The regulatory changes in this
final rule merely restructure and recodify existing regulations and do not
alter current regulatory obligations.
FinCEN believes the costs that may
arise as a result of restructuring these
regulations will be confined to training,
publication and computer programming.
The new regulatory structure will
require financial institution compliance
personnel to be retrained to assure
familiarity with the new numbering
format but does not require changes to
program, recordkeeping, or reporting
requirements. FinCEN has attempted to
mitigate any substantial costs of
retraining by providing a Distribution
Table.
Publication costs incurred to
reproduce informational materials
supplied by financial institutions to
customers and the public should be
minimized by the time interval afforded
between the proposed rule, analysis and
publication of this final rule.
FinCEN’s analysis of the small entities
that are subject to this regulation
indicates that the vast majority of such
entities file paper reports with FinCEN.
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These entities should incur no
additional filing costs because they will
continue to obtain the most current
copy of the form available on the
FinCEN Web site to file a report. For
financial institutions that file
electronically using computer programs,
the citation to Chapter X should not
have an effect on completion of the
required fields contained in FinCEN
forms. As an example, FinCEN’s Form
104, the Currency Transaction Report,
will require the same completion of
each field in the same order. While the
underlying regulatory citations may be
changing, the completion of FinCEN
forms will not.
D. Paperwork Reduction Act
This regulation contains no new
information collection requirements
subject to review and approval by the
Office of Management and Budget under
the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d) et seq.). The
information collection requirements for
the Bank Secrecy Act, currently codified
at 31 CFR Part 103, were previously
approved by the Office of Management
and Budget under OMB Control
numbers 1506–0001 through 1506–
0046. Under the Paperwork Reduction
Act, an agency may not conduct or
sponsor and a person is not required to
respond to a collection of information
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Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Rules and Regulations
unless it displays a valid OMB control
number.
List of Subjects in 31 CFR Part 103 and
31 CFR Parts 1010 and 1020 Through
1028
Administrative practice and
procedure, Banks, banking, Brokers,
Currency, Foreign banking, Foreign
currencies, Gambling, Investigations,
Penalties, Reporting and recordkeeping
requirements, Securities, Terrorism.
Department of the Treasury
31 CFR Chapter I
Authority and Issuance
For the reasons set forth above, under
the authority of 12 U.S.C. 1829b and
1951–1959; 31 U.S.C. 5311–5314, 5316–
5332; title III, sec. 314, Pub. L. 107–56,
115 Stat. 307, Part 103 of Title 31 of the
Code of Federal Regulations is removed.
■
Department of the Treasury
Financial Crimes Enforcement Network
31 CFR Chapter X
Authority and Issuance
For the reasons set forth above,
Chapter X, consisting of parts 1000
through 1099, is added to Title 31 to
read as follows:
■
CHAPTER X—FINANCIAL CRIMES
ENFORCEMENT NETWORK, DEPARTMENT
OF THE TREASURY
PARTS 1000–1009 [RESERVED]
1010.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
1010.340 Reports of transportation of
currency or monetary instruments.
1010.350 Reports of foreign financial
accounts.
1010.360 Reports of transactions with
foreign financial agencies.
1010.370 Reports of certain domestic coin
and currency transactions.
Subpart D—Records Required To Be
Maintained
1010.400 General.
1010.401 Determination by the Secretary.
1010.405 [Reserved]
1010.410 Records to be made and retained
by financial institutions.
1010.415 Purchases of bank checks and
drafts, cashier’s checks, money orders
and traveler’s checks.
1010.420 Records to be made and retained
by persons having financial interests in
foreign financial accounts.
1010.430 Nature of records and retention
period.
1010.440 Person outside the United States.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1010.500 General.
1010.505 Definitions.
1010.520 Information sharing between
government agencies and financial
institutions.
1010.530 [Reserved]
1010.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions; and Special Measures
1010.600
PART 1010—GENERAL PROVISIONS
Subpart A—General Definitions
Sec.
1010.100
General definitions.
Subpart B—Programs
1010.200 General.
1010.205 Exempted anti-money laundering
programs for certain financial
institutions.
1010.210 Anti-money laundering programs.
1010.220 Customer identification program
requirements.
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Subpart C—Reports Required To Be Made
1010.300 General.
1010.301 Determination by the Secretary.
1010.305 [Reserved]
1010.306 Filing of reports.
1010.310 Reports of transactions in
currency.
1010.311 Filing obligations for reports of
transactions in currency.
1010.312 Identification required.
1010.313 Aggregation.
1010.314 Structured transactions.
1010.315 Exemptions for non-bank
financial institutions.
1010.320 Reports of suspicious
transactions.
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General.
Special Due Diligence for Correspondent
Accounts and Private Banking Accounts
1010.605 Definitions.
1010.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
1010.620 Due diligence programs for
private banking accounts.
1010.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
1010.640 [Reserved]
Special Measures Under Section 311 of the
USA Patriot Act and Law Enforcement
Access to Foreign Bank Records
1010.651 Special measures against Burma.
1010.652 Special measures against
Myanmar Mayflower Bank and Asia
Wealth Bank.
1010.653 Special measures against
Commercial Bank of Syria.
1010.654 Special measures against VEF
Bank.
1010.655 Special measures against Banco
Delta Asia.
1010.670 Summons or subpoena of foreign
bank records; Termination of
correspondent relationship.
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Subpart G—Administrative Rulings
1010.710 Scope.
1010.711 Submitting requests.
1010.712 Nonconforming requests.
1010.713 Oral communications.
1010.714 Withdrawing requests.
1010.715 Issuing rulings.
1010.716 Modifying or rescinding rulings.
1010.717 Disclosing information.
Subpart H—Enforcement; Penalties; and
Forfeiture
1010.810 Enforcement.
1010.820 Civil penalty.
1010.830 Forfeiture of currency or
monetary instruments.
1010.840 Criminal penalty.
1010.850 Enforcement authority with
respect to transportation of currency or
monetary instruments.
Subpart I—Summons
1010.911 General.
1010.912 Persons who may issue summons.
1010.913 Contents of summons.
1010.914 Service of summons.
1010.915 Examination of witnesses and
records.
1010.916 Enforcement of summons.
1010.917 Payment of expenses.
Subpart J—Miscellaneous
1010.920 Access to records.
1010.930 Rewards for informants.
1010.940 Photographic or other
reproductions of Government
obligations.
1010.950 Availability of information.
1010.960 Disclosure.
1010.970 Exceptions, exemptions, and
reports.
1010.980 Dollars as including foreign
currency.
Authority: 12 U.S.C. 1829b and 1951–1959;
31 U.S.C. 5311–5314, 5316–5332; title III,
sec. 314, Pub. L. 107–56, 115 Stat. 307.
Subpart A—General Definitions
§ 1010.100
General definitions.
When used in this chapter and in
forms prescribed under this chapter,
where not otherwise distinctly
expressed or manifestly incompatible
with the intent thereof, terms shall have
the meanings ascribed in this subpart.
Terms applicable to a particular type of
financial institution or specific part or
subpart of this chapter are located in
that part or subpart. Terms may have
different meanings in different parts or
subparts.
(a) Accept. A receiving financial
institution, other than the recipient’s
financial institution, accepts a
transmittal order by executing the
transmittal order. A recipient’s financial
institution accepts a transmittal order by
paying the recipient, by notifying the
recipient of the receipt of the order or
by otherwise becoming obligated to
carry out the order.
(b) At one time. For purposes of
§ 1010.340 of this part, a person who
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transports, mails, ships or receives; is
about to or attempts to transport, mail
or ship; or causes the transportation,
mailing, shipment or receipt of
monetary instruments, is deemed to do
so ‘‘at one time’’ if:
(1) That person either alone, in
conjunction with or on behalf of others;
(2) Transports, mails, ships or
receives in any manner; is about to
transport, mail or ship in any manner;
or causes the transportation, mailing,
shipment or receipt in any manner of;
(3) Monetary instruments;
(4) Into the United States or out of the
United States;
(5) Totaling more than $10,000;
(6)(i) On one calendar day; or
(ii) If for the purpose of evading the
reporting requirements of § 1010.340, on
one or more days.
(c) Attorney General. The Attorney
General of the United States.
(d) Bank. Each agent, agency, branch
or office within the United States of any
person doing business in one or more of
the capacities listed below:
(1) A commercial bank or trust
company organized under the laws of
any State or of the United States;
(2) A private bank;
(3) A savings and loan association or
a building and loan association
organized under the laws of any State or
of the United States;
(4) An insured institution as defined
in section 401 of the National Housing
Act;
(5) A savings bank, industrial bank or
other thrift institution;
(6) A credit union organized under
the law of any State or of the United
States;
(7) Any other organization (except a
money services business) chartered
under the banking laws of any state and
subject to the supervision of the bank
supervisory authorities of a State;
(8) A bank organized under foreign
law;
(9) Any national banking association
or corporation acting under the
provisions of section 25(a) of the Act of
Dec. 23, 1913, as added by the Act of
Dec. 24, 1919, ch. 18, 41 Stat. 378, as
amended (12 U.S.C. 611–32).
(e) Bank Secrecy Act. The Currency
and Foreign Transactions Reporting Act,
its amendments, and the other statutes
relating to the subject matter of that Act,
have come to be referred to as the Bank
Secrecy Act. These statutes are codified
at 12 U.S.C. 1829b, 12 U.S.C. 1951–
1959, 18 U.S.C. 1956, 18 U.S.C. 1957, 18
U.S.C. 1960, and 31 U.S.C. 5311–5314
and 5316–5332 and notes thereto.
(f) Beneficiary. The person to be paid
by the beneficiary’s bank.
(g) Beneficiary’s bank. The bank or
foreign bank identified in a payment
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order in which an account of the
beneficiary is to be credited pursuant to
the order or which otherwise is to make
payment to the beneficiary if the order
does not provide for payment to an
account.
(h) Broker or dealer in securities. A
broker or dealer in securities, registered
or required to be registered with the
Securities and Exchange Commission
under the Securities Exchange Act of
1934, except persons who register
pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934.
(i) Business day. As used in this
chapter with respect to banks, business
day means that day, as normally
communicated to its depository
customers, on which a bank routinely
posts a particular transaction to its
customer’s account.
(j) Commodity. Any good, article,
service, right, or interest described in
section 1a(4) of the Commodity
Exchange Act (‘‘CEA’’), 7 U.S.C. 1a(4).
(k) Common carrier. Any person
engaged in the business of transporting
individuals or goods for a fee who holds
himself out as ready to engage in such
transportation for hire and who
undertakes to do so indiscriminately for
all persons who are prepared to pay the
fee for the particular service offered.
(l) Contract of sale. Any sale,
agreement of sale, or agreement to sell
as described in section 1a(7) of the CEA,
7 U.S.C. 1a(7).
(m) Currency. The coin and paper
money of the United States or of any
other country that is designated as legal
tender and that circulates and is
customarily used and accepted as a
medium of exchange in the country of
issuance. Currency includes U.S. silver
certificates, U.S. notes and Federal
Reserve notes. Currency also includes
official foreign bank notes that are
customarily used and accepted as a
medium of exchange in a foreign
country.
(n) Deposit account. Deposit accounts
include transaction accounts described
in paragraph (ccc) of this section,
savings accounts, and other time
deposits.
(o) Domestic. When used herein,
refers to the doing of business within
the United States, and limits the
applicability of the provision where it
appears to the performance by such
institutions or agencies of functions
within the United States.
(p) Established customer. A person
with an account with the financial
institution, including a loan account or
deposit or other asset account, or a
person with respect to which the
financial institution has obtained and
maintains on file the person’s name and
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65813
address, as well as taxpayer
identification number (e.g., social
security or employer identification
number) or, if none, alien identification
number or passport number and country
of issuance, and to which the financial
institution provides financial services
relying on that information.
(q) Execution date. The day on which
the receiving financial institution may
properly issue a transmittal order in
execution of the sender’s order. The
execution date may be determined by
instruction of the sender but cannot be
earlier than the day the order is
received, and, unless otherwise
determined, is the day the order is
received. If the sender’s instruction
states a payment date, the execution
date is the payment date or an earlier
date on which execution is reasonably
necessary to allow payment to the
recipient on the payment date.
(r) Federal functional regulator.
(1) The Board of Governors of the
Federal Reserve System;
(2) The Office of the Comptroller of
the Currency;
(3) The Board of Directors of the
Federal Deposit Insurance Corporation;
(4) The Office of Thrift Supervision;
(5) The National Credit Union
Administration;
(6) The Securities and Exchange
Commission; or
(7) The Commodity Futures Trading
Commission.
(s) FinCEN. FinCEN means the
Financial Crimes Enforcement Network,
a bureau of the Department of the
Treasury.
(t) Financial institution. Each agent,
agency, branch, or office within the
United States of any person doing
business, whether or not on a regular
basis or as an organized business
concern, in one or more of the capacities
listed below:
(1) A bank (except bank credit card
systems);
(2) A broker or dealer in securities;
(3) A money services business as
defined in paragraph (ff) of this section;
(4) A telegraph company;
(5)(i) Casino. A casino or gambling
casino that: Is duly licensed or
authorized to do business as such in the
United States, whether under the laws
of a State or of a Territory or Insular
Possession of the United States, or
under the Indian Gaming Regulatory Act
or other Federal, State, or tribal law or
arrangement affecting Indian lands
(including, without limitation, a casino
operating on the assumption or under
the view that no such authorization is
required for casino operation on Indian
lands); and has gross annual gaming
revenue in excess of $1 million. The
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term includes the principal
headquarters and every domestic branch
or place of business of the casino.
(ii) For purposes of this paragraph
(t)(5), ‘‘gross annual gaming revenue’’
means the gross gaming revenue
received by a casino, during either the
previous business year or the current
business year of the casino. A casino or
gambling casino which is a casino for
purposes of this chapter solely because
its gross annual gaming revenue exceeds
$1,000,000 during its current business
year, shall not be considered a casino
for purposes of this chapter prior to the
time in its current business year that its
gross annual gaming revenue exceeds
$1,000,000.
(iii) Any reference in this chapter,
other than in this paragraph (t)(5) and in
paragraph (t)(6) of this section, to a
casino shall also include a reference to
a card club, unless the provision in
question contains specific language
varying its application to card clubs or
excluding card clubs from its
application;
(6)(i) Card club. A card club, gaming
club, card room, gaming room, or
similar gaming establishment that is
duly licensed or authorized to do
business as such in the United States,
whether under the laws of a State, of a
Territory or Insular Possession of the
United States, or of a political
subdivision of any of the foregoing, or
under the Indian Gaming Regulatory Act
or other Federal, State, or tribal law or
arrangement affecting Indian lands
(including, without limitation, an
establishment operating on the
assumption or under the view that no
such authorization is required for
operation on Indian lands for an
establishment of such type), and that
has gross annual gaming revenue in
excess of $1,000,000. The term includes
the principal headquarters and every
domestic branch or place of business of
the establishment. The term ‘‘casino,’’ as
used in this chapter shall include a
reference to ‘‘card club’’ to the extent
provided in paragraph (t)(5)(iii) of this
section.
(ii) For purposes of this paragraph
(t)(6), ‘‘gross annual gaming revenue’’
means the gross revenue derived from or
generated by customer gaming activity
(whether in the form of per-game or pertable fees, however computed, rentals,
or otherwise) and received by an
establishment, during either the
establishment’s previous business year
or its current business year. A card club
that is a financial institution for
purposes of this chapter solely because
its gross annual revenue exceeds
$1,000,000 during its current business
year, shall not be considered a financial
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institution for purposes of this chapter
prior to the time in its current business
year when its gross annual revenue
exceeds $1,000,000;
(7) A person subject to supervision by
any state or Federal bank supervisory
authority;
(8) A futures commission merchant;
(9) An introducing broker in
commodities; or
(10) A mutual fund.
(u) Foreign bank. A bank organized
under foreign law, or an agency, branch
or office located outside the United
States of a bank. The term does not
include an agent, agency, branch or
office within the United States of a bank
organized under foreign law.
(v) Foreign financial agency. A person
acting outside the United States for a
person (except for a country, a monetary
or financial authority acting as a
monetary or financial authority, or an
international financial institution of
which the United States Government is
a member) as a financial institution,
bailee, depository trustee, or agent, or
acting in a similar way related to
money, credit, securities, gold, or a
transaction in money, credit, securities,
or gold.
(w) Funds transfer. The series of
transactions, beginning with the
originator’s payment order, made for the
purpose of making payment to the
beneficiary of the order. The term
includes any payment order issued by
the originator’s bank or an intermediary
bank intended to carry out the
originator’s payment order. A funds
transfer is completed by acceptance by
the beneficiary’s bank of a payment
order for the benefit of the beneficiary
of the originator’s payment order. Funds
transfers governed by the Electronic
Fund Transfer Act of 1978 (Title XX,
Pub. L. 95–630, 92 Stat. 3728, 15 U.S.C.
1693, et seq.), as well as any other funds
transfers that are made through an
automated clearinghouse, an automated
teller machine, or a point-of-sale system,
are excluded from this definition.
(x) Futures commission merchant.
Any person registered or required to be
registered as a futures commission
merchant with the Commodity Futures
Trading Commission (‘‘CFTC’’) under
the CEA, except persons who register
pursuant to section 4f(a)(2) of the CEA,
7 U.S.C. 6f(a)(2).
(y) Indian Gaming Regulatory Act.
The Indian Gaming Regulatory Act of
1988, codified at 25 U.S.C. 2701–2721
and 18 U.S.C. 1166–68.
(z) Intermediary bank. A receiving
bank other than the originator’s bank or
the beneficiary’s bank.
(aa) Intermediary financial institution.
A receiving financial institution, other
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than the transmittor’s financial
institution or the recipient’s financial
institution. The term intermediary
financial institution includes an
intermediary bank.
(bb) Introducing broker-commodities.
Any person registered or required to be
registered as an introducing broker with
the CFTC under the CEA, except
persons who register pursuant to section
4f(a)(2) of the CEA, 7 U.S.C. 6f(a)(2).
(cc) Investment security. An
instrument which:
(1) Is issued in bearer or registered
form;
(2) Is of a type commonly dealt in
upon securities exchanges or markets or
commonly recognized in any area in
which it is issued or dealt in as a
medium for investment;
(3) Is either one of a class or series or
by its terms is divisible into a class or
series of instruments; and
(4) Evidences a share, participation or
other interest in property or in an
enterprise or evidences an obligation of
the issuer.
(dd) Monetary instruments. (1)
Monetary instruments include:
(i) Currency;
(ii) Traveler’s checks in any form;
(iii) All negotiable instruments
(including personal checks, business
checks, official bank checks, cashier’s
checks, third-party checks, promissory
notes (as that term is defined in the
Uniform Commercial Code), and money
orders) that are either in bearer form,
endorsed without restriction, made out
to a fictitious payee (for the purposes of
§ 1010.340), or otherwise in such form
that title thereto passes upon delivery;
(iv) Incomplete instruments
(including personal checks, business
checks, official bank checks, cashier’s
checks, third-party checks, promissory
notes (as that term is defined in the
Uniform Commercial Code), and money
orders) signed but with the payee’s
name omitted; and
(v) Securities or stock in bearer form
or otherwise in such form that title
thereto passes upon delivery.
(2) Monetary instruments do not
include warehouse receipts or bills of
lading.
(ee) [Reserved]
(ff) Money services business. Each
agent, agency, branch, or office within
the United States of any person doing
business, whether or not on a regular
basis or as an organized business
concern, in one or more of the capacities
listed in paragraphs (ff)(1) through (ff)(6)
of this section. Notwithstanding the
preceding sentence, the term ‘‘money
services business’’ shall not include a
bank, nor shall it include a person
registered with, and regulated or
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examined by, the Securities and
Exchange Commission or the
Commodity Futures Trading
Commission.
(1) Currency dealer or exchanger. A
currency dealer or exchanger (other than
a person who does not exchange
currency in an amount greater than
$1,000 in currency or monetary or other
instruments for any person on any day
in one or more transactions).
(2) Check casher. A person engaged in
the business of a check casher (other
than a person who does not cash checks
in an amount greater than $1,000 in
currency or monetary or other
instruments for any person on any day
in one or more transactions).
(3) Issuer of traveler’s checks, money
orders, or stored value. An issuer of
traveler’s checks, money orders, or,
stored value (other than a person who
does not issue such checks or money
orders or stored value in an amount
greater than $1,000 in currency or
monetary or other instruments to any
person on any day in one or more
transactions).
(4) Seller or redeemer of traveler’s
checks, money orders, or stored value. A
seller or redeemer of traveler’s checks,
money orders, or stored value (other
than a person who does not sell such
checks or money orders or stored value
in an amount greater than $1,000 in
currency or monetary or other
instruments to or redeem such
instruments for an amount greater than
$1,000 in currency or monetary or other
instruments from, any person on any
day in one or more transactions).
(5) Money transmitter—(i) In general.
Money transmitter:
(A) Any person, whether or not
licensed or required to be licensed, who
engages as a business in accepting
currency, or funds denominated in
currency, and transmits the currency or
funds, or the value of the currency or
funds, by any means through a financial
agency or institution, a Federal Reserve
Bank or other facility of one or more
Federal Reserve Banks, the Board of
Governors of the Federal Reserve
System, or both, or an electronic funds
transfer network; or
(B) Any other person engaged as a
business in the transfer of funds.
(ii) Facts and circumstance:
Limitation. Whether a person ‘‘engages
as a business’’ in the activities described
in paragraph (ff)(5)(i) of this section is
a matter of facts and circumstances.
Generally, the acceptance and
transmission of funds as an integral part
of the execution and settlement of a
transaction other than the funds
transmission itself (for example, in
connection with a bona fide sale of
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securities or other property), will not
cause a person to be a money
transmitter within the meaning of
paragraph (ff)(5)(i) of this section.
(6) U.S. Postal Service. The United
States Postal Service, except with
respect to the sale of postage or
philatelic products.
(gg) Mutual fund. An ‘‘investment
company’’ (as the term is defined in
section 3 of the Investment Company
Act (15 U.S.C. 80a–3)) that is an ‘‘openend company’’ (as that term is defined
in section 5 of the Investment Company
Act (15 U.S.C. 80a–5)) that is registered
or is required to register with the
Commission under section 8 of the
Investment Company Act (15 U.S.C.
80a–8).
(hh) Option on a commodity. Any
agreement, contract, or transaction
described in section 1a(26) of the CEA,
7 U.S.C. 1a(26).
(ii) Originator. The sender of the first
payment order in a funds transfer.
(jj) Originator’s bank. The receiving
bank to which the payment order of the
originator is issued if the originator is
not a bank or foreign bank, or the
originator if the originator is a bank or
foreign bank.
(kk) Payment date. The day on which
the amount of the transmittal order is
payable to the recipient by the
recipient’s financial institution. The
payment date may be determined by
instruction of the sender, but cannot be
earlier than the day the order is received
by the recipient’s financial institution
and, unless otherwise prescribed by
instruction, is the date the order is
received by the recipient’s financial
institution.
(ll) Payment order. An instruction of
a sender to a receiving bank, transmitted
orally, electronically, or in writing, to
pay, or to cause another bank or foreign
bank to pay, a fixed or determinable
amount of money to a beneficiary if:
(1) The instruction does not state a
condition to payment to the beneficiary
other than time of payment;
(2) The receiving bank is to be
reimbursed by debiting an account of, or
otherwise receiving payment from, the
sender; and
(3) The instruction is transmitted by
the sender directly to the receiving bank
or to an agent, funds transfer system, or
communication system for transmittal to
the receiving bank.
(mm) Person. An individual, a
corporation, a partnership, a trust or
estate, a joint stock company, an
association, a syndicate, joint venture,
or other unincorporated organization or
group, an Indian Tribe (as that term is
defined in the Indian Gaming
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Regulatory Act), and all entities
cognizable as legal personalities.
(nn) Receiving bank. The bank or
foreign bank to which the sender’s
instruction is addressed.
(oo) Receiving financial institution.
The financial institution or foreign
financial agency to which the sender’s
instruction is addressed. The term
receiving financial institution includes a
receiving bank.
(pp) Recipient. The person to be paid
by the recipient’s financial institution.
The term recipient includes a
beneficiary, except where the recipient’s
financial institution is a financial
institution other than a bank.
(qq) Recipient’s financial institution.
The financial institution or foreign
financial agency identified in a
transmittal order in which an account of
the recipient is to be credited pursuant
to the transmittal order or which
otherwise is to make payment to the
recipient if the order does not provide
for payment to an account. The term
recipient’s financial institution includes
a beneficiary’s bank, except where the
beneficiary is a recipient’s financial
institution.
(rr) Secretary. The Secretary of the
Treasury or any person duly authorized
by the Secretary to perform the function
mentioned.
(ss) Security. Security means any
instrument or interest described in
section 3(a)(10) of the Securities
Exchange Act of 1934, 15 U.S.C.
78c(a)(10).
(tt) Self-regulatory organization:
(1) Shall have the same meaning as
provided in section 3(a)(26) of the
Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(26)); and
(2) Means a ‘‘registered entity’’ or a
‘‘registered futures association’’ as
provided in section 1a(29) or 17,
respectively, of the Commodity
Exchange Act (7 U.S.C. 1a(29), 21).
(uu) Sender. The person giving the
instruction to the receiving financial
institution.
(vv) State. The States of the United
States and, wherever necessary to carry
out the provisions of this chapter, the
District of Columbia.
(ww) Stored value. Funds or monetary
value represented in digital electronics
format (whether or not specially
encrypted) and stored or capable of
storage on electronic media in such a
way as to be retrievable and transferable
electronically.
(xx) Structure (structuring). For
purposes of § 1010.314, a person
structures a transaction if that person,
acting alone, or in conjunction with, or
on behalf of, other persons, conducts or
attempts to conduct one or more
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transactions in currency, in any amount,
at one or more financial institutions, on
one or more days, in any manner, for the
purpose of evading the reporting
requirements under §§ 1010.311,
1010.313, 1020.315, 1021.311 and
1021.313 of this chapter. ‘‘In any
manner’’ includes, but is not limited to,
the breaking down of a single sum of
currency exceeding $10,000 into smaller
sums, including sums at or below
$10,000, or the conduct of a transaction,
or series of currency transactions at or
below $10,000. The transaction or
transactions need not exceed the
$10,000 reporting threshold at any
single financial institution on any single
day in order to constitute structuring
within the meaning of this definition.
(yy) Taxpayer Identification Number.
Taxpayer Identification Number (‘‘TIN’’)
is defined by section 6109 of the
Internal Revenue Code of 1986 (26
U.S.C. 6109) and the Internal Revenue
Service regulations implementing that
section (e.g., social security number or
employer identification number).
(zz) Territories and Insular
Possessions. The Commonwealth of
Puerto Rico, the United States Virgin
Islands, Guam, the Commonwealth of
the Northern Mariana Islands, and all
other territories and possessions of the
United States other than the Indian
lands and the District of Columbia.
(aaa) [Reserved]
(bbb) Transaction. (1) Except as
provided in paragraph (bbb)(2) of this
section, transaction means a purchase,
sale, loan, pledge, gift, transfer, delivery,
or other disposition, and with respect to
a financial institution includes a
deposit, withdrawal, transfer between
accounts, exchange of currency, loan,
extension of credit, purchase or sale of
any stock, bond, certificate of deposit, or
other monetary instrument, security,
contract of sale of a commodity for
future delivery, option on any contract
of sale of a commodity for future
delivery, option on a commodity,
purchase or redemption of any money
order, payment or order for any money
remittance or transfer, purchase or
redemption of casino chips or tokens, or
other gaming instruments or any other
payment, transfer, or delivery by,
through, or to a financial institution, by
whatever means effected.
(2) For purposes of §§ 1010.311,
1010.313, 1020.315, 1021.311, 1021.313,
and other provisions of this chapter
relating solely to the report required by
those sections, the term ‘‘transaction in
currency’’ shall mean a transaction
involving the physical transfer of
currency from one person to another. A
transaction which is a transfer of funds
by means of bank check, bank draft,
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wire transfer, or other written order, and
which does not include the physical
transfer of currency, is not a transaction
in currency for this purpose.
(ccc) Transaction account.
Transaction accounts include those
accounts described in 12 U.S.C.
461(b)(1)(C), money market accounts
and similar accounts that take deposits
and are subject to withdrawal by check
or other negotiable order.
(ddd) Transmittal of funds. A series of
transactions beginning with the
transmittor’s transmittal order, made for
the purpose of making payment to the
recipient of the order. The term includes
any transmittal order issued by the
transmittor’s financial institution or an
intermediary financial institution
intended to carry out the transmittor’s
transmittal order. The term transmittal
of funds includes a funds transfer. A
transmittal of funds is completed by
acceptance by the recipient’s financial
institution of a transmittal order for the
benefit of the recipient of the
transmittor’s transmittal order. Funds
transfers governed by the Electronic
Fund Transfer Act of 1978 (Title XX,
Pub. L. 95–630, 92 Stat. 3728, 15 U.S.C.
1693, et seq.), as well as any other funds
transfers that are made through an
automated clearinghouse, an automated
teller machine, or a point-of-sale system,
are excluded from this definition.
(eee) Transmittal order. The term
transmittal order includes a payment
order and is an instruction of a sender
to a receiving financial institution,
transmitted orally, electronically, or in
writing, to pay, or cause another
financial institution or foreign financial
agency to pay, a fixed or determinable
amount of money to a recipient if:
(1) The instruction does not state a
condition to payment to the recipient
other than time of payment;
(2) The receiving financial institution
is to be reimbursed by debiting an
account of, or otherwise receiving
payment from, the sender; and
(3) The instruction is transmitted by
the sender directly to the receiving
financial institution or to an agent or
communication system for transmittal to
the receiving financial institution.
(fff) Transmittor. The sender of the
first transmittal order in a transmittal of
funds. The term transmittor includes an
originator, except where the
transmittor’s financial institution is a
financial institution or foreign financial
agency other than a bank or foreign
bank.
(ggg) Transmittor’s financial
institution. The receiving financial
institution to which the transmittal
order of the transmittor is issued if the
transmittor is not a financial institution
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or foreign financial agency, or the
transmittor if the transmittor is a
financial institution or foreign financial
agency. The term transmittor’s financial
institution includes an originator’s
bank, except where the originator is a
transmittor’s financial institution other
than a bank or foreign bank.
(hhh) United States. The States of the
United States, the District of Columbia,
the Indian lands (as that term is defined
in the Indian Gaming Regulatory Act),
and the Territories and Insular
Possessions of the United States.
(iii) U.S. person. (1) A United States
citizen; or (2) A person other than an
individual (such as a corporation,
partnership or trust), that is established
or organized under the laws of a State
or the United States. Non-U.S. person
means a person that is not a U.S. person.
(jjj) U.S. Postal Service. The United
States Postal Service, except with
respect to the sale of postage or
philatelic products.
Subpart B—Programs
§ 1010.200
General.
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to Subpart B of its Chapter X Part
for any additional program
requirements. Unless otherwise
indicated, the program requirements
contained in this Subpart B apply to all
financial institutions (as defined in 31
U.S.C. 5312(a)(2) or (c)(1)).
§ 1010.205 Exempted anti-money
laundering programs for certain financial
institutions.
(a) Exempt financial institutions.
Subject to the provisions of paragraphs
(c) and (d) of this section, the following
financial institutions (as defined in 31
U.S.C. 5312(a)(2) or (c)(1)) are exempt
from the requirement in 31 U.S.C.
5318(h)(1) concerning the establishment
of anti-money laundering programs:
(1) An agency of the United States
Government, or of a State or local
government, carrying out a duty or
power of a business described in 31
U.S.C. 5312(a)(2); and
(2) [Reserved]
(b) Temporary exemption for certain
financial institutions. (1) Subject to the
provisions of paragraphs (c) and (d) of
this section, the following financial
institutions (as defined in 31 U.S.C.
5312(a)(2) or (c)(1)) are exempt from the
requirement in 31 U.S.C. 5318(h)(1)
concerning the establishment of antimoney laundering programs:
(i) Pawnbroker;
(ii) Loan or finance company;
(iii) Travel agency;
(iv) Telegraph company;
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(v) Seller of vehicles, including
automobiles, airplanes, and boats;
(vi) Person involved in real estate
closings and settlements;
(vii) Private banker;
(viii) Commodity pool operator;
(ix) Commodity trading advisor; or
(x) Investment company.
(2) Subject to the provisions of
paragraphs (c) and (d) of this section, a
bank (as defined in § 1010.100(d)) that
is not subject to regulation by a Federal
functional regulator (as defined in
§ 1010.100(r)) is exempt from the
requirement in 31 U.S.C. 5318(h)(1)
concerning the establishment of antimoney laundering programs.
(3) Subject to the provisions of
paragraphs (c) and (d) of this section, a
person described in § 1010.100(t)(7) is
exempt from the requirement in 31
U.S.C. 5318(h)(1) concerning the
establishment of anti-money laundering
programs.
(c) Limitation on exemption. The
exemptions described in paragraph (b)
of this section shall not apply to any
financial institution that is otherwise
required to establish an anti-money
laundering program by this chapter.
(d) Compliance obligations of deferred
financial institutions. Nothing in this
section shall be deemed to relieve an
exempt financial institution from its
responsibility to comply with any other
applicable requirement of law or
regulation, including title 31 of the
U.S.C. and this chapter.
§ 1010.210
programs.
Anti-money laundering
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to Subpart B of its Chapter X Part
for any additional anti-money
laundering program requirements.
§ 1010.220 Customer identification
program requirements.
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to Subpart B of its Chapter X Part
for any additional customer
identification program requirements.
Subpart C—Reports Required To Be
Made
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§ 1010.300
General.
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to its Chapter X Part for any
additional reporting requirements.
Unless otherwise indicated, the
reporting requirements contained in this
Subpart C apply to all financial
institutions.
§ 1010.301
Determination by the Secretary.
The Secretary hereby determines that
the reports required by this chapter have
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a high degree of usefulness in criminal,
tax, or regulatory investigations or
proceedings.
§ 1010.305
[Reserved]
§ 1010.306
Filing of reports.
(a)(1) A report required by § 1010.311
or § 1021.311, shall be filed by the
financial institution within 15 days
following the day on which the
reportable transaction occurred.
(2) A copy of each report filed
pursuant to §§ 1010.311, 1010.313,
1020.315, 1021.311 and 1021.313, shall
be retained by the financial institution
for a period of five years from the date
of the report.
(3) All reports required to be filed by
§§ 1010.311, 1010.313, 1020.315,
1021.311 and 1021.313, shall be filed
with the Commissioner of Internal
Revenue, unless otherwise specified.
(b)(1) A report required by
§ 1010.340(a) shall be filed at the time
of entry into the United States or at the
time of departure, mailing or shipping
from the United States, unless otherwise
specified by the Commissioner of
Customs and Border Protection.
(2) A report required by § 1010.340(b)
shall be filed within 15 days after
receipt of the currency or other
monetary instruments.
(3) All reports required by § 1010.340
shall be filed with the Customs officer
in charge at any port of entry or
departure, or as otherwise specified by
the Commissioner of Customs and
Border Protection. Reports required by
§ 1010.340(a) for currency or other
monetary instruments not physically
accompanying a person entering or
departing from the United States, may
be filed by mail on or before the date of
entry, departure, mailing or shipping.
All reports required by § 1010.340(b)
may also be filed by mail. Reports filed
by mail shall be addressed to the
Commissioner of Customs and Border
Protection, Attention: Currency
Transportation Reports, Washington, DC
20229.
(c) Reports required to be filed by
§ 1010.350 shall be filed with the
Commissioner of Internal Revenue on or
before June 30 of each calendar year
with respect to foreign financial
accounts exceeding $10,000 maintained
during the previous calendar year.
(d) Reports required by § 1010.311,
§ 1010.313, § 1010.340, § 1010.350,
§ 1020.315, § 1021.311 or § 1021.313 of
this chapter shall be filed on forms
prescribed by the Secretary. All
information called for in such forms
shall be furnished.
(e) Forms to be used in making the
reports required by § 1010.311,
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§ 1010.313, § 1010.350, § 1020.315,
§ 1021.311 or § 1021.313 of this chapter
may be obtained from the Internal
Revenue Service. Forms to be used in
making the reports required by
§ 1010.340 may be obtained from the
U.S. Customs and Border Protection.
§ 1010.310
currency.
Reports of transactions in
Sections 1010.310 through 1010.314
set forth the rules for the reporting by
financial institutions of transactions in
currency. Unless otherwise indicated,
the transactions in currency reporting
requirements in §§ 1010.310 through
1010.314 apply to all financial
institutions. Each financial institution
should refer to Subpart C of its Chapter
X Part for any additional transactions in
currency reporting requirements.
§ 1010.311 Filing obligations for reports of
transactions in currency.
Each financial institution other than a
casino shall file a report of each deposit,
withdrawal, exchange of currency or
other payment or transfer, by, through,
or to such financial institution which
involves a transaction in currency of
more than $10,000, except as otherwise
provided in this section. In the case of
the U.S. Postal Service, the obligation
contained in the preceding sentence
shall not apply to payments or transfers
made solely in connection with the
purchase of postage or philatelic
products.
§ 1010.312
Identification required.
Before concluding any transaction
with respect to which a report is
required under § 1010.311, § 1010.313,
§ 1020.315, § 1021.311 or § 1021.313 of
this chapter, a financial institution shall
verify and record the name and address
of the individual presenting a
transaction, as well as record the
identity, account number, and the social
security or taxpayer identification
number, if any, of any person or entity
on whose behalf such transaction is to
be effected. Verification of the identity
of an individual who indicates that he
or she is an alien or is not a resident of
the United States must be made by
passport, alien identification card, or
other official document evidencing
nationality or residence (e.g., a
Provincial driver’s license with
indication of home address).
Verification of identity in any other case
shall be made by examination of a
document, other than a bank signature
card, that is normally acceptable within
the banking community as a means of
identification when cashing checks for
nondepositors (e.g., a driver’s license or
credit card). A bank signature card may
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be relied upon only if it was issued after
documents establishing the identity of
the individual were examined and
notation of the specific information was
made on the signature card. In each
instance, the specific identifying
information (i.e., the account number of
the credit card, the driver’s license
number, etc.) used in verifying the
identity of the customer shall be
recorded on the report, and the mere
notation of ‘‘known customer’’ or ‘‘bank
signature card on file’’ on the report is
prohibited.
§ 1010.313
Aggregation.
(a) Multiple branches. A financial
institution includes all of its domestic
branch offices, and any recordkeeping
facility, wherever located, that contains
records relating to the transactions of
the institution’s domestic offices, for
purposes of the transactions in currency
reporting requirements in this chapter.
(b) Multiple transactions. In the case
of financial institutions other than
casinos, for purposes of the transactions
in currency reporting requirements in
this chapter, multiple currency
transactions shall be treated as a single
transaction if the financial institution
has knowledge that they are by or on
behalf of any person and result in either
cash in or cash out totaling more than
$10,000 during any one business day (or
in the case of the U.S. Postal Service,
any one day). Deposits made at night or
over a weekend or holiday shall be
treated as if received on the next
business day following the deposit.
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§ 1010.314
Structured transactions.
No person shall for the purpose of
evading the transactions in currency
reporting requirements of this chapter
with respect to such transaction:
(a) Cause or attempt to cause a
domestic financial institution to fail to
file a report required under the
transactions in currency reporting
requirements of this chapter;
(b) Cause or attempt to cause a
domestic financial institution to file a
report required under the transactions
in currency reporting requirements of
this chapter that contains a material
omission or misstatement of fact; or
(c) Structure (as that term is defined
in § 1010.100(xx)) or assist in
structuring, or attempt to structure or
assist in structuring, any transaction
with one or more domestic financial
institutions.
§ 1010.315 Exemptions for non-bank
financial institutions.
A non-bank financial institution is not
required to file a report otherwise
required by § 1010.311 with respect to a
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transaction in currency between the
institution and a commercial bank.
§ 1010.320 Reports of suspicious
transactions.
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to subpart C of its financial
institution part in this Chapter for any
additional suspicious transaction
reporting requirements.
§ 1010.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
(a) Reporting requirement—(1)
Reportable transactions—(i) In general.
Any person (solely for purposes of
section 5331 of title 31, United States
Code and this section, ‘‘person’’ shall
have the same meaning as under 26
U.S.C.7701(a)(1)) who, in the course of
a trade or business in which such
person is engaged, receives currency in
excess of $10,000 in 1 transaction (or
2 or more related transactions) shall,
except as otherwise provided, make a
report of information with respect to the
receipt of currency. This section does
not apply to amounts received in a
transaction reported under 31 U.S.C.
5313 and §§ 1010.311, 1010.313,
1020.315, 1021.311 or 1021.313 of this
chapter.
(ii) Certain financial transactions.
Section 6050I of title 26 of the United
States Code requires persons to report
information about financial transactions
to the IRS, and 31 U.S.C. 5331 requires
persons to report similar information
about certain transactions to FinCEN.
This information shall be reported on
the same form as prescribed by the
Secretary.
(2) Currency received for the account
of another. Currency in excess of
$10,000 received by a person for the
account of another must be reported
under this section. Thus, for example, a
person who collects delinquent
accounts receivable for an automobile
dealer must report with respect to the
receipt of currency in excess of $10,000
from the collection of a particular
account even though the proceeds of the
collection are credited to the account of
the automobile dealer (i.e., where the
rights to the proceeds from the account
are retained by the automobile dealer
and the collection is made on a fee-forservice basis).
(3) Currency received by agents—
(i) General rule. Except as provided in
paragraph (a)(3)(ii) of this section, a
person who in the course of a trade or
business acts as an agent (or in some
other similar capacity) and receives
currency in excess of $10,000 from a
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principal must report the receipt of
currency under this section.
(ii) Exception. An agent who receives
currency from a principal and uses all
of the currency within 15 days in a
currency transaction (the ‘‘second
currency transaction’’) which is
reportable under section 5312 of title 31,
or 31 U.S.C. 5331 and this section, and
who discloses the name, address, and
TIN of the principal to the recipient in
the second currency transaction need
not report the initial receipt of currency
under this section. An agent will be
deemed to have met the disclosure
requirements of this paragraph (a)(3)(ii)
if the agent discloses only the name of
the principal and the agent knows that
the recipient has the principal’s address
and taxpayer identification number.
(iii) Example. The following example
illustrates the application of the rules in
paragraphs (a)(3)(i) and (ii) of this
section:
Example. B, the principal, gives D, an
attorney, $75,000 in currency to purchase
real property on behalf of B. Within 15 days
D purchases real property for currency from
E, a real estate developer, and discloses to E,
B’s name, address, and taxpayer
identification number. Because the
transaction qualifies for the exception
provided in paragraph (a)(3)(ii) of this
section, D need not report with respect to the
initial receipt of currency under this section.
The exception does not apply, however, if D
pays E by means other than currency, or
effects the purchase more than 15 days
following receipt of the currency from B, or
fails to disclose B’s name, address, and
taxpayer identification number (assuming D
does not know that E already has B’s address
and taxpayer identification number), or
purchases the property from a person whose
sale of the property is not in the course of
that person’s trade or business. In any such
case, D is required to report the receipt of
currency from B under this section.
(b) Multiple payments. The receipt of
multiple currency deposits or currency
installment payments (or other similar
payments or prepayments) relating to a
single transaction (or two or more
related transactions), is reported as set
forth in paragraphs (b)(1) through (b)(3)
of this section.
(1) Initial payment in excess of
$10,000. If the initial payment exceeds
$10,000, the recipient must report the
initial payment within 15 days of its
receipt.
(2) Initial payment of $10,000 or less.
If the initial payment does not exceed
$10,000, the recipient must aggregate
the initial payment and subsequent
payments made within one year of the
initial payment until the aggregate
amount exceeds $10,000, and report
with respect to the aggregate amount
within 15 days after receiving the
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payment that causes the aggregate
amount to exceed $10,000.
(3) Subsequent payments. In addition
to any other required report, a report
must be made each time that previously
unreportable payments made within a
12-month period with respect to a single
transaction (or two or more related
transactions), individually or in the
aggregate, exceed $10,000. The report
must be made within 15 days after
receiving the payment in excess of
$10,000 or the payment that causes the
aggregate amount received in the 12month period to exceed $10,000. (If
more than one report would otherwise
be required for multiple currency
payments within a 15-day period that
relate to a single transaction (or two or
more related transactions), the recipient
may make a single combined report
with respect to the payments. The
combined report must be made no later
than the date by which the first of the
separate reports would otherwise be
required to be made.)
(4) Example. The following example
illustrates the application of the rules in
paragraphs (b)(1) through (b)(3) of this
section:
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Example. On January 10, Year 1, M
receives an initial payment in currency of
$11,000 with respect to a transaction. M
receives subsequent payments in currency
with respect to the same transaction of
$4,000 on February 15, Year 1, $6,000 on
March 20, Year 1, and $12,000 on May 15,
Year 1. M must make a report with respect
to the payment received on January 10, Year
1, by January 25, Year 1. M must also make
a report with respect to the payments totaling
$22,000 received from February 15, Year 1,
through May 15, Year 1. This report must be
made by May 30, Year 1, that is, within 15
days of the date that the subsequent
payments, all of which were received within
a 12-month period, exceeded $10,000.
(c) Meaning of terms. The following
definitions apply for purposes of this
section—
(1) Currency. Solely for purposes of 31
U.S.C. 5331 and this section, currency
means—
(i) The coin and currency of the
United States or of any other country,
which circulate in and are customarily
used and accepted as money in the
country in which issued; and
(ii) A cashier’s check (by whatever
name called, including ‘‘treasurer’s
check’’ and ‘‘bank check’’), bank draft,
traveler’s check, or money order having
a face amount of not more than
$10,000—
(A) Received in a designated reporting
transaction as defined in paragraph
(c)(2) of this section (except as provided
in paragraphs (c)(3), (4), and (5) of this
section), or
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(B) Received in any transaction in
which the recipient knows that such
instrument is being used in an attempt
to avoid the reporting of the transaction
under section 5331 and this section.
(2) Designated reporting transaction.
A designated reporting transaction is a
retail sale (or the receipt of funds by a
broker or other intermediary in
connection with a retail sale) of—
(i) A consumer durable,
(ii) A collectible, or
(iii) A travel or entertainment activity.
(3) Exception for certain loans. A
cashier’s check, bank draft, traveler’s
check, or money order received in a
designated reporting transaction is not
treated as currency pursuant to
paragraph (c)(1)(ii)(A) of this section if
the instrument constitutes the proceeds
of a loan from a bank. The recipient may
rely on a copy of the loan document, a
written statement from the bank, or
similar documentation (such as a
written lien instruction from the issuer
of the instrument) to substantiate that
the instrument constitutes loan
proceeds.
(4) Exception for certain installment
sales. A cashier’s check, bank draft,
traveler’s check, or money order
received in a designated reporting
transaction is not treated as currency
pursuant to paragraph (c)(1)(ii)(A) of
this section if the instrument is received
in payment on a promissory note or an
installment sales contract (including a
lease that is considered to be a sale for
Federal income tax purposes). However,
the preceding sentence applies only if—
(i) Promissory notes or installment
sales contracts with the same or
substantially similar terms are used in
the ordinary course of the recipient’s
trade or business in connection with
sales to ultimate consumers; and
(ii) The total amount of payments
with respect to the sale that are received
on or before the 60th day after the date
of the sale does not exceed 50 percent
of the purchase price of the sale.
(5) Exception for certain down
payment plans. A cashier’s check, bank
draft, traveler’s check, or money order
received in a designated reporting
transaction is not treated as currency
pursuant to paragraph (c)(1)(ii)(A) of
this section if the instrument is received
pursuant to a payment plan requiring
one or more down payments and the
payment of the balance of the purchase
price by a date no later than the date of
the sale (in the case of an item of travel
or entertainment, a date no later than
the earliest date that any item of travel
or entertainment pertaining to the same
trip or event is furnished). However, the
preceding sentence applies only if—
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65819
(i) The recipient uses payment plans
with the same or substantially similar
terms in the ordinary course of its trade
or business in connection with sales to
ultimate consumers; and
(ii) The instrument is received more
than 60 days prior to the date of the sale
(in the case of an item of travel or
entertainment, the date on which the
final payment is due).
(6) Examples. The following examples
illustrate the definition of ‘‘currency’’ set
forth in paragraphs (c)(1) through (c)(5)
of this section:
Example 1. D, an individual, purchases
gold coins from M, a coin dealer, for $13,200.
D tenders to M in payment United States
currency in the amount of $6,200 and a
cashier’s check in the face amount of $7,000
which D had purchased. Because the sale is
a designated reporting transaction, the
cashier’s check is treated as currency for
purposes of 31 U.S.C. 5331 and this section.
Therefore, because M has received more than
$10,000 in currency with respect to the
transaction, M must make the report required
by 31 U.S.C. 5331 and this section.
Example 2. E, an individual, purchases an
automobile from Q, an automobile dealer, for
$11,500. E tenders to Q in payment United
States currency in the amount of $2,000 and
a cashier’s check payable to E and Q in the
amount of $9,500. The cashier’s check
constitutes the proceeds of a loan from the
bank issuing the check. The origin of the
proceeds is evident from provisions inserted
by the bank on the check that instruct the
dealer to cause a lien to be placed on the
vehicle as security for the loan. The sale of
the automobile is a designated reporting
transaction. However, under paragraph (c)(3)
of this section, because E has furnished Q
documentary information establishing that
the cashier’s check constitutes the proceeds
of a loan from the bank issuing the check, the
cashier’s check is not treated as currency
pursuant to paragraph (c)(1)(ii)(A) of this
section.
Example 3. F, an individual, purchases an
item of jewelry from S, a retail jeweler, for
$12,000. F gives S traveler’s checks totaling
$2,400 and pays the balance with a personal
check payable to S in the amount of $9,600.
Because the sale is a designated reporting
transaction, the traveler’s checks are treated
as currency for purposes of section 5331 and
this section. However, because the personal
check is not treated as currency for purposes
of section 5331 and this section, S has not
received more than $10,000 in currency in
the transaction and no report is required to
be filed under section 5331 and this section.
Example 4. G, an individual, purchases a
boat from T, a boat dealer, for $16,500. G
pays T with a cashier’s check payable to T
in the amount of $16,500. The cashier’s
check is not treated as currency because the
face amount of the check is more than
$10,000. Thus, no report is required to be
made by T under section 5331 and this
section.
Example 5. H, an individual, arranges with
W, a travel agent, for the chartering of a
passenger aircraft to transport a group of
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individuals to a sports event in another city.
H also arranges with W for hotel
accommodations for the group and for
admission tickets to the sports event. In
payment, H tenders to W money orders
which H had previously purchased. The total
amount of the money orders, none of which
individually exceeds $10,000 in face amount,
exceeds $10,000. Because the transaction is
a designated reporting transaction, the money
orders are treated as currency for purposes of
section 5331 and this section. Therefore,
because W has received more than $10,000
in currency with respect to the transaction,
W must make the report required by section
5331 and this section.
(7) Consumer durable. The term
consumer durable means an item of
tangible personal property of a type that
is suitable under ordinary usage for
personal consumption or use, that can
reasonably be expected to be useful for
at least 1 year under ordinary usage, and
that has a sales price of more than
$10,000. Thus, for example, a $20,000
automobile is a consumer durable
(whether or not it is sold for business
use), but a $20,000 dump truck or a
$20,000 factory machine is not.
(8) Collectible. The term collectible
means an item described in paragraphs
(A) through (D) of section 408 (m)(2) of
title 26 of the United States Code
(determined without regard to section
408 (m)(3) of title 26 of the United
States Code).
(9) Travel or entertainment activity.
The term travel or entertainment
activity means an item of travel or
entertainment (within the meaning of 26
CFR 1.274–2(b)(1)) pertaining to a single
trip or event where the aggregate sales
price of the item and all other items
pertaining to the same trip or event that
are sold in the same transaction (or
related transactions) exceeds $10,000.
(10) Retail sale. The term retail sale
means any sale (whether for resale or for
any other purpose) made in the course
of a trade or business if that trade or
business principally consists of making
sales to ultimate consumers.
(11) Trade or business. The term trade
or business has the same meaning as
under section 162 of title 26, United
States Code.
(12) Transaction. (i) Solely for
purposes of 31 U.S.C. 5331 and this
section, the term transaction means the
underlying event precipitating the
payer’s transfer of currency to the
recipient. In this context, transactions
include (but are not limited to) a sale of
goods or services; a sale of real property;
a sale of intangible property; a rental of
real or personal property; an exchange
of currency for other currency; the
establishment or maintenance of or
contribution to a custodial, trust, or
escrow arrangement; a payment of a
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preexisting debt; a conversion of
currency to a negotiable instrument; a
reimbursement for expenses paid; or the
making or repayment of a loan. A
transaction may not be divided into
multiple transactions in order to avoid
reporting under this section.
(ii) The term related transactions
means any transaction conducted
between a payer (or its agent) and a
recipient of currency in a 24-hour
period. Additionally, transactions
conducted between a payer (or its agent)
and a currency recipient during a period
of more than 24 hours are related if the
recipient knows or has reason to know
that each transaction is one of a series
of connected transactions.
(iii) The following examples illustrate
the definition of paragraphs (c)(12)(i)
and (ii) of this section:
Example 1. A person has a tacit agreement
with a gold dealer to purchase $36,000 in
gold bullion. The $36,000 purchase
represents a single transaction under
paragraph (c)(12)(i) of this section and the
reporting requirements of this section cannot
be avoided by recasting the single sales
transaction into 4 separate $9,000 sales
transactions.
Example 2. An attorney agrees to represent
a client in a criminal case with the attorney’s
fee to be determined on an hourly basis. In
the first month in which the attorney
represents the client, the bill for the
attorney’s services comes to $8,000 which the
client pays in currency. In the second month
in which the attorney represents the client,
the bill for the attorney’s services comes to
$4,000, which the client again pays in
currency. The aggregate amount of currency
paid ($12,000) relates to a single transaction
as defined in paragraph (c)(12)(i) of this
section, the sale of legal services relating to
the criminal case, and the receipt of currency
must be reported under this section.
Example 3. A person intends to contribute
a total of $45,000 to a trust fund, and the
trustee of the fund knows or has reason to
know of that intention. The $45,000
contribution is a single transaction under
paragraph (c)(12)(i) of this section and the
reporting requirement of this section cannot
be avoided by the grantor’s making five
separate $9,000 contributions of currency to
a single fund or by making five $9,000
contributions of currency to five separate
funds administered by a common trustee.
Example 4. K, an individual, attends a one
day auction and purchases for currency two
items, at a cost of $9,240 and $1,732.50
respectively (tax and buyer’s premium
included). Because the transactions are
related transactions as defined in paragraph
(c)(12)(ii) of this section, the auction house
is required to report the aggregate amount of
currency received from the related sales
($10,972.50), even though the auction house
accounts separately on its books for each
item sold and presents the purchaser with
separate bills for each item purchased.
Example 5. F, a coin dealer, sells for
currency $9,000 worth of gold coins to an
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individual on three successive days. Under
paragraph (c)(12)(ii) of this section the three
$9,000 transactions are related transactions
aggregating $27,000 if F knows, or has reason
to know, that each transaction is one of a
series of connected transactions.
(13) Recipient. (i) The term recipient
means the person receiving the
currency. Except as provided in
paragraph (c)(13)(ii) of this section, each
store, division, branch, department,
headquarters, or office (‘‘branch’’)
(regardless of physical location)
comprising a portion of a person’s trade
or business shall for purposes of this
section be deemed a separate recipient.
(ii) A branch that receives currency
payments will not be deemed a separate
recipient if the branch (or a central unit
linking such branch with other
branches) would in the ordinary course
of business have reason to know the
identity of payers making currency
payments to other branches of such
person.
(iii) Examples. The following
examples illustrate the application of
the rules in paragraphs (c)(13)(i) and (ii)
of this section:
Example 1. N, an individual, purchases
regulated futures contracts at a cost of $7,500
and $5,000, respectively, through two
different branches of Commodities Broker X
on the same day. N pays for each purchase
with currency. Each branch of Commodities
Broker X transmits the sales information
regarding each of N’s purchases to a central
unit of Commodities Broker X (which settles
the transactions against N’s account). Under
paragraph (c)(13)(ii) of this section the
separate branches of Commodities Broker X
are not deemed to be separate recipients;
therefore, Commodities Broker X must report
with respect to the two related regulated
futures contracts sales in accordance with
this section.
Example 2. P, a corporation, owns and
operates a racetrack. P’s racetrack contains
100 betting windows at which pari-mutuel
wagers may be made. R, an individual, places
currency wagers of $3,000 each at five
separate betting windows. Assuming that in
the ordinary course of business each betting
window (or a central unit linking windows)
does not have reason to know the identity of
persons making wagers at other betting
windows, each betting window would be
deemed to be a separate currency recipient
under paragraph (c)(13)(i) of this section. As
no individual recipient received currency in
excess of $10,000, no report need be made by
P under this section.
(d) Exceptions to the reporting
requirements of 31 U.S.C. 5331—(1)
Receipt is made with respect to a foreign
currency transaction—(i) In general.
Generally, there is no requirement to
report with respect to a currency
transaction if the entire transaction
occurs outside the United States (the
fifty states and the District of Columbia).
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An entire transaction consists of both
the transaction as defined in paragraph
(c)(12)(i) of this section and the receipt
of currency by the recipient. If,
however, any part of an entire
transaction occurs in the
Commonwealth of Puerto Rico or a
possession or territory of the United
States and the recipient of currency in
that transaction is subject to the general
jurisdiction of the Internal Revenue
Service under title 26 of the United
States Code, the recipient is required to
report the transaction under this
section.
(ii) Example. The following example
illustrates the application of the rules in
paragraph (d)(1)(i) of this section:
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Example. W, an individual engaged in the
trade or business of selling aircraft, reaches
an agreement to sell an airplane to a U.S.
citizen living in Mexico. The agreement, no
portion of which is formulated in the United
States, calls for a purchase price of $125,000
and requires delivery of and payment for the
airplane to be made in Mexico. Upon
delivery of the airplane in Mexico, W
receives $125,000 in currency. W is not
required to report under 31 U.S.C. 5331 or
this section because the exception provided
in paragraph (d)(1)(i) of this section (‘‘foreign
transaction exception’’) applies. If, however,
any part of the agreement to sell had been
formulated in the United States, the foreign
transaction exception would not apply and
W would be required to report the receipt of
currency under 31 U.S.C. 5331 and this
section.
(2) Receipt of currency not in the
course of the recipient’s trade or
business. The receipt of currency in
excess of $10,000 by a person other than
in the course of the person’s trade or
business is not reportable under 31
U.S.C. 5331. Thus, for example, F, an
individual in the trade or business of
selling real estate, sells a motorboat for
$12,000, the purchase price of which is
paid in currency. F did not use the
motorboat in any trade or business in
which F was engaged. F is not required
to report under 31 U.S.C. 5331 or this
section because the exception provided
in this paragraph (d)(2) applies.
(e) Time, manner, and form of
reporting—(1) In general. The reports
required by paragraph (a) of this section
must be made by filing a Form 8300, as
specified in 26 CFR 1.6050I–1(e)(2). The
reports must be filed at the time and in
the manner specified in 26 CFR
1.6050I–1(e)(1) and (3) respectively.
(2) Verification. A person making a
report of information under this section
must verify the identity of the person
from whom the reportable currency is
received. Verification of the identity of
a person who purports to be an alien
must be made by examination of such
person’s passport, alien identification
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card, or other official document
evidencing nationality or residence.
Verification of the identity of any other
person may be made by examination of
a document normally acceptable as a
means of identification when cashing or
accepting checks (for example, a driver’s
license or a credit card). In addition, a
report will be considered incomplete if
the person required to make a report
knows (or has reason to know) that an
agent is conducting the transaction for
a principal, and the return does not
identify both the principal and the
agent.
(3) Retention of reports. A person
required to make a report under this
section must keep a copy of each report
filed for five years from the date of
filing.
§ 1010.340 Reports of transportation of
currency or monetary instruments.
(a) Each person who physically
transports, mails, or ships, or causes to
be physically transported, mailed, or
shipped, or attempts to physically
transport, mail or ship, or attempts to
cause to be physically transported,
mailed or shipped, currency or other
monetary instruments in an aggregate
amount exceeding $10,000 at one time
from the United States to any place
outside the United States, or into the
United States from any place outside the
United States, shall make a report
thereof. A person is deemed to have
caused such transportation, mailing or
shipping when he aids, abets, counsels,
commands, procures, or requests it to be
done by a financial institution or any
other person.
(b) Each person who receives in the
U.S. currency or other monetary
instruments in an aggregate amount
exceeding $10,000 at one time which
have been transported, mailed, or
shipped to such person from any place
outside the United States with respect to
which a report has not been filed under
paragraph (a) of this section, whether or
not required to be filed thereunder, shall
make a report thereof, stating the
amount, the date of receipt, the form of
monetary instruments, and the person
from whom received.
(c) This section shall not require
reports by:
(1) A Federal Reserve;
(2) A bank, a foreign bank, or a broker
or dealer in securities, in respect to
currency or other monetary instruments
mailed or shipped through the postal
service or by common carrier;
(3) A commercial bank or trust
company organized under the laws of
any State or of the United States with
respect to overland shipments of
currency or monetary instruments
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shipped to or received from an
established customer maintaining a
deposit relationship with the bank, in
amounts which the bank may
reasonably conclude do not exceed
amounts commensurate with the
customary conduct of the business,
industry or profession of the customer
concerned;
(4) A person who is not a citizen or
resident of the United States in respect
to currency or other monetary
instruments mailed or shipped from
abroad to a bank or broker or dealer in
securities through the postal service or
by common carrier;
(5) A common carrier of passengers in
respect to currency or other monetary
instruments in the possession of its
passengers;
(6) A common carrier of goods in
respect to shipments of currency or
monetary instruments not declared to be
such by the shipper;
(7) A travelers’ check issuer or its
agent in respect to the transportation of
travelers’ checks prior to their delivery
to selling agents for eventual sale to the
public;
(8) By a person with respect to a
restrictively endorsed traveler’s check
that is in the collection and
reconciliation process after the traveler’s
check has been negotiated;
(9) Nor by a person engaged as a
business in the transportation of
currency, monetary instruments and
other commercial papers with respect to
the transportation of currency or other
monetary instruments overland between
established offices of banks or brokers or
dealers in securities and foreign
persons.
(d) A transfer of funds through normal
banking procedures which does not
involve the physical transportation of
currency or monetary instruments is not
required to be reported by this section.
This section does not require that more
than one report be filed covering a
particular transportation, mailing or
shipping of currency or other monetary
instruments with respect to which a
complete and truthful report has been
filed by a person. However, no person
required by paragraph (a) or (b) of this
section to file a report shall be excused
from liability for failure to do so if, in
fact, a complete and truthful report has
not been filed.
§ 1010.350
accounts.
Reports of foreign financial
Each person subject to the jurisdiction
of the United States (except a foreign
subsidiary of a U.S. person) having a
financial interest in, or signature or
other authority over, a bank, securities
or other financial account in a foreign
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country shall report such relationship to
the Commissioner of the Internal
Revenue for each year in which such
relationship exists, and shall provide
such information as shall be specified in
a reporting form prescribed by the
Secretary to be filed by such persons.
Persons having a financial interest in 25
or more foreign financial accounts need
only note that fact on the form. Such
persons will be required to provide
detailed information concerning each
account when so requested by the
Secretary or his delegate.
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§ 1010.360 Reports of transactions with
foreign financial agencies.
(a) Promulgation of reporting
requirements. The Secretary, when he
deems appropriate, may promulgate
regulations requiring specified financial
institutions to file reports of certain
transactions with designated foreign
financial agencies. If any such
regulation is issued as a final rule
without notice and opportunity for
public comment, then a finding of good
cause for dispensing with notice and
comment in accordance with 5 U.S.C.
553(b) will be included in the
regulation. If any such regulation is not
published in the Federal Register, then
any financial institution subject to the
regulation will be named and personally
served or otherwise given actual notice
in accordance with 5 U.S.C. 553(b). If a
financial institution is given notice of a
reporting requirement under this section
by means other than publication in the
Federal Register, the Secretary may
prohibit disclosure of the existence or
provisions of that reporting requirement
to the designated foreign financial
agency or agencies and to any other
party.
(b) Information subject to reporting
requirements. A regulation promulgated
pursuant to paragraph (a) of this section
shall designate one or more of the
following categories of information to be
reported:
(1) Checks or drafts, including
traveler’s checks, received by
respondent financial institution for
collection or credit to the account of a
foreign financial agency, sent by
respondent financial institution to a
foreign country for collection or
payment, drawn by respondent financial
institution on a foreign financial agency,
drawn by a foreign financial agency on
respondent financial institution—
including the following information.
(i) Name of maker or drawer;
(ii) Name of drawee or drawee
financial institution;
(iii) Name of payee;
(iv) Date and amount of instrument;
(v) Names of all endorsers.
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(2) Transmittal orders received by a
respondent financial institution from a
foreign financial agency or sent by
respondent financial institution to a
foreign financial agency, including all
information maintained by that
institution pursuant to §§ 1010.410 and
1020.410.
(3) Loans made by respondent
financial institution to or through a
foreign financial agency—including the
following information:
(i) Name of borrower;
(ii) Name of person acting for
borrower;
(iii) Date and amount of loan;
(iv) Terms of repayment;
(v) Name of guarantor;
(vi) Rate of interest;
(vii) Method of disbursing proceeds;
(viii) Collateral for loan.
(4) Commercial paper received or
shipped by the respondent financial
institution—including the following
information:
(i) Name of maker;
(ii) Date and amount of paper;
(iii) Due date;
(iv) Certificate number;
(v) Amount of transaction.
(5) Stocks received or shipped by
respondent financial institution—
including the following information:
(i) Name of corporation;
(ii) Type of stock;
(iii) Certificate number;
(iv) Number of shares;
(v) Date of certificate;
(vi) Name of registered holder;
(vii) Amount of transaction.
(6) Bonds received or shipped by
respondent financial institution—
including the following information:
(i) Name of issuer;
(ii) Bond number;
(iii) Type of bond series;
(iv) Date issued;
(v) Due date;
(vi) Rate of interest;
(vii) Amount of transaction;
(viii) Name of registered holder.
(7) Certificates of deposit received or
shipped by respondent financial
institution—including the following
information:
(i) Name and address of issuer;
(ii) Date issued;
(iii) Dollar amount;
(iv) Name of registered holder;
(v) Due date;
(vi) Rate of interest;
(vii) Certificate number;
(viii) Name and address of issuing
agent.
(c) Scope of reports. In issuing
regulations as provided in paragraph (a)
of this section, the Secretary will
prescribe:
(1) A reasonable classification of
financial institutions subject to or
exempt from a reporting requirement;
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(2) A foreign country to which a
reporting requirement applies if the
Secretary decides that applying the
requirement to all foreign countries is
unnecessary or undesirable;
(3) The magnitude of transactions
subject to a reporting requirement; and
(4) The kind of transaction subject to
or exempt from a reporting requirement.
(d) Form of reports. Regulations
issued pursuant to paragraph (a) of this
section may prescribe the manner in
which the information is to be reported.
However, the Secretary may authorize a
designated financial institution to report
in a different manner if the institution
demonstrates to the Secretary that the
form of the required report is
unnecessarily burdensome on the
institution as prescribed; that a report in
a different form will provide all the
information the Secretary deems
necessary; and that submission of the
information in a different manner will
not unduly hinder the effective
administration of this chapter.
(e) Limitations. (1) In issuing
regulations under paragraph (a) of this
section, the Secretary shall consider the
need to avoid impeding or controlling
the export or import of monetary
instruments and the need to avoid
burdening unreasonably a person
making a transaction with a foreign
financial agency.
(2) The Secretary shall not issue a
regulation under paragraph (a) of this
section for the purpose of obtaining
individually identifiable account
information concerning a customer, as
defined by the Right to Financial
Privacy Act (12 U.S.C. 3401 et seq.),
where that customer is already the
subject of an ongoing investigation for
possible violation of the Currency and
Foreign Transactions Reporting Act, or
is known by the Secretary to be the
subject of an investigation for possible
violation of any other Federal law.
(3) The Secretary may issue a
regulation pursuant to paragraph (a) of
this section requiring a financial
institution to report transactions
completed prior to the date it received
notice of the reporting requirement.
However, with respect to completed
transactions, a financial institution may
be required to provide information only
from records required to be maintained
pursuant to the requirements of this
chapter, or any other provision of state
or Federal law, or otherwise maintained
in the regular course of business.
§ 1010.370 Reports of certain domestic
coin and currency transactions.
(a) If the Secretary of the Treasury
finds, upon the Secretary’s own
initiative or at the request of an
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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
and 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 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 is involved for the payment,
receipt, or transfer of United States
coins or currency (or such other
monetary instruments 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.
(b) An order issued under paragraph
(a) of this section shall be directed to the
Chief Executive Officer of the financial
institution and shall designate one or
more of the following categories of
information to be reported: Each
deposit, withdrawal, exchange of
currency 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 currency and/or monetary
instruments equal to or exceeding an
amount to be specified in the order.
(c) In issuing an order under
paragraph (a) of this section, the
Secretary will prescribe:
(1) The dollar amount of transactions
subject to the reporting requirement in
the order;
(2) The type of transaction or
transactions subject to or exempt from a
reporting requirement in the order;
(3) The appropriate form for reporting
the transactions required in the order;
(4) The address to which reports
required in the order are to be sent or
from which they will be picked up;
(5) The starting and ending dates by
which such transactions specified in the
order are to be reported;
(6) The name of a Treasury official to
be contacted for any additional
information or questions;
(7) The amount of time the reports
and records of reports generated in
response to the order will have to be
retained by the financial institution; and
(8) Any other information deemed
necessary to carry out the purposes of
the order.
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(d)(1) No order issued pursuant to
paragraph (a) of this section shall
prescribe a reporting period of more
than 60 days unless renewed pursuant
to the requirements of paragraph (a).
(2) Any revisions to an order issued
under this section will not be effective
until made in writing by the Secretary.
(3) Unless otherwise specified in the
order, a bank receiving an order under
this section may continue to use the
exemptions granted under § 1020.315 of
this chapter prior to the receipt of the
order, but may not grant additional
exemptions.
(4) For purposes of this section, the
term geographic area means 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, as specified in an
order issued pursuant to paragraph (a)
of this section.
Subpart D—Records Required To Be
Maintained
§ 1010.400
General.
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to its Chapter X Part for any
additional recordkeeping requirements.
Unless otherwise indicated, the
recordkeeping requirements contained
in this Subpart D apply to all financial
institutions.
§ 1010.401
Determination by the Secretary.
The Secretary hereby determines that
the records required to be kept by this
chapter have a high degree of usefulness
in criminal, tax, or regulatory
investigations or proceedings.
§ 1010.405
[Reserved]
§ 1010.410 Records to be made and
retained by financial institutions.
Each financial institution shall retain
either the original or a microfilm or
other copy or reproduction of each of
the following:
(a) A record of each extension of
credit in an amount in excess of
$10,000, except an extension of credit
secured by an interest in real property,
which record shall contain the name
and address of the person to whom the
extension of credit is made, the amount
thereof, the nature or purpose thereof,
and the date thereof;
(b) A record of each advice, request,
or instruction received or given
regarding any transaction resulting (or
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65823
intended to result and later canceled if
such a record is normally made) in the
transfer of currency or other monetary
instruments, funds, checks, investment
securities, or credit, of more than
$10,000 to or from any person, account,
or place outside the United States.
(c) A record of each advice, request,
or instruction given to another financial
institution or other person located
within or without the United States,
regarding a transaction intended to
result in the transfer of funds, or of
currency, other monetary instruments,
checks, investment securities, or credit,
of more than $10,000 to a person,
account or place outside the United
States.
(d) A record of such information for
such period of time as the Secretary may
require in an order issued under
§ 1010.370(a), not to exceed five years.
(e) Nonbank financial institutions.
Each agent, agency, branch, or office
located within the United States of a
financial institution other than a bank is
subject to the requirements of this
paragraph (e) with respect to a
transmittal of funds in the amount of
$3,000 or more:
(1) Recordkeeping requirements. (i)
For each transmittal order that it accepts
as a transmittor’s financial institution, a
financial institution shall obtain and
retain either the original or a microfilm,
other copy, or electronic record of the
following information relating to the
transmittal order:
(A) The name and address of the
transmittor;
(B) The amount of the transmittal
order;
(C) The execution date of the
transmittal order;
(D) Any payment instructions
received from the transmittor with the
transmittal order;
(E) The identity of the recipient’s
financial institution;
(F) As many of the following items as
are received with the transmittal order: 1
(1) The name and address of the
recipient;
(2) The account number of the
recipient; and
(3) Any other specific identifier of the
recipient; and
(G) Any form relating to the
transmittal of funds that is completed or
signed by the person placing the
transmittal order.
1 For transmittals of funds effected through the
Federal Reserve’s Fedwire funds transfer system by
a domestic broker or dealers in securities, only one
of the items is required to be retained, if received
with the transmittal order, until such time as the
bank that sends the order to the Federal Reserve
Bank completes its conversion to the expanded
Fedwire message format.
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(ii) For each transmittal order that it
accepts as an intermediary financial
institution, a financial institution shall
retain either the original or a microfilm,
other copy, or electronic record of the
transmittal order.
(iii) For each transmittal order that it
accepts as a recipient’s financial
institution, a financial institution shall
retain either the original or a microfilm,
other copy, or electronic record of the
transmittal order.
(2) Transmittors other than
established customers. In the case of a
transmittal order from a transmittor that
is not an established customer, in
addition to obtaining and retaining the
information required in paragraph
(e)(1)(i) of this section:
(i) If the transmittal order is made in
person, prior to acceptance the
transmittor’s financial institution shall
verify the identity of the person placing
the transmittal order. If it accepts the
transmittal order, the transmittor’s
financial institution shall obtain and
retain a record of the name and address,
the type of identification reviewed, and
the number of the identification
document (e.g., driver’s license), as well
as a record of the person’s taxpayer
identification number (e.g., social
security or employer identification
number) or, if none, alien identification
number or passport number and country
of issuance, or a notation in the record
of the lack thereof. If the transmittor’s
financial institution has knowledge that
the person placing the transmittal order
is not the transmittor, the transmittor’s
financial institution shall obtain and
retain a record of the transmittor’s
taxpayer identification number (e.g.,
social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, if
known by the person placing the order,
or a notation in the record of the lack
thereof.
(ii) If the transmittal order accepted
by the transmittor’s financial institution
is not made in person, the transmittor’s
financial institution shall obtain and
retain a record of the name and address
of the person placing the transmittal
order, as well as the person’s taxpayer
identification number (e.g., social
security or employer identification
number) or, if none, alien identification
number or passport number and country
of issuance, or a notation in the record
of the lack thereof, and a copy or record
of the method of payment (e.g., check or
credit card transaction) for the
transmittal of funds. If the transmittor’s
financial institution has knowledge that
the person placing the transmittal order
is not the transmittor, the transmittor’s
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financial institution shall obtain and
retain a record of the transmittor’s
taxpayer identification number (e.g.,
social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, if
known by the person placing the order,
or a notation in the record of the lack
thereof.
(3) Recipients other than established
customers. For each transmittal order
that it accepts as a recipient’s financial
institution for a recipient that is not an
established customer, in addition to
obtaining and retaining the information
required in paragraph (e)(1)(iii) of this
section:
(i) If the proceeds are delivered in
person to the recipient or its
representative or agent, the recipient’s
financial institution shall verify the
identity of the person receiving the
proceeds and shall obtain and retain a
record of the name and address, the type
of identification reviewed, and the
number of the identification document
(e.g., driver’s license), as well as a
record of the person’s taxpayer
identification number (e.g., social
security or employer identification
number) or, if none, alien identification
number or passport number and country
of issuance, or a notation in the record
of the lack thereof. If the recipient’s
financial institution has knowledge that
the person receiving the proceeds is not
the recipient, the recipient’s financial
institution shall obtain and retain a
record of the recipient’s name and
address, as well as the recipient’s
taxpayer identification number (e.g.,
social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, if
known by the person receiving the
proceeds, or a notation in the record of
the lack thereof.
(ii) If the proceeds are delivered other
than in person, the recipient’s financial
institution shall retain a copy of the
check or other instrument used to effect
payment, or the information contained
thereon, as well as the name and
address of the person to which it was
sent.
(4) Retrievability. The information
that a transmittor’s financial institution
must retain under paragraphs (e)(1)(i)
and (e)(2) of this section shall be
retrievable by the transmittor’s financial
institution by reference to the name of
the transmittor. If the transmittor is an
established customer of the transmittor’s
financial institution and has an account
used for transmittals of funds, then the
information also shall be retrievable by
account number. The information that a
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recipient’s financial institution must
retain under paragraphs (e)(1)(iii) and
(e)(3) of this section shall be retrievable
by the recipient’s financial institution
by reference to the name of the
recipient. If the recipient is an
established customer of the recipient’s
financial institution and has an account
used for transmittals of funds, then the
information also shall be retrievable by
account number. This information need
not be retained in any particular
manner, so long as the financial
institution is able to retrieve the
information required by this paragraph,
either by accessing transmittal of funds
records directly or through reference to
some other record maintained by the
financial institution.
(5) Verification. Where verification is
required under paragraphs (e)(2) and
(e)(3) of this section, a financial
institution shall verify a person’s
identity by examination of a document
(other than a customer signature card),
preferably one that contains the person’s
name, address, and photograph, that is
normally acceptable by financial
institutions as a means of identification
when cashing checks for persons other
than established customers. Verification
of the identity of an individual who
indicates that he or she is an alien or is
not a resident of the United States may
be made by passport, alien
identification card, or other official
document evidencing nationality or
residence (e.g., a foreign driver’s license
with indication of home address).
(6) Exceptions. The following
transmittals of funds are not subject to
the requirements of this section:
(i) Transmittals of funds where the
transmittor and the recipient are any of
the following:
(A) A bank;
(B) A wholly-owned domestic
subsidiary of a bank chartered in the
United States;
(C) A broker or dealer in securities;
(D) A wholly-owned domestic
subsidiary of a broker or dealer in
securities;
(E) A futures commission merchant or
an introducing broker in commodities;
(F) A wholly-owned domestic
subsidiary of a futures commission
merchant or an introducing broker in
commodities;
(G) The United States;
(H) A state or local government; or
(I) A Federal, State or local
government agency or instrumentality;
or
(J) A mutual fund; and
(ii) Transmittals of funds where both
the transmittor and the recipient are the
same person and the transmittor’s
financial institution and the recipient’s
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financial institution are the same broker
or dealer in securities.
(f) Any transmittor’s financial
institution or intermediary financial
institution located within the United
States shall include in any transmittal
order for a transmittal of funds in the
amount of $3,000 or more, information
as required in this paragraph (f):
(1) A transmittor’s financial
institution shall include in a transmittal
order, at the time it is sent to a receiving
financial institution, the following
information:
(i) The name and, if the payment is
ordered from an account, the account
number of the transmittor;
(ii) The address of the transmittor,
except for a transmittal order through
Fedwire until such time as the bank that
sends the order to the Federal Reserve
Bank completes its conversion to the
expanded Fedwire format;
(iii) The amount of the transmittal
order;
(iv) The execution date of the
transmittal order;
(v) The identity of the recipient’s
financial institution;
(vi) As many of the following items as
are received with the transmittal order: 2
(A) The name and address of the
recipient;
(B) The account number of the
recipient;
(C) Any other specific identifier of the
recipient; and
(vii) Either the name and address or
numerical identifier of the transmittor’s
financial institution.
(2) A receiving financial institution
that acts as an intermediary financial
institution, if it accepts a transmittal
order, shall include in a corresponding
transmittal order at the time it is sent to
the next receiving financial institution,
the following information, if received
from the sender:
(i) The name and the account number
of the transmittor;
(ii) The address of the transmittor,
except for a transmittal order through
Fedwire until such time as the bank that
sends the order to the Federal Reserve
Bank completes its conversion to the
expanded Fedwire format;
(iii) The amount of the transmittal
order;
(iv) The execution date of the
transmittal order;
(v) The identity of the recipient’s
financial institution;
(vi) As many of the following items as
are received with the transmittal order: 3
(A) The name and address of the
recipient;
(B) The account number of the
recipient;
(C) Any other specific identifier of the
recipient; and
(vii) Either the name and address or
numerical identifier of the transmittor’s
financial institution.
(3) Safe harbor for transmittals of
funds prior to conversion to the
expanded Fedwire message format. The
following provisions apply to
transmittals of funds effected through
the Federal Reserve’s Fedwire funds
transfer system or otherwise by a
financial institution before the bank that
sends the order to the Federal Reserve
Bank or otherwise completes its
conversion to the expanded Fedwire
message format.
(i) Transmittor’s financial institution.
A transmittor’s financial institution will
be deemed to be in compliance with the
provisions of paragraph (f)(1) of this
section if it:
(A) Includes in the transmittal order,
at the time it is sent to the receiving
financial institution, the information
specified in paragraphs (f)(1)(iii)
through (v), and the information
specified in paragraph (f)(1)(vi) of this
section to the extent that such
information has been received by the
financial institution, and
(B) Provides the information specified
in paragraphs (f)(1)(i), (ii) and (vii) of
this section to a financial institution
that acted as an intermediary financial
institution or recipient’s financial
institution in connection with the
transmittal order, within a reasonable
time after any such financial institution
makes a request therefor in connection
with the requesting financial
institution’s receipt of a lawful request
for such information from a Federal,
State, or local law enforcement or
financial regulatory agency, or in
connection with the requesting financial
institution’s own Bank Secrecy Act
compliance program.
(ii) Intermediary financial institution.
An intermediary financial institution
will be deemed to be in compliance
with the provisions of paragraph (f)(2) of
this section if it:
(A) Includes in the transmittal order,
at the time it is sent to the receiving
2 For transmittals of funds effected through the
Federal Reserve’s Fedwire funds transfer system by
a financial institution, only one of the items is
required to be included in the transmittal order, if
received with the sender’s transmittal order, until
such time as the bank that sends the order to the
Federal Reserve Bank completes its conversion to
the expanded Fedwire message format.
3 For transmittals of funds effected through the
Federal Reserve’s Fedwire funds transfer system by
a financial institution, only one of the items is
required to be included in the transmittal order, if
received with the sender’s transmittal order, until
such time as the bank that sends the order to the
Federal Reserve Bank completes its conversion to
the expanded Fedwire message format.
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65825
financial institution, the information
specified in paragraphs (f)(2)(iii)
through (f)(2)(vi) of this section, to the
extent that such information has been
received by the intermediary financial
institution; and
(B) Provides the information specified
in paragraphs (f)(2)(i), (ii) and (vii) of
this section, to the extent that such
information has been received by the
intermediary financial institution, to a
financial institution that acted as an
intermediary financial institution or
recipient’s financial institution in
connection with the transmittal order,
within a reasonable time after any such
financial institution makes a request
therefor in connection with the
requesting financial institution’s receipt
of a lawful request for such information
from a Federal, State, or local law
enforcement or regulatory agency, or in
connection with the requesting financial
institution’s own Bank Secrecy Act
compliance program.
(iii) Obligation of requesting financial
institution. Any information requested
under paragraph (f)(3)(i)(B) or
(f)(3)(ii)(B) of this section shall be
treated by the requesting institution,
once received, as if it had been included
in the transmittal order to which such
information relates.
(4) Exceptions. The requirements of
this paragraph (f) shall not apply to
transmittals of funds that are listed in
paragraph (e)(6) of this section or
§ 1020.410(a)(6) of this chapter.
§ 1010.415 Purchases of bank checks and
drafts, cashier’s checks, money orders and
traveler’s checks.
(a) No financial institution may issue
or sell a bank check or draft, cashier’s
check, money order or traveler’s check
for $3,000 or more in currency unless it
maintains records of the following
information, which must be obtained for
each issuance or sale of one or more of
these instruments to any individual
purchaser which involves currency in
amounts of $3,000–$10,000 inclusive:
(1) If the purchaser has a deposit
account with the financial institution:
(i)(A) The name of the purchaser;
(B) The date of purchase;
(C) The type(s) of instrument(s)
purchased;
(D) The serial number(s) of each of the
instrument(s) purchased; and
(E) The amount in dollars of each of
the instrument(s) purchased.
(ii) In addition, the financial
institution must verify that the
individual is a deposit accountholder or
must verify the individual’s identity.
Verification may be either through a
signature card or other file or record at
the financial institution provided the
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deposit accountholder’s name and
address were verified previously and
that information was recorded on the
signature card or other file or record; or
by examination of a document which is
normally acceptable within the banking
community as a means of identification
when cashing checks for nondepositors
and which contains the name and
address of the purchaser. If the deposit
accountholder’s identity has not been
verified previously, the financial
institution shall verify the deposit
accountholder’s identity by examination
of a document which is normally
acceptable within the banking
community as a means of identification
when cashing checks for nondepositors
and which contains the name and
address of the purchaser, and shall
record the specific identifying
information (e.g., State of issuance and
number of driver’s license).
(2) If the purchaser does not have a
deposit account with the financial
institution:
(i)(A) The name and address of the
purchaser;
(B) The social security number of the
purchaser, or if the purchaser is an alien
and does not have a social security
number, the alien identification
number;
(C) The date of birth of the purchaser;
(D) The date of purchase;
(E) The type(s) of instrument(s)
purchased;
(F) The serial number(s) of the
instrument(s) purchased; and
(G) The amount in dollars of each of
the instrument(s) purchased.
(ii) In addition, the financial
institution shall verify the purchaser’s
name and address by examination of a
document which is normally acceptable
within the banking community as a
means of identification when cashing
checks for nondepositors and which
contains the name and address of the
purchaser, and shall record the specific
identifying information (e.g., State of
issuance and number of driver’s
license).
(b) Contemporaneous purchases of the
same or different types of instruments
totaling $3,000 or more shall be treated
as one purchase. Multiple purchases
during one business day totaling $3,000
or more shall be treated as one purchase
if an individual employee, director,
officer, or partner of the financial
institution has knowledge that these
purchases have occurred.
(c) Records required to be kept shall
be retained by the financial institution
for a period of five years and shall be
made available to the Secretary upon
request at any time.
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§ 1010.420 Records to be made and
retained by persons having financial
interests in foreign financial accounts.
Records of accounts required by
§ 1010.350 to be reported to the
Commissioner of Internal Revenue shall
be retained by each person having a
financial interest in or signature or other
authority over any such account. Such
records shall contain the name in which
each such account is maintained, the
number or other designation of such
account, the name and address of the
foreign bank or other person with whom
such account is maintained, the type of
such account, and the maximum value
of each such account during the
reporting period. Such records shall be
retained for a period of 5 years and shall
be kept at all times available for
inspection as authorized by law. In the
computation of the period of 5 years,
there shall be disregarded any period
beginning with a date on which the
taxpayer is indicted or information
instituted on account of the filing of a
false or fraudulent Federal income tax
return or failing to file a Federal income
tax return, and ending with the date on
which final disposition is made of the
criminal proceeding.
§ 1010.430
period.
Nature of records and retention
(a) Wherever it is required that there
be retained either the original or a
microfilm or other copy or reproduction
of a check, draft, monetary instrument,
investment security, or other similar
instrument, there shall be retained a
copy of both front and back of each such
instrument or document, except that no
copy need be retained of the back of any
instrument or document which is
entirely blank or which contains only
standardized printed information, a
copy of which is on file.
(b) Records required by this chapter to
be retained by financial institutions may
be those made in the ordinary course of
business by a financial institution. If no
record is made in the ordinary course of
business of any transaction with respect
to which records are required to be
retained by this chapter, then such a
record shall be prepared in writing by
the financial institution.
(c) The rules and regulations issued
by the Internal Revenue Service under
26 U.S.C. 6109 determine what
constitutes a taxpayer identification
number and whose number shall be
obtained in the case of an account
maintained by one or more persons.
(d) All records that are required to be
retained by this chapter shall be
retained for a period of five years.
Records or reports required to be kept
pursuant to an order issued under
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§ 1010.370 of this chapter shall be
retained for the period of time specified
in such order, not to exceed five years.
All such records shall be filed or stored
in such a way as to be accessible within
a reasonable period of time, taking into
consideration the nature of the record,
and the amount of time expired since
the record was made.
§ 1010.440
States.
Person outside the United
For the purposes of this chapter, a
remittance or transfer of funds, or of
currency, other monetary instruments,
checks, investment securities, or credit
to the domestic account of a person
whose address is known by the person
making the remittance or transfer, to be
outside the United States, shall be
deemed to be a remittance or transfer to
a person outside the United States,
except that, unless otherwise directed
by the Secretary, this section shall not
apply to a transaction on the books of
a domestic financial institution
involving the account of a customer of
such institution whose address is within
approximately 50 miles of the location
of the institution, or who is known to
be temporarily outside the United
States.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1010.500
General.
Sections 1010.505 through 1010.540
of this Subpart E were issued pursuant
to the requirements of section 314 of the
USA PATRIOT Act. Each financial
institution (as defined in 31 U.S.C.
5312(a)(2) or (c)(1)) should refer to its
Chapter X Part for any additional
special information sharing procedures.
§ 1010.505
Definitions.
For purposes of this Subpart E, the
following definitions apply:
(a) Account means a formal banking
or business relationship established to
provide regular services, dealings, and
other financial transactions, and
includes, but is not limited to, a demand
deposit, savings deposit, or other
transaction or asset account and a credit
account or other extension of credit.
(b) 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.
(c) Terrorist activity means an act of
domestic terrorism or international
terrorism as those terms are defined in
18 U.S.C. 2331.
(d) Transaction. (1) Except as
provided in paragraph (d)(2) of this
section, the term ‘‘transaction’’ shall
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have the same meaning as provided in
§ 1010.100(bbb).
(2) For purposes of § 1010.520, a
transaction shall not mean any
transaction conducted through an
account.
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§ 1010.520 Information sharing between
government agencies and financial
institutions.
(a) Definitions. For purposes of this
section:
(1) Financial institution means any
financial institution described in 31
U.S.C. 5312(a)(2).
(2) 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, 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
obtained 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
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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
´
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:
(A) Any current account maintained
for a named suspect;
(B) Any account maintained for a
named suspect during the preceding
twelve months; and
(C) Any transaction, as defined by
§ 1010.505(d), conducted by or on
behalf of a named suspect, or any
transmittal of funds conducted in which
a named suspect was either the
transmittor or the recipient, during the
preceding six months that is required
under law or regulation to be recorded
by the financial institution or is
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65827
recorded and maintained electronically
by the institution.
(ii) Report to FinCEN. If a financial
institution identifies an account or
transaction identified with any
individual, entity, or organization
named in a request from FinCEN, it
shall report to FinCEN, in the manner
and in the time frame specified in
FinCEN’s request, the following
information:
(A) The name of such individual,
entity, or organization;
(B) The number of each such account,
or in the case of a transaction, the date
and type of each such transaction; and
(C) Any Social Security number,
taxpayer identification number,
passport number, date of birth, address,
or other similar identifying information
provided by the individual, entity, or
organization when each such account
was opened or each such transaction
was conducted.
(iii) Designation of contact person.
Upon receiving an information request
under this section, a financial
institution shall designate one person to
be the point of contact at the institution
regarding the request and to receive
similar requests for information from
FinCEN in the future. When requested
by FinCEN, a financial institution shall
provide FinCEN with the name, title,
mailing address, e-mail address,
telephone number, and facsimile
number of such person, in such manner
as FinCEN may prescribe. A financial
institution that has provided FinCEN
with contact information must promptly
notify FinCEN of any changes to such
information.
(iv) Use and security of information
request. (A) A financial institution shall
not use information provided by
FinCEN pursuant to this section for any
purpose other than:
(1) Reporting to FinCEN as provided
in this section;
(2) Determining whether to establish
or maintain an account, or to engage in
a transaction; or
(3) Assisting the financial institution
in complying with any requirement of
this chapter.
(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.
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(2) Notwithstanding paragraph
(b)(3)(iv)(B)(1) of this section, a financial
institution authorized to share
information under § 1010.540 may share
information concerning an individual,
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.
(v) No other action required. Nothing
in this section shall be construed to
require a financial institution to take
any action, or to decline to take any
action, with respect to an account
established for, or a transaction engaged
in with, an individual, entity, or
organization named in a request from
FinCEN, or to decline to establish an
account for, or to engage in a transaction
with, any such individual, entity, or
organization. Except as otherwise
provided in an information request
under this section, such a request shall
not require a financial institution to
report on future account opening
activity or transactions or to treat a
suspect list received under this section
as a government list for purposes of
section 326 of Public Law 107–56.
(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.
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§ 1010.530
[Reserved]
§ 1010.540 Voluntary information sharing
among financial institutions.
(a) Definitions. For purposes of this
section:
(1) Financial institution. (i) Except as
provided in paragraph (a)(1)(ii) of this
section, the term ‘‘financial institution’’
means any financial institution
described in 31 U.S.C. 5312(a)(2) that is
required under this chapter to establish
and maintain an anti-money laundering
program, or is treated under this chapter
as having satisfied the requirements of
31 U.S.C. 5318(h)(1).
(ii) For purposes of this section, a
financial institution shall not mean any
institution included within a class of
financial institutions that FinCEN has
designated as ineligible to share
information under this section.
(2) Association of financial
institutions means a group or
organization the membership of which
is comprised entirely of financial
institutions as defined in paragraph
(a)(1) of this section.
(b) Voluntary information sharing
among financial institutions—(1) In
general. Subject to paragraphs (b)(2),
(b)(3), and (b)(4) of this section, a
financial institution or an association of
financial institutions may, under the
protection of the safe harbor from
liability described in paragraph (b)(5) of
this section, transmit, receive, or
otherwise share information with any
other financial institution or association
of financial institutions regarding
individuals, entities, organizations, and
countries for purposes of identifying
and, where appropriate, reporting
activities that the financial institution or
association suspects may involve
possible terrorist activity or money
laundering.
(2) Notice requirement. A financial
institution or association of financial
institutions that intends to share
information as described in paragraph
(b)(1) of this section shall submit to
FinCEN a notice described on FinCEN’s
Internet Web site, https://
www.fincen.gov. Each notice provided
pursuant to this paragraph (b)(2) shall
be effective for the one year period
beginning on the date of the notice. In
order to continue to engage in the
sharing of information after the end of
the one year period, a financial
institution or association of financial
institutions must submit a new notice.
Completed notices may be submitted to
FinCEN by accessing FinCEN’s Internet
Web site, https://www.fincen.gov., and
entering the appropriate information as
directed, or, if a financial institution
does not have Internet access, by mail
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to: FinCEN, P.O. Box 39, Vienna, VA
22183.
(3) Verification requirement. Prior to
sharing information as described in
paragraph (b)(1) of this section, a
financial institution or an association of
financial institutions must take
reasonable steps to verify that the other
financial institution or association of
financial institutions with which it
intends to share information has
submitted to FinCEN the notice required
by paragraph (b)(2) of this section. A
financial institution or an association of
financial institutions may satisfy this
paragraph (b)(3) by confirming that the
other financial institution or association
of financial institutions appears on a list
that FinCEN will periodically make
available to financial institutions or
associations of financial institutions that
have filed a notice with it, or by
confirming directly with the other
financial institution or association of
financial institutions that the requisite
notice has been filed.
(4) Use and security of information. (i)
Information received by a financial
institution or an association of financial
institutions pursuant to this section
shall not be used for any purpose other
than:
(A) Identifying and, where
appropriate, reporting on money
laundering or terrorist activities;
(B) Determining whether to establish
or maintain an account, or to engage in
a transaction; or
(C) Assisting the financial institution
in complying with any requirement of
this chapter.
(ii) Each financial institution or
association of financial institutions that
engages in the sharing of information
pursuant to this section shall maintain
adequate procedures to protect the
security and confidentiality of such
information. The requirements of this
paragraph (b)(4)(ii) 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-LeachBliley Act (15 U.S.C. 6801), and
applicable regulations issued
thereunder, with regard to the
protection of its customers’ nonpublic
personal information.
(5) Safe harbor from certain liability—
(i) In general. A financial institution or
association of financial institutions that
shares information pursuant to
paragraph (b) of this section shall be
protected from liability for such sharing,
or for any failure to provide notice of
such sharing, to an individual, entity, or
organization that is identified in such
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sharing, to the full extent provided in
subsection 314(b) of Public Law 107–56.
(ii) Limitation. Paragraph (b)(5)(i) of
this section shall not apply to a
financial institution or association of
financial institutions to the extent such
institution or association fails to comply
with paragraphs (b)(2), (b)(3), or (b)(4) of
this section.
(c) Information sharing between
financial institutions and the Federal
Government. If, as a result of
information shared pursuant to this
section, a financial institution knows,
suspects, or has reason to suspect that
an individual, entity, or organization is
involved in, or may be involved in
terrorist activity or money laundering,
and such institution is subject to a
suspicious activity reporting
requirement under this chapter or other
applicable regulations, the institution
shall file a Suspicious Activity Report in
accordance with those regulations. In
situations involving violations requiring
immediate attention, such as when a
reportable violation involves terrorist
activity or is ongoing, the financial
institution shall immediately notify, by
telephone, an appropriate law
enforcement authority and financial
institution supervisory authorities in
addition to filing timely a Suspicious
Activity Report. A financial institution
that is not subject to a suspicious
activity reporting requirement is not
required to file a Suspicious Activity
Report or otherwise to notify law
enforcement of suspicious activity that
is detected as a result of information
shared pursuant to this section. Such a
financial institution is encouraged,
however, to voluntarily report such
activity to FinCEN.
(d) No effect on financial institution
reporting obligations. Nothing in this
subpart affects the obligation of a
financial institution to file a Suspicious
Activity Report pursuant to this chapter
or any other applicable regulations, or to
otherwise contact directly a Federal
agency concerning individuals or
entities suspected of engaging in
terrorist activity or money laundering.
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures
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§ 1010.600
General.
Each financial institution (as defined
in 31 U.S.C. 5312(a)(2) or (c)(1)) should
refer to its Chapter X Part for any
additional special standards of
diligence; prohibitions; and special
measures requirements.
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Special Due Diligence for
Correspondent Accounts and Private
Banking Accounts
§ 1010.605
Definitions.
Except as otherwise provided, the
following definitions apply for purposes
of §§ 1010.610 through 1010.630 and
§ 1010.670:
(a) Beneficial owner of an account
means an individual who has a level of
control over, or entitlement to, the funds
or assets in the account that, as a
practical matter, enables the individual,
directly or indirectly, to control, manage
or direct the account. The ability to fund
the account or the entitlement to the
funds of the account alone, however,
without any corresponding authority to
control, manage or direct the account
(such as in the case of a minor child
beneficiary), does not cause the
individual to be a beneficial owner.
(b) Certification and recertification
mean the certification and
recertification forms regarding
correspondent accounts for foreign
banks located on FinCEN’s Internet Web
site, https://www.fincen.gov.
(c) Correspondent account. (1) The
term correspondent account means:
(i) For purposes of § 1010.610(a), (d)
and (e), an account established for a
foreign financial institution to receive
deposits from, or to make payments or
other disbursements on behalf of, the
foreign financial institution, or to
handle other financial transactions
related to such foreign financial
institution; and
(ii) For purposes of §§ 1010.610(b)
and (c), 1010.630 and 1010.670, an
account established for a foreign bank to
receive deposits from, or to make
payments or other disbursements on
behalf of, the foreign bank, or to handle
other financial transactions related to
such foreign bank.
(2) For purposes of this definition, the
term account:
(i) As applied to banks (as set forth in
paragraphs (e)(1)(i) through (vii) of this
section):
(A) Means any formal banking or
business relationship established by a
bank to provide regular services,
dealings, and other financial
transactions; and
(B) Includes a demand deposit,
savings deposit, or other transaction or
asset account and a credit account or
other extension of credit;
(ii) As applied to brokers or dealers in
securities (as set forth in paragraph
(e)(1)(viii) of this section) means any
formal relationship established with a
broker or dealer in securities to provide
regular services to effect transactions in
securities, including, but not limited to,
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the purchase or sale of securities and
securities loaned and borrowed activity,
and to hold securities or other assets for
safekeeping or as collateral;
(iii) As applied to futures commission
merchants and introducing brokers (as
set forth in paragraph (e)(1)(ix) of this
section) means any formal relationship
established by a futures commission
merchant to provide regular services,
including, but not limited to, those
established to effect transactions in
contracts of sale of a commodity for
future delivery, options on any contract
of sale of a commodity for future
delivery, or options on a commodity;
and
(iv) As applied to mutual funds (as set
forth in paragraph (e)(1)(x) of this
section) means any contractual or other
business relationship established
between a person and a mutual fund to
provide regular services to effect
transactions in securities issued by the
mutual fund, including the purchase or
sale of securities.
(d) Correspondent relationship has
the same meaning as correspondent
account for purposes of §§ 1010.630 and
1010.670.
(e) Covered financial institution
means: (1) For purposes of § 1010.610
and 1010.620:
(i) An insured bank (as defined in
section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)));
(ii) A commercial bank;
(iii) An agency or branch of a foreign
bank in the United States;
(iv) A federally insured credit union;
(v) A savings association;
(vi) A corporation acting under
section 25A of the Federal Reserve Act
(12 U.S.C. 611 et seq.);
(vii) A trust bank or trust company
that is federally regulated and is subject
to an anti-money laundering program
requirement;
(viii) A broker or dealer in securities
registered, or required to be registered,
with the Securities and Exchange
Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.), except persons who register
pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934;
(ix) A futures commission merchant
or an introducing broker registered, or
required to be registered, with the
Commodity Futures Trading
Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), except
persons who register pursuant to section
4(f)(a)(2) of the Commodity Exchange
Act; and
(x) A mutual fund;
(2) For purposes of §§ 1010.630 and
1010.670:
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(i) An insured bank (as defined in
section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)));
(ii) A commercial bank or trust
company;
(iii) A private banker;
(iv) An agency or branch of a foreign
bank in the United States;
(v) A credit union;
(vi) A savings association;
(vii) A corporation acting under
section 25A of the Federal Reserve Act
(12 U.S.C. 611 et seq.); and
(viii) A broker or dealer in securities
registered, or required to be registered,
with the Securities and Exchange
Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.), except persons who register
pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934.
(f) Foreign financial institution. (1)
The term foreign financial institution
means:
(i) A foreign bank;
(ii) Any branch or office located
outside the United States of any covered
financial institution described in
paragraphs (e)(1)(viii) through (x) of this
section;
(iii) Any other person organized
under foreign law (other than a branch
or office of such person in the United
States) that, if it were located in the
United States, would be a covered
financial institution described in
paragraphs (e)(1)(viii) through (x) of this
section; and
(iv) Any person organized under
foreign law (other than a branch or
office of such person in the United
States) that is engaged in the business
of, and is readily identifiable as:
(A) A currency dealer or exchanger; or
(B) A money transmitter.
(2) For purposes of paragraph (f)(1)(iv)
of this section, a person is not ‘‘engaged
in the business’’ of a currency dealer, a
currency exchanger or a money
transmitter if such transactions are
merely incidental to the person’s
business.
(g) Foreign shell bank means a foreign
bank without a physical presence in any
country.
(h) Non-United States person or nonU.S. person means a natural person who
is neither a United States citizen nor is
accorded the privilege of residing
permanently in the United States
pursuant to title 8 of the United States
Code. For purposes of this paragraph
(h), the definition of person in
§ 1010.100(mm) does not apply,
notwithstanding paragraph (k) of this
section.
(i) Offshore banking license means a
license to conduct banking activities
that prohibits the licensed entity from
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conducting banking activities with the
citizens of, or in the local currency of,
the jurisdiction that issued the license.
(j) Owner. (1) The term owner means
any person who, directly or indirectly:
(i) Owns, controls, or has the power
to vote 25 percent or more of any class
of voting securities or other voting
interests of a foreign bank; or
(ii) Controls in any manner the
election of a majority of the directors (or
individuals exercising similar functions)
of a foreign bank.
(2) For purposes of this definition:
(i) Members of the same family shall
be considered to be one person.
(ii) The term same family means
parents, spouses, children, siblings,
uncles, aunts, grandparents,
grandchildren, first cousins,
stepchildren, stepsiblings, parents-inlaw, and spouses of any of the foregoing.
(iii) Each member of the same family
who has an ownership interest in a
foreign bank must be identified if the
family is an owner as a result of
aggregating the ownership interests of
the members of the family. In
determining the ownership interests of
the same family, any voting interest of
any family member shall be taken into
account.
(iv) Voting securities or other voting
interests means securities or other
interests that entitle the holder to vote
for or to select directors (or individuals
exercising similar functions).
(k) Person has the meaning provided
in § 1010.100(mm).
(l) Physical presence means a place of
business that:
(1) Is maintained by a foreign bank;
(2) Is located at a fixed address (other
than solely an electronic address or a
post-office box) in a country in which
the foreign bank is authorized to
conduct banking activities, at which
location the foreign bank:
(i) Employs one or more individuals
on a full-time basis; and
(ii) Maintains operating records
related to its banking activities; and
(3) Is subject to inspection by the
banking authority that licensed the
foreign bank to conduct banking
activities.
(m) Private banking account means an
account (or any combination of
accounts) maintained at a covered
financial institution that:
(1) Requires a minimum aggregate
deposit of funds or other assets of not
less than $1,000,000;
(2) Is established on behalf of or for
the benefit of one or more non-U.S.
persons who are direct or beneficial
owners of the account; and
(3) Is assigned to, or is administered
or managed by, in whole or in part, an
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officer, employee, or agent of a covered
financial institution acting as a liaison
between the covered financial
institution and the direct or beneficial
owner of the account.
(n) Regulated affiliate. (1) The term
regulated affiliate means a foreign shell
bank that:
(i) Is an affiliate of a depository
institution, credit union, or foreign bank
that maintains a physical presence in
the United States or a foreign country,
as applicable; and
(ii) Is subject to supervision by a
banking authority in the country
regulating such affiliated depository
institution, credit union, or foreign
bank.
(2) For purposes of this definition:
(i) Affiliate means a foreign bank that
is controlled by, or is under common
control with, a depository institution,
credit union, or foreign bank.
(ii) Control means:
(A) Ownership, control, or power to
vote 50 percent or more of any class of
voting securities or other voting
interests of another company; or
(B) Control in any manner the election
of a majority of the directors (or
individuals exercising similar functions)
of another company.
(o) Secretary means the Secretary of
the Treasury.
(p) Senior foreign political figure. (1)
The term senior foreign political figure
means:
(i) A current or former:
(A) Senior official in the executive,
legislative, administrative, military, or
judicial branches of a foreign
government (whether elected or not);
(B) Senior official of a major foreign
political party; or
(C) Senior executive of a foreign
government-owned commercial
enterprise;
(ii) A corporation, business, or other
entity that has been formed by, or for
the benefit of, any such individual;
(iii) An immediate family member of
any such individual; and
(iv) A person who is widely and
publicly known (or is actually known by
the relevant covered financial
institution) to be a close associate of
such individual.
(2) For purposes of this definition:
(i) Senior official or executive means
an individual with substantial authority
over policy, operations, or the use of
government-owned resources; and
(ii) Immediate family member means
spouses, parents, siblings, children and
a spouse’s parents and siblings.
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§ 1010.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
(a) In general. A covered financial
institution shall establish a due
diligence program that includes
appropriate, specific, risk-based, and,
where necessary, enhanced policies,
procedures, and controls that are
reasonably designed to enable the
covered financial institution to detect
and report, on an ongoing basis, any
known or suspected money laundering
activity conducted through or involving
any correspondent account established,
maintained, administered, or managed
by such covered financial institution in
the United States for a foreign financial
institution. The due diligence program
required by this section shall be a part
of the anti-money laundering program
otherwise required by this chapter. Such
policies, procedures, and controls shall
include:
(1) Determining whether any such
correspondent account is subject to
paragraph (b) of this section;
(2) Assessing the money laundering
risk presented by such correspondent
account, based on a consideration of all
relevant factors, which shall include, as
appropriate:
(i) The nature of the foreign financial
institution’s business and the markets it
serves;
(ii) The type, purpose, and anticipated
activity of such correspondent account;
(iii) The nature and duration of the
covered financial institution’s
relationship with the foreign financial
institution (and any of its affiliates);
(iv) The anti-money laundering and
supervisory regime of the jurisdiction
that issued the charter or license to the
foreign financial institution, and, to the
extent that information regarding such
jurisdiction is reasonably available, of
the jurisdiction in which any company
that is an owner of the foreign financial
institution is incorporated or chartered;
and
(v) Information known or reasonably
available to the covered financial
institution about the foreign financial
institution’s anti-money laundering
record; and
(3) Applying risk-based procedures
and controls to each such correspondent
account reasonably designed to detect
and report known or suspected money
laundering activity, including a periodic
review of the correspondent account
activity sufficient to determine
consistency with information obtained
about the type, purpose, and anticipated
activity of the account.
(b) Enhanced due diligence for certain
foreign banks. In the case of a
correspondent account established,
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maintained, administered, or managed
in the United States for a foreign bank
described in paragraph (c) of this
section, the due diligence program
required by paragraph (a) of this section
shall include enhanced due diligence
procedures designed to ensure that the
covered financial institution, at a
minimum, takes reasonable steps to:
(1) Conduct enhanced scrutiny of
such correspondent account to guard
against money laundering and to
identify and report any suspicious
transactions in accordance with
applicable law and regulation. This
enhanced scrutiny shall reflect the risk
assessment of the account and shall
include, as appropriate:
(i) Obtaining and considering
information relating to the foreign
bank’s anti-money laundering program
to assess the risk of money laundering
presented by the foreign bank’s
correspondent account;
(ii) Monitoring transactions to, from,
or through the correspondent account in
a manner reasonably designed to detect
money laundering and suspicious
activity; and
(iii)(A) Obtaining information from
the foreign bank about the identity of
any person with authority to direct
transactions through any correspondent
account that is a payable-through
account, and the sources and beneficial
owner of funds or other assets in the
payable-through account.
(B) For purposes of paragraph
(b)(1)(iii)(A) of this section, a payablethrough account means a correspondent
account maintained by a covered
financial institution for a foreign bank
by means of which the foreign bank
permits its customers to engage, either
directly or through a subaccount, in
banking activities usual in connection
with the business of banking in the
United States.
(2) Determine whether the foreign
bank for which the correspondent
account is established or maintained in
turn maintains correspondent accounts
for other foreign banks that use the
foreign correspondent account
established or maintained by the
covered financial institution and, if so,
take reasonable steps to obtain
information relevant to assess and
mitigate money laundering risks
associated with the foreign bank’s
correspondent accounts for other foreign
banks, including, as appropriate, the
identity of those foreign banks.
(3)(i) Determine, for any
correspondent account established or
maintained for a foreign bank whose
shares are not publicly traded, the
identity of each owner of the foreign
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65831
bank and the nature and extent of each
owner’s ownership interest.
(ii) For purposes of paragraph (b)(3)(i)
of this section:
(A) Owner means any person who
directly or indirectly owns, controls, or
has the power to vote 10 percent or
more of any class of securities of a
foreign bank. For purposes of this
paragraph (b)(3)(ii)(A):
(1) Members of the same family shall
be considered to be one person; and
(2) Same family has the meaning
provided in § 1010.605(j)(2)(ii).
(B) Publicly traded means shares that
are traded on an exchange or an
organized over-the-counter market that
is regulated by a foreign securities
authority as defined in section 3(a)(50)
of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(50)).
(c) Foreign banks to be accorded
enhanced due diligence. The due
diligence procedures described in
paragraph (b) of this section are required
for any correspondent account
maintained for a foreign bank that
operates under:
(1) An offshore banking license;
(2) A banking license issued by a
foreign country that has been designated
as non-cooperative with international
anti-money laundering principles or
procedures by an intergovernmental
group or organization of which the
United States is a member and with
which designation the U.S.
representative to the group or
organization concurs; or
(3) A banking license issued by a
foreign country that has been designated
by the Secretary as warranting special
measures due to money laundering
concerns.
(d) Special procedures when due
diligence or enhanced due diligence
cannot be performed. The due diligence
program required by paragraphs (a) and
(b) of this section shall include
procedures to be followed in
circumstances in which a covered
financial institution cannot perform
appropriate due diligence or enhanced
due diligence with respect to a
correspondent account, including when
the covered financial institution should
refuse to open the account, suspend
transaction activity, file a suspicious
activity report, or close the account.
(e) Applicability rules for general due
diligence. The provisions of paragraph
(a) of this section apply to covered
financial institutions as follows:
(1) General rules—(i) Correspondent
accounts established on or after July 5,
2006. Effective July 5, 2006, the
requirements of paragraph (a) of this
section shall apply to each
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correspondent account established on or
after that date.
(ii) Correspondent accounts
established before July 5, 2006. Effective
October 2, 2006, the requirements of
paragraph (a) of this section shall apply
to each correspondent account
established before July 5, 2006.
(2) Special rules for certain banks.
Until the requirements of paragraph (a)
of this section become applicable as set
forth in paragraph (e)(1) of this section,
the due diligence requirements of 31
U.S.C. 5318(i)(1) shall continue to apply
to any covered financial institution
listed in § 1010.605(e)(1)(i) through (vi).
(3) Special rules for all other covered
financial institutions. The due diligence
requirements of 31 U.S.C. 5318(i)(1)
shall not apply to a covered financial
institution listed in § 1010.605(e)(1)(vii)
through (x) until the requirements of
paragraph (a) of this section become
applicable as set forth in paragraph
(e)(1) of this section.
(f) Applicability rules for enhanced
due diligence. The provisions of
paragraph (b) of this section apply to
covered financial institutions as follows:
(1) General rules—(i) Correspondent
accounts established on or after
February 5, 2008. Effective February 5,
2008, the requirements of paragraph (b)
of this section shall apply to each
correspondent account established on or
after such date.
(ii) Correspondent accounts
established before February 5, 2008.
Effective May 5, 2008, the requirements
of paragraph (b) of this section shall
apply to each correspondent account
established before February 5, 2008.
(2) Special rules for certain banks.
Until the requirements of paragraph (b)
of this section become applicable as set
forth in paragraph (f)(1) of this section,
the enhanced due diligence
requirements of 31 U.S.C. 5318(i)(2)
shall continue to apply to any covered
financial institutions listed in
§ 1010.605(e)(1)(i) through (vi).
(3) Special rules for all other covered
financial institutions. The enhanced due
diligence requirements of 31 U.S.C.
5318(i)(2) shall not apply to a covered
financial institution listed in
§ 1010.605(e)(1)(vii) through (x) until
the requirements of paragraph (b) of this
section become applicable, as set forth
in paragraph (f)(1) of this section.
(g) Exemptions—(1) Exempt financial
institutions. Except as provided in this
section, a financial institution defined
in 31 U.S.C. 5312(a)(2) or (c)(1), or
§ 1010.100(t) is exempt from the
requirements of 31 U.S.C. 5318(i)(1) and
(i)(2) pertaining to correspondent
accounts.
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(2) Other compliance obligations of
financial institutions unaffected.
Nothing in paragraph (g) of this section
shall be construed to relieve a financial
institution from its responsibility to
comply with any other applicable
requirement of law or regulation,
including title 31, United States Code,
and this chapter.
§ 1010.620 Due diligence programs for
private banking accounts.
(a) In general. A covered financial
institution shall maintain a due
diligence program that includes
policies, procedures, and controls that
are reasonably designed to detect and
report any known or suspected money
laundering or suspicious activity
conducted through or involving any
private banking account that is
established, maintained, administered,
or managed in the United States by such
financial institution. The due diligence
program required by this section shall
be a part of the anti-money laundering
program otherwise required by this
chapter.
(b) Minimum requirements. The due
diligence program required by
paragraph (a) of this section shall be
designed to ensure, at a minimum, that
the financial institution takes reasonable
steps to:
(1) Ascertain the identity of all
nominal and beneficial owners of a
private banking account;
(2) Ascertain whether any person
identified under paragraph (b)(1) of this
section is a senior foreign political
figure;
(3) Ascertain the source(s) of funds
deposited into a private banking
account and the purpose and expected
use of the account; and
(4) Review the activity of the account
to ensure that it is consistent with the
information obtained about the client’s
source of funds, and with the stated
purpose and expected use of the
account, as needed to guard against
money laundering, and to report, in
accordance with applicable law and
regulation, any known or suspected
money laundering or suspicious activity
conducted to, from, or through a private
banking account.
(c) Special requirements for senior
foreign political figures. (1) In the case
of a private banking account for which
a senior foreign political figure is a
nominal or beneficial owner, the due
diligence program required by
paragraph (a) of this section shall
include enhanced scrutiny of such
account that is reasonably designed to
detect and report transactions that may
involve the proceeds of foreign
corruption.
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(2) For purposes of this paragraph (c),
the term proceeds of foreign corruption
means any asset or property that is
acquired by, through, or on behalf of a
senior foreign political figure through
misappropriation, theft, or
embezzlement of public funds, the
unlawful conversion of property of a
foreign government, or through acts of
bribery or extortion, and shall include
any other property into which any such
assets have been transformed or
converted.
(d) Special procedures when due
diligence cannot be performed. The due
diligence program required by
paragraph (a) of this section shall
include procedures to be followed in
circumstances in which a covered
financial institution cannot perform
appropriate due diligence with respect
to a private banking account, including
when the covered financial institution
should refuse to open the account,
suspend transaction activity, file a
suspicious activity report, or close the
account.
(e) Applicability rules. The provisions
of this section apply to covered
financial institutions as follows:
(1) General rules—(i) Private banking
accounts established on or after July 5,
2006. Effective July 5, 2006, the
requirements of this section shall apply
to each private banking account
established on or after such date.
(ii) Private banking accounts
established before July 5, 2006. Effective
October 2, 2006, the requirements of
this section shall apply to each private
banking account established before July
5, 2006.
(2) Special rules for certain banks and
for brokers or dealers in securities,
futures commission merchants, and
introducing brokers. Until the
requirements of this section become
applicable as set forth in paragraph
(e)(1) of this section, the requirements of
31 U.S.C. 5318(i)(3) shall continue to
apply to a covered financial institution
listed in § 1010.605(e)(1)(i) through (vi),
(viii), or (ix).
(3) Special rules for federally
regulated trust banks or trust
companies, and mutual funds. Until the
requirements of this section become
applicable as set forth in paragraph
(e)(1) of this section, the requirements of
31 U.S.C. 5318(i)(3) shall not apply to a
covered financial institution listed in
§ 1010.605(e)(1)(vii) or (x).
(4) Exemptions—(i) Exempt financial
institutions. Except as provided in this
section, a financial institution defined
in 31 U.S.C. 5312(a)(2) or (c)(1) or
§ 1010.100(t) is exempt from the
requirements of 31 U.S.C. 5318(i)(3)
pertaining to private banking accounts.
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(ii) Other compliance obligations of
financial institutions unaffected.
Nothing in paragraph (e)(4) of this
section shall be construed to relieve a
financial institution from its
responsibility to comply with any other
applicable requirement of law or
regulation, including title 31, United
States Code, and this chapter.
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§ 1010.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
(a) Requirements for covered financial
institutions—(1) Prohibition on
correspondent accounts for foreign shell
banks. (i) A covered financial institution
shall not establish, maintain,
administer, or manage a correspondent
account in the United States for, or on
behalf of, a foreign shell bank.
(ii) A covered financial institution
shall take reasonable steps to ensure
that any correspondent account
established, maintained, administered,
or managed by that covered financial
institution in the United States for a
foreign bank is not being used by that
foreign bank to indirectly provide
banking services to a foreign shell bank.
(iii) Nothing in paragraph (a)(1) of this
section prohibits a covered financial
institution from providing a
correspondent account or banking
services to a regulated affiliate.
(2) Records of owners and agents. (i)
Except as provided in paragraph
(a)(2)(ii) of this section, a covered
financial institution that maintains a
correspondent account in the United
States for a foreign bank shall maintain
records in the United States identifying
the owners of each such foreign bank
whose shares are not publicly traded
and the name and street address of a
person who resides in the United States
and is authorized, and has agreed to be
an agent to accept service of legal
process for records regarding each such
account.
(ii) A covered financial institution
need not maintain records of the owners
of any foreign bank that is required to
have on file with the Federal Reserve
Board a Form FR Y–7 that identifies the
current owners of the foreign bank as
required by such form.
(iii) For purposes of paragraph (a)(2)(i)
of this section, publicly traded refers to
shares that are traded on an exchange or
on an organized over-the-counter market
that is regulated by a foreign securities
authority as defined in section 3(a)(50)
of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(50)).
(b) Safe harbor. Subject to paragraphs
(c) and (d) of this section, a covered
financial institution will be deemed to
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be in compliance with the requirements
of paragraph (a) of this section with
respect to a foreign bank if the covered
financial institution obtains, at least
once every three years, a certification or
recertification from the foreign bank.
(c) Interim verification. If at any time
a covered financial institution knows,
suspects, or has reason to suspect, that
any information contained in a
certification or recertification provided
by a foreign bank, or otherwise relied
upon by the covered financial
institution for purposes of this section,
is no longer correct, the covered
financial institution shall request that
the foreign bank verify or correct such
information, or shall take other
appropriate measures to ascertain the
accuracy of the information or to obtain
correct information, as appropriate. See
paragraph (d)(3) of this section for
additional requirements if a foreign
bank fails to verify or correct the
information or if a covered financial
institution cannot ascertain the accuracy
of the information or obtain correct
information.
(d) Closure of correspondent
accounts—(1) Accounts existing on
October 28, 2002. In the case of any
correspondent account that was in
existence on October 28, 2002, if the
covered financial institution has not
obtained a certification (or
recertification) from the foreign bank, or
has not otherwise obtained
documentation of the information
required by such certification (or
recertification), on or before March 31,
2003, and at least once every three years
thereafter, the covered financial
institution shall close all correspondent
accounts with such foreign bank within
a commercially reasonable time, and
shall not permit the foreign bank to
establish any new positions or execute
any transaction through any such
account, other than transactions
necessary to close the account.
(2) Accounts established after October
28, 2002. In the case of any
correspondent account established after
October 28, 2002, if the covered
financial institution has not obtained a
certification (or recertification), or has
not otherwise obtained documentation
of the information required by such
certification (or recertification) within
30 calendar days after the date the
account is established, and at least once
every three years thereafter, the covered
financial institution shall close all
correspondent accounts with such
foreign bank within a commercially
reasonable time, and shall not permit
the foreign bank to establish any new
positions or execute any transaction
through any such account, other than
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65833
transactions necessary to close the
account.
(3) Verification of previously provided
information. In the case of a foreign
bank with respect to which the covered
financial institution undertakes to verify
information pursuant to paragraph (c) of
this section, if the covered financial
institution has not obtained, from the
foreign bank or otherwise, verification
of the information or corrected
information within 90 calendar days
after the date of undertaking the
verification, the covered financial
institution shall close all correspondent
accounts with such foreign bank within
a commercially reasonable time, and
shall not permit the foreign bank to
establish any new positions or execute
any transaction through any such
account, other than transactions
necessary to close the account.
(4) Reestablishment of closed
accounts and establishment of new
accounts. A covered financial
institution shall not reestablish any
account closed pursuant to this
paragraph (d), and shall not establish
any other correspondent account with
the concerned foreign bank, until it
obtains from the foreign bank the
certification or the recertification, as
appropriate.
(5) Limitation on liability. A covered
financial institution shall not be liable
to any person in any court or arbitration
proceeding for terminating a
correspondent account in accordance
with this paragraph (d).
(e) Recordkeeping requirement. A
covered financial institution shall retain
the original of any document provided
by a foreign bank, and the original or a
copy of any document otherwise relied
upon by the covered financial
institution, for purposes of this section,
for at least 5 years after the date that the
covered financial institution no longer
maintains any correspondent account
for such foreign bank. A covered
financial institution shall retain such
records with respect to any foreign bank
for such longer period as the Secretary
may direct.
(f) Special rules concerning
information requested prior to October
28, 2002—(1) Definition. For purposes
of this paragraph (f) the term ‘‘Interim
Guidance’’ means:
(i) The Interim Guidance of the
Department of the Treasury dated
November 20, 2001 and published in
the Federal Register on November 27,
2001; or
(ii) The guidance issued in a
document published in the Federal
Register on December 28, 2001.
(2) Use of Interim Guidance
certification. In the case of a
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correspondent account in existence on
October 28, 2002, the term
‘‘certification’’ as used in paragraphs (b),
(c), (d)(1), and (d)(3) of this section shall
also include the certification appended
to the Interim Guidance, provided that
such certification was requested prior to
October 28, 2002 and obtained by the
covered financial institution on or
before December 26, 2002.
(3) Recordkeeping requirement.
Paragraph (e) of this section shall apply
to any document provided by a foreign
bank, or otherwise relied upon by a
covered financial institution, for
purposes of the Interim Guidance.
§ 1010.640
[Reserved]
Special Measures Under Section 311 of
the USA Patriot Act and Law
Enforcement Access to Foreign Bank
Records
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§ 1010.651
Burma.
Special measures against
(a) Definitions. For purposes of this
section:
(1) Burmese banking institution
means any foreign bank, as that term is
defined in § 1010.100(u), chartered or
licensed by Burma, including branches
and offices located outside Burma.
(2) Correspondent account has the
same meaning as provided in
§ 1010.605(c).
(3) Covered financial institution has
the same meaning as provided in
§ 1010.605(e)(2) and also includes the
following:
(i) A futures commission merchant or
an introducing broker registered, or
required to register, with the
Commodity Futures Trading
Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.); and
(ii) An investment company (as
defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a–5))
that is an open-end company (as defined
in section 5 of the Investment Company
Act (15 U.S.C. 80a–5)) and that is
registered, or required to register, with
the Securities and Exchange
Commission pursuant to that Act.
(b) Requirements for covered financial
institutions—(1) Prohibition on
correspondent accounts. A covered
financial institution shall terminate any
correspondent account that is
established, maintained, administered,
or managed in the United States for, or
on behalf of, a Burmese banking
institution.
(2) Prohibition on indirect
correspondent accounts. (i) If a covered
financial institution has or obtains
knowledge that a correspondent account
established, maintained, administered,
or managed by that covered financial
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institution in the United States for a
foreign bank is being used by the foreign
bank to provide banking services
indirectly to a Burmese banking
institution, the covered financial
institution shall ensure that the
correspondent account is no longer used
to provide such services, including,
where necessary, terminating the
correspondent account; and
(ii) A covered financial institution
required to terminate an account
pursuant to paragraph (b)(2)(i) of this
section:
(A) Shall do so within a commercially
reasonable time, and shall not permit
the foreign bank to establish any new
positions or execute any transactions
through such account, other than those
necessary to close the account; and
(B) May reestablish an account closed
pursuant to this paragraph if it
determines that the account will not be
used to provide banking services
indirectly to a Burmese banking
institution.
(3) Exception. The provisions of
paragraphs (b)(1) and (2) of this section
shall not apply to a correspondent
account provided that the operation of
such account is not prohibited by
Executive Order 13310 and the
transactions involving Burmese banking
institutions that are conducted through
the correspondent account are limited
solely to transactions that are exempted
from, or otherwise authorized by
regulation, order, directive, or license
pursuant to, Executive Order 13310.
(4) Reporting and recordkeeping not
required. Nothing in this section shall
require a covered financial institution to
maintain any records, obtain any
certification, or report any information
not otherwise required by law or
regulation.
§ 1010.652 Special measures against
Myanmar Mayflower Bank and Asia Wealth
Bank.
(a) Definitions. For purposes of this
section:
(1) Asia Wealth Bank means all
headquarters, branches, and offices of
Asia Wealth Bank operating in Burma or
in any jurisdiction.
(2) Correspondent account has the
same meaning as provided in
§ 1010.605(c).
(3) Covered financial institution has
the same meaning as provided in
§ 1010.605(e)(2) and also includes the
following:
(i) A futures commission merchant or
an introducing broker registered, or
required to register, with the
Commodity Futures Trading
Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.); and
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(ii) An investment company (as
defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a–5))
that is an open-end company (as defined
in section 5 of the Investment Company
Act (15 U.S.C. 80a–5)) and that is
registered, or required to register, with
the Securities and Exchange
Commission pursuant to that Act.
(4) Myanmar Mayflower Bank means
all headquarters, branches, and offices
of Myanmar Mayflower Bank operating
in Burma or in any jurisdiction.
(b) Requirements for covered financial
institutions—(1) Prohibition on
correspondent accounts. A covered
financial institution shall terminate any
correspondent account that is
established, maintained, administered,
or managed in the United States for, or
on behalf of, Myanmar Mayflower Bank
or Asia Wealth Bank.
(2) Prohibition on indirect
correspondent accounts. (i) If a covered
financial institution has or obtains
knowledge that a correspondent account
established, maintained, administered,
or managed by that covered financial
institution in the United States for a
foreign bank is being used by the foreign
bank to provide banking services
indirectly to Myanmar Mayflower Bank
or Asia Wealth Bank, the covered
financial institution shall ensure that
the correspondent account is no longer
used to provide such services,
including, where necessary, terminating
the correspondent account; and
(ii) A covered financial institution
required to terminate an account
pursuant to paragraph (b)(2)(i) of this
section:
(A) Shall do so within a commercially
reasonable time, and shall not permit
the foreign bank to establish any new
positions or execute any transactions
through such account, other than those
necessary to close the account; and
(B) May reestablish an account closed
pursuant to this paragraph if it
determines that the account will not be
used to provide banking services
indirectly to Myanmar Mayflower Bank
or Asia Wealth Bank.
(3) Reporting and recordkeeping not
required. Nothing in this section shall
require a covered financial institution to
maintain any records, obtain any
certification, or to report any
information not otherwise required by
law or regulation.
§ 1010.653 Special measures against
Commercial Bank of Syria.
(a) Definitions. For purposes of this
section:
(1) Commercial Bank of Syria means
any branch, office, or subsidiary of
Commercial Bank of Syria operating in
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Syria or in any other jurisdiction,
including Syrian Lebanese Commercial
Bank.
(2) Correspondent account has the
same meaning as provided in
§ 1010.605(c)(1)(ii).
(3) Covered financial institution
includes:
(i) An insured bank (as defined in
section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)));
(ii) A commercial bank;
(iii) An agency or branch of a foreign
bank in the United States;
(iv) A federally insured credit union;
(v) A savings association;
(vi) A corporation acting under
section 25A of the Federal Reserve Act
(12 U.S.C. 611 et seq.);
(vii) A trust bank or trust company
that is federally regulated and is subject
to an anti-money laundering program
requirement;
(viii) A broker or dealer in securities
registered, or required to be registered,
with the Securities and Exchange
Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.), except persons who register
pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934;
(ix) A futures commission merchant
or an introducing broker registered, or
required to be registered, with the
Commodity Futures Trading
Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), except
persons who register pursuant to section
4(f)(a)(2) of the Commodity Exchange
Act; and
(x) A mutual fund, which means an
investment company (as defined in
section 3(a)(1) of the Investment
Company Act of 1940 ((‘‘Investment
Company Act’’) (15 U.S.C. 80a–3(a)(1)))
that is an open-end company (as defined
in section 5(a)(1) of the Investment
Company Act (15 U.S.C. 80a–5(a)(1)))
and that is registered, or is required to
register with the Securities and
Exchange Commission pursuant to the
Investment Company Act.
(4) Subsidiary means a company of
which more than 50 percent of the
voting stock or analogous equity interest
is owned by another company.
(b) Requirements for covered financial
institutions—(1) Prohibition on direct
use of correspondent accounts. A
covered financial institution shall
terminate any correspondent account
that is open or maintained in the United
States for, or on behalf of, Commercial
Bank of Syria.
(2) Due diligence of correspondent
accounts to prohibit indirect use. (i) A
covered financial institution shall apply
due diligence to its correspondent
accounts that is reasonably designed to
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guard against their indirect use by
Commercial Bank of Syria. At a
minimum, that due diligence must
include:
(A) Notifying correspondent account
holders that the correspondent account
may not be used to provide Commercial
Bank of Syria with access to the covered
financial institution; and
(B) Taking reasonable steps to identify
any indirect use of its correspondent
accounts by Commercial Bank of Syria,
to the extent that such indirect use can
be determined from transactional
records maintained in the covered
financial institution’s normal course of
business.
(ii) A covered financial institution
shall take a risk-based approach when
deciding what, if any, additional due
diligence measures it should adopt to
guard against the indirect use of its
correspondent accounts by Commercial
Bank of Syria.
(iii) A covered financial institution
that obtains knowledge that a
correspondent account is being used by
the foreign bank to provide indirect
access to Commercial Bank of Syria
shall take all appropriate steps to
prevent such indirect access, including,
where necessary, terminating the
correspondent account.
(iv) A covered financial institution
required to terminate a correspondent
account pursuant to paragraph (b)(2)(iii)
of this section:
(A) Should do so within a
commercially reasonable time, and
should not permit the foreign bank to
establish any new positions or execute
any transaction through such
correspondent account, other than those
necessary to close the correspondent
account; and
(B) May reestablish a correspondent
account closed pursuant to this
paragraph if it determines that the
correspondent account will not be used
to provide banking services indirectly to
Commercial Bank of Syria.
(3) Recordkeeping and reporting. (i) A
covered financial institution is required
to document its compliance with the
notice requirement set forth in
paragraph (b)(2)(i)(A) of this section.
(ii) Nothing in this section shall
require a covered financial institution to
report any information not otherwise
required to be reported by law or
regulation.
§ 1010.654
Bank.
Special measures against VEF
(a) Definitions. For purposes of this
section:
(1) Correspondent account has the
same meaning as provided in
§ 1010.605(c)(1)(ii).
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65835
(2) Covered financial institution
includes:
(i) An insured bank (as defined in
section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)));
(ii) A commercial bank;
(iii) An agency or branch of a foreign
bank in the United States;
(iv) A federally insured credit union;
(v) A savings association;
(vi) A corporation acting under
section 25A of the Federal Reserve Act
(12 U.S.C. 611 et seq.);
(vii) A trust bank or trust company
that is federally regulated and is subject
to an anti-money laundering program
requirement;
(viii) A broker or dealer in securities
registered, or required to be registered,
with the U.S. Securities and Exchange
Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.), except persons who register
pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934;
(ix) A futures commission merchant
or an introducing broker registered, or
required to be registered, with the
Commodity Futures Trading
Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), except
persons who register pursuant to section
4(f)(a)(2) of the Commodity Exchange
Act; and
(x) A mutual fund, which means an
investment company (as defined in
section 3(a)(1) of the Investment
Company Act of 1940 ((‘‘Investment
Company Act’’) (15 U.S.C. 80a–3(a)(1)))
that is an open-end company (as defined
in section 5(a)(1) of the Investment
Company Act (15 U.S.C. 80a–5(a)(1)))
and that is registered, or is required to
register with the Securities and
Exchange Commission pursuant to the
Investment Company Act.
(3) Subsidiary means a company of
which more than 50 percent of the
voting stock or analogous equity interest
is owned by another company.
(4) VEF Bank means any branch,
office, or subsidiary of joint stock
company VEF Banka operating in the
Republic of Latvia or in any other
jurisdiction. The one known VEF Bank
¯
subsidiary, Veiksmes lızings, and any
branches or offices, are included in the
definition.
(b) Requirements for covered financial
institutions—(1) Prohibition on direct
use of correspondent accounts. A
covered financial institution shall
terminate any correspondent account
that is opened or maintained in the
United States for, or on behalf of, VEF
Bank.
(2) Due diligence of correspondent
accounts to prohibit indirect use. (i) A
covered financial institution shall apply
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due diligence to its correspondent
accounts that is reasonably designed to
guard against their indirect use by VEF
Bank. At a minimum, that due diligence
must include:
(A) Notifying correspondent
accountholders that the correspondent
account may not be used to provide VEF
Bank with access to the covered
financial institution; and
(B) Taking reasonable steps to identify
any indirect use of its correspondent
accounts by VEF Bank, to the extent that
such indirect use can be determined
from transactional records maintained
in the covered financial institution’s
normal course of business.
(ii) A covered financial institution
shall take a risk-based approach when
deciding what, if any, additional due
diligence measures it should adopt to
guard against the indirect use of its
correspondent accounts by VEF Bank.
(iii) A covered financial institution
that obtains knowledge that a
correspondent account is being used by
the foreign bank to provide indirect
access to VEF Bank shall take all
appropriate steps to prevent such
indirect access, including, where
necessary, terminating the
correspondent account.
(iv) A covered financial institution
required to terminate a correspondent
account pursuant to paragraph (b)(2)(iii)
of this section:
(A) Should do so within a
commercially reasonable time, and
should not permit the foreign bank to
establish any new positions or execute
any transaction through such
correspondent account, other than those
necessary to close the correspondent
account; and
(B) May reestablish a correspondent
account closed pursuant to this
paragraph if it determines that the
correspondent account will not be used
to provide banking services indirectly to
VEF Bank.
(3) Recordkeeping and reporting. (i) A
covered financial institution is required
to document its compliance with the
notice requirement set forth in
paragraph (b)(2)(i)(A) of this section.
(ii) Nothing in this section shall
require a covered financial institution to
report any information not otherwise
required to be reported by law or
regulation.
§ 1010.655 Special measures against
Banco Delta Asia.
(a) Definitions. For purposes of this
section:
(1) Banco Delta Asia means all
branches, offices, and subsidiaries of
Banco Delta Asia operating in any
jurisdiction, including its subsidiaries
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Delta Asia Credit Limited and Delta
Asia Insurance Limited.
(2) Correspondent account has the
same meaning as provided in
§ 1010.605(c)(1)(ii).
(3) Covered financial institution
includes:
(i) An insured bank (as defined in
section 3(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(h)));
(ii) A commercial bank;
(iii) An agency or branch of a foreign
bank in the United States;
(iv) A federally insured credit union;
(v) A savings association;
(vi) A corporation acting under
section 25A of the Federal Reserve Act
(12 U.S.C. 611 et seq.);
(vii) A trust bank or trust company
that is federally regulated and is subject
to an anti-money laundering program
requirement;
(viii) A broker or dealer in securities
registered, or required to be registered,
with the U.S. Securities and Exchange
Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.), except persons who register
pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934;
(ix) A futures commission merchant
or an introducing broker registered, or
required to register, with the
Commodity Futures Trading
Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), except
persons who register pursuant to section
4(f)(a)(2) of the Commodity Exchange
Act; and
(x) A mutual fund, which means an
investment company (as defined in
section 3(a)(1) of the Investment
Company Act of 1940 ((‘‘Investment
Company Act’’) (15 U.S.C. 80a–3(a)(1)))
that is an open-end company (as defined
in section 5(a)(1) of the Investment
Company Act (15 U.S.C. 80a–5(a)(1)))
and that is registered, or is required to
register with the Securities and
Exchange Commission pursuant to the
Investment Company Act.
(4) Subsidiary means a company of
which more than 50 percent of the
voting stock or analogous equity interest
is owned by another company.
(b) Requirements for covered financial
institutions—(1) Prohibition on direct
use of correspondent accounts. A
covered financial institution shall
terminate any correspondent account
that is established, maintained,
administered, or managed in the United
States for, or on behalf of, Banco Delta
Asia.
(2) Due diligence of correspondent
accounts to prohibit indirect use.
(i) A covered financial institution
shall apply due diligence to its
correspondent accounts that is
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reasonably designed to guard against
their indirect use by Banco Delta Asia.
At a minimum, that due diligence must
include:
(A) Notifying correspondent
accountholders the correspondent
account may not be used to provide
Banco Delta Asia with access to the
covered financial institution; and
(B) Taking reasonable steps to identify
any indirect use of its correspondent
accounts by Banco Delta Asia, to the
extent that such indirect use can be
determined from transactional records
maintained in the covered financial
institution’s normal course of business.
(ii) A covered financial institution
shall take a risk-based approach when
deciding what, if any, additional due
diligence measures it should adopt to
guard against the indirect use of its
correspondent accounts by Banco Delta
Asia.
(iii) A covered financial institution
that obtains knowledge that a
correspondent account is being used by
the foreign bank to provide indirect
access to Banco Delta Asia shall take all
appropriate steps to prevent such
indirect access, including, where
necessary, terminating the
correspondent account.
(iv) A covered financial institution
required to terminate a correspondent
account pursuant to paragraph (b)(2)(iii)
of this section:
(A) Should do so within a
commercially reasonable time, and
should not permit the foreign bank to
establish any new positions or execute
any transaction through such
correspondent account, other than those
necessary to close the correspondent
account; and
(B) May reestablish a correspondent
account closed pursuant to this
paragraph if it determines that the
correspondent account will not be used
to provide banking services indirectly to
Banco Delta Asia.
(3) Recordkeeping and reporting. (i) A
covered financial institution is required
to document its compliance with the
notice requirement set forth in
paragraph (b)(2)(i)(A) of this section.
(ii) Nothing in this section shall
require a covered financial institution to
report any information not otherwise
required to be reported by law or
regulation.
§ 1010.670 Summons or subpoena of
foreign bank records; Termination of
correspondent relationship.
(a) Definitions. The definitions in
§ 1010.605 apply to this section.
(b) Issuance to foreign banks. The
Secretary or the Attorney General may
issue a summons or subpoena to any
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foreign bank that maintains a
correspondent account in the United
States and may request records related
to such correspondent account,
including records maintained outside of
the United States relating to the deposit
of funds into the foreign bank. The
summons or subpoena may be served on
the foreign bank in the United States if
the foreign bank has a representative in
the United States, or in a foreign
country pursuant to any mutual legal
assistance treaty, multilateral
agreement, or other request for
international law enforcement
assistance.
(c) Issuance to covered financial
institutions. Upon receipt of a written
request from a Federal law enforcement
officer for information required to be
maintained by a covered financial
institution under paragraph (a)(2) of
§ 1010.630, the covered financial
institution shall provide the information
to the requesting officer not later than 7
days after receipt of the request.
(d) Termination upon receipt of
notice. A covered financial institution
shall terminate any correspondent
relationship with a foreign bank not
later than 10 business days after receipt
of written notice from the Secretary or
the Attorney General (in each case, after
consultation with the other) that the
foreign bank has failed:
(1) To comply with a summons or
subpoena issued under paragraph (b) of
this section; or
(2) To initiate proceedings in a United
States court contesting such summons
or subpoena.
(e) Limitation on liability. A covered
financial institution shall not be liable
to any person in any court or arbitration
proceeding for terminating a
correspondent relationship in
accordance with paragraph (d) of this
section.
(f) Failure to terminate relationship.
Failure to terminate a correspondent
relationship in accordance with this
section shall render the covered
financial institution liable for a civil
penalty of up to $10,000 per day until
the correspondent relationship is so
terminated.
(1) A complete description of the
situation for which the ruling is
requested,
(2) A complete statement of all
material facts related to the subject
transaction,
(3) A concise and unambiguous
question to be answered,
(4) A statement certifying, to the best
of the requestor’s knowledge and belief,
that the question to be answered is not
applicable to any ongoing state or
Federal investigation, litigation, grand
jury proceeding, or proceeding before
any other governmental body involving
either the requestor, any other party to
the subject transaction, or any other
party with whom the requestor has an
agency relationship,
(5) A statement identifying any
information in the request that the
requestor considers to be exempt from
disclosure under the Freedom of
Information Act, 5 U.S.C. 552, and the
reason therefor,
(6) If the subject situation is
hypothetical, a statement justifying why
the particular situation described
warrants the issuance of a ruling,
(7) The signature of the person
making the request, or
(8) If an agent makes the request, the
signature of the agent and a statement
certifying the authority under which the
request is made.
(b) A request filed by a corporation
shall be signed by a corporate officer
and a request filed by a partnership
shall be signed by a partner.
(c) A request may advocate a
particular proposed interpretation and
may set forth the legal and factual basis
for that interpretation.
(d) Requests shall be addressed to:
Director, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA
22183.
(e) The requester shall advise the
Director, FinCEN, immediately in
writing of any subsequent change in any
material fact or statement submitted
with a ruling request in conformity with
paragraph (a) of this section.
§ 1010.712
Subpart G—Administrative Rulings
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§ 1010.710
Scope.
This subpart provides that the
Director, FinCEN, or his designee, either
unilaterally or upon request, may issue
administrative rulings interpreting the
application of this chapter.
§ 1010.711
Submitting requests.
(a) Each request for an administrative
ruling must be in writing and contain
the following information:
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Nonconforming requests.
The Director, FinCEN, or his designee
shall notify the requester if the ruling
request does not conform with the
requirements of § 1010.711. The notice
shall be in writing and shall describe
the requirements that have not been
met. A request that is not brought into
conformity with such requirements
within 30 days from the date of such
notice, unless extended for good cause
by FinCEN, shall be treated as though it
were withdrawn.
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§ 1010.713
65837
Oral communications.
(a) The Director of FinCEN or his
designee will not issue administrative
rulings in response to oral requests. Oral
opinions or advice by Treasury,
Customs and Border Protection, the
Internal Revenue Service, the Office of
the Comptroller of the Currency, or any
other bank supervisory agency
personnel, regarding the interpretation
and application of this chapter, do not
bind FinCEN and carry no precedential
value.
(b) A person who has made a ruling
request in conformity with § 1010.711
may request an opportunity for oral
discussion of the issues presented in the
request. The request should be made to
the Director, FinCEN, and any decision
to grant such a conference is wholly
within the discretion of the Director.
Personal conferences or telephone
conferences may be scheduled only for
the purpose of affording the requester an
opportunity to discuss freely and openly
the matters set forth in the
administrative ruling request.
Accordingly, the conferees will not be
bound by any argument or position
advocated or agreed to, expressly or
impliedly, during the conference. Any
new arguments or facts put forth by the
requester at the meeting must be
reduced to writing by the requester and
submitted in conformity with
§ 1010.711 before they may be
considered in connection with the
request.
§ 1010.714
Withdrawing requests.
A person may withdraw a request for
an administrative ruling at any time
before the ruling has been issued.
§ 1010.715
Issuing rulings.
The Director, FinCEN, or his designee
may issue a written ruling interpreting
the relationship between this chapter
and each situation for which such a
ruling has been requested in conformity
with § 1010.711. A ruling issued under
this section shall bind FinCEN only in
the event that the request describes a
specifically identified actual situation.
A ruling issued under this section shall
have precedential value, and hence may
be relied upon by others similarly
situated, only if FinCEN makes it
available to the public through
publication on the FinCEN Web site
under the heading ‘‘Administrative
rulings’’ or other appropriate forum. All
rulings with precedential value will be
available by mail to any person upon
written request specifically identifying
the ruling sought. FinCEN will make
every effort to respond to each requestor
within 90 days of receiving a request.
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(Approved by the Office of Management
and Budget under control number 1506–
0009)
§ 1010.716
rulings.
Modifying or rescinding
(a) The Director, FinCEN, or his
designee may modify or rescind any
ruling made pursuant to § 1010.715:
(1) When, in light of changes in the
statute or regulations, the ruling no
longer sets forth the interpretation of the
Director, FinCEN with respect to the
described situation,
(2) When any fact or statement
submitted in the original ruling request
is found to be materially inaccurate or
incomplete, or
(3) For other good cause.
(b) Any person may submit to the
Director, FinCEN a written request that
an administrative ruling be modified or
rescinded. The request should conform
to the requirements of § 1010.711,
explain why rescission or modification
is warranted, and refer to any reasons in
paragraph (a) of this section that are
relevant. The request may advocate an
alternative interpretation and may set
forth the legal and factual basis for that
interpretation.
(c) FinCEN shall modify an existing
administrative ruling by issuing a new
ruling that rescinds the relevant prior
ruling. Once rescinded, an
administrative ruling shall no longer
have any precedential value.
(d) An administrative ruling may be
modified or rescinded retroactively with
respect to one or more parties to the
original ruling request if the Director,
FinCEN, determines that:
(1) A fact or statement in the original
ruling request was materially inaccurate
or incomplete,
(2) The requestor failed to notify in
writing FinCEN of a material change to
any fact or statement in the original
request, or
(3) A party to the original request
acted in bad faith when relying upon
the ruling.
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§ 1010.717
Disclosing information.
(a) Any part of any administrative
ruling, including names, addresses, or
information related to the business
transactions of private parties, may be
disclosed pursuant to a request under
the Freedom of Information Act, 5
U.S.C. 552. If the request for an
administrative ruling contains
information which the requestor wishes
to be considered for exemption from
disclosure under the Freedom of
Information Act, the requestor should
clearly identify such portions of the
request and the reasons why such
information should be exempt from
disclosure.
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(b) A requestor claiming an exemption
from disclosure will be notified, at least
10 days before the administrative ruling
is issued, of a decision not to exempt
any of such information from disclosure
so that the underlying request for an
administrative ruling can be withdrawn
if the requestor so chooses.
Subpart H—Enforcement; Penalties;
and Forfeiture
§ 1010.810
Enforcement.
(a) Overall authority for enforcement
and compliance, including coordination
and direction of procedures and
activities of all other agencies exercising
delegated authority under this chapter,
is delegated to the Director, FinCEN.
(b) Authority to examine institutions
to determine compliance with the
requirements of this chapter is delegated
as follows:
(1) To the Comptroller of the Currency
with respect to those financial
institutions regularly examined for
safety and soundness by national bank
examiners;
(2) To the Board of Governors of the
Federal Reserve System with respect to
those financial institutions regularly
examined for safety and soundness by
Federal Reserve bank examiners;
(3) To the Federal Deposit Insurance
Corporation with respect to those
financial institutions regularly
examined for safety and soundness by
FDIC bank examiners;
(4) To the Federal Home Loan Bank
Board with respect to those financial
institutions regularly examined for
safety and soundness by FHLBB bank
examiners;
(5) To the Chairman of the Board of
the National Credit Union
Administration with respect to those
financial institutions regularly
examined for safety and soundness by
NCUA examiners.
(6) To the Securities and Exchange
Commission with respect to brokers and
dealers in securities and investment
companies as that term is defined in the
Investment Company Act of 1940 (15
U.S.C. 80–1 et seq.);
(7) To the Commissioner of Customs
and Border Protection with respect to
§§ 1010.340 and 1010.830;
(8) To the Commissioner of Internal
Revenue with respect to all financial
institutions, except brokers or dealers in
securities, mutual funds, futures
commission merchants, introducing
brokers in commodities, and commodity
trading advisors, not currently
examined by Federal bank supervisory
agencies for soundness and safety; and
(9) To the Commodity Futures
Trading Commission with respect to
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futures commission merchants,
introducing brokers in commodities,
and commodity trading advisors.
(c) Authority for investigating
criminal violations of this chapter is
delegated as follows:
(1) To the Commissioner of Customs
and Border Protection with respect to
§ 1010.340;
(2) To the Commissioner of Internal
Revenue except with respect to
§ 1010.340.
(d) Authority for the imposition of
civil penalties for violations of this
chapter lies with the Director of
FinCEN.
(e) Periodic reports shall be made to
the Director, FinCEN by each agency to
which compliance authority has been
delegated under paragraph (b) of this
section. These reports shall be in such
a form and submitted at such intervals
as the Director, FinCEN may direct.
Evidence of specific violations of any of
the requirements of this chapter may be
submitted to the Director, FinCEN at
any time.
(f) The Director, FinCEN or his
delegate, and any agency to which
compliance has been delegated under
paragraph (b) of this section, may
examine any books, papers, records, or
other data of domestic financial
institutions relevant to the
recordkeeping or reporting requirements
of this chapter.
(g) The authority to enforce the
provisions of 31 U.S.C. 5314 and
§§ 1010.350 and 1010.420 of this
chapter has been redelegated from
FinCEN to the Commissioner of Internal
Revenue by means of a Memorandum of
Agreement between FinCEN and IRS.
Such authority includes, with respect to
31 U.S.C. 5314 and 1010.350 and
1010.420 of this chapter, the authority
to: assess and collect civil penalties
under 31 U.S.C. 5321 and 31 CFR
1010.820; investigate possible civil
violations of these provisions (in
addition to the authority already
provided at paragraph (c)(2)) of this
section); employ the summons power of
subpart I of this part 1010; issue
administrative rulings under subpart G
of this part 1010; and take any other
action reasonably necessary for the
enforcement of these and related
provisions, including pursuit of
injunctions.
§ 1010.820
Civil penalty.
(a) For any willful violation,
committed on or before October 12,
1984, of any reporting requirement for
financial institutions under this chapter
or of any recordkeeping requirements of
§§ 1010.311, 1010.313, 1020.315,
1021.311 or 1021.313, the Secretary may
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assess upon any domestic financial
institution, and upon any partner,
director, officer, or employee thereof
who willfully participates in the
violation, a civil penalty not to exceed
$1,000.
(b) For any willful violation
committed after October 12, 1984 and
before October 28, 1986, of any
reporting requirement for financial
institutions under this chapter or of the
recordkeeping requirements of
§ 1010.420, the Secretary may assess
upon any domestic financial institution,
and upon any partner, director, officer,
or employee thereof who willfully
participates in the violation, a civil
penalty not to exceed $10,000.
(c) For any willful violation of any
recordkeeping requirement for financial
institutions, except violations of
§ 1010.420, under this chapter, the
Secretary may assess upon any domestic
financial institution, and upon any
partner, director, officer, or employee
thereof who willfully participates in the
violation, a civil penalty not to exceed
$1,000.
(d) For any failure to file a report
required under § 1010.340 or for filing
such a report containing any material
omission or misstatement, the Secretary
may assess a civil penalty up to the
amount of the currency or monetary
instruments transported, mailed or
shipped, less any amount forfeited
under § 1010.830.
(e) For any willful violation of
§ 1010.314 committed after January 26,
1987, the Secretary may assess upon any
person a civil penalty not to exceed the
amount of coins and currency involved
in the transaction with respect to which
such penalty is imposed. The amount of
any civil penalty assessed under this
paragraph shall be reduced by the
amount of any forfeiture to the United
States in connection with the
transaction for which the penalty was
imposed.
(f) For any willful violation
committed after October 27, 1986, of
any reporting requirement for financial
institutions under this chapter (except
§ 1010.350, § 1010.360 or § 1010.420),
the Secretary may assess upon any
domestic financial institution, and upon
any partner, director, officer, or
employee thereof who willfully
participates in the violation, a civil
penalty not to exceed the greater of the
amount (not to exceed $100,000)
involved in the transaction or $25,000.
(g) For any willful violation
committed after October 27, 1986, of
any requirement of § 1010.350,
§ 1010.360 or § 1010.420, the Secretary
may assess upon any person, a civil
penalty:
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(1) In the case of a violation of
§ 1010.360 involving a transaction, a
civil penalty not to exceed the greater of
the amount (not to exceed $100,000) of
the transaction, or $25,000; and
(2) In the case of a violation of
§ 1010.350 or § 1010.420 involving a
failure to report the existence of an
account or any identifying information
required to be provided with respect to
such account, a civil penalty not to
exceed the greater of the amount (not to
exceed $100,000) equal to the balance in
the account at the time of the violation,
or $25,000.
(h) For each negligent violation of any
requirement of this chapter, committed
after October 27, 1986, the Secretary
may assess upon any financial
institution a civil penalty not to exceed
$500.
§ 1010.830 Forfeiture of currency or
monetary instruments.
Any currency or other monetary
instruments which are in the process of
any transportation with respect to
which a report is required under
§ 1010.340 are subject to seizure and
forfeiture to the United States if such
report has not been filed as required in
§ 1010.360, or contains material
omissions or misstatements. The
Secretary may, in his sole discretion,
remit or mitigate any such forfeiture in
whole or in part upon such terms and
conditions as he deems reasonable.
§ 1010.840
Criminal penalty.
(a) Any person who willfully violates
any provision of Title I of Public Law
91–508, or of this chapter authorized
thereby may, upon conviction thereof,
be fined not more than $1,000 or be
imprisoned not more than 1 year, or
both. Such person may in addition, if
the violation is of any provision
authorized by Title I of Public Law 91–
508 and if the violation is committed in
furtherance of the commission of any
violation of Federal law punishable by
imprisonment for more than 1 year, be
fined not more than $10,000 or be
imprisoned not more than 5 years, or
both.
(b) Any person who willfully violates
any provision of Title II of Public Law
91–508, or of this chapter authorized
thereby, may, upon conviction thereof,
be fined not more than $250,000 or be
imprisoned not more than 5 years, or
both.
(c) Any person who willfully violates
any provision of Title II of Public Law
91–508, or of this chapter authorized
thereby, where the violation is either
(1) Committed while violating another
law of the United States, or
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65839
(2) Committed as part of a pattern of
any illegal activity involving more than
$100,000 in any 12-month period, may,
upon conviction thereof, be fined not
more than $500,000 or be imprisoned
not more than 10 years, or both.
(d) Any person who knowingly makes
any false, fictitious or fraudulent
statement or representation in any
report required by this chapter may,
upon conviction thereof, be fined not
more than $10,000 or be imprisoned not
more than 5 years, or both.
§ 1010.850 Enforcement authority with
respect to transportation of currency or
monetary instruments.
(a) If a customs officer has reasonable
cause to believe that there is a monetary
instrument being transported without
the filing of the report required by
§§ 1010.340 and 1010.360 of this
chapter, he may stop and search,
without a search warrant, a vehicle,
vessel, aircraft, or other conveyance,
envelope or other container, or person
entering or departing from the United
States with respect to which or whom
the officer reasonably believes is
transporting such instrument.
(b) If the Secretary has reason to
believe that currency or monetary
instruments are in the process of
transportation and with respect to
which a report required under
§ 1010.340 has not been filed or
contains material omissions or
misstatements, he may apply to any
court of competent jurisdiction for a
search warrant. Upon a showing of
probable cause, the court may issue a
warrant authorizing the search of any or
all of the following:
(1) One or more designated persons.
(2) One or more designated or
described places or premises.
(3) One or more designated or
described letters, parcels, packages, or
other physical objects.
(4) One or more designated or
described vehicles. Any application for
a search warrant pursuant to this section
shall be accompanied by allegations of
fact supporting the application.
(c) This section is not in derogation of
the authority of the Secretary under any
other law or regulation.
Subpart I—Summons
§ 1010.911
General.
For any investigation for the purpose
of civil enforcement of violations of the
Bank Secrecy Act, or any regulation
issued pursuant to the Bank Secrecy
Act, the Secretary or delegate of the
Secretary may summon a financial
institution or an officer or employee of
a financial institution (including a
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former officer or employee), or any
person having possession, custody, or
care of any of the records and reports
required under the Bank Secrecy Act or
this chapter to appear before the
Secretary or his delegate, at a time and
place named in the summons, and to
give testimony, under oath, and be
examined, and to produce such books,
papers, records, or other data as may be
relevant or material to such
investigation.
§ 1010.912 Persons who may issue
summons.
For purposes of this chapter, the
following officials are hereby designated
as delegates of the Secretary who are
authorized to issue a summons under
§ 1010.911, solely for the purposes of
civil enforcement of this chapter:
(a) FinCEN. The Director, FinCEN.
(b) Internal Revenue Service. Except
with respect to § 1010.340 of this
chapter, the Commissioner, the Deputy
Commissioner, or a delegate of either
official, and, for the purposes of
perfecting seizures and forfeitures
related to civil enforcement of this
chapter, the Chief (Criminal
Investigation) or a delegate.
(c) Customs and Border Protection.
With respect to § 1010.340 of this
chapter, the Commissioner, the Deputy
Commissioner, the Assistant
Commissioner (Enforcement), Regional
Commissioners, Assistant Regional
Commissioners (Enforcement), and
Special Agents in Charge.
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§ 1010.913
Contents of summons.
(a) Summons for testimony. Any
summons issued under § 1010.911 of
this chapter to compel the appearance
and testimony of a person shall state:
(1) The name, title, address, and
telephone number of the person before
whom the appearance shall take place
(who may be a person other than the
persons who are authorized to issue
such a summons under § 1010.912 of
this chapter);
(2) The address to which the person
summoned shall report for the
appearance;
(3) The date and time of the
appearance; and
(4) The name, title, address, and
telephone number of the person who
has issued the summons.
(b) Summons of books, papers,
records, or data. Any summons issued
under § 1010.911 of this chapter to
require the production of books, papers,
records, or other data shall describe the
materials to be produced with
reasonable specificity, and shall state:
(1) The name, title, address, and
telephone number of the person to
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whom the materials shall be produced
(who may be a person other than the
persons who are authorized to issue
such a summons under § 1010.912 of
this chapter);
(2) The address at which the person
summoned shall produce the materials,
not to exceed 500 miles from any place
where the financial institution operates
or conducts business in the United
States;
(3) The specific manner of
production, whether by personal
delivery, by mail, or by messenger
service;
(4) The date and time for production;
and
(5) The name, title, address, and
telephone number of the person who
has issued the summons.
§ 1010.914
Service of summons.
(a) Who may serve. Any delegate of
the Secretary authorized under
§ 1010.912 of this chapter to issue a
summons, or any other person
authorized by law to serve summonses
or other process, is hereby authorized to
serve a summons issued under this
chapter.
(b) Manner of service. Service of a
summons may be made—
(1) Upon any person, by registered
mail, return receipt requested, directed
to the person summoned;
(2) Upon a natural person by personal
delivery; or
(3) Upon any other person by delivery
to an officer, managing or general agent,
or any other agent authorized to receive
service of process.
(c) Certificate of service. The
summons shall contain a certificate of
service to be signed by the server of the
summons. On the hearing of an
application for enforcement of the
summons, the certificate of service
signed by the person serving the
summons shall be evidence of the facts
it states.
§ 1010.915
records.
Examination of witnesses and
(a) General. Any delegate of the
Secretary authorized under § 1010.912
of this chapter to issue a summons, or
any officer or employee of the Treasury
Department or any component thereof
who is designated by that person
(whether in the summons or otherwise),
is hereby authorized to receive evidence
and to examine witnesses pursuant to
the summons. Any person authorized by
law may administer any oaths and
affirmations that may be required under
this subpart.
(b) Testimony taken under oath.
Testimony of any person under this
chapter may be taken under oath, and
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shall be taken down in writing by the
person examining the person
summoned or shall be otherwise
transcribed. After the testimony of a
witness has been transcribed, a copy of
that transcript shall be made available to
the witness upon request, unless for
good cause the person issuing the
summons determines, under 5 U.S.C.
555, that a copy should not be provided.
If such a determination has been made,
the witness shall be limited to
inspection of the official transcript of
the testimony.
(c) Disclosure of summons, testimony,
or records. Unless the Secretary or a
delegate of the Secretary listed under
§ 1010.912(a) of this chapter so
authorizes in writing, or it is otherwise
required by law, no delegate of the
Secretary listed under § 1010.912 (b) or
(c) of this chapter or other officer or
employee of the Treasury Department or
any component thereof shall—
(1) Make public the name of any
person to whom a summons has been
issued under this chapter, or release any
information to the public concerning
that person or the issuance of a
summons to that person prior to the
time and date set for that person’s
appearance or production of records; or
(2) Disclose any testimony taken
(including the name of the witness) or
material presented pursuant to the
summons, to any person other than an
officer or employee of the Treasury
Department or of any component
thereof. Nothing in the preceding
sentence shall preclude a delegate of the
Secretary, or other officer or employee
of the Treasury Department or any
component thereof, from disclosing
testimony taken, or material presented
pursuant to a summons issued under
this chapter, to any person in order to
obtain necessary information for
investigative purposes relating to the
performance of official duties, or to any
officer or employee of the Department of
Justice in connection with a possible
violation of Federal law.
§ 1010.916
Enforcement of summons.
In the case of contumacy by, or refusal
to obey a summons issued to, any
person under this chapter, the Secretary
or any delegate of the Secretary listed
under § 1010.912 of this chapter shall
refer the matter to the Attorney General
or delegate of the Attorney General
(including any United States Attorney
or Assistant United States Attorney, as
appropriate), who may bring an action
to compel compliance with the
summons in any court of the United
States within the jurisdiction of which
the investigation which gave rise to the
summons being or has been carried on,
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the jurisdiction in which the person
summoned is a resident, or the
jurisdiction in which the person
summoned carries on business or may
be found. When a referral is made by a
delegate of the Secretary other than a
delegate named in § 1010.912(a) of this
chapter, prompt notification of the
referral must be made to the Director,
FinCEN. The court may issue an order
requiring the person summoned to
appear before the Secretary or delegate
of the Secretary to produce books,
papers, records, or other data, to give
testimony as may be necessary in order
to explain how such material was
compiled and maintained, and to pay
the costs of the proceeding. Any failure
to obey the order of the court may be
punished by the court as a contempt
thereof. All process in any case under
this section may be served in any
judicial district in which such person
may be found.
§ 1010.917
Payment of expenses.
Persons summoned under this chapter
shall be paid the same fees and mileage
for travel in the United States that are
paid witnesses in the courts of the
United States. The United States shall
not be liable for any other expense
incurred in connection with the
production of books, papers, records, or
other data under this chapter.
Subpart J—Miscellaneous
§ 1010.920
Access to records.
Except as provided in
§§ 1020.410(b)(1), 1021.410(a), and
1023.410(a)(1), and except for the
purpose of assuring compliance with
the recordkeeping and reporting
requirements of this chapter, this
chapter does not authorize the Secretary
or any other person to inspect or review
the records required to be maintained by
this chapter. Other inspection, review or
access to such records is governed by
other applicable law.
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§ 1010.930
Rewards for informants.
(a) If an individual provides original
information which leads to a recovery of
a criminal fine, civil penalty, or
forfeiture, which exceeds $50,000, for a
violation of the provisions of the Bank
Secrecy Act or of this chapter, the
Secretary may pay a reward to that
individual.
(b) The Secretary shall determine the
amount of the reward to be paid under
this section; however, any reward paid
may not be more than 25 percent of the
net amount of the fine, penalty or
forfeiture collected, or $150,000,
whichever is less.
(c) An officer or employee of the
United States, a State, or a local
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government who provides original
information described in paragraph (a)
in the performance of official duties is
not eligible for a reward under this
section.
§ 1010.940 Photographic or other
reproductions of Government obligations.
Nothing herein contained shall
require or authorize the microfilming or
other reproduction of:
(a) Currency or other obligation or
security of the United States as defined
in 18 U.S.C. 8, or
(b) Any obligation or other security of
any foreign government, the
reproduction of which is prohibited by
law.
§ 1010.950
Availability of information.
(a) The Secretary may within his
discretion disclose information reported
under this chapter for any reason
consistent with the purposes of the
Bank Secrecy Act, including those set
forth in paragraphs (b) through (d) of
this section.
(b) The Secretary may make any
information set forth in any report
received pursuant to this chapter
available to another agency of the
United States, to an agency of a state or
local government or to an agency of a
foreign government, upon the request of
the head of such department or agency
made in writing and stating the
particular information desired, the
criminal, tax or regulatory purpose for
which the information is sought, and
the official need for the information.
(c) The Secretary may make any
information set forth in any report
received pursuant to this chapter
available to the Congress, or any
committee or subcommittee thereof,
upon a written request stating the
particular information desired, the
criminal, tax or regulatory purpose for
which the information is sought, and
the official need for the information.
(d) The Secretary may make any
information set forth in any report
received pursuant to this chapter
available to any other department or
agency of the United States that is a
member of the Intelligence Community,
as defined by Executive Order 12333 or
any succeeding executive order, upon
the request of the head of such
department or agency made in writing
and stating the particular information
desired, the national security matter
with which the information is sought
and the official need therefor.
(e) Any information made available
under this section to other department
or agencies of the United States, any
state or local government, or any foreign
government shall be received by them in
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confidence, and shall not be disclosed
to any person except for official
purposes relating to the investigation,
proceeding or matter in connection with
which the information is sought.
(f) The Secretary may require that a
State or local government department or
agency requesting information under
paragraph (b) of this section pay fees to
reimburse the Department of the
Treasury for costs incidental to such
disclosure. The amount of such fees will
be set in accordance with the statute on
fees for government services, 31 U.S.C.
9701.
§ 1010.960
Disclosure.
All reports required under this
chapter and all records of such reports
are specifically exempted from
disclosure under section 552 of Title 5,
United States Code.
§ 1010.970
reports.
Exceptions, exemptions, and
(a) The Secretary, in his sole
discretion, may by written order or
authorization make exceptions to or
grant exemptions from the requirements
of this chapter. Such exceptions or
exemptions may be conditional or
unconditional, may apply to particular
persons or to classes of persons, and
may apply to particular transactions or
classes of transactions. They shall,
however, be applicable only as
expressly Stated in the order of
authorization, and they shall be
revocable in the sole discretion of the
Secretary.
(b) The Secretary shall have authority
to further define all terms used herein.
(c)(1) The Secretary may, as an
alternative to the reporting and
recordkeeping requirements for casinos
in §§ 1010.306(a), 1021.311, and
1021.410, grant exemptions to the
casinos in any State whose regulatory
system substantially meets the reporting
and recordkeeping requirements of this
chapter.
(2) In order for a State regulatory
system to qualify for an exemption on
behalf of its casinos, the State must
provide:
(i) That the Treasury Department be
allowed to evaluate the effectiveness of
the State’s regulatory system by periodic
oversight review of that system;
(ii) That the reports required under
the State’s regulatory system be
submitted to the Treasury Department
within 15 days of receipt by the State;
(iii) That any records required to be
maintained by the casinos relevant to
any matter under this chapter and to
which the State has access or maintains
under its regulatory system be made
available to the Treasury Department
within 30 days of request;
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(iv) That the Treasury Department be
provided with periodic status reports on
the State’s compliance efforts and
findings;
(v) That all but minor violations of the
State requirements be reported to
Treasury within 15 days of discovery;
and
(vi) That the State will initiate
compliance examinations of specific
institutions at the request of Treasury
within a reasonable time, not to exceed
90 days where appropriate, and will
provide reports of these examinations to
Treasury within 15 days of completion
or periodically during the course of the
examination upon the request of the
Secretary. If for any reason the State
were not able to conduct an
investigation within a reasonable time,
the State will permit Treasury to
conduct the investigation.
(3) Revocation of any exemption
under this subsection shall be in the
sole discretion of the Secretary.
§ 1010.980
currency.
§ 1020.100
PARTS 1011–1019 [RESERVED]
Part 1020—RULE FOR BANKS
Subpart A—Definitions
Definitions.
Subpart B—Programs
1020.200 General.
1020.210 Anti-money laundering program
requirements for financial institutions
regulated only by a Federal functional
regulator, including banks, savings
associations, and credit unions.
1020.220 Customer Identification Programs
for banks, savings associations, credit
unions, and certain non-Federally
regulated banks.
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Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Banks
1020.600 General.
1020.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
1020.620 Due diligence programs for
private banking accounts.
1020.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
1020.640 [Reserved].
1020.670 Summons or subpoena of foreign
bank records; Termination of
correspondent relationship.
Subpart A—Definitions
Dollars as including foreign
Wherever in this chapter an amount is
Stated in dollars, it shall be deemed to
mean also the equivalent amount in any
foreign currency.
Sec.
1020.100
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1020.500 General.
1020.520 Special information sharing
procedures to deter money laundering
and terrorist activity for banks.
1020.530 [Reserved].
1020.540 Voluntary information sharing
among financial institutions.
Subpart C—Reports Required To Be Made
by Banks
1020.300 General.
1020.310 Reports of transactions in
currency.
1020.311 Filing obligations.
1020.312 Identification required.
1020.313 Aggregation.
1020.314 Structured transactions.
1020.315 Transactions of exempt persons.
1020.320 Reports by banks of suspicious
transactions.
Subpart D—Records Required To Be
Maintained by Banks
1020.400 General.
1020.410 Records to be made and retained
by banks.
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Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1020. Unless otherwise
indicated, for purposes of this Part:
(a) Account. For purposes of
§ 1020.220:
(1) Account means a formal banking
relationship established to provide or
engage in services, dealings, or other
financial transactions including a
deposit account, a transaction or asset
account, a credit account, or other
extension of credit. Account also
includes a relationship established to
provide a safety deposit box or other
safekeeping services, or cash
management, custodian, and trust
services.
(2) Account does not include:
(i) A product or service where a
formal banking relationship is not
established with a person, such as
check-cashing, wire transfer, or sale of
a check or money order;
(ii) An account that the bank acquires
through an acquisition, merger,
purchase of assets, or assumption of
liabilities; or
(iii) An account opened for the
purpose of participating in an employee
benefit plan established under the
Employee Retirement Income Security
Act of 1974.
(b) Bank. For the purposes of
§ 1020.220, means:
(1) A bank, as that term is defined in
§ 1010.100(d), that is subject to
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regulation by a Federal functional
regulator; and
(2) A credit union, private bank, and
trust company, as set forth in
§ 1010.100(d) of this Chapter, that does
not have a Federal functional regulator.
(c) Customer. For the purposes of
§ 1020.220:
(1) Customer means:
(i) A person that opens a new account;
and
(ii) An individual who opens a new
account for:
(A) An individual who lacks legal
capacity, such as a minor; or
(B) An entity that is not a legal
person, such as a civic club.
(2) Customer does not include:
(i) A financial institution regulated by
a Federal functional regulator or a bank
regulated by a State bank regulator;
(ii) A person described in
§ 1020.315(b)(2) through (b)(4); or
(iii) A person that has an existing
account with the bank, provided that
the bank has a reasonable belief that it
knows the true identity of the person.
(d) Financial institution means:
(1) For the purposes of § 1020.210, a
financial institution defined in 31
U.S.C. 5312(a)(2) or (c)(1) that is subject
to regulation by a Federal functional
regulator or a self-regulatory
organization.
(2) For the purposes of § 1020.220,
financial institution is defined at 31
U.S.C. 5312(a)(2) and (c)(1).
Subpart B—Programs
§ 1020.200
General.
Banks are subject to the program
requirements set forth and cross
referenced in this subpart. Banks should
also refer to Subpart B of Part 1010 of
this Chapter for program requirements
contained in that subpart which apply
to banks.
§ 1020.210 Anti-money laundering
program requirements for financial
institutions regulated only by a Federal
functional regulator, including banks,
savings associations, and credit unions.
A financial institution regulated by a
Federal functional regulator that is not
subject to the regulations of a self
regulatory organization shall be deemed
to satisfy the requirements of 31 U.S.C.
5318(h)(1) if it implements and
maintains an anti-money laundering
program that complies with the
requirements of §§ 1010.610 and
1010.620 and the regulation of its
Federal functional regulator governing
such programs.
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§ 1020.220 Customer Identification
Programs for banks, savings associations,
credit unions, and certain non-Federally
regulated banks.
(a) Customer Identification Program:
minimum requirements—(1) In general.
A bank must implement a written
Customer Identification Program (CIP)
appropriate for its size and type of
business that, at a minimum, includes
each of the requirements of paragraphs
(a)(1) through (5) of this section. If a
bank is required to have an anti-money
laundering compliance program under
the regulations implementing 31 U.S.C.
5318(h), 12 U.S.C. 1818(s), or 12 U.S.C.
1786(q)(1), then the CIP must be a part
of the anti-money laundering
compliance program. Until such time as
credit unions, private banks, and trust
companies without a Federal functional
regulator are subject to such a program,
their CIPs must be approved by their
boards of directors.
(2) Identity verification procedures.
The CIP must include risk-based
procedures for verifying the identity of
each customer to the extent reasonable
and practicable. The procedures must
enable the bank to form a reasonable
belief that it knows the true identity of
each customer. These procedures must
be based on the bank’s assessment of the
relevant risks, including those presented
by the various types of accounts
maintained by the bank, the various
methods of opening accounts provided
by the bank, the various types of
identifying information available, and
the bank’s size, location, and customer
base. At a minimum, these procedures
must contain the elements described in
this paragraph (a)(2).
(i) Customer information required—
(A) In general. The CIP must contain
procedures for opening an account that
specify the identifying information that
will be obtained from each customer.
Except as permitted by paragraphs
(a)(2)(i)(B) and (C) of this section, the
bank must obtain, at a minimum, the
following information from the
customer prior to opening an account:
(1) Name;
(2) Date of birth, for an individual;
(3) Address, which shall be:
(i) For an individual, a residential or
business street address;
(ii) For an individual who does not
have a residential or business street
address, an Army Post Office (APO) or
Fleet Post Office (FPO) box number, or
the residential or business street address
of next of kin or of another contact
individual; or
(iii) For a person other than an
individual (such as a corporation,
partnership, or trust), a principal place
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of business, local office, or other
physical location; and
(4) Identification number, which shall
be:
(i) For a U.S. person, a taxpayer
identification number; or
(ii) For a non-U.S. person, one or more
of the following: A taxpayer
identification number; passport number
and country of issuance; alien
identification card number; or number
and country of issuance of any other
government-issued document
evidencing nationality or residence and
bearing a photograph or similar
safeguard.
Note to Paragraph(a)(2)(i)(A)(4)(ii): When
opening an account for a foreign business or
enterprise that does not have an
identification number, the bank must request
alternative government-issued
documentation certifying the existence of the
business or enterprise.
(B) Exception for persons applying for
a taxpayer identification number.
Instead of obtaining a taxpayer
identification number from a customer
prior to opening the account, the CIP
may include procedures for opening an
account for a customer that has applied
for, but has not received, a taxpayer
identification number. In this case, the
CIP must include procedures to confirm
that the application was filed before the
customer opens the account and to
obtain the taxpayer identification
number within a reasonable period of
time after the account is opened.
(C) Credit card accounts. In
connection with a customer who opens
a credit card account, a bank may obtain
the identifying information about a
customer required under paragraph
(a)(2)(i)(A) by acquiring it from a thirdparty source prior to extending credit to
the customer.
(ii) Customer verification. The CIP
must contain procedures for verifying
the identity of the customer, using
information obtained in accordance
with paragraph (a)(2)(i) of this section,
within a reasonable time after the
account is opened. The procedures must
describe when the bank will use
documents, non-documentary methods,
or a combination of both methods as
described in this paragraph (a)(2)(ii).
(A) Verification through documents.
For a bank relying on documents, the
CIP must contain procedures that set
forth the documents that the bank will
use. These documents may include:
(1) For an individual, unexpired
government-issued identification
evidencing nationality or residence and
bearing a photograph or similar
safeguard, such as a driver’s license or
passport; and
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(2) For a person other than an
individual (such as a corporation,
partnership, or trust), documents
showing the existence of the entity,
such as certified articles of
incorporation, a government-issued
business license, a partnership
agreement, or trust instrument.
(B) Verification through nondocumentary methods. For a bank
relying on non-documentary methods,
the CIP must contain procedures that
describe the non-documentary methods
the bank will use.
(1) These methods may include
contacting a customer; independently
verifying the customer’s identity
through the comparison of information
provided by the customer with
information obtained from a consumer
reporting agency, public database, or
other source; checking references with
other financial institutions; and
obtaining a financial statement.
(2) The bank’s non-documentary
procedures must address situations
where an individual is unable to present
an unexpired government-issued
identification document that bears a
photograph or similar safeguard; the
bank is not familiar with the documents
presented; the account is opened
without obtaining documents; the
customer opens the account without
appearing in person at the bank; and
where the bank is otherwise presented
with circumstances that increase the
risk that the bank will be unable to
verify the true identity of a customer
through documents.
(C) Additional verification for certain
customers. The CIP must address
situations where, based on the bank’s
risk assessment of a new account
opened by a customer that is not an
individual, the bank will obtain
information about individuals with
authority or control over such account,
including signatories, in order to verify
the customer’s identity. This
verification method applies only when
the bank cannot verify the customer’s
true identity using the verification
methods described in paragraphs
(a)(2)(ii)(A) and (B) of this section.
(iii) Lack of verification. The CIP must
include procedures for responding to
circumstances in which the bank cannot
form a reasonable belief that it knows
the true identity of a customer. These
procedures should describe:
(A) When the bank should not open
an account;
(B) The terms under which a customer
may use an account while the bank
attempts to verify the customer’s
identity;
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(C) When the bank should close an
account, after attempts to verify a
customer’s identity have failed; and
(D) When the bank should file a
Suspicious Activity Report in
accordance with applicable law and
regulation.
(3) Recordkeeping. The CIP must
include procedures for making and
maintaining a record of all information
obtained under the procedures
implementing paragraph (a) of this
section.
(i) Required records. At a minimum,
the record must include:
(A) All identifying information about
a customer obtained under paragraph
(a)(2)(i) of this section;
(B) A description of any document
that was relied on under paragraph
(a)(2)(ii)(A) of this section noting the
type of document, any identification
number contained in the document, the
place of issuance and, if any, the date
of issuance and expiration date;
(C) A description of the methods and
the results of any measures undertaken
to verify the identity of the customer
under paragraph (a)(2)(ii)(B) or (C) of
this section; and
(D) A description of the resolution of
any substantive discrepancy discovered
when verifying the identifying
information obtained.
(ii) Retention of records. The bank
must retain the information in
paragraph (a)(3)(i)(A) of this section for
five years after the date the account is
closed or, in the case of credit card
accounts, five years after the account is
closed or becomes dormant. The bank
must retain the information in
paragraphs (a)(3)(i)(B), (C), and (D) of
this section for five years after the
record is made.
(4) Comparison with government lists.
The CIP must include procedures for
determining whether the customer
appears on any list of known or
suspected terrorists or terrorist
organizations issued by any Federal
government agency and designated as
such by Treasury in consultation with
the Federal functional regulators. The
procedures must require the bank to
make such a determination within a
reasonable period of time after the
account is opened, or earlier, if required
by another Federal law or regulation or
Federal directive issued in connection
with the applicable list. The procedures
must also require the bank to follow all
Federal directives issued in connection
with such lists.
(5)(i) Customer notice. The CIP must
include procedures for providing bank
customers with adequate notice that the
bank is requesting information to verify
their identities.
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(ii) Adequate notice. Notice is
adequate if the bank generally describes
the identification requirements of this
section and provides the notice in a
manner reasonably designed to ensure
that a customer is able to view the
notice, or is otherwise given notice,
before opening an account. For example,
depending upon the manner in which
the account is opened, a bank may post
a notice in the lobby or on its Web site,
include the notice on its account
applications, or use any other form of
written or oral notice.
(iii) Sample notice. If appropriate, a
bank may use the following sample
language to provide notice to its
customers:
Important Information About Procedures for
Opening a New Account
To help the government fight the funding
of terrorism and money laundering activities,
Federal law requires all financial institutions
to obtain, verify, and record information that
identifies each person who opens an account.
What this means for you: When you open
an account, we will ask for your name,
address, date of birth, and other information
that will allow us to identify you. We may
also ask to see your driver’s license or other
identifying documents.
(6) Reliance on another financial
institution. The CIP may include
procedures specifying when a bank will
rely on the performance by another
financial institution (including an
affiliate) of any procedures of the bank’s
CIP, with respect to any customer of the
bank that is opening, or has opened, an
account or has established a similar
formal banking or business relationship
with the other financial institution to
provide or engage in services, dealings,
or other financial transactions, provided
that:
(i) Such reliance is reasonable under
the circumstances;
(ii) The other financial institution is
subject to a rule implementing 31 U.S.C.
5318(h) and is regulated by a Federal
functional regulator; and
(iii) The other financial institution
enters into a contract requiring it to
certify annually to the bank that it has
implemented its anti-money laundering
program, and that it will perform (or its
agent will perform) the specified
requirements of the bank’s CIP.
(b) Exemptions. The appropriate
Federal functional regulator, with the
concurrence of the Secretary, may, by
order or regulation, exempt any bank or
type of account from the requirements
of this section. The Federal functional
regulator and the Secretary shall
consider whether the exemption is
consistent with the purposes of the
Bank Secrecy Act and with safe and
sound banking, and may consider other
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appropriate factors. The Secretary will
make these determinations for any bank
or type of account that is not subject to
the authority of a Federal functional
regulator.
(c) Other requirements unaffected.
Nothing in this section relieves a bank
of its obligation to comply with any
other provision in this chapter,
including provisions concerning
information that must be obtained,
verified, or maintained in connection
with any account or transaction.
Subpart C—Reports Required To Be
Made By Banks
§ 1020.300
General.
Banks are subject to the reporting
requirements set forth and cross
referenced in this subpart. Banks should
also refer to Subpart C of Part 1010 of
this Chapter for reporting requirements
contained in that subpart which apply
to banks.
§ 1020.310
currency.
Reports of transactions in
The reports of transactions in
currency requirements for banks are
located in subpart C of Part 1010 of this
Chapter and this subpart.
§ 1020.311
Filing obligations.
Refer to § 1010.311 of this Chapter for
reports of transactions in currency filing
obligations for banks.
§ 1020.312
Identification required.
Refer to § 1010.312 of this Chapter for
identification requirements for reports
of transactions in currency filed by
banks.
§ 1020.313
Aggregation.
Refer to § 1010.313 of this Chapter for
reports of transactions in currency
aggregation requirements for banks.
§ 1020.314
Structured transactions.
Refer to § 1010.314 of this Chapter for
rules regarding structured transactions
for banks.
§ 1020.315
persons.
Transactions of exempt
(a) General. No bank is required to file
a report otherwise required by
§ 1010.311 with respect to any
transaction in currency between an
exempt person and such bank, or, to the
extent provided in paragraph (e)(6) of
this section, between such exempt
person and other banks affiliated with
such bank. (A limitation on the
exemption described in this paragraph
(a) is set forth in paragraph (f) of this
section.)
(b) Exempt person. For purposes of
this section, an exempt person is:
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(1) A bank, to the extent of such
bank’s domestic operations;
(2) A department or agency of the
United States, of any State, or of any
political subdivision of any State;
(3) Any entity established under the
laws of the United States, of any State,
or of any political subdivision of any
State, or under an interstate compact
between two or more States, that
exercises governmental authority on
behalf of the United States or any such
State or political subdivision;
(4) Any entity, other than a bank,
whose common stock or analogous
equity interests are listed on the New
York Stock Exchange or the American
Stock Exchange or whose common stock
or analogous equity interests have been
designated as a NASDAQ National
Market Security listed on the NASDAQ
Stock Market (except stock or interests
listed under the separate ‘‘NASDAQ
Capital Markets Companies’’ heading),
provided that, for purposes of this
paragraph (b)(4), a person that is a
financial institution, other than a bank,
is an exempt person only to the extent
of its domestic operations;
(5) Any subsidiary, other than a bank,
of any entity described in paragraph
(b)(4) of this section (a ‘‘listed entity’’)
that is organized under the laws of the
United States or of any State and at least
51 percent of whose common stock or
analogous equity interest is owned by
the listed entity, provided that, for
purposes of this paragraph (b)(5), a
person that is a financial institution,
other than a bank, is an exempt person
only to the extent of its domestic
operations;
(6) To the extent of its domestic
operations and only with respect to
transactions conducted through its
exemptible accounts, any other
commercial enterprise (for purposes of
this section, a ‘‘non-listed business’’),
other than an enterprise specified in
paragraph (e)(8) of this section, that:
(i) Maintains a transaction account, as
defined in paragraph (e)(9) of this
section, at the bank for at least two
months, except as provided in
paragraph (c)(2)(ii) of this section;
(ii) Frequently engages in transactions
in currency with the bank in excess of
$10,000; and
(iii) Is incorporated or organized
under the laws of the United States or
a State, or is registered as and eligible
to do business within the United States
or a State; or
(7) With respect solely to withdrawals
for payroll purposes from existing
exemptible accounts, any other person
(for purposes of this section, a ‘‘payroll
customer’’) that:
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(i) Maintains a transaction account, as
defined in paragraph (e)(9) of this
section, at the bank for at least two
months, except as provided in
paragraph (c)(2)(ii) of this section;
(ii) Operates a firm that regularly
withdraws more than $10,000 in order
to pay its United States employees in
currency; and
(iii) Is incorporated or organized
under the laws of the United States or
a State, or is registered as and eligible
to do business within the United States
or a State.
(c) Designation of certain exempt
persons—(1) General. Except as
provided in paragraph (c)(2) of this
section, a bank must designate an
exempt person by filing FinCEN Form
110. Such designation must occur by the
close of the 30-calendar day period
beginning after the day of the first
reportable transaction in currency with
that person sought to be exempted from
reporting under the terms of this
section. The designation must be made
separately by each bank that treats the
customer as an exempt person, except as
provided in paragraph (e)(6) of this
section.
(2) Special rules.
(i) A bank is not required to file a
FinCEN Form 110 with respect to the
transfer of currency to or from:
(A) Any of the twelve Federal Reserve
Banks; or
(B) Any exempt person as described
in paragraphs (b)(1) to (3) of this section.
(ii) Notwithstanding subparagraphs
(b)(6)(i) and (b)(7)(i) of this section, and
if the requirements under this section
are otherwise satisfied, a bank may
designate a non-listed business or a
payroll customer, as described in
paragraphs (b)(6) and (7) of this section,
as an exempt person before the
customer has maintained a transaction
account at the bank for at least two
months if the bank conducts and
documents a risk-based assessment of
the customer and forms a reasonable
belief that the customer has a legitimate
business purpose for conducting
frequent transactions in currency.
(d) Annual review. At least once each
year, a bank must review the eligibility
of an exempt person described in
paragraphs (b)(4) to (7) of this section to
determine whether such person remains
eligible for an exemption. As part of its
annual review, a bank must review the
application of the monitoring system
required to be maintained by paragraph
(h)(2) of this section to each existing
account of an exempt person described
in paragraphs (b)(6) or (b)(7) of this
section.
(e) Operating rules—(1) General rule.
Subject to the specific rules of this
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section, a bank must take such steps to
assure itself that a person is an exempt
person (within the meaning of the
applicable provision of paragraph (b) of
this section), to document the basis for
its conclusions, and document its
compliance, with the terms of this
section, that a reasonable and prudent
bank would take and document to
protect itself from loan or other fraud or
loss based on misidentification of a
person’s status, and in the case of the
monitoring system requirement set forth
in paragraph (h)(2) of this section, such
steps that a reasonable and prudent
bank would take and document to
identify suspicious transactions as
required by paragraph (h)(2) of this
section.
(2) Governmental departments and
agencies. A bank may treat a person as
a governmental department, agency, or
entity if the name of such person
reasonably indicates that it is described
in paragraph (b)(2) or (b)(3) of this
section, or if such person is known
generally in the community to be a
State, the District of Columbia, a tribal
government, a Territory or Insular
Possession of the United States, or a
political subdivision or a wholly-owned
agency or instrumentality of any of the
foregoing. An entity generally exercises
governmental authority on behalf of the
United States, a State, or a political
subdivision, for purposes of paragraph
(b)(3) of this section, only if its
authorities include one or more of the
powers to tax, to exercise the authority
of eminent domain, or to exercise police
powers with respect to matters within
its jurisdiction. Examples of entities that
exercise governmental authority
include, but are not limited to, the New
Jersey Turnpike Authority and the Port
Authority of New York and New Jersey.
(3) Stock exchange listings. In
determining whether a person is
described in paragraph (b)(4) of this
section, a bank may rely on any New
York, American, or NASDAQ Stock
Market listing published in a newspaper
of general circulation, on any commonly
accepted or published stock symbol
guide, on any information contained in
the Securities and Exchange
Commission ‘‘EDGAR’’ System, or on
any information contained on an
Internet site or sites maintained by the
New York Stock Exchange, the
American Stock Exchange, or the
NASDAQ.
(4) Listed company subsidiaries. In
determining whether a person is
described in paragraph (b)(5) of this
section, a bank may rely upon:
(i) Any reasonably authenticated
corporate officer’s certificate;
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(ii) Any reasonably authenticated
photocopy of Internal Revenue Service
Form 851 (Affiliation Schedule) or the
equivalent thereof for the appropriate
tax year; or
(iii) A person’s Annual Report or
Form 10–K, as filed in each case with
the Securities and Exchange
Commission.
(5) Aggregated accounts. In
determining the qualification of a
customer as a non-listed business or a
payroll customer, a bank may treat all
exemptible accounts of the customer as
a single account. If a bank elects to treat
all exemptible accounts of a customer as
a single account, the bank must
continue to treat such accounts
consistently as a single account for
purposes of determining the
qualification of the customer as a nonlisted business or payroll customer.
(6) Affiliated banks. The designation
required by paragraph (c) of this section
may be made by a parent bank holding
company or one of its bank subsidiaries
on behalf of all bank subsidiaries of the
holding company, so long as the
designation lists each bank subsidiary to
which the designation shall apply.
(7) Sole proprietorships. A sole
proprietorship may be treated as a nonlisted business if it otherwise meets the
requirements of paragraph (b)(6) of this
section, as applicable. In addition, a sole
proprietorship may be treated as a
payroll customer if it otherwise meets
the requirements of paragraph (b)(7) of
this section, as applicable.
(8) Ineligible businesses. A business
engaged primarily in one or more of the
following activities may not be treated
as a non-listed business for purposes of
this section: Serving as financial
institutions or agents of financial
institutions of any type; purchase or sale
to customers of motor vehicles of any
kind, vessels, aircraft, farm equipment
or mobile homes; the practice of law,
accountancy, or medicine; auctioning of
goods; chartering or operation of ships,
buses, or aircraft; gaming of any kind
(other than licensed parimutuel betting
at race tracks); investment advisory
services or investment banking services;
real estate brokerage; pawn brokerage;
title insurance and real estate closing;
trade union activities; and any other
activities that may be specified by
FinCEN. A business that engages in
multiple business activities may be
treated as a non-listed business so long
as no more than 50% of its gross
revenues are derived from one or more
of the ineligible business activities
listed in this paragraph (e)(8).
(9) Exemptible accounts of a nonlisted business or payroll customer. The
exemptible accounts of a non-listed
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business or payroll customer include
transaction accounts and money market
deposit accounts. However, money
market deposit accounts maintained
other than in connection with a
commercial enterprise are not
exemptible accounts. A transaction
account, for purposes of this section, is
any account described in section
19(b)(1)(C) of the Federal Reserve Act,
12 U.S.C. 461(b)(1)(C), and its
implementing regulations (12 CFR part
204). A money market deposit account,
for purposes of this section, is any
interest-bearing account that is
described as a money market deposit
account in 12 CFR 204.2(d)(2).
(10) Documentation. The records
maintained by a bank to document its
compliance with and administration of
the rules of this section shall be
maintained in accordance with the
provisions of § 1010.430.
(f) Limitation on exemption. A
transaction carried out by an exempt
person as an agent for another person
who is the beneficial owner of the funds
that are the subject of a transaction in
currency is not subject to the exemption
from reporting contained in paragraph
(a) of this section.
(g) Limitation on liability. (1) No bank
shall be subject to penalty under this
chapter for failure to file a report
required by § 1010.311 with respect to a
transaction in currency by an exempt
person with respect to which the
requirements of this section have been
satisfied, unless the bank:
(i) Knowingly files false or incomplete
information with respect to the
transaction or the customer engaging in
the transaction; or
(ii) Has reason to believe that the
customer does not meet the criteria
established by this section for treatment
of the transactor as an exempt person or
that the transaction is not a transaction
of the exempt person.
(2) Subject to the specific terms of this
section, and absent any specific
knowledge of information indicating
that a customer no longer meets the
requirements of an exempt person, a
bank satisfies the requirements of this
section to the extent it continues to treat
that customer as an exempt person until
the completion of that customer’s next
required periodic review, which as
required by paragraph (d) of this section
for an exempt person described in
paragraph (b)(4) to (7) of this section,
shall occur no less than once each year.
(3) A bank that files a report with
respect to a currency transaction by an
exempt person rather than treating such
person as exempt shall remain subject,
with respect to each such report, to the
rules for filing reports, and the penalties
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for filing false or incomplete reports that
are applicable to reporting of
transactions in currency by persons
other than exempt persons.
(h) Obligations to file suspicious
activity reports and maintain system for
monitoring transactions in currency. (1)
Nothing in this section relieves a bank
of the obligation, or reduces in any way
such bank’s obligation, to file a report
required by § 1020.320 with respect to
any transaction, including any
transaction in currency that a bank
knows, suspects, or has reason to
suspect is a transaction or attempted
transaction that is described in
§ 1020.320(a)(2)(i), (ii), or (iii), or
relieves a bank of any reporting or
recordkeeping obligation imposed by
this chapter (except the obligation to
report transactions in currency pursuant
to this chapter to the extent provided in
this section). Thus, for example, a sharp
increase from one year to the next in the
gross total of currency transactions
made by an exempt customer, or
similarly anomalous transactions trends
or patterns, may trigger the obligation of
a bank under § 1020.320.
(2) Consistent with its annual review
obligations under paragraph (d) of this
section, a bank shall establish and
maintain a monitoring system that is
reasonably designed to detect, for each
account of a non-listed business or
payroll customer, those transactions in
currency involving such account that
would require a bank to file a suspicious
transaction report. The statement in the
preceding sentence with respect to
accounts of non-listed business and
payroll customers does not limit the
obligation of banks generally to take the
steps necessary to satisfy the terms of
paragraph (h)(1) of this section and
§ 1020.320 with respect to all exempt
persons.
(i) Revocation. Without any action on
the part of the Department of the
Treasury and subject to the limitation
on liability contained in paragraph (g)(2)
of this section:
(1) The status of an entity as an
exempt person under paragraph (b)(4) of
this section ceases once such entity
ceases to be listed on the applicable
stock exchange; and
(2) The status of a subsidiary as an
exempt person under paragraph (b)(5) of
this section ceases once such subsidiary
ceases to have at least 51 per cent of its
common stock or analogous equity
interest owned by a listed entity.
(Approved by the Office of Management
and Budget under control number 1506–
0012)
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§ 1020.320 Reports by banks of suspicious
transactions.
(a) General. (1) Every bank shall file
with the Treasury Department, to the
extent and in the manner required by
this section, a report of any suspicious
transaction relevant to a possible
violation of law or regulation. A bank
may also file with the Treasury
Department by using the Suspicious
Activity Report specified in paragraph
(b)(1) of this section or otherwise, a
report of any suspicious transaction that
it believes is relevant to the possible
violation of any law or regulation but
whose reporting is not required by this
section.
(2) A transaction requires reporting
under the terms of this section if it is
conducted or attempted by, at, or
through the bank, it involves or
aggregates at least $5,000 in funds or
other assets, and the bank knows,
suspects, or has reason to suspect that:
(i) The transaction involves funds
derived from illegal activities or is
intended or conducted in order to hide
or disguise funds or assets derived from
illegal activities (including, without
limitation, the ownership, nature,
source, location, or control of such
funds or assets) as part of a plan to
violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
(ii) The transaction is designed to
evade any requirements of this chapter
or of any other regulations promulgated
under the Bank Secrecy Act; or
(iii) The transaction has no business
or apparent lawful purpose or is not the
sort in which the particular customer
would normally be expected to engage,
and the bank knows of no reasonable
explanation for the transaction after
examining the available facts, including
the background and possible purpose of
the transaction.
(b) Filing procedures—(1) What to file.
A suspicious transaction shall be
reported by completing a Suspicious
Activity Report (‘‘SAR’’), and collecting
and maintaining supporting
documentation as required by paragraph
(d) of this section.
(2) Where to file. The SAR shall be
filed with FinCEN in a central location,
to be determined by FinCEN, as
indicated in the instructions to the SAR.
(3) When to file. A bank is required to
file a SAR no later than 30 calendar
days after the date of initial detection by
the bank of facts that may constitute a
basis for filing a SAR. If no suspect was
identified on the date of the detection of
the incident requiring the filing, a bank
may delay filing a SAR for an additional
30 calendar days to identify a suspect.
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In no case shall reporting be delayed
more than 60 calendar days after the
date of initial detection of a reportable
transaction. In situations involving
violations that require immediate
attention, such as, for example, ongoing
money laundering schemes, the bank
shall immediately notify, by telephone,
an appropriate law enforcement
authority in addition to filing timely a
SAR.
(c) Exceptions. A bank is not required
to file a SAR for a robbery or burglary
committed or attempted that is reported
to appropriate law enforcement
authorities, or for lost, missing,
counterfeit, or stolen securities with
respect to which the bank files a report
pursuant to the reporting requirements
of 17 CFR 240.17f–1.
(d) Retention of records. A bank shall
maintain a copy of any SAR filed and
the original or business record
equivalent of any supporting
documentation for a period of five years
from the date of filing the SAR.
Supporting documentation shall be
identified, and maintained by the bank
as such, and shall be deemed to have
been filed with the SAR. A bank shall
make all supporting documentation
available to FinCEN and any
appropriate law enforcement agencies or
bank supervisory agencies upon request.
(e) Confidentiality of reports;
limitation of liability. No bank or other
financial institution, and no director,
officer, employee, or agent of any bank
or other financial institution, who
reports a suspicious transaction under
this chapter, may notify any person
involved in the transaction that the
transaction has been reported. Thus, any
person subpoenaed or otherwise
requested to disclose a SAR or the
information contained in a SAR, except
where such disclosure is requested by
FinCEN or an appropriate law
enforcement or bank supervisory
agency, shall decline to produce the
SAR or to provide any information that
would disclose that a SAR has been
prepared or filed, citing this paragraph
(e) and 31 U.S.C. 5318(g)(2), and shall
notify FinCEN of any such request and
its response thereto. A bank, and any
director, officer, employee, or agent of
such bank, that makes a report pursuant
to this section (whether such report is
required by this section or is made
voluntarily) shall be protected from
liability for any disclosure contained in,
or for failure to disclose the fact of such
report, or both, to the full extent
provided by 31 U.S.C. 5318(g)(3).
(f) Compliance. Compliance with this
section shall be audited by the
Department of the Treasury, through
FinCEN or its delegees under the terms
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65847
of the Bank Secrecy Act. Failure to
satisfy the requirements of this section
may be a violation of the reporting rules
of the Bank Secrecy Act and of this
chapter. Such failure may also violate
provisions of Title 12 of the Code of
Federal Regulations.
Subpart D—Records Required To Be
Maintained By Banks
§ 1020.400
General.
Banks are subject to the recordkeeping
requirements set forth and cross
referenced in this subpart. Banks should
also refer to Subpart D of Part 1010 of
this Chapter for recordkeeping
requirements contained in that subpart
which apply to banks.
§ 1020.410 Records to be made and
retained by banks.
(a) Each agent, agency, branch, or
office located within the United States
of a bank is subject to the requirements
of this paragraph (a) with respect to a
funds transfer in the amount of $3,000
or more, and is required to retain either
the original or a microfilm or other copy
or reproduction of each of the following:
(1) Recordkeeping requirements. (i)
For each payment order that it accepts
as an originator’s bank, a bank shall
obtain and retain either the original or
a microfilm, other copy, or electronic
record of the following information
relating to the payment order:
(A) The name and address of the
originator;
(B) The amount of the payment order;
(C) The execution date of the payment
order;
(D) Any payment instructions
received from the originator with the
payment order;
(E) The identity of the beneficiary’s
bank; and
(F) As many of the following items as
are received with the payment order: 1
(1) The name and address of the
beneficiary;
(2) The account number of the
beneficiary; and
(3) Any other specific identifier of the
beneficiary.
(ii) For each payment order that it
accepts as an intermediary bank, a bank
shall retain either the original or a
microfilm, other copy, or electronic
record of the payment order.
(iii) For each payment order that it
accepts as a beneficiary’s bank, a bank
shall retain either the original or a
1 For funds transfers effected through the Federal
Reserve’s Fedwire funds transfer system, only one
of the items is required to be retained, if received
with the payment order, until such time as the bank
that sends the order to the Federal Reserve Bank
completes its conversion to the expanded Fedwire
message format.
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microfilm, other copy, or electronic
record of the payment order.
(2) Originators other than established
customers. In the case of a payment
order from an originator that is not an
established customer, in addition to
obtaining and retaining the information
required in paragraph (a)(1)(i) of this
section:
(i) If the payment order is made in
person, prior to acceptance the
originator’s bank shall verify the
identity of the person placing the
payment order. If it accepts the payment
order, the originator’s bank shall obtain
and retain a record of the name and
address, the type of identification
reviewed, the number of the
identification document (e.g., driver’s
license), as well as a record of the
person’s taxpayer identification number
(e.g., social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, or a
notation in the record of the lack
thereof. If the originator’s bank has
knowledge that the person placing the
payment order is not the originator, the
originator’s bank shall obtain and retain
a record of the originator’s taxpayer
identification number (e.g., social
security or employer identification
number) or, if none, alien identification
number or passport number and country
of issuance, if known by the person
placing the order, or a notation in the
record of the lack thereof.
(ii) If the payment order accepted by
the originator’s bank is not made in
person, the originator’s bank shall
obtain and retain a record of name and
address of the person placing the
payment order, as well as the person’s
taxpayer identification number (e.g.,
social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, or a
notation in the record of the lack
thereof, and a copy or record of the
method of payment (e.g., check or credit
card transaction) for the funds transfer.
If the originator’s bank has knowledge
that the person placing the payment
order is not the originator, the
originator’s bank shall obtain and retain
a record of the originator’s taxpayer
identification number (e.g., social
security or employer identification
number) or, if none, alien identification
number or passport number and country
of issuance, if known by the person
placing the order, or a notation in the
record of the lack thereof.
(3) Beneficiaries other than
established customers. For each
payment order that it accepts as a
beneficiary’s bank for a beneficiary that
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is not an established customer, in
addition to obtaining and retaining the
information required in paragraph
(a)(1)(iii) of this section:
(i) If the proceeds are delivered in
person to the beneficiary or its
representative or agent, the beneficiary’s
bank shall verify the identity of the
person receiving the proceeds and shall
obtain and retain a record of the name
and address, the type of identification
reviewed, and the number of the
identification document (e.g., driver’s
license), as well as a record of the
person’s taxpayer identification number
(e.g., social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, or a
notation in the record of the lack
thereof. If the beneficiary’s bank has
knowledge that the person receiving the
proceeds is not the beneficiary, the
beneficiary’s bank shall obtain and
retain a record of the beneficiary’s name
and address, as well as the beneficiary’s
taxpayer identification number (e.g.,
social security or employer
identification number) or, if none, alien
identification number or passport
number and country of issuance, if
known by the person receiving the
proceeds, or a notation in the record of
the lack thereof.
(ii) If the proceeds are delivered other
than in person, the beneficiary’s bank
shall retain a copy of the check or other
instrument used to effect payment, or
the information contained thereon, as
well as the name and address of the
person to which it was sent.
(4) Retrievability. The information
that an originator’s bank must retain
under paragraphs (a)(1)(i) and (a)(2) of
this section shall be retrievable by the
originator’s bank by reference to the
name of the originator. If the originator
is an established customer of the
originator’s bank and has an account
used for funds transfers, then the
information also shall be retrievable by
account number. The information that a
beneficiary’s bank must retain under
paragraphs (a)(1)(iii) and (a)(3) of this
section shall be retrievable by the
beneficiary’s bank by reference to the
name of the beneficiary. If the
beneficiary is an established customer of
the beneficiary’s bank and has an
account used for funds transfers, then
the information also shall be retrievable
by account number. This information
need not be retained in any particular
manner, so long as the bank is able to
retrieve the information required by this
paragraph, either by accessing funds
transfer records directly or through
reference to some other record
maintained by the bank.
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(5) Verification. Where verification is
required under paragraphs (a)(2) and
(a)(3) of this section, a bank shall verify
a person’s identity by examination of a
document (other than a bank signature
card), preferably one that contains the
person’s name, address, and
photograph, that is normally acceptable
by financial institutions as a means of
identification when cashing checks for
persons other than established
customers. Verification of the identity of
an individual who indicates that he or
she is an alien or is not a resident of the
United States may be made by passport,
alien identification card, or other
official document evidencing
nationality or residence (e.g., a foreign
driver’s license with indication of home
address).
(6) Exceptions. The following funds
transfers are not subject to the
requirements of this section:
(i) Funds transfers where the
originator and beneficiary are any of the
following:
(A) A bank;
(B) A wholly owned domestic
subsidiary of a bank chartered in the
United States;
(C) A broker or dealer in securities;
(D) A wholly owned domestic
subsidiary of a broker or dealer in
securities;
(E) A futures commission merchant or
an introducing broker in commodities;
(F) A wholly owned domestic
subsidiary of a futures commission
merchant or an introducing broker in
commodities;
(G) The United States;
(H) A state or local government;
(I) A Federal, State or local
government agency or instrumentality;
or
(J) A mutual fund; and
(ii) Funds transfers where both the
originator and the beneficiary are the
same person and the originator’s bank
and the beneficiary’s bank are the same
bank.
(b)(1) With respect to each certificate
of deposit sold or redeemed after May
31, 1978, and before October 1, 2003, or
each deposit or share account opened
with a bank after June 30, 1972, and
before October 1, 2003, a bank shall,
within 30 days from the date such a
transaction occurs or an account is
opened, secure and maintain a record of
the taxpayer identification number of
the customer involved; or where the
account or certificate is in the names of
two or more persons, the bank shall
secure the taxpayer identification
number of a person having a financial
interest in the certificate or account. In
the event that a bank has been unable
to secure, within the 30-day period
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specified, the required identification, it
shall nevertheless not be deemed to be
in violation of this section if it has made
a reasonable effort to secure such
identification, and it maintains a list
containing the names, addresses, and
account numbers of those persons from
whom it has been unable to secure such
identification, and makes the names,
addresses, and account numbers of
those persons available to the Secretary
as directed by him. A bank acting as an
agent for another person in the purchase
or redemption of a certificate of deposit
issued by another bank is responsible
for obtaining and recording the required
taxpayer identification, as well as for
maintaining the records referred to in
paragraphs (c)(11) and (12) of this
section. The issuing bank can satisfy the
recordkeeping requirement by recording
the name and address of the agent
together with a description of the
instrument and the date of the
transaction. Where a person is a nonresident alien, the bank shall also record
the person’s passport number or a
description of some other government
document used to verify his identity.
(2) The 30-day period provided for in
paragraph (b)(1) of this section shall be
extended where the person opening the
account has applied for a taxpayer
identification or social security number
on Form SS–4 or SS–5, until such time
as the person maintaining the account
has had a reasonable opportunity to
secure such number and furnish it to the
bank.
(3) A taxpayer identification number
required under paragraph (b)(1) of this
section need not be secured for accounts
or transactions with the following:
(i) Agencies and instrumentalities of
Federal, State, local or foreign
governments;
(ii) Judges, public officials, or clerks
of courts of record as custodians of
funds in controversy or under the
control of the court;
(iii) Aliens who are ambassadors,
ministers, career diplomatic or consular
officers, or naval, military or other
´
attaches of foreign embassies and
legations, and for the members of their
immediate families;
(iv) Aliens who are accredited
representatives of international
organizations which are entitled to
enjoy privileges, exemptions and
immunities as an international
organization under the International
Organization Immunities Act of
December 29, 1945 (22 U.S.C. 288), and
the members of their immediate
families;
(v) Aliens temporarily residing in the
United States for a period not to exceed
180 days;
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(vi) Aliens not engaged in a trade or
business in the United States who are
attending a recognized college or
university or any training program,
supervised or conducted by any agency
of the Federal Government;
(vii) Unincorporated subordinate
units of a tax exempt central
organization which are covered by a
group exemption letter,
(viii) A person under 18 years of age
with respect to an account opened as a
part of a school thrift savings program,
provided the annual interest is less than
$10;
(ix) A person opening a Christmas
club, vacation club and similar
installment savings programs, provided
the annual interest is less than $10; and
(x) Non-resident aliens who are not
engaged in a trade or business in the
United States.
(4) In instances described in
paragraphs (b)(3)(viii) and (ix) of this
section, the bank shall, within 15 days
following the end of any calendar year
in which the interest accrued in that
year is $10 or more use its best effort to
secure and maintain the appropriate
taxpayer identification number or
application form therefor.
(5) The rules and regulations issued
by the Internal Revenue Service under
section 6109 of the Internal Revenue
Code of 1954 shall determine what
constitutes a taxpayer identification
number and whose number shall be
obtained in the case of an account
maintained by one or more persons.
(c) Each bank shall, in addition, retain
either the original or a microfilm or
other copy or reproduction of each of
the following:
(1) Each document granting signature
authority over each deposit or share
account, including any notations, if
such are normally made, of specific
identifying information verifying the
identity of the signer (such as a driver’s
license number or credit card number);
(2) Each statement, ledger card or
other record on each deposit or share
account, showing each transaction in, or
with respect to, that account;
(3) Each check, clean draft, or money
order drawn on the bank or issued and
payable by it, except those drawn for
$100 or less or those drawn on accounts
which can be expected to have drawn
on them an average of at least 100
checks per month over the calendar year
or on each occasion on which such
checks are issued, and which are:
(i) Dividend checks,
(ii) Payroll checks,
(iii) Employee benefit checks,
(iv) Insurance claim checks,
(v) Medical benefit checks,
(vi) Checks drawn on government
agency accounts,
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65849
(vii) Checks drawn by brokers or
dealers in securities,
(viii) Checks drawn on fiduciary
accounts,
(ix) Checks drawn on other financial
institutions, or
(x) Pension or annuity checks;
(4) Each item in excess of $100 (other
than bank charges or periodic charges
made pursuant to agreement with the
customer), comprising a debit to a
customer’s deposit or share account, not
required to be kept, and not specifically
exempted, under paragraph (c)(3) of this
section;
(5) Each item, including checks,
drafts, or transfers of credit, of more
than $10,000 remitted or transferred to
a person, account or place outside the
United States;
(6) A record of each remittance or
transfer of funds, or of currency, other
monetary instruments, checks,
investment securities, or credit, of more
than $10,000 to a person, account or
place outside the United States;
(7) Each check or draft in an amount
in excess of $10,000 drawn on or issued
by a foreign bank which the domestic
bank has paid or presented to a nonbank
drawee for payment;
(8) Each item, including checks, drafts
or transfers of credit, of more than
$10,000 received directly and not
through a domestic financial institution,
by letter, cable or any other means, from
a bank, broker or dealer in foreign
exchange outside the United States;
(9) A record of each receipt of
currency, other monetary instruments,
investment securities or checks, and of
each transfer of funds or credit, of more
than $10,000 received on any one
occasion directly and not through a
domestic financial institution, from a
bank, broker or dealer in foreign
exchange outside the United States; and
(10) Records prepared or received by
a bank in the ordinary course of
business, which would be needed to
reconstruct a transaction account and to
trace a check in excess of $100
deposited in such account through its
domestic processing system or to supply
a description of a deposited check in
excess of $100. This subparagraph shall
be applicable only with respect to
demand deposits.
(11) A record containing the name,
address, and taxpayer identification
number as determined under section
6109 of the Internal Revenue Code of
1986, if available, of the purchaser of
each certificate of deposit, as well as a
description of the instrument, a notation
of the method of payment, and the date
of the transaction.
(12) A record containing the name,
address and taxpayer identification
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number as determined under section
6109 of the Internal Revenue Code of
1986, if available, of any person
presenting a certificate of deposit for
payment, as well as a description of the
instrument and the date of the
transaction.
(13) Each deposit slip or credit ticket
reflecting a transaction in excess of $100
or the equivalent record for direct
deposit or other wire transfer deposit
transactions. The slip or ticket shall
record the amount of any currency
involved.
§ 1020.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
PART 1021—RULES FOR CASINOS
AND CARD CLUBS
§ 1020.500
General.
Banks are subject to the special
information sharing procedures to deter
money laundering and terrorist activity
requirements set forth and cross
referenced in this subpart. Banks should
also refer to Subpart E of Part 1010 of
this Chapter for special information
sharing procedures to deter money
laundering and terrorist activity
contained in that subpart which apply
to banks.
§ 1020.520 Special information sharing
procedures to deter money laundering and
terrorist activity for banks.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1020.530
[Reserved]
§ 1020.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures
§ 1020.600
General.
Banks are subject to the special
standards of diligence; prohibitions; and
special measures requirements set forth
and cross referenced in this subpart.
Banks should also refer to Subpart F of
Part 1010 of this Chapter for special
standards of diligence; prohibitions; and
special measures contained in that
subpart which apply to banks.
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§ 1020.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
(a) Refer to § 1010.610 of this Chapter.
(b) [Reserved]
§ 1020.620 Due diligence programs for
private banking accounts.
(a) Refer to § 1010.620 of this Chapter.
(b) [Reserved]
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(a) Refer to § 1010.630 of this Chapter.
(b) [Reserved]
§ 1020.640
[Reserved]
§ 1020.670 Summons or subpoena of
foreign bank records; Termination of
correspondent relationship.
(a) Refer to § 1010.670 of this Chapter.
(b) [Reserved]
Subpart A—Definitions
Sec.
1021.100 Definitions.
Subpart B—Programs
1021.200 General.
1021.210 Anti-money laundering program
requirements for casinos.
Subpart C—Reports Required To Be Made
By Casinos and Card Clubs
1021.300 General.
1021.310 Reports of transactions in
currency.
1021.311 Filing obligations.
1021.312 Identification required.
1021.313 Aggregation.
1021.314 Structured transactions.
1021.315 Exemptions.
1021.320 Reports by casinos of suspicious
transactions.
1021.330 Exceptions to the reporting
requirements of 31 U.S.C. 5331.
Subpart D—Records Required To Be
Maintained By Casinos and Card Clubs
1021.400 General.
1021.410 Additional records to be made
and retained by casinos.
1021.670 Summons or subpoena of foreign
bank records; Termination of
correspondent relationship.
Subpart A—Definitions
§ 1021.100
Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1021. Unless otherwise
indicated, for purposes of this Part:
(a) Business year means the annual
accounting period, such as a calendar or
fiscal year, by which a casino maintains
its books and records for purposes of
subtitle A of title 26 of the United States
Code.
(b) Casino account number means any
and all numbers by which a casino
identifies a customer.
(c) Customer includes every person
which is involved in a transaction to
which this chapter applies with a
casino, whether or not that person
participates, or intends to participate, in
the gaming activities offered by that
casino.
(d) Gaming day means the normal
business day of a casino. For a casino
that offers 24 hour gaming, the term
means that 24 hour period by which the
casino keeps its books and records for
business, accounting, and tax purposes.
For purposes of the regulations
contained in this chapter, each casino
may have only one gaming day,
common to all of its divisions.
(e) Machine-readable means capable
of being read by an automated data
processing system.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity for Casinos and Card
Clubs
1021.500 General.
1021.520 Special information sharing
procedures to deter money laundering
and terrorist activity for casinos and card
clubs.
1021.530 [Reserved]
1021.540 Voluntary information sharing
among financial institutions.
Subpart B—Programs
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Casinos and Card Clubs
1021.600 General.
1021.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
1021.620 Due diligence programs for
private banking accounts.
1021.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
1021.640 [Reserved]
§ 1021.210 Anti-money laundering
program requirements for casinos.
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§ 1021.200
General.
Casinos and card clubs are subject to
the program requirements set forth and
cross referenced in this subpart. Casinos
and card clubs should also refer to
Subpart B of Part 1010 of this Chapter
for program requirements contained in
that subpart which apply to casinos and
card clubs.
(a) Requirements for casinos. A casino
shall be deemed to satisfy the
requirements of 31 U.S.C. 5318(h)(1) if
it implements and maintains a
compliance program described in
paragraph (b) of this section.
(b) Compliance programs. (1) Each
casino shall develop and implement a
written program reasonably designed to
assure and monitor compliance with the
requirements set forth in 31 U.S.C.
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chapter 53, subchapter II and the
regulations contained in this chapter.
(2) At a minimum, each compliance
program shall provide for:
(i) A system of internal controls to
assure ongoing compliance;
(ii) Internal and/or external
independent testing for compliance. The
scope and frequency of the testing shall
be commensurate with the money
laundering and terrorist financing risks
posed by the products and services
provided by the casino;
(iii) Training of casino personnel,
including training in the identification
of unusual or suspicious transactions, to
the extent that the reporting of such
transactions is required by this chapter,
by other applicable law or regulation, or
by the casino’s own administrative and
compliance policies;
(iv) An individual or individuals to
assure day-to-day compliance;
(v) Procedures for using all available
information to determine:
(A) When required by this chapter,
the name, address, social security
number, and other information, and
verification of the same, of a person;
(B) The occurrence of any transactions
or patterns of transactions required to be
reported pursuant to § 1021.320;
(C) Whether any record as described
in subpart D of Part 1010 of this Chapter
or subpart D of this Part 1021 must be
made and retained; and
(vi) For casinos that have automated
data processing systems, the use of
automated programs to aid in assuring
compliance.
Subpart C—Reports Required To Be
Made By Casinos and Card Clubs
§ 1021.300
General.
Casinos and card clubs are subject to
the reporting requirements set forth and
cross referenced in this subpart. Casinos
and card clubs should also refer to
Subpart C of Part 1010 of this Chapter
for reporting requirements contained in
that subpart which apply to casinos and
card clubs.
§ 1021.310
currency.
Reports of transactions in
The reports of transactions in
currency requirements for casinos are
located in subpart C of Part 1010 of this
Chapter and this subpart.
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§ 1021.311
Filing obligations.
Each casino shall file a report of each
transaction in currency, involving either
cash in or cash out, of more than
$10,000.
(a) Transactions in currency involving
cash in include, but are not limited to:
(1) Purchases of chips, tokens, and
other gaming instruments;
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(2) Front money deposits;
(3) Safekeeping deposits;
(4) Payments on any form of credit,
including markers and counter checks;
(5) Bets of currency, including money
plays;
(6) Currency received by a casino for
transmittal of funds through wire
transfer for a customer;
(7) Purchases of a casino’s check;
(8) Exchanges of currency for
currency, including foreign currency;
and
(9) Bills inserted into electronic
gaming devices.
(b) Transactions in currency involving
cash out include, but are not limited to:
(1) Redemptions of chips, tokens,
tickets, and other gaming instruments;
(2) Front money withdrawals;
(3) Safekeeping withdrawals;
(4) Advances on any form of credit,
including markers and counter checks;
(5) Payments on bets;
(6) Payments by a casino to a
customer based on receipt of funds
through wire transfers;
(7) Cashing of checks or other
negotiable instruments;
(8) Exchanges of currency for
currency, including foreign currency;
(9) Travel and complimentary
expenses and gaming incentives; and
(10) Payment for tournament,
contests, and other promotions.
(c) Other provisions of this chapter
notwithstanding, casinos are exempted
from the reporting obligations found in
this section and § 1021.313 for the
following transactions in currency or
currency transactions:
(1) Transactions between a casino and
a currency dealer or exchanger, or
between a casino and a check casher, as
those terms are defined in § 1010.100(ff)
of this Chapter, so long as such
transactions are conducted pursuant to
a contractual or other arrangement with
a casino covering the financial services
in paragraphs (a)(8), (b)(7), and (b)(8) of
this section;
(2) Cash out transactions to the extent
the currency is won in a money play
and is the same currency the customer
wagered in the money play, or cash in
transactions to the extent the currency
is the same currency the customer
previously wagered in a money play on
the same table game without leaving the
table;
(3) Bills inserted into electronic
gaming devices in multiple transactions
(unless a casino has knowledge
pursuant to § 1021.313 in which case
this exemption would not apply); and
(4) Jackpots from slot machines or
video lottery terminals.
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§ 1021.312
65851
Identification required.
Refer to § 1010.312 of this Chapter for
identification requirements for reports
of transaction in currency filed by
casinos and card clubs.
§ 1021.313
Aggregation.
In the case of a casino, multiple
currency transactions shall be treated as
a single transaction if the casino has
knowledge that they are by or on behalf
of any person and result in either cash
in or cash out totaling more than
$10,000 during any gaming day. For
purposes of this section, a casino shall
be deemed to have the knowledge
described in the preceding sentence, if:
Any sole proprietor, partner, officer,
director, or employee of the casino,
acting within the scope of his or her
employment, has knowledge that such
multiple currency transactions have
occurred, including knowledge from
examining the books, records, logs,
information retained on magnetic disk,
tape or other machine-readable media,
or in any manual system, and similar
documents and information, which the
casino maintains pursuant to any law or
regulation or within the ordinary course
of its business, and which contain
information that such multiple currency
transactions have occurred.
§ 1021.314
Structured transactions.
Refer to § 1010.314 of this Chapter for
rules regarding structured transactions
for casinos.
§ 1021.315
Exemptions.
Refer to § 1010.315 of this Chapter for
exemptions from the obligation to file
reports of transactions in currency for
casinos.
§ 1021.320 Reports by casinos of
suspicious transactions.
(a) General. (1) Every casino shall file
with FinCEN, to the extent and in the
manner required by this section, a
report of any suspicious transaction
relevant to a possible violation of law or
regulation. A casino may also file with
FinCEN, by using the form specified in
paragraph (b)(1) of this section, or
otherwise, a report of any suspicious
transaction that it believes is relevant to
the possible violation of any law or
regulation but whose reporting is not
required by this section.
(2) A transaction requires reporting
under the terms of this section if it is
conducted or attempted by, at, or
through a casino, and involves or
aggregates at least $5,000 in funds or
other assets, and the casino knows,
suspects, or has reason to suspect that
the transaction (or a pattern of
transactions of which the transaction is
a part):
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(i) Involves funds derived from illegal
activity or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity (including,
without limitation, the ownership,
nature, source, location, or control of
such funds or assets) as part of a plan
to violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
(ii) Is designed, whether through
structuring or other means, to evade any
requirements of this chapter or of any
other regulations promulgated under the
Bank Secrecy Act;
(iii) Has no business or apparent
lawful purpose or is not the sort in
which the particular customer would
normally be expected to engage, and the
casino knows of no reasonable
explanation for the transaction after
examining the available facts, including
the background and possible purpose of
the transaction; or
(iv) Involves use of the casino to
facilitate criminal activity.
(b) Filing procedures—(1) What to file.
A suspicious transaction shall be
reported by completing a Suspicious
Activity Report by Casinos (‘‘SARC’’),
and collecting and maintaining
supporting documentation as required
by paragraph (d) of this section.
(2) Where to file. The SARC shall be
filed with FinCEN in a central location,
to be determined by FinCEN, as
indicated in the instructions to the
SARC.
(3) When to file. A SARC shall be filed
no later than 30 calendar days after the
date of the initial detection by the
casino of facts that may constitute a
basis for filing a SARC under this
section. If no suspect is identified on the
date of such initial detection, a casino
may delay filing a SARC for an
additional 30 calendar days to identify
a suspect, but in no case shall reporting
be delayed more than 60 calendar days
after the date of such initial detection.
In situations involving violations that
require immediate attention, such as
ongoing money laundering schemes, the
casino shall immediately notify by
telephone an appropriate law
enforcement authority in addition to
filing timely a SARC. Casinos wishing
voluntarily to report suspicious
transactions that may relate to terrorist
activity may call FinCEN’s Financial
Institutions Hotline at 1–866–556–3974
in addition to filing timely a SARC if
required by this section.
(c) Exceptions. A casino is not
required to file a SARC for a robbery or
burglary committed or attempted that is
reported to appropriate law enforcement
authorities.
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(d) Retention of records. A casino
shall maintain a copy of any SARC filed
and the original or business record
equivalent of any supporting
documentation for a period of five years
from the date of filing the SARC.
Supporting documentation shall be
identified as such and maintained by
the casino, and shall be deemed to have
been filed with the SARC. A casino
shall make all supporting
documentation available to FinCEN, any
other appropriate law enforcement
agencies or Federal, State, local, or tribal
gaming regulators upon request.
(e) Confidentiality of reports;
limitation of liability. No casino, and no
director, officer, employee, or agent of
any casino, who reports a suspicious
transaction under this chapter, may
notify any person involved in the
transaction that the transaction has been
reported. Thus, any person subpoenaed
or otherwise requested to disclose a
SARC or the information contained in a
SARC, except where such disclosure is
requested by FinCEN or another
appropriate law enforcement or
regulatory agency, shall decline to
produce the SARC or to provide any
information that would disclose that a
SARC has been prepared or filed, citing
this paragraph (e) and 31 U.S.C.
5318(g)(2), and shall notify FinCEN of
any such request and its response
thereto. A casino, and any director,
officer, employee, or agent of such
casino, that makes a report pursuant to
this section (whether such report is
required by this section or made
voluntarily) shall be protected from
liability for any disclosure contained in,
or for failure to disclose the fact of, such
report, or both, to the extent provided
by 31 U.S.C. 5318(g)(3).
(f) Compliance. Compliance with this
section shall be audited by the
Department of the Treasury, through
FinCEN or its delegees, under the terms
of the Bank Secrecy Act. Failure to
satisfy the requirements of this section
may constitute a violation of the
reporting rules of the Bank Secrecy Act
and of this chapter.
(g) Applicability date. This section
applies to transactions occurring after
March 25, 2003.
§ 1021.330 Exceptions to the reporting
requirements of 31 U.S.C. 5331.
(a) Receipt of currency by certain
casinos having gross annual gaming
revenue in excess of $1,000,000—In
general. If a casino receives currency in
excess of $10,000 and is required to
report the receipt of such currency
directly to the Treasury Department
under § 1010.306, § 1021.311, or
§ 1021.313 and is subject to the
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recordkeeping requirements of
§ 1021.410, then the casino is not
required to make a report with respect
to the receipt of such currency under 31
U.S.C. 5331 and this section.
(b) Casinos exempt under
§ 1010.970(c). Pursuant to § 1010.970,
the Secretary may exempt from the
reporting and recordkeeping
requirements under § 1010.306,
§ 1021.311, § 1021.313 or § 1021.410
casinos in any state whose regulatory
system substantially meets the reporting
and recordkeeping requirements of this
chapter. Such casinos shall not be
required to report receipt of currency
under 31 U.S.C. 5331 and this section.
(c) Reporting of currency received in
a non-gaming business. Non-gaming
businesses (such as shops, restaurants,
entertainment, and hotels) at casino
hotels and resorts are separate trades or
businesses in which the receipt of
currency in excess of $10,000 is
reportable under section 5331 and these
regulations. Thus, a casino exempt
under paragraph (a) or (b) of this section
must report with respect to currency in
excess of $10,000 received in its nongaming businesses.
(d) Example. The following example
illustrates the application of the rules in
paragraphs (a) and (c) of this section:
Example. A and B are casinos having gross
annual gaming revenue in excess of
$1,000,000. C is a casino with gross annual
gaming revenue of less than $1,000,000.
Casino A receives $15,000 in currency from
a customer with respect to a gaming
transaction which the casino reports to the
Treasury Department under §§ 1010.306,
1021.311, and 1021.313. Casino B receives
$15,000 in currency from a customer in
payment for accommodations provided to
that customer at Casino B’s hotel. Casino C
receives $15,000 in currency from a customer
with respect to a gaming transaction. Casino
A is not required to report the transaction
under 31 U.S.C. 5331 or this section because
the exception for certain casinos provided in
paragraph (a) of this section (‘‘the casino
exception’’) applies. Casino B is required to
report under 31 U.S.C. 5331 and this section
because the casino exception does not apply
to the receipt of currency from a nongaming
activity. Casino C is required to report under
31 U.S.C. 5331 and this section because the
casino exception does not apply to casinos
having gross annual gaming revenue of
$1,000,000 or less which do not have to
report to the Treasury Department under
§§ 1010.306, 1021.311, and 1021.313.
Subpart D—Records Required To Be
Maintained By Casinos and Card Clubs
§ 1021.400
General.
Casinos and card clubs are subject to
the recordkeeping requirements set forth
and cross referenced in this subpart.
Casinos and card clubs should also refer
to Subpart D of Part 1010 of this Chapter
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for recordkeeping requirements
contained in that subpart which apply
to casinos and card clubs.
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§ 1021.410 Additional records to be made
and retained by casinos.
(a) With respect to each deposit of
funds, account opened or line of credit
extended after the effective date of these
regulations, a casino shall, at the time
the funds are deposited, the account is
opened or credit is extended, secure and
maintain a record of the name,
permanent address, and social security
number of the person involved. Where
the deposit, account or credit is in the
names of two or more persons, the
casino shall secure the name, permanent
address, and social security number of
each person having a financial interest
in the deposit, account or line of credit.
The name and address of such person
shall be verified by the casino at the
time the deposit is made, account
opened, or credit extended. The
verification shall be made by
examination of a document of the type
described in § 1010.312 of this Chapter,
and the specific identifying information
shall be recorded in the manner
described in § 1010.312 of this Chapter.
In the event that a casino has been
unable to secure the required social
security number, it shall not be deemed
to be in violation of this section if it has
made a reasonable effort to secure such
number and it maintains a list
containing the names and permanent
addresses of those persons from who it
has been unable to obtain social security
numbers and makes the names and
addresses of those persons available to
the Secretary upon request. Where a
person is a nonresident alien, the casino
shall also record the person’s passport
number or a description of some other
government document used to verify his
identity.
(b) In addition, each casino shall
retain either the original or a microfilm
or other copy or reproduction of each of
the following:
(1) A record of each receipt (including
but not limited to funds for safekeeping
or front money) of funds by the casino
for the account (credit or deposit) of any
person. The record shall include the
name, permanent address and social
security number of the person from
whom the funds were received, as well
as the date and amount of the funds
received. If the person from whom the
funds were received is a non-resident
alien, the person’s passport number or
a description of some other government
document used to verify the person’s
identity shall be obtained and recorded;
(2) A record of each bookkeeping
entry comprising a debit or credit to a
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customer’s deposit account or credit
account with the casino;
(3) Each statement, ledger card or
other record of each deposit account or
credit account with the casino, showing
each transaction (including deposits,
receipts, withdrawals, disbursements or
transfers) in or with respect to, a
customer’s deposit account or credit
account with the casino;
(4) A record of each extension of
credit in excess of $2,500, the terms and
conditions of such extension of credit,
and repayments. The record shall
include the customer’s name,
permanent address, social security
number, and the date and amount of the
transaction (including repayments). If
the customer or person for whom the
credit extended is a non-resident alien,
his passport number or description of
some other government document used
to verify his identity shall be obtained
and recorded;
(5) A record of each advice, request or
instruction received or given by the
casino for itself or another person with
respect to a transaction involving a
person, account or place outside the
United States (including but not limited
to communications by wire, letter, or
telephone). If the transfer outside the
United States is on behalf of a third
party, the record shall include the third
party’s name, permanent address, social
security number, signature, and the date
and amount of the transaction. If the
transfer is received from outside the
United States on behalf of a third party,
the record shall include the third party’s
name, permanent address, social
security number, signature, and the date
and amount of the transaction. If the
person for whom the transaction is
being made is a non-resident alien the
record shall also include the person’s
name, his passport number or a
description of some other government
document used to verify his identity;
(6) Records prepared or received by
the casino in the ordinary course of
business which would be needed to
reconstruct a person’s deposit account
or credit account with the casino or to
trace a check deposited with the casino
through the casino’s records to the bank
of deposit;
(7) All records, documents or manuals
required to be maintained by a casino
under state and local laws or
regulations, regulations of any
governing Indian tribe or tribal
government, or terms of (or any
regulations issued under) any TribalState compacts entered into pursuant to
the Indian Gaming Regulatory Act, with
respect to the casino in question.
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(8) All records which are prepared or
used by a casino to monitor a customer’s
gaming activity.
(9)(i) A separate record containing a
list of each transaction between the
casino and its customers involving the
following types of instruments having a
face value of $3,000 or more:
(A) Personal checks (excluding
instruments which evidence credit
granted by a casino strictly for gaming,
such as markers);
(B) Business checks (including casino
checks);
(C) Official bank checks;
(D) Cashier’s checks;
(E) Third-party checks;
(F) Promissory notes;
(G) Traveler’s checks; and
(H) Money orders.
(ii) The list will contain the time,
date, and amount of the transaction; the
name and permanent address of the
customer; the type of instrument; the
name of the drawee or issuer of the
instrument; all reference numbers (e.g.,
casino account number, personal check
number, etc.); and the name or casino
license number of the casino employee
who conducted the transaction.
Applicable transactions will be placed
on the list in the chronological order in
which they occur.
(10) A copy of the compliance
program described in § 1021.210(b).
(11) In the case of card clubs only,
records of all currency transactions by
customers, including without limitation,
records in the form of currency
transaction logs and multiple currency
transaction logs, and records of all
activity at cages or similar facilities,
including, without limitation, cage
control logs.
(c)(1) Casinos which input, store, or
retain, in whole or in part, for any
period of time, any record required to be
maintained by § 1010.410 of this
Chapter or this section on computer
disk, tape, or other machine-readable
media shall retain the same on
computer disk, tape, or machinereadable media.
(2) All indexes, books, programs,
record layouts, manuals, formats,
instructions, file descriptions, and
similar materials which would enable a
person readily to access and review the
records that are described in § 1010.410
of this Chapter and this section and that
are input, stored, or retained on
computer disk, tape, or other machinereadable media shall be retained for the
period of time such records are required
to be retained.
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Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity for
Casinos and Card Clubs
§ 1021.500
General.
Casinos and card clubs are subject to
the special information sharing
procedures to deter money laundering
and terrorist activity requirements set
forth and cross referenced in this
subpart. Casinos and card clubs should
also refer to Subpart E of Part 1010 of
this Chapter for special information
sharing procedures to deter money
laundering and terrorist activity
contained in that subpart which apply
to casinos and card clubs.
§ 1021.520 Special information sharing
procedures to deter money laundering and
terrorist activity for casinos and card clubs.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1021.530
[Reserved]
§ 1021.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Casinos and Card Clubs
§ 1021.600
General.
Casinos and card clubs are subject to
the special standards of diligence;
prohibitions; and special measures
requirements set forth and cross
referenced in this subpart. Casinos and
card clubs should also refer to Subpart
F of Part 1010 of this Chapter for special
standards of diligence; prohibitions; and
special measures contained in that
subpart which apply to casinos and card
clubs.
§ 1021.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
(a) Refer to § 1010.610 of this Chapter.
(b) [Reserved]
(a) Refer to § 1010.620 of this Chapter.
(b) [Reserved]
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§ 1021.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
(a) Refer to § 1010.630 of this Chapter.
(b) [Reserved]
[Reserved]
§ 1021.670 Summons or subpoena of
foreign bank records; Termination of
correspondent relationship.
(a) Refer to § 1010.670 of this Chapter.
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PART 1022—RULES FOR MONEY
SERVICES BUSINESSES
Subpart A—Definitions
Sec.
1022.100 Definitions.
Subpart B—Programs
1022.200 General.
1022.210 Anti-money laundering programs
for money services businesses.
Subpart C—Reports Required To Be Made
By Money Services Businesses
1022.300 General.
1022.310 Reports of transactions in
currency.
1022.311 Filing obligations.
1022.312 Identification required.
1022.313 Aggregation.
1022.314 Structured transactions.
1022.315 Exemptions.
1022.320 Reports by money services
businesses of suspicious transactions.
1022.380 Registration of money services
businesses.
Subpart D—Records Required To Be
Maintained By Money Services Businesses
1022.400 General.
1022.410 Additional records to be made
and retained by currency dealers or
exchangers.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1022.500 General.
1022.520 Special information sharing
procedures to deter money laundering
and terrorist activity for money services
businesses.
1022.530 [Reserved]
1022.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Money Services Businesses
1022.600 General.
1022.610 [Reserved]
1022.620 [Reserved]
1022.630 [Reserved]
1022.640 [Reserved]
1022.670 [Reserved]
Subpart A—Definitions
§ 1021.620 Due diligence programs for
private banking accounts.
§ 1021.640
§ 1022.210 Anti-money laundering
programs for money services businesses.
(b) [Reserved]
§ 1022.100
Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein.
Subpart B—Programs
§ 1022.200
General.
Money services businesses are subject
to the program requirements set forth
and cross referenced in this subpart.
Money services businesses should also
refer to Subpart B of Part 1010 of this
Chapter for program requirements
contained in that subpart which apply
to money services businesses.
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(a) Each money services business, as
defined by § 1010.100(ff) of this
Chapter, shall develop, implement, and
maintain an effective anti-money
laundering program. An effective antimoney laundering program is one that is
reasonably designed to prevent the
money services business from being
used to facilitate money laundering and
the financing of terrorist activities.
(b) The program shall be
commensurate with the risks posed by
the location and size of, and the nature
and volume of the financial services
provided by, the money services
business.
(c) The program shall be in writing,
and a money services business shall
make copies of the anti-money
laundering program available for
inspection to the Department of the
Treasury upon request.
(d) At a minimum, the program shall:
(1) Incorporate policies, procedures,
and internal controls reasonably
designed to assure compliance with this
chapter.
(i) Policies, procedures, and internal
controls developed and implemented
under this section shall include
provisions for complying with the
requirements of this chapter including,
to the extent applicable to the money
services business, requirements for:
(A) Verifying customer identification;
(B) Filing reports;
(C) Creating and retaining records;
and
(D) Responding to law enforcement
requests.
(ii) Money services businesses that
have automated data processing systems
should integrate their compliance
procedures with such systems.
(iii) A person that is a money services
business solely because it is an agent for
another money services business as set
forth in § 1022.380(a)(2), and the money
services business for which it serves as
agent, may by agreement allocate
between them responsibility for
development of policies, procedures,
and internal controls required by this
paragraph (d)(1). Each money services
business shall remain solely responsible
for implementation of the requirements
set forth in this section, and nothing in
this paragraph (d)(1) relieves any money
services business from its obligation to
establish and maintain an effective antimoney laundering program.
(2) Designate a person to assure day
to day compliance with the program and
this chapter. The responsibilities of
such person shall include assuring that:
(i) The money services business
properly files reports, and creates and
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retains records, in accordance with
applicable requirements of this chapter;
(ii) The compliance program is
updated as necessary to reflect current
requirements of this chapter, and related
guidance issued by the Department of
the Treasury; and
(iii) The money services business
provides appropriate training and
education in accordance with paragraph
(d)(3) of this section.
(3) Provide education and/or training
of appropriate personnel concerning
their responsibilities under the program,
including training in the detection of
suspicious transactions to the extent
that the money services business is
required to report such transactions
under this chapter.
(4) Provide for independent review to
monitor and maintain an adequate
program. The scope and frequency of
the review shall be commensurate with
the risk of the financial services
provided by the money services
business. Such review may be
conducted by an officer or employee of
the money services business so long as
the reviewer is not the person
designated in paragraph (d)(2) of this
section.
(e) Compliance date. A money
services business must develop and
implement an anti-money laundering
program that complies with the
requirements of this section on or before
the later of July 24, 2002, and the end
of the 90-day period beginning on the
day following the date the business is
established.
Subpart C—Reports Required To Be
Made By Money Services Businesses
§ 1022.300
General.
Money services businesses are subject
to the reporting requirements set forth
and cross referenced in this subpart.
Money services businesses should also
refer to Subpart C of Part 1010 of this
Chapter for reporting requirements
contained in that subpart which apply
to money services businesses.
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§ 1022.310
currency.
Reports of transactions in
The reports of transactions in
currency requirements for money
services businesses are located in
subpart C of Part 1010 of this Chapter
and this subpart.
§ 1022.311
Filing obligations.
Refer to § 1010.311 of this Chapter for
reports of transactions in currency filing
obligations for money services
businesses.
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§ 1022.312
Identification required.
Refer to § 1010.312 of this Chapter for
identification requirements for reports
of transactions in currency filed by
money services businesses.
§ 1022.313
Aggregation.
Refer to § 1010.313 of this Chapter for
reports of transactions in currency
aggregation requirements for money
services businesses.
§ 1022.314
Structured transactions.
Refer to § 1010.314 of this Chapter for
rules regarding structured transactions
for money services businesses.
§ 1022.315
Exemptions.
Refer to § 1010.315 of this Chapter for
exemptions from the obligation to file
reports of transactions in currency for
money services businesses.
§ 1022.320 Reports by money services
businesses of suspicious transactions.
(a) General. (1) Every money services
business, described in § 1010.100(ff) (1),
(3), (4), (5), or (6) of this Chapter, shall
file with the Treasury Department, to
the extent and in the manner required
by this section, a report of any
suspicious transaction relevant to a
possible violation of law or regulation.
Any money services business may also
file with the Treasury Department, by
using the form specified in paragraph
(b)(1) of this section, or otherwise, a
report of any suspicious transaction that
it believes is relevant to the possible
violation of any law or regulation but
whose reporting is not required by this
section.
(2) A transaction requires reporting
under the terms of this section if it is
conducted or attempted by, at, or
through a money services business,
involves or aggregates funds or other
assets of at least $2,000 (except as
provided in paragraph (a)(3) of this
section), and the money services
business knows, suspects, or has reason
to suspect that the transaction (or a
pattern of transactions of which the
transaction is a part):
(i) Involves funds derived from illegal
activity or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity (including,
without limitation, the ownership,
nature, source, location, or control of
such funds or assets) as part of a plan
to violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
(ii) Is designed, whether through
structuring or other means, to evade any
requirements of this chapter or of any
other regulations promulgated under the
Bank Secrecy Act; or
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65855
(iii) Serves no business or apparent
lawful purpose, and the reporting
money services business knows of no
reasonable explanation for the
transaction after examining the available
facts, including the background and
possible purpose of the transaction.
(iv) Involves use of the money
services business to facilitate criminal
activity.
(3) To the extent that the
identification of transactions required to
be reported is derived from a review of
clearance records or other similar
records of money orders or traveler’s
checks that have been sold or processed,
an issuer of money orders or traveler’s
checks shall only be required to report
a transaction or pattern of transactions
that involves or aggregates funds or
other assets of at least $5,000.
(4) The obligation to identify and
properly and timely to report a
suspicious transaction rests with each
money services business involved in the
transaction, provided that no more than
one report is required to be filed by the
money services businesses involved in a
particular transaction (so long as the
report filed contains all relevant facts).
Whether, in addition to any liability on
its own for failure to report, a money
services business that issues the
instrument or provides the funds
transfer service involved in the
transaction may be liable for the failure
of another money services business
involved in the transaction to report that
transaction depends upon the nature of
the contractual or other relationship
between the businesses, and the legal
effect of the facts and circumstances of
the relationship and transaction
involved, under general principles of
the law of agency.
(5) Notwithstanding the provisions of
this section, a transaction that involves
solely the issuance, or facilitation of the
transfer of stored value, or the issuance,
sale, or redemption of stored value,
shall not be subject to reporting under
this paragraph (a), until the
promulgation of rules specifically
relating to such reporting.
(b) Filing procedures—(1) What to file.
A suspicious transaction shall be
reported by completing a Suspicious
Activity Report-MSB (‘‘SAR–MSB’’), and
collecting and maintaining supporting
documentation as required by paragraph
(c) of this section.
(2) Where to file. The SAR–MSB shall
be filed in a central location to be
determined by FinCEN, as indicated in
the instructions to the SAR–MSB.
(3) When to file. A money services
business subject to this section is
required to file each SAR–MSB no later
than 30 calendar days after the date of
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the initial detection by the money
services business of facts that may
constitute a basis for filing a SAR–MSB
under this section. In situations
involving violations that require
immediate attention, such as ongoing
money laundering schemes, the money
services business shall immediately
notify by telephone an appropriate law
enforcement authority in addition to
filing a SAR–MSB. Money services
businesses wishing voluntarily to report
suspicious transactions that may relate
to terrorist activity may call FinCEN’s
Financial Institutions Hotline at 1–866–
556–3974 in addition to filing timely a
SAR–MSB if required by this section.
(c) Retention of records. A money
services business shall maintain a copy
of any SAR–MSB filed and the original
or business record equivalent of any
supporting documentation for a period
of five years from the date of filing the
SAR–MSB. Supporting documentation
shall be identified as such and
maintained by the money services
business, and shall be deemed to have
been filed with the SAR–MSB. A money
services business shall make all
supporting documentation available to
FinCEN and any other appropriate law
enforcement agencies or supervisory
agencies upon request.
(d) Confidentiality of reports;
limitation of liability. No financial
institution, and no director, officer,
employee, or agent of any financial
institution, who reports a suspicious
transaction under this chapter, may
notify any person involved in the
transaction that the transaction has been
reported. Thus, any person subpoenaed
or otherwise requested to disclose a
SAR–MSB or the information contained
in a SAR–MSB, except where such
disclosure is requested by FinCEN or an
appropriate law enforcement or
supervisory agency, shall decline to
produce the SAR–MSB or to provide
any information that would disclose
that a SAR–MSB has been prepared or
filed, citing this paragraph (d) and 31
U.S.C. 5318(g)(2), and shall notify
FinCEN of any such request and its
response thereto. A reporting money
services business, and any director,
officer, employee, or agent of such
reporting money services business, that
makes a report pursuant to this section
(whether such report is required by this
section or made voluntarily) shall be
protected from liability for any
disclosure contained in, or for failure to
disclose the fact of, such report, or both,
to the extent provided by 31 U.S.C.
5318(g)(3).
(e) Compliance. Compliance with this
section shall be audited by the
Department of the Treasury, through
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FinCEN or its delegees under the terms
of the Bank Secrecy Act. Failure to
satisfy the requirements of this section
may constitute a violation of the
reporting rules of the Bank Secrecy Act
and of this chapter.
(f) Applicability date. This section
applies to transactions occurring after
December 31, 2001.
§ 1022.380 Registration of money services
businesses.
(a) Registration requirement—(1) In
general. Except as provided in
paragraph (a)(2) of this section, relating
to agents, each money services business
(whether or not licensed as a money
services business by any State) must
register with the Department of the
Treasury and, as part of that registration,
maintain a list of its agents as required
by 31 U.S.C. 5330 and this section. This
section does not apply to the U.S. Postal
Service, to agencies of the United States,
of any State, or of any political
subdivision of a State, or to a person to
the extent that the person is an issuer,
seller, or redeemer of stored value.
(2) Agents. A person that is a money
services business solely because that
person serves as an agent of another
money services business, see
§ 1010.100(ff) of this Chapter, is not
required to register under this section,
but a money services business that
engages in activities described in
§ 1010.100(ff) of this Chapter both on its
own behalf and as an agent for others
must register under this section. For
example, a supermarket corporation that
acts as an agent for an issuer of money
orders and performs no other services of
a nature and value that would cause the
corporation to be a money services
business, is not required to register; the
answer would be the same if the
supermarket corporation served as an
agent both of a money order issuer and
of a money transmitter. However,
registration would be required if the
supermarket corporation, in addition to
acting as an agent of an issuer of money
orders, cashed checks or exchanged
currencies (other than as an agent for
another business) in an amount greater
than $1,000 in currency or monetary or
other instruments for any person on any
day, in one or more transactions.
(3) Agency status. The determination
whether a person is an agent depends
on all the facts and circumstances.
(b) Registration procedures—(1) In
general. (i) A money services business
must be registered by filing such form
as FinCEN may specify with the
Enterprise Computing Center in Detroit
of the Internal Revenue Service (or such
other location as the form may specify).
The information required by 31 U.S.C.
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5330(b) and any other information
required by the form must be reported
in the manner and to the extent required
by the form.
(ii) A branch office of a money
services business is not required to file
its own registration form. A money
services business must, however, report
information about its branch locations
or offices as provided by the
instructions to the registration form.
(iii) A money services business must
retain a copy of any registration form
filed under this section and any
registration number that may be
assigned to the business at a location in
the United States and for the period
specified in § 1010.430(d) of this
Chapter.
(2) Registration period. A money
services business must be registered for
the initial registration period and each
renewal period. The initial registration
period is the two-calendar-year period
beginning with the calendar year in
which the money services business is
first required to be registered. However,
the initial registration period for a
money services business required to
register by December 31, 2001 (see
paragraph (b)(3) of this section) is the
two-calendar year period beginning
2002. Each two-calendar-year period
following the initial registration period
is a renewal period.
(3) Due date. The registration form for
the initial registration period must be
filed on or before the later of December
31, 2001, and the end of the 180-day
period beginning on the day following
the date the business is established. The
registration form for a renewal period
must be filed on or before the last day
of the calendar year preceding the
renewal period.
(4) Events requiring re-registration. If
a money services business registered as
such under the laws of any State
experiences a change in ownership or
control that requires the business to be
re-registered under State law, the money
services business must also be reregistered under this section. In
addition, if there is a transfer of more
than 10 percent of the voting power or
equity interests of a money services
business (other than a money services
business that must report such transfer
to the Securities and Exchange
Commission), the money services
business must be re-registered under
this section. Finally, if a money services
business experiences a more than 50-per
cent increase in the number of its agents
during any registration period, the
money services business must be reregistered under this section. The
registration form must be filed not later
than 180 days after such change in
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ownership, transfer of voting power or
equity interests, or increase in agents.
The calendar year in which the change,
transfer, or increase occurs is treated as
the first year of a new two-year
registration period.
(c) Persons required to file the
registration form. Under 31 U.S.C.
5330(a), any person who owns or
controls a money services business is
responsible for registering the business;
however, only one registration form is
required to be filed for each registration
period. A person is treated as owning or
controlling a money services business
for purposes of filing the registration
form only to the extent provided by the
form. If more than one person owns or
controls a money services business, the
owning or controlling persons may enter
into an agreement designating one of
them to register the business. The
failure of the designated person to
register the money services business
does not, however, relieve any of the
other persons who own or control the
business of liability for the failure to
register the business. See paragraph (e)
of this section, relating to consequences
of the failure to comply with 31 U.S.C.
5330 or this section.
(d) List of agents—(1) In general. A
money services business must prepare
and maintain a list of its agents. The
initial list of agents must be prepared by
January 1, 2002, and must be revised
each January 1, for the immediately
preceding 12 month period; for money
services businesses established after
December 31, 2001, the initial agent list
must be prepared by the due date of the
initial registration form and must be
revised each January 1 for the
immediately preceding 12-month
period. The list is not filed with the
registration form but must be
maintained at the location in the United
States reported on the registration form
under paragraph (b)(1) of this section.
Upon request, a money services
business must make its list of agents
available to FinCEN and any other
appropriate law enforcement agency
(including, without limitation, the
examination function of the Internal
Revenue Service in its capacity as
delegee of Bank Secrecy Act
examination authority). Requests for
information made pursuant to the
preceding sentence shall be coordinated
through FinCEN in the manner and to
the extent determined by FinCEN. The
original list of agents and any revised
list must be retained for the period
specified in § 1010.430(d) of this
Chapter.
(2) Information included on the list of
agents—(i) In general. Except as
provided in paragraph (d)(2)(ii) of this
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section, a money services business must
include the following information with
respect to each agent on the list
(including any revised list) of its
agents—
(A) The name of the agent, including
any trade names or doing-business-as
names;
(B) The address of the agent,
including street address, city, state, and
ZIP code;
(C) The telephone number of the
agent;
(D) The type of service or services
(money orders, traveler’s checks, check
sales, check cashing, currency exchange,
and money transmitting) the agent
provides;
(E) A listing of the months in the 12
months immediately preceding the date
of the most recent agent list in which
the gross transaction amount of the
agent with respect to financial products
or services issued by the money services
business maintaining the agent list
exceeded $100,000. For this purpose,
the money services gross transaction
amount is the agent’s gross amount
(excluding fees and commissions)
received from transactions of one or
more businesses described in
§ 1010.100(ff) of this Chapter;
(F) The name and address of any
depository institution at which the
agent maintains a transaction account
(as defined in 12 U.S.C. 461(b)(1)(C)) for
all or part of the funds received in or for
the financial products or services issued
by the money services business
maintaining the list, whether in the
agent’s or the business principal’s name;
(G) The year in which the agent first
became an agent of the money services
business; and
(H) The number of branches or
subagents the agent has.
(ii) Special rules. Information about
agent volume must be current within 45
days of the due date of the agent list.
The information described by
paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of
this section is not required to be
included in an agent list with respect to
any person that is an agent of the money
services business maintaining the list
before the first day of the month
beginning after February 16, 2000 so
long as the information described by
paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of
this section is made available upon the
request of FinCEN and any other
appropriate law enforcement agency
(including, without limitation, the
examination function of the Internal
Revenue Service in its capacity as
delegee of Bank Secrecy Act
examination authority).
(e) Consequences of failing to comply
with 31 U.S.C. 5330 or the regulations
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65857
thereunder. It is unlawful to do business
without complying with 31 U.S.C. 5330
and this section. A failure to comply
with the requirements of 31 U.S.C. 5330
or this section includes the filing of
false or materially incomplete
information in connection with the
registration of a money services
business. Any person who fails to
comply with any requirement of 31
U.S.C. 5330 or this section shall be
liable for a civil penalty of $5,000 for
each violation. Each day a violation of
31 U.S.C. 5330 or this section continues
constitutes a separate violation. In
addition, under 31 U.S.C. 5320, the
Secretary of the Treasury may bring a
civil action to enjoin the violation. See
18 U.S.C. 1960 for a criminal penalty for
failure to comply with the registration
requirements of 31 U.S.C. 5330 or this
section.
(f) Applicability date. This section is
applicable as of September 20, 1999.
Registration of money services
businesses under this section will not be
required prior to December 31, 2001.
Subpart D—Records Required To Be
Maintained By Money Services
Businesses
§ 1022.400
General.
Money services businesses are subject
to the recordkeeping requirements set
forth and cross referenced in this
subpart. Money services businesses
should also refer to Subpart D of Part
1010 of this Chapter for recordkeeping
requirements contained in that subpart
which apply to money services
businesses.
§ 1022.410 Additional records to be made
and retained by currency dealers or
exchangers.
(a)(1) After July 7, 1987, each
currency dealer or exchanger shall
secure and maintain a record of the
taxpayer identification number of each
person for whom a transaction account
is opened or a line of credit is extended
within 30 days after such account is
opened or credit line extended. Where
a person is a non-resident alien, the
currency dealer or exchanger shall also
record the person’s passport number or
a description of some other government
document used to verify his identity.
Where the account or credit line is in
the names of two or more persons, the
currency dealer or exchanger shall
secure the taxpayer identification
number of a person having a financial
interest in the account or credit line. In
the event that a currency dealer or
exchanger has been unable to secure the
identification required within the 30day period specified, it shall
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nevertheless not be deemed to be in
violation of this section if:
(i) It has made a reasonable effort to
secure such identification, and
(ii) It maintains a list containing the
names, addresses, and account or credit
line numbers of those persons from
whom it has been unable to secure such
identification, and makes the names,
addresses, and account or credit line
numbers of those persons available to
the Secretary as directed by him.
(2) The 30-day period provided for in
paragraph (a)(1) of this section shall be
extended where the person opening the
account or credit line has applied for a
taxpayer identification or social security
number on Form SS–4 or SS–5, until
such time as the person maintaining the
account or credit line has had a
reasonable opportunity to secure such
number and furnish it to the currency
dealer or exchanger.
(3) A taxpayer identification number
for an account or credit line required
under paragraph (a)(1) of this section
need not be secured in the following
instances:
(i) Accounts for public funds opened
by agencies and instrumentalities of
Federal, state, local or foreign
governments,
(ii) Accounts for aliens who are—
(A) Ambassadors, ministers, career
diplomatic or consular officers, or
(B) Naval, military or other attaches of
foreign embassies, and legations, and for
members of their immediate families,
(iii) Accounts for aliens who are
accredited representatives to
international organizations which are
entitled to enjoy privileges, exemptions,
and immunities as an international
organization under the International
Organizations Immunities Act of
December 29, 1945 (22 U.S.C. 288), and
for the members of their immediate
families,
(iv) Aliens temporarily residing in the
United States for a period not to exceed
180 days,
(v) Aliens not engaged in a trade or
business in the United States who are
attending a recognized college or any
training program, supervised or
conducted by any agency of the Federal
Government, and
(vi) Unincorporated subordinate units
of a tax exempt central organization
which are covered by a group
exemption letter.
(b) Each currency dealer or exchanger
shall retain either the original or a
microfilm or other copy or reproduction
of each of the following:
(1) Statements of accounts from
banks, including paid checks, charges or
other debit entry memoranda, deposit
slips and other credit memoranda
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representing the entries reflected on
such statements;
(2) Daily work records, including
purchase and sales slips or other
memoranda needed to identify and
reconstruct currency transactions with
customers and foreign banks;
(3) A record of each exchange of
currency involving transactions in
excess of $1000, including the name and
address of the customer (and passport
number or taxpayer identification
number unless received by mail or
common carrier) date and amount of the
transaction and currency name, country,
and total amount of each foreign
currency;
(4) Signature cards or other
documents evidencing signature
authority over each deposit or security
account, containing the name of the
depositor, street address, taxpayer
identification number (TIN) or employer
identification number (EIN) and the
signature of the depositor or of a person
authorized to sign on the account (if
customer accounts are maintained in a
code name, a record of the actual owner
of the account);
(5) Each item, including checks,
drafts, or transfers of credit, of more
than $10,000 remitted or transferred to
a person, account or place outside the
United States;
(6) A record of each receipt of
currency, other monetary instruments,
investment securities and checks, and of
each transfer of funds or credit, or more
than $10,000 received on any one
occasion directly and not through a
domestic financial institution, from any
person, account or place outside the
United States;
(7) Records prepared or received by a
dealer in the ordinary course of
business, that would be needed to
reconstruct an account and trace a check
in excess of $100 deposited in such
account through its internal
recordkeeping system to its depository
institution, or to supply a description of
a deposited check in excess of $100;
(8) A record maintaining the name,
address and taxpayer identification
number, if available, of any person
presenting a certificate of deposit for
payment, as well as a description of the
instrument and date of transaction;
(9) A system of books and records that
will enable the currency dealer or
exchanger to prepare an accurate
balance sheet and income statement.
(c) This section does not apply to
banks that offer services in dealing or
changing currency to their customers as
an adjunct to their regular service.
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Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1022.500
General.
Money services businesses are subject
to the special information sharing
procedures to deter money laundering
and terrorist activity requirements set
forth and cross referenced in this
subpart. Money services businesses
should also refer to Subpart E of Part
1010 of this Chapter for special
information sharing procedures to deter
money laundering and terrorist activity
contained in that subpart which apply
to money services businesses.
§ 1022.520 Special information sharing
procedures to deter money laundering and
terrorist activity for money services
businesses.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1022.530
[Reserved]
§ 1022.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Money Services
Businesses
§ 1022.600
General.
Money services businesses are subject
to the special standards of diligence;
prohibitions; and special measures
requirements set forth and cross
referenced in this subpart. Money
services businesses should also refer to
Subpart F of Part 1010 of this Chapter
for special standards of diligence;
prohibitions; and special measures
contained in that subpart which apply
to money services businesses.
§ 1022.610
[Reserved]
§ 1022.620
[Reserved]
§ 1022.630
[Reserved]
§ 1022.640
[Reserved]
§ 1022.670
[Reserved]
PART 1023—RULES FOR BROKERS
OR DEALERS IN SECURITIES
Subpart A—Definitions
Sec.
1023.100 Definitions.
Subpart B—Programs
1023.200 General.
1023.210 Anti-money laundering program
requirements for brokers or dealers in
securities.
1023.220 Customer identification programs
for broker-dealers.
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Subpart C—Reports Required To Be Made
By Brokers or Dealers in Securities
1023.300 General.
1023.310 Reports of transactions in
currency.
1023.311 Filing obligations.
1023.312 Identification required.
1023.313 Aggregation.
1023.314 Structured transactions.
1023.315 Exemptions
1023.320 Reports by brokers or dealers in
securities of suspicious transactions.
Subpart D—Records Required To Be
Maintained By Brokers or Dealers in
Securities
1023.400 General.
1023.410 Additional records to be made
and retained by brokers or dealers in
securities.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1023.500 General.
1023.520 Special information sharing
procedures to deter money laundering
and terrorist activity for brokers or
dealers in securities.
1023.530 [Reserved]
1023.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Brokers or Dealers in Securities
1023.600 General.
1023.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
1023.620 Due diligence programs for
private banking accounts.
1023.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
1023.640 [Reserved]
1023.670 Summons or subpoena of foreign
bank account records; Termination of
correspondent relationship.
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Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1023. Unless otherwise
indicated, for purposes of this Part:
(a) Account. For purposes of
§ 1023.220:
(1) Account means a formal
relationship with a broker-dealer
established to effect transactions in
securities, including, but not limited to,
the purchase or sale of securities and
securities loaned and borrowed activity,
and to hold securities or other assets for
safekeeping or as collateral.
(2) Account does not include:
(i) An account that the broker-dealer
acquires through any acquisition,
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Subpart B—Programs
§ 1023.200
Subpart A—Definitions
§ 1023.100
merger, purchase of assets, or
assumption of liabilities; or
(ii) An account opened for the
purpose of participating in an employee
benefit plan established under the
Employee Retirement Income Security
Act of 1974.
(b) Broker-dealer means a person
registered or required to be registered as
a broker or dealer with the Commission
under the Securities Exchange Act of
1934 (15 U.S.C. 77a et seq.), except
persons who register pursuant to 15
U.S.C. 78o(b)(11).
(c) Commission means, for the
purposes of § 1023.220, the United
States Securities and Exchange
Commission.
(d) Customer. For purposes of
§ 1023.220:
(1) Customer means:
(i) A person that opens a new account;
and
(ii) An individual who opens a new
account for:
(A) An individual who lacks legal
capacity; or
(B) An entity that is not a legal
person.
(2) Customer does not include:
(i) A financial institution regulated by
a Federal functional regulator or a bank
regulated by a state bank regulator;
(ii) A person described in
§ 1020.315(b)(2) through (4) of this
Chapter; or
(iii) A person that has an existing
account with the broker-dealer,
provided the broker-dealer has a
reasonable belief that it knows the true
identity of the person.
(e) Financial institution is defined at
31 U.S.C. 5312(a)(2) and (c)(1).
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General.
Brokers or dealers in securities are
subject to the program requirements set
forth and cross referenced in this
subpart. Brokers or dealers in securities
should also refer to Subpart B of Part
1010 of this Chapter for program
requirements contained in that subpart
which apply to brokers or dealers in
securities.
§ 1023.210 Anti-money laundering
program requirements for brokers or
dealers in securities.
A financial institution regulated by a
self-regulatory organization shall be
deemed to satisfy the requirements of 31
U.S.C. 5318(h)(1) if:
(a) The financial institution complies
with the requirements of §§ 1010.610 of
this Chapter and 1010.620 and any
applicable regulation of its Federal
functional regulator governing the
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establishment and implementation of
anti-money laundering programs; and
(b)(1) The financial institution
implements and maintains an antimoney laundering program that
complies with the rules, regulations, or
requirements of its self-regulatory
organization governing such programs;
and
(2) The rules, regulations, or
requirements of the self-regulatory
organization have been approved, if
required, by the appropriate Federal
functional regulator.
§ 1023.220 Customer identification
programs for broker-dealers.
(a) Customer identification program:
minimum requirements—(1) In general.
A broker-dealer must establish,
document, and maintain a written
Customer Identification Program (‘‘CIP’’)
appropriate for its size and business
that, at a minimum, includes each of the
requirements of paragraphs (a)(1)
through (a)(5) of this section. The CIP
must be a part of the broker-dealer’s
anti-money laundering compliance
program required under 31 U.S.C.
5318(h).
(2) Identity verification procedures.
The CIP must include risk-based
procedures for verifying the identity of
each customer to the extent reasonable
and practicable. The procedures must
enable the broker-dealer to form a
reasonable belief that it knows the true
identity of each customer. The
procedures must be based on the brokerdealer’s assessment of the relevant risks,
including those presented by the
various types of accounts maintained by
the broker-dealer, the various methods
of opening accounts provided by the
broker-dealer, the various types of
identifying information available and
the broker-dealer’s size, location and
customer base. At a minimum, these
procedures must contain the elements
described in this paragraph (a)(2).
(i)(A) Customer information required.
The CIP must contain procedures for
opening an account that specify
identifying information that will be
obtained from each customer. Except as
permitted by paragraph (a)(2)(i)(B) of
this section, the broker-dealer must
obtain, at a minimum, the following
information prior to opening an
account:
(1) Name;
(2) Date of birth, for an individual;
(3) Address, which shall be:
(i) For an individual, a residential or
business street address;
(ii) for an individual who does not
have a residential or business street
address, an Army Post Office (APO) or
Fleet Post Office (FPO) box number, or
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the residential or business street address
of a next of kin or another contact
individual; or
(iii) for a person other than an
individual (such as a corporation,
partnership or trust), a principal place
of business, local office or other
physical location; and
(4) Identification number, which shall
be:
(i) For a U.S. person, a taxpayer
identification number; or
(ii) for a non-U.S. person, one or more
of the following: A taxpayer
identification number, a passport
number and country of issuance, an
alien identification card number, or the
number and country of issuance of any
other government-issued document
evidencing nationality or residence and
bearing a photograph or similar
safeguard.
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Note to Paragraph (a)(2)(i)(A)(4)(ii): When
opening an account for a foreign business or
enterprise that does not have an
identification number, the broker-dealer must
request alternative government-issued
documentation certifying the existence of the
business or enterprise.
(B) Exception for persons applying for
a taxpayer identification number.
Instead of obtaining a taxpayer
identification number from a customer
prior to opening an account, the CIP
may include procedures for opening an
account for a customer that has applied
for, but has not received, a taxpayer
identification number. In this case, the
CIP must include procedures to confirm
that the application was filed before the
customer opens the account and to
obtain the taxpayer identification
number within a reasonable period of
time after the account is opened.
(ii) Customer verification. The CIP
must contain procedures for verifying
the identity of each customer, using
information obtained in accordance
with paragraph (a)(2)(i) of this section,
within a reasonable time before or after
the customer’s account is opened. The
procedures must describe when the
broker-dealer will use documents, nondocumentary methods, or a combination
of both methods, as described in this
paragraph (a)(2)(ii).
(A) Verification through documents.
For a broker-dealer relying on
documents, the CIP must contain
procedures that set forth the documents
the broker-dealer will use. These
documents may include:
(1) For an individual, an unexpired
government-issued identification
evidencing nationality or residence and
bearing a photograph or similar
safeguard, such as a driver’s license or
passport; and
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(2) For a person other than an
individual (such as a corporation,
partnership or trust), documents
showing the existence of the entity,
such as certified articles of
incorporation, a government-issued
business license, a partnership
agreement, or a trust instrument.
(B) Verification through nondocumentary methods. For a brokerdealer relying on non-documentary
methods, the CIP must contain
procedures that set forth the nondocumentary methods the broker-dealer
will use.
(1) These methods may include
contacting a customer; independently
verifying the customer’s identity
through the comparison of information
provided by the customer with
information obtained from a consumer
reporting agency, public database, or
other source; checking references with
other financial institutions; or obtaining
a financial statement.
(2) The broker-dealer’s nondocumentary procedures must address
situations where an individual is unable
to present an unexpired governmentissued identification document that
bears a photograph or similar safeguard;
the broker-dealer is not familiar with the
documents presented; the account is
opened without obtaining documents;
the customer opens the account without
appearing in person at the broker-dealer;
and where the broker-dealer is
otherwise presented with circumstances
that increase the risk that the brokerdealer will be unable to verify the true
identity of a customer through
documents.
(C) Additional verification for certain
customers. The CIP must address
situations where, based on the brokerdealer’s risk assessment of a new
account opened by a customer that is
not an individual, the broker-dealer will
obtain information about individuals
with authority or control over such
account. This verification method
applies only when the broker-dealer
cannot verify the customer’s true
identity using the verification methods
described in paragraphs (a)(2)(ii)(A) and
(B) of this section.
(iii) Lack of verification. The CIP must
include procedures for responding to
circumstances in which the brokerdealer cannot form a reasonable belief
that it knows the true identity of a
customer. These procedures should
describe:
(A) When the broker-dealer should
not open an account;
(B) The terms under which a customer
may conduct transactions while the
broker-dealer attempts to verify the
customer’s identity;
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(C) When the broker-dealer should
close an account after attempts to verify
a customer’s identity fail; and
(D) When the broker-dealer should
file a Suspicious Activity Report in
accordance with applicable law and
regulation.
(3) Recordkeeping. The CIP must
include procedures for making and
maintaining a record of all information
obtained under procedures
implementing paragraph (a) of this
section.
(i) Required records. At a minimum,
the record must include:
(A) All identifying information about
a customer obtained under paragraph
(a)(2)(i) of this section,
(B) A description of any document
that was relied on under paragraph
(a)(2)(ii)(A) of this section noting the
type of document, any identification
number contained in the document, the
place of issuance, and if any, the date
of issuance and expiration date;
(C) A description of the methods and
the results of any measures undertaken
to verify the identity of a customer
under paragraphs (a)(2)(ii)(B) and (C) of
this section; and
(D) A description of the resolution of
each substantive discrepancy
discovered when verifying the
identifying information obtained.
(ii) Retention of records. The brokerdealer must retain the records made
under paragraph (a)(3)(i)(A) of this
section for five years after the account
is closed and the records made under
paragraphs (a)(3)(i)(B), (C) and (D) of
this section for five years after the
record is made. In all other respects, the
records must be maintained pursuant to
the provisions of 17 CFR 240.17a–4.
(4) Comparison with government lists.
The CIP must include procedures for
determining whether a customer
appears on any list of known or
suspected terrorists or terrorist
organizations issued by any Federal
government agency and designated as
such by Treasury in consultation with
the Federal functional regulators. The
procedures must require the brokerdealer to make such a determination
within a reasonable period of time after
the account is opened, or earlier if
required by another Federal law or
regulation or Federal directive issued in
connection with the applicable list. The
procedures also must require the brokerdealer to follow all Federal directives
issued in connection with such lists.
(5)(i) Customer notice. The CIP must
include procedures for providing
customers with adequate notice that the
broker-dealer is requesting information
to verify their identities.
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(ii) Adequate notice. Notice is
adequate if the broker-dealer generally
describes the identification
requirements of this section and
provides such notice in a manner
reasonably designed to ensure that a
customer is able to view the notice, or
is otherwise given notice, before
opening an account. For example,
depending upon the manner in which
the account is opened, a broker-dealer
may post a notice in the lobby or on its
Web site, include the notice on its
account applications or use any other
form of oral or written notice.
(iii) Sample notice. If appropriate, a
broker-dealer may use the following
sample language to provide notice to its
customers:
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Important Information About Procedures for
Opening a New Account
To help the government fight the funding
of terrorism and money laundering activities,
Federal law requires all financial institutions
to obtain, verify, and record information that
identifies each person who opens an account.
What this means for you: When you open
an account, we will ask for your name,
address, date of birth and other information
that will allow us to identify you. We may
also ask to see your driver’s license or other
identifying documents.
(6) Reliance on another financial
institution. The CIP may include
procedures specifying when the brokerdealer will rely on the performance by
another financial institution (including
an affiliate) of any procedures of the
broker-dealer’s CIP, with respect to any
customer of the broker-dealer that is
opening an account or has established
an account or similar business
relationship with the other financial
institution to provide or engage in
services, dealings, or other financial
transactions, provided that:
(i) Such reliance is reasonable under
the circumstances;
(ii) The other financial institution is
subject to a rule implementing 31 U.S.C.
5318(h), and regulated by a Federal
functional regulator; and
(iii) The other financial institution
enters into a contract requiring it to
certify annually to the broker-dealer that
it has implemented its anti-money
laundering program, and that it will
perform (or its agent will perform)
specified requirements of the brokerdealer’s CIP.
(b) Exemptions. The Commission,
with the concurrence of the Secretary,
may by order or regulation exempt any
broker-dealer that registers with the
Commission pursuant to 15 U.S.C. 78o
or 15 U.S.C. 78o–4 or any type of
account from the requirements of this
section. The Secretary, with the
concurrence of the Commission, may
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Jkt 223001
exempt any broker-dealer that registers
with the Commission pursuant to 15
U.S.C. 78o–5. In issuing such
exemptions, the Commission and the
Secretary shall consider whether the
exemption is consistent with the
purposes of the Bank Secrecy Act, and
in the public interest, and may consider
other necessary and appropriate factors.
(c) Other requirements unaffected.
Nothing in this section relieves a brokerdealer of its obligation to comply with
any other provision of this chapter,
including provisions concerning
information that must be obtained,
verified, or maintained in connection
with any account or transaction.
Subpart C—Reports Required To Be
Made By Brokers or Dealers in
Securities
§ 1023.300
General.
Brokers or dealers in securities are
subject to the reporting requirements set
forth and cross referenced in this
subpart. Brokers or dealers in securities
should also refer to Subpart C of Part
1010 of this Chapter for reporting
requirements contained in that subpart
which apply to brokers or dealers in
securities.
§ 1023.310
currency.
Reports of transactions in
The reports of transactions in
currency requirements for brokers or
dealers in securities are located in
subpart C of Part 1010 of this Chapter
and this subpart.
§ 1023.311
Filing obligations.
Refer to § 1010.311 of this Chapter for
reports of transactions in currency filing
obligations for brokers or dealers in
securities.
§ 1023.312
Identification required.
Refer to § 1010.312 of this Chapter for
identification requirements for reports
of transactions in currency filed by
brokers or dealers in securities.
§ 1023.313
Aggregation.
Refer to § 1010.313 of this Chapter for
reports of transactions in currency
aggregation requirements for brokers or
dealers in securities.
§ 1023.314
Structured transactions.
Refer to § 1010.314 of this Chapter for
rules regarding structured transactions
for brokers or dealers in securities.
§ 1023.315
Exemptions.
Refer to § 1010.315 of this Chapter for
exemptions from the obligation to file
reports of transactions in currency for
brokers or dealers in securities.
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§ 1023.320 Reports by brokers or dealers
in securities of suspicious transactions.
(a) General. (1) Every broker or dealer
in securities within the United States
(for purposes of this section, a ‘‘brokerdealer’’) shall file with FinCEN, to the
extent and in the manner required by
this section, a report of any suspicious
transaction relevant to a possible
violation of law or regulation. A brokerdealer may also file with FinCEN a
report of any suspicious transaction that
it believes is relevant to the possible
violation of any law or regulation but
whose reporting is not required by this
section. Filing a report of a suspicious
transaction does not relieve a brokerdealer from the responsibility of
complying with any other reporting
requirements imposed by the Securities
and Exchange Commission or a selfregulatory organization (‘‘SRO’’) (as
defined in section 3(a)(26) of the
Securities Exchange Act of 1934, 15
U.S.C. 78c(a)(26)).
(2) A transaction requires reporting
under the terms of this section if it is
conducted or attempted by, at, or
through a broker-dealer, it involves or
aggregates funds or other assets of at
least $5,000, and the broker-dealer
knows, suspects, or has reason to
suspect that the transaction (or a pattern
of transactions of which the transaction
is a part):
(i) Involves funds derived from illegal
activity or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity (including,
without limitation, the ownership,
nature, source, location, or control of
such funds or assets) as part of a plan
to violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
(ii) Is designed, whether through
structuring or other means, to evade any
requirements of this chapter or of any
other regulations promulgated under the
Bank Secrecy Act;
(iii) Has no business or apparent
lawful purpose or is not the sort in
which the particular customer would
normally be expected to engage, and the
broker-dealer knows of no reasonable
explanation for the transaction after
examining the available facts, including
the background and possible purpose of
the transaction; or
(iv) Involves use of the broker-dealer
to facilitate criminal activity.
(3) The obligation to identify and
properly and timely to report a
suspicious transaction rests with each
broker-dealer involved in the
transaction, provided that no more than
one report is required to be filed by the
broker-dealers involved in a particular
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transaction (so long as the report filed
contains all relevant facts).
(b) Filing procedures—(1) What to file.
A suspicious transaction shall be
reported by completing a Suspicious
Activity Report by the Securities and
Futures Industry (‘‘SAR–SF’’), and
collecting and maintaining supporting
documentation as required by paragraph
(d) of this section.
(2) Where to file. The SAR–SF shall be
filed with FinCEN in a central location,
to be determined by FinCEN, as
indicated in the instructions to the
SAR–SF.
(3) When to file. A SAR–SF shall be
filed no later than 30 calendar days after
the date of the initial detection by the
reporting broker-dealer of facts that may
constitute a basis for filing a SAR–SF
under this section. If no suspect is
identified on the date of such initial
detection, a broker-dealer may delay
filing a SAR–SF for an additional 30
calendar days to identify a suspect, but
in no case shall reporting be delayed
more than 60 calendar days after the
date of such initial detection. In
situations involving violations that
require immediate attention, such as
terrorist financing or ongoing money
laundering schemes, the broker-dealer
shall immediately notify by telephone
an appropriate law enforcement
authority in addition to filing timely a
SAR–SF. Broker-dealers wishing
voluntarily to report suspicious
transactions that may relate to terrorist
activity may call FinCEN’s Financial
Institutions Hotline at 1–866–556–3974
in addition to filing timely a SAR–SF if
required by this section. The brokerdealer may also, but is not required to,
contact the Securities and Exchange
Commission to report in such situations.
(c) Exceptions. (1) A broker-dealer is
not required to file a SAR–SF to report:
(i) A robbery or burglary committed or
attempted of the broker-dealer that is
reported to appropriate law enforcement
authorities, or for lost, missing,
counterfeit, or stolen securities with
respect to which the broker-dealer files
a report pursuant to the reporting
requirements of 17 CFR 240.17f–1;
(ii) A violation otherwise required to
be reported under this section of any of
the Federal securities laws or rules of an
SRO by the broker-dealer or any of its
officers, directors, employees, or other
registered representatives, other than a
violation of 17 CFR 240.17a–8 or 17 CFR
405.4, so long as such violation is
appropriately reported to the SEC or an
SRO.
(2) A broker-dealer may be required to
demonstrate that it has relied on an
exception in paragraph (c)(1) of this
section, and must maintain records of
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its determinations to do so for the
period specified in paragraph (d) of this
section. To the extent that a Form RE–
3, Form U–4, or Form U–5 concerning
the transaction is filed consistent with
the SRO rules, a copy of that form will
be a sufficient record for purposes of
this paragraph (c)(2).
(3) For the purposes of this paragraph
(c) the term ‘‘Federal securities laws’’
means the ‘‘securities laws,’’ as that term
is defined in section 3(a)(47) of the
Securities Exchange Act of 1934, 15
U.S.C. 78c(a)(47), and the rules and
regulations promulgated by the
Securities and Exchange Commission
under such laws.
(d) Retention of records. A brokerdealer shall maintain a copy of any
SAR–SF filed and the original or
business record equivalent of any
supporting documentation for a period
of five years from the date of filing the
SAR–SF. Supporting documentation
shall be identified as such and
maintained by the broker-dealer, and
shall be deemed to have been filed with
the SAR–SF. A broker-dealer shall make
all supporting documentation available
to FinCEN, any other appropriate law
enforcement agencies or Federal or State
securities regulators, and for purposes of
paragraph (g) of this section, to an SRO
registered with the Securities and
Exchange Commission, upon request.
(e) Confidentiality of reports. No
financial institution, and no director,
officer, employee, or agent of any
financial institution, who reports a
suspicious transaction under this
chapter, may notify any person involved
in the transaction that the transaction
has been reported, except to the extent
permitted by paragraph (a)(3) of this
section. Thus, any person subpoenaed
or otherwise requested to disclose a
SAR–SF or the information contained in
a SAR–SF, except where such
disclosure is requested by FinCEN, the
Securities and Exchange Commission,
or another appropriate law enforcement
or regulatory agency, or for purposes of
paragraph (g) of this section, an SRO
registered with the Securities and
Exchange Commission, shall decline to
produce the SAR–SF or to provide any
information that would disclose that a
SAR–SF has been prepared or filed,
citing this paragraph (e) and 31 U.S.C.
5318(g)(2), and shall notify FinCEN of
any such request and its response
thereto.
(f) Limitation of liability. A brokerdealer, and any director, officer,
employee, or agent of such brokerdealer, that makes a report of any
possible violation of law or regulation
pursuant to this section or any other
authority (or voluntarily) shall not be
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liable to any person under any law or
regulation of the United States (or
otherwise to the extent also provided in
31 U.S.C. 5318(g)(3), including in any
arbitration proceeding) for any
disclosure contained in, or for failure to
disclose the fact of, such report.
(g) Examination and enforcement.
Compliance with this section shall be
examined by the Department of the
Treasury, through FinCEN or its
delegees, under the terms of the Bank
Secrecy Act. Reports filed under this
section shall be made available to an
SRO registered with the Securities and
Exchange Commission examining a
broker-dealer for compliance with the
requirements of this section. Failure to
satisfy the requirements of this section
may constitute a violation of the
reporting rules of the Bank Secrecy Act
and of this chapter.
(h) Applicability date. This section
applies to transactions occurring after
December 30, 2002.
Subpart D—Records Required To Be
Maintained by Brokers or Dealers in
Securities
§ 1023.400
General.
Brokers or dealers in securities are
subject to the recordkeeping
requirements set forth and cross
referenced in this subpart. Brokers or
dealers in securities should also refer to
Subpart D of Part 1010 of this Chapter
for recordkeeping requirements
contained in that subpart which apply
to brokers or dealers in securities.
§ 1023.410 Additional records to be made
and retained by brokers or dealers in
securities.
(a)(1) With respect to each brokerage
account opened with a broker or dealer
in securities after June 30, 1972, and
before October 1, 2003, by a person
residing or doing business in the United
States or a citizen of the United States,
such broker or dealer shall within 30
days from the date such account is
opened, secure and maintain a record of
the taxpayer identification number of
the person maintaining the account; or
in the case of an account of one or more
individuals, such broker or dealer shall
secure and maintain a record of the
social security number of an individual
having a financial interest in that
account. In the event that a broker or
dealer has been unable to secure the
identification required within the 30day period specified, it shall
nevertheless not be deemed to be in
violation of this section if: It has made
a reasonable effort to secure such
identification, and it maintains a list
containing the names, addresses, and
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account numbers of those persons from
whom it has been unable to secure such
identification, and makes the names,
addresses, and account numbers of
those persons available to the Secretary
as directed by him. Where a person is
a non-resident alien, the broker or
dealer in securities shall also record the
person’s passport number or a
description of some other government
document used to verify his identity.
(2) The 30-day period provided for in
paragraph (a)(1) of this section shall be
extended where the person opening the
account has applied for a taxpayer
identification or social security number
on Form SS–4 or SS–5, until such time
as the person maintaining the account
has had a reasonable opportunity to
secure such number and furnish it to the
broker or dealer.
(3) A taxpayer identification number
for a deposit or share account required
under paragraph (a)(1) of this section
need not be secured in the following
instances:
(i) Accounts for public funds opened
by agencies and instrumentalities of
Federal, state, local, or foreign
governments,
(ii) Accounts for aliens who are
ambassadors, ministers, career
diplomatic or consular officers, or naval,
military or other attaches of foreign
embassies, and legations, and for the
members of their immediate families,
(iii) Accounts for aliens who are
accredited representatives to
international organizations which are
entitled to enjoy privileges, exemptions,
and immunities as an international
organization under the International
Organizations Immunities Act of
December 29, 1945 (22 U.S.C. 288), and
for the members of their immediate
families,
(iv) Aliens temporarily residing in the
United States for a period not to exceed
180 days,
(v) Aliens not engaged in a trade or
business in the United States who are
attending a recognized college or
university or any training program,
supervised or conducted by any agency
of the Federal Government, and
(vi) Unincorporated subordinate units
of a tax exempt central organization
which are covered by a group
exemption letter.
(b) Every broker or dealer in securities
shall, in addition, retain either the
original or a microfilm or other copy or
reproduction of each of the following:
(1) Each document granting signature
or trading authority over each
customer’s account;
(2) Each record described in 17 CFR
240.17a–3(a)(1), (2), (3), (5), (6), (7), (8),
and (9);
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(3) A record of each remittance or
transfer of funds, or of currency, checks,
other monetary instruments, investment
securities, or credit, of more than
$10,000 to a person, account, or place,
outside the United States;
(4) A record of each receipt of
currency, other monetary instruments,
checks, or investment securities and of
each transfer of funds or credit, of more
than $10,000 received on any one
occasion directly and not through a
domestic financial institution, from any
person, account or place outside the
United States.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1023.500
General.
Brokers or dealers in securities are
subject to the special information
sharing procedures to deter money
laundering and terrorist activity
requirements set forth and cross
referenced in this subpart. Brokers or
dealers in securities should also refer to
Subpart E of Part 1010 of this Chapter
for special information sharing
procedures to deter money laundering
and terrorist activity contained in that
subpart which apply to brokers or
dealers in securities.
§ 1023.520 Special information sharing
procedures to deter money laundering and
terrorist activity for brokers or dealers in
securities.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1023.530
[Reserved]
§ 1023.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Brokers or Dealers in
Securities
§ 1023.600
General.
Brokers or dealers in securities are
subject to the special standards of
diligence; prohibitions; and special
measures requirements set forth and
cross referenced in this subpart. Brokers
or dealers in securities should also refer
to Subpart F of Part 1010 of this Chapter
for special standards of diligence;
prohibitions; and special measures
contained in that subpart which apply
to brokers or dealers in securities.
§ 1023.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
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65863
(b) [Reserved]
§ 1023.620 Due diligence programs for
private banking accounts.
(a) Refer to § 1010.620 of this Chapter.
(b) [Reserved]
§ 1023.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
(a) Refer to § 1010.630 of this Chapter.
(b) [Reserved]
§ 1023.640
[Reserved]
§ 1023.670 Summons or subpoena of
foreign bank records; termination of
correspondent relationship.
(a) Refer to § 1010.670 of this Chapter.
(b) [Reserved]
PART 1024—RULES FOR MUTUAL
FUNDS
Subpart A—Definitions
Sec.
1024.100 Definitions.
Subpart B—Programs
1024.200 General.
1024.210 Anti-money laundering programs
for mutual funds.
1024.220 Customer identification programs
for mutual funds.
Subpart C—Reports Required To Be Made
By Mutual Funds
1024.300 General.
1024.310 Reports of transactions in
currency.
1024.311 Filing obligations.
1024.312 Identification required.
1024.313 Aggregation.
1024.314 Structured transactions.
1024.315 Exemptions
1024.320 Reports by mutual funds of
suspicious transactions.
Subpart D—Records Required To Be
Maintained By Mutual Funds
1024.400 General.
1024.410 Recordkeeping.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1024.500 General.
1024.520 Special information sharing
procedures to deter money laundering
and terrorist activity for mutual funds.
1024.530 [Reserved]
1024.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Mutual Funds
1024.600 General.
1024.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
1024.620 Due diligence programs for
private banking accounts.
1024.630 Prohibition on correspondent
accounts for foreign shell banks; records
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concerning owners of foreign banks and
agents for service of legal process.
1024.640 [Reserved]
1024.670 [Reserved]
Subpart A—Definitions
§ 1024.100
Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1024. Unless otherwise
indicated, for purposes of this Part:
(a) Account. For purposes of
§ 1024.220:
(1) Account means any contractual or
other business relationship between a
person and a mutual fund established to
effect transactions in securities issued
by the mutual fund, including the
purchase or sale of securities.
(2) Account does not include:
(i) An account that a mutual fund
acquires through any acquisition,
merger, purchase of assets, or
assumption of liabilities; or
(ii) An account opened for the
purpose of participating in an employee
benefit plan established under the
Employee Retirement Income Security
Act of 1974.
(b) Commission means the United
States Securities and Exchange
Commission.
(c) Customer. For purposes of
§ 1024.220:
(1) Customer means:
(i) A person that opens a new account;
and
(ii) An individual who opens a new
account for:
(A) An individual who lacks legal
capacity, such as a minor; or
(B) An entity that is not a legal
person, such as a civic club.
(2) Customer does not include:
(i) A financial institution regulated by
a Federal functional regulator or a bank
regulated by a State bank regulator;
(ii) A person described in
§ 1020.315(b)(2) through (4) of this
Chapter; or
(iii) A person that has an existing
account with the mutual fund, provided
that the mutual fund has a reasonable
belief that it knows the true identity of
the person.
(d) Financial institution is defined at
31 U.S.C. 5312(a)(2) and (c)(1).
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Subpart B—Programs
§ 1024.200
General.
Mutual funds are subject to the
program requirements set forth and
cross referenced in this subpart. Mutual
funds should also refer to Subpart B of
Part 1010 of this Chapter for program
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requirements contained in that subpart
which apply to mutual funds.
§ 1024.210 Anti-money laundering
programs for mutual funds.
(a) Effective July 24, 2002, each
mutual fund shall develop and
implement a written anti-money
laundering program reasonably
designed to prevent the mutual fund
from being used for money laundering
or the financing of terrorist activities
and to achieve and monitor compliance
with the applicable requirements of the
Bank Secrecy Act (31 U.S.C. 5311, et
seq.), and the implementing regulations
promulgated thereunder by the
Department of the Treasury. Each
mutual fund’s anti-money laundering
program must be approved in writing by
its board of directors or trustees. A
mutual fund shall make its anti-money
laundering program available for
inspection by the Commission.
(b) The anti-money laundering
program shall at a minimum:
(1) Establish and implement policies,
procedures, and internal controls
reasonably designed to prevent the
mutual fund from being used for money
laundering or the financing of terrorist
activities and to achieve compliance
with the applicable provisions of the
Bank Secrecy Act and the implementing
regulations thereunder;
(2) Provide for independent testing for
compliance to be conducted by the
mutual fund’s personnel or by a
qualified outside party;
(3) Designate a person or persons
responsible for implementing and
monitoring the operations and internal
controls of the program; and
(4) Provide ongoing training for
appropriate persons.
§ 1024.220 Customer identification
programs for mutual funds.
(a) Customer identification program:
minimum requirements—(1) In general.
A mutual fund must implement a
written Customer Identification Program
(‘‘CIP’’) appropriate for its size and type
of business that, at a minimum, includes
each of the requirements of paragraphs
(a)(1) through (5) of this section. The
CIP must be a part of the mutual fund’s
anti-money laundering program
required under the regulations
implementing 31 U.S.C. 5318(h).
(2) Identity verification procedures.
The CIP must include risk-based
procedures for verifying the identity of
each customer to the extent reasonable
and practicable. The procedures must
enable the mutual fund to form a
reasonable belief that it knows the true
identity of each customer. The
procedures must be based on the mutual
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fund’s assessment of the relevant risks,
including those presented by the
manner in which accounts are opened,
fund shares are distributed, and
purchases, sales and exchanges are
effected, the various types of accounts
maintained by the mutual fund, the
various types of identifying information
available, and the mutual fund’s
customer base. At a minimum, these
procedures must contain the elements
described in this paragraph (a)(2).
(i) Customer information required—
(A) In general. The CIP must contain
procedures for opening an account that
specify the identifying information that
will be obtained with respect to each
customer. Except as permitted by
paragraph (a)(2)(i)(B) of this section, a
mutual fund must obtain, at a
minimum, the following information
prior to opening an account:
(1) Name;
(2) Date of birth, for an individual;
(3) Address, which shall be:
(i) For an individual, a residential or
business street address;
(ii) For an individual who does not
have a residential or business street
address, an Army Post Office (APO) or
Fleet Post Office (FPO) box number, or
the residential or business street address
of next of kin or of another contact
individual; or
(iii) For a person other than an
individual (such as a corporation,
partnership, or trust), a principal place
of business, local office or other
physical location; and
(4) Identification number, which shall
be:
(i) For a U.S. person, a taxpayer
identification number; or
(ii) For a non-U.S. person, one or more
of the following: a taxpayer
identification number; passport number
and country of issuance; alien
identification card number; or number
and country of issuance of any other
government-issued document
evidencing nationality or residence and
bearing a photograph or similar
safeguard.
Note to Paragraph (a)(2)(i)(A)(4)(ii): When
opening an account for a foreign business or
enterprise that does not have an
identification number, the mutual fund must
request alternative government-issued
documentation certifying the existence of the
business or enterprise.
(B) Exception for persons applying for
a taxpayer identification number.
Instead of obtaining a taxpayer
identification number from a customer
prior to opening an account, the CIP
may include procedures for opening an
account for a person that has applied
for, but has not received, a taxpayer
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identification number. In this case, the
CIP must include procedures to confirm
that the application was filed before the
person opens the account and to obtain
the taxpayer identification number
within a reasonable period of time after
the account is opened.
(ii) Customer verification. The CIP
must contain procedures for verifying
the identity of the customer, using the
information obtained in accordance
with paragraph (a)(2)(i) of this section,
within a reasonable time after the
account is opened. The procedures must
describe when the mutual fund will use
documents, non-documentary methods,
or a combination of both methods as
described in this paragraph (a)(2)(ii).
(A) Verification through documents.
For a mutual fund relying on
documents, the CIP must contain
procedures that set forth the documents
that the mutual fund will use. These
documents may include:
(1) For an individual, unexpired
government-issued identification
evidencing nationality or residence and
bearing a photograph or similar
safeguard, such as a driver’s license or
passport; and
(2) For a person other than an
individual (such as a corporation,
partnership, or trust), documents
showing the existence of the entity,
such as certified articles of
incorporation, a government-issued
business license, a partnership
agreement, or trust instrument.
(B) Verification through nondocumentary methods. For a mutual
fund relying on non-documentary
methods, the CIP must contain
procedures that describe the nondocumentary methods the mutual fund
will use.
(1) These methods may include
contacting a customer; independently
verifying the customer’s identity
through the comparison of information
provided by the customer with
information obtained from a consumer
reporting agency, public database, or
other source; checking references with
other financial institutions; and
obtaining a financial statement.
(2) The mutual fund’s nondocumentary procedures must address
situations where an individual is unable
to present an unexpired governmentissued identification document that
bears a photograph or similar safeguard;
the mutual fund is not familiar with the
documents presented; the account is
opened without obtaining documents;
the customer opens the account without
appearing in person; and where the
mutual fund is otherwise presented
with circumstances that increase the
risk that the mutual fund will be unable
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to verify the true identity of a customer
through documents.
(C) Additional verification for certain
customers. The CIP must address
situations where, based on the mutual
fund’s risk assessment of a new account
opened by a customer that is not an
individual, the mutual fund will obtain
information about individuals with
authority or control over such account,
including persons authorized to effect
transactions in the shareholder of
record’s account, in order to verify the
customer’s identity. This verification
method applies only when the mutual
fund cannot verify the customer’s true
identity using the verification methods
described in paragraphs (a)(2)(ii)(A) and
(B) of this section.
(iii) Lack of verification. The CIP must
include procedures for responding to
circumstances in which the mutual fund
cannot form a reasonable belief that it
knows the true identity of a customer.
These procedures should describe:
(A) When the mutual fund should not
open an account;
(B) The terms under which a customer
may use an account while the mutual
fund attempts to verify the customer’s
identity;
(C) When the mutual fund should file
a Suspicious Activity Report in
accordance with applicable law and
regulation; and
(D) When the mutual fund should
close an account, after attempts to verify
a customer’s identity have failed.
(3) Recordkeeping. The CIP must
include procedures for making and
maintaining a record of all information
obtained under paragraph (a) of this
section.
(i) Required records. At a minimum,
the record must include:
(A) All identifying information about
a customer obtained under paragraph
(a)(2)(i) of this section;
(B) A description of any document
that was relied on under paragraph
(a)(2)(ii)(A) of this section noting the
type of document, any identification
number contained in the document, the
place of issuance, and if any, the date
of issuance and expiration date;
(C) A description of the methods and
the results of any measures undertaken
to verify the identity of the customer
under paragraph (a)(2)(ii)(B) or (C) of
this section; and
(D) A description of the resolution of
any substantive discrepancy discovered
when verifying the identifying
information obtained.
(ii) Retention of records. The mutual
fund must retain the information in
paragraph (a)(3)(i)(A) of this section for
five years after the date the account is
closed. The mutual fund must retain the
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information in paragraphs (a)(3)(i)(B),
(C), and (D) of this section for five years
after the record is made.
(4) Comparison with government lists.
The CIP must include procedures for
determining whether the customer
appears on any list of known or
suspected terrorists or terrorist
organizations issued by any Federal
government agency and designated as
such by the Department of the Treasury
in consultation with the Federal
functional regulators. The procedures
must require the mutual fund to make
such a determination within a
reasonable period of time after the
account is opened, or earlier, if required
by another Federal law or regulation or
Federal directive issued in connection
with the applicable list. The procedures
must also require the mutual fund to
follow all Federal directives issued in
connection with such lists.
(5)(i) Customer notice. The CIP must
include procedures for providing
mutual fund customers with adequate
notice that the mutual fund is
requesting information to verify their
identities.
(ii) Adequate notice. Notice is
adequate if the mutual fund generally
describes the identification
requirements of this section and
provides the notice in a manner
reasonably designed to ensure that a
customer is able to view the notice, or
is otherwise given notice, before
opening an account. For example,
depending on the manner in which the
account is opened, a mutual fund may
post a notice on its Web site, include the
notice on its account applications, or
use any other form of written or oral
notice.
(iii) Sample notice. If appropriate, a
mutual fund may use the following
sample language to provide notice to its
customers:
Important Information About Procedures for
Opening a New Account
To help the government fight the funding
of terrorism and money laundering activities,
Federal law requires all financial institutions
to obtain, verify, and record information that
identifies each person who opens an account.
What this means for you: When you open
an account, we will ask for your name,
address, date of birth, and other information
that will allow us to identify you. We may
also ask to see your driver’s license or other
identifying documents.
(6) Reliance on other financial
institutions. The CIP may include
procedures specifying when a mutual
fund will rely on the performance by
another financial institution (including
an affiliate) of any procedures of the
mutual fund’s CIP, with respect to any
customer of the mutual fund that is
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opening, or has opened, an account or
has established a similar formal
business relationship with the other
financial institution to provide or
engage in services, dealings, or other
financial transactions, provided that:
(i) Such reliance is reasonable under
the circumstances;
(ii) The other financial institution is
subject to a rule implementing 31 U.S.C.
5318(h) and is regulated by a Federal
functional regulator; and
(iii) The other financial institution
enters into a contract requiring it to
certify annually to the mutual fund that
it has implemented its anti-money
laundering program, and that it (or its
agent) will perform the specific
requirements of the mutual fund’s CIP.
(b) Exemptions. The Commission,
with the concurrence of the Secretary,
may, by order or regulation, exempt any
mutual fund or type of account from the
requirements of this section. The
Commission and the Secretary shall
consider whether the exemption is
consistent with the purposes of the
Bank Secrecy Act and is in the public
interest, and may consider other
appropriate factors.
(c) Other requirements unaffected.
Nothing in this section relieves a mutual
fund of its obligation to comply with
any other provision in this chapter,
including provisions concerning
information that must be obtained,
verified, or maintained in connection
with any account or transaction.
Subpart C—Reports Required To Be
Made By Mutual Funds
§ 1024.300
General.
Mutual funds are subject to the
reporting requirements set forth and
cross referenced in this subpart. Mutual
funds should also refer to Subpart C of
Part 1010 of this Chapter for reporting
requirements contained in that subpart
which apply to mutual funds.
§ 1024.310
currency.
Reports of transactions in
The reports of transactions in
currency requirements for mutual funds
are located in subpart C of Part 1010 of
this Chapter and this subpart.
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§ 1024.311
Filing obligations.
Refer to § 1010.311 of this Chapter for
reports of transactions in currency filing
obligations for mutual funds.
§ 1024.312
Identification required.
Refer to § 1010.312 of this Chapter for
identification requirements for reports
of transactions in currency filed by
mutual funds.
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§ 1024.313
Aggregation.
Refer to § 1010.313 of this Chapter for
reports of transactions in currency
aggregation requirements for mutual
funds.
§ 1024.314
Structured transactions.
Refer to § 1010.314 of this Chapter for
rules regarding structured transactions
for mutual funds.
§ 1024.315
Exemptions.
Refer to § 1010.315 of this Chapter for
exemptions from the obligation to file
reports of transactions in currency for
mutual funds.
§ 1024.320 Reports by mutual funds of
suspicious transactions.
(a) General. (1) Every investment
company (as defined in section 3 of the
Investment Company Act of 1940 (15
U.S.C. 80a–3) (‘‘Investment Company
Act’’) that is an open-end company (as
defined in section 5 of the Investment
Company Act (15 U.S.C. 80a–5)) and
that is registered, or is required to
register, with the Securities and
Exchange Commission pursuant to that
Act (for purposes of this section, a
‘‘mutual fund’’), shall file with the
Financial Crimes Enforcement Network,
to the extent and in the manner required
by this section, a report of any
suspicious transaction relevant to a
possible violation of law or regulation.
A mutual fund may also file with the
Financial Crimes Enforcement Network
a report of any suspicious transaction
that it believes is relevant to the
possible violation of any law or
regulation, but whose reporting is not
required by this section. Filing a report
of a suspicious transaction does not
relieve a mutual fund from the
responsibility of complying with any
other reporting requirements imposed
by the Securities and Exchange
Commission.
(2) A transaction requires reporting
under this section if it is conducted or
attempted by, at, or through a mutual
fund, it involves or aggregates funds or
other assets of at least $5,000, and the
mutual fund knows, suspects, or has
reason to suspect that the transaction (or
a pattern of transactions of which the
transaction is a part):
(i) Involves funds derived from illegal
activity or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity (including,
without limitation, the ownership,
nature, source, location, or control of
such funds or assets) as part of a plan
to violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
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(ii) Is designed, whether through
structuring or other means, to evade any
requirements of this chapter or any
other regulations promulgated under the
Bank Secrecy Act;
(iii) Has no business or apparent
lawful purpose or is not the sort in
which the particular customer would
normally be expected to engage, and the
mutual fund knows of no reasonable
explanation for the transaction after
examining the available facts, including
the background and possible purpose of
the transaction; or
(iv) Involves use of the mutual fund
to facilitate criminal activity.
(3) More than one mutual fund may
have an obligation to report the same
transaction under this section, and other
financial institutions may have separate
obligations to report suspicious activity
with respect to the same transaction
pursuant to other provisions of this
chapter. In those instances, no more
than one report is required to be filed
by the mutual fund(s) and other
financial institution(s) involved in the
transaction, provided that the report
filed contains all relevant facts,
including the name of each financial
institution and the words ‘‘joint filing’’
in the narrative section, and each
institution maintains a copy of the
report filed, along with any supporting
documentation.
(b) Filing and notification
procedures—(1) What to file. A
suspicious transaction shall be reported
by completing a Suspicious Activity
Report by Securities and Futures
Industries (‘‘SAR–SF’’), and collecting
and maintaining supporting
documentation as required by paragraph
(c) of this section.
(2) Where to file. Form SAR–SF shall
be filed with the Financial Crimes
Enforcement Network in accordance
with the instructions to the Form
SAR–SF.
(3) When to file. A Form SAR–SF
shall be filed no later than 30 calendar
days after the date of the initial
detection by the reporting mutual fund
of facts that may constitute a basis for
filing a Form SAR–SF under this
section. If no suspect is identified on the
date of such initial detection, a mutual
fund may delay filing a Form SAR–SF
for an additional 30 calendar days to
identify a suspect, but in no case shall
reporting be delayed more than 60
calendar days after the date of such
initial detection.
(4) Mandatory notification to law
enforcement. In situations involving
violations that require immediate
attention, such as suspected terrorist
financing or ongoing money laundering
schemes, a mutual fund shall
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immediately notify by telephone an
appropriate law enforcement authority
in addition to filing timely a Form
SAR–SF.
(5) Voluntary notification to the
Financial Crimes Enforcement Network
or the Securities and Exchange
Commission. Mutual funds wishing
voluntarily to report suspicious
transactions that may relate to terrorist
activity may call the Financial Crimes
Enforcement Network’s Financial
Institutions Hotline at 1–866–556–3974
in addition to filing timely a Form
SAR–SF if required by this section. The
mutual fund may also, but is not
required to, contact the Securities and
Exchange Commission to report in such
situations.
(c) Retention of records. A mutual
fund shall maintain a copy of any Form
SAR–SF filed by the fund or on its
behalf (including joint reports), and the
original (or business record equivalent)
of any supporting documentation
concerning any Form SAR–SF that it
files (or is filed on its behalf), for a
period of five years from the date of
filing the Form SAR–SF. Supporting
documentation shall be identified as
such and maintained by the mutual
fund, and shall be deemed to have been
filed with the Form SAR–SF. The
mutual fund shall make all supporting
documentation available to the
Financial Crimes Enforcement Network,
any other appropriate law enforcement
agencies or Federal or state securities
regulators, and for purposes of an
examination of a broker-dealer pursuant
to § 1023.320(g) of this chapter
regarding a joint report, to a selfregulatory organization (as defined in
section 3(a)(26) of the Securities
Exchange Act of 1934, 15 U.S.C.
78c(a)(26)) registered with the Securities
and Exchange Commission, upon
request.
(d) Confidentiality of reports. No
mutual fund, and no director, officer,
employee, or agent of any mutual fund,
who reports a suspicious transaction
under this chapter (whether such a
report is required by this section or
made voluntarily), may notify any
person involved in the transaction that
the transaction has been reported,
except to the extent permitted by
paragraph (a)(3) of this section. Any
person subpoenaed or otherwise
required to disclose a Form SAR–SF or
the information contained in a Form
SAR–SF, including a Form SAR–SF
filed jointly with another financial
institution involved in the same
transaction (except where such
disclosure is requested by the Financial
Crimes Enforcement Network, the
Securities and Exchange Commission,
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15:07 Oct 25, 2010
Jkt 223001
another appropriate law enforcement or
regulatory agency, or, in the case of a
joint report involving a broker-dealer, a
self-regulatory organization registered
with the Securities and Exchange
Commission conducting an examination
of such broker-dealer pursuant to
§ 1023.320(g) of this chapter), shall
decline to produce Form SAR–SF or to
provide any information that would
disclose that a Form SAR–SF has been
prepared or filed, citing this paragraph
(d) and 31 U.S.C. 5318(g)(2), and shall
notify the Financial Crimes Enforcement
Network of any such request and its
response thereto.
(e) Limitation of liability. A mutual
fund, and any director, officer,
employee, or agent of such mutual fund,
that makes a report of any possible
violation of law or regulation pursuant
to this section, including a joint report
(whether such report is required by this
section or made voluntarily) shall be
protected from liability for any
disclosure contained in, or for failure to
disclose the fact of, such report, or both,
to the extent provided in 31 U.S.C.
5318(g)(3).
(f) Examinations and enforcement.
Compliance with this section shall be
examined by the Department of the
Treasury, through the Financial Crimes
Enforcement Network or its delegees,
under the terms of the Bank Secrecy
Act. Failure to satisfy the requirements
of this section may constitute a violation
of the reporting rules of the Bank
Secrecy Act and of this chapter.
(g) Applicability date. This section
applies to transactions occurring after
October 31, 2006.
Subpart D—Records Required To Be
Maintained By Mutual Funds
§ 1024.400
General.
Mutual funds are subject to the
recordkeeping requirements set forth
and cross referenced in this subpart.
Mutual funds should also refer to
Subpart D of Part 1010 of this Chapter
for recordkeeping requirements
contained in that subpart which apply
to mutual funds.
§ 1024.410
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
General.
Mutual funds are subject to the
special information sharing procedures
to deter money laundering and terrorist
activity requirements set forth and cross
referenced in this subpart. Mutual funds
should also refer to Subpart E of Part
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Frm 00063
1010 of this Chapter for special
information sharing procedures to deter
money laundering and terrorist activity
contained in that subpart which apply
to mutual funds.
§ 1024.520 Special information sharing
procedures to deter money laundering and
terrorist activity for mutual funds.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1024.530
[Reserved]
§ 1024.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Mutual Funds
§ 1024.600
General.
Mutual funds are subject to the
special standards of diligence;
prohibitions; and special measures
requirements set forth and cross
referenced in this subpart. Mutual funds
should also refer to Subpart F of Part
1010 of this Chapter for special
standards of diligence; prohibitions; and
special measures contained in that
subpart which apply to mutual funds.
§ 1024.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
(a) Refer to § 1010.610 of this Chapter.
(b) [Reserved]
§ 1024.620 Due diligence programs for
private banking accounts.
(a) Refer to § 1010.620 of this Chapter.
(b) [Reserved]
§ 1024.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
(a) Refer to § 1010.630 of this Chapter.
(b) [Reserved]
§ 1024.640
[Reserved]
§ 1024.670
[Reserved]
PART 1025—RULES FOR INSURANCE
COMPANIES
Recordkeeping.
Refer to § 1010.410 of this Chapter.
§ 1024.500
65867
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Subpart A—Definitions
Sec.
1025.100 Definitions.
Subpart B—Programs
1025.200 General.
1025.210 Anti-money laundering programs
for insurance companies.
Subpart C—Reports Required To Be Made
By Insurance Companies
1025.300 General.
1025.310 [Reserved]
1025.315 [Reserved]
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1025.320 Reports by insurance companies
of suspicious transactions.
1025.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
Subpart D—Records Required To Be
Maintained By Insurance Companies
1025.400 General.
1025.410 Recordkeeping.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1025.500 General.
1025.520 Special information sharing
procedures to deter money laundering
and terrorist activity for insurance
companies.
1025.530 [Reserved]
1025.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Insurance Companies
1025.600 [Reserved]
1025.610 [Reserved]
1025.620 [Reserved]
1025.630 [Reserved]
1025.640 [Reserved]
1025.670 [Reserved]
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Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1025. Unless otherwise
indicated, for purposes of this Part:
(a) Annuity contract means any
agreement between the insurer and the
contract owner whereby the insurer
promises to pay out a fixed or variable
income stream for a period of time.
(b) Covered product means:
(1) A permanent life insurance policy,
other than a group life insurance policy;
(2) An annuity contract, other than a
group annuity contract; or
(3) Any other insurance product with
features of cash value or investment.
(c) Group annuity contract means a
master contract providing annuities to a
group of persons under a single
contract.
(d) Group life insurance policy means
any life insurance policy under which a
number of persons and their
dependents, if appropriate, are insured
under a single policy.
(e) Insurance agent means a sales and/
or service representative of an insurance
company. The term ‘‘insurance agent’’
encompasses any person that sells,
markets, distributes, or services an
insurance company’s covered products,
including, but not limited to, a person
who represents only one insurance
company, a person who represents more
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Subpart B—Programs
§ 1025.200
Subpart A—Definitions
§ 1025.100
than one insurance company, and a
bank or broker-dealer in securities that
sells any covered product of an
insurance company.
(f) Insurance broker means a person
who, by acting as the customer’s
representative, arranges and/or services
covered products on behalf of the
customer.
(g) Insurance company or insurer. (1)
Except as provided in paragraph (g)(2)
of this section, the term ‘‘insurance
company’’ or ‘‘insurer’’ means any
person engaged within the United States
as a business in the issuing or
underwriting of any covered product.
(2) The term ‘‘insurance company’’ or
‘‘insurer’’ does not include an insurance
agent or insurance broker.
(h) Permanent life insurance policy
means an agreement that contains a cash
value or investment element and that
obligates the insurer to indemnify or to
confer a benefit upon the insured or
beneficiary to the agreement contingent
upon the death of the insured.
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General.
Insurance companies are subject to
the program requirements set forth and
cross referenced in this subpart.
Insurance companies should also refer
to Subpart B of Part 1010 of this Chapter
for program requirements contained in
that subpart which apply to insurance
companies.
§ 1025.210 Anti-money laundering
programs for insurance companies.
(a) In general. Not later than May 2,
2006, each insurance company shall
develop and implement a written antimoney laundering program applicable
to its covered products that is
reasonably designed to prevent the
insurance company from being used to
facilitate money laundering or the
financing of terrorist activities. The
program must be approved by senior
management. An insurance company
shall make a copy of its anti-money
laundering program available to the
Department of the Treasury, the
Financial Crimes Enforcement Network,
or their designee upon request.
(b) Minimum requirements. At a
minimum, the program required by
paragraph (a) of this section shall:
(1) Incorporate policies, procedures,
and internal controls based upon the
insurance company’s assessment of the
money laundering and terrorist
financing risks associated with its
covered products. Policies, procedures,
and internal controls developed and
implemented by an insurance company
under this section shall include
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provisions for complying with the
applicable requirements of subchapter II
of chapter 53 of title 31, United States
Code and this chapter, integrating the
company’s insurance agents and
insurance brokers into its anti-money
laundering program, and obtaining all
relevant customer-related information
necessary for an effective anti-money
laundering program.
(2) Designate a compliance officer
who will be responsible for ensuring
that:
(i) The anti-money laundering
program is implemented effectively,
including monitoring compliance by the
company’s insurance agents and
insurance brokers with their obligations
under the program;
(ii) The anti-money laundering
program is updated as necessary; and
(iii) Appropriate persons are educated
and trained in accordance with
paragraph (b)(3) of this section.
(3) Provide for on-going training of
appropriate persons concerning their
responsibilities under the program. An
insurance company may satisfy this
requirement with respect to its
employees, insurance agents, and
insurance brokers by directly training
such persons or verifying that persons
have received training by another
insurance company or by a competent
third party with respect to the covered
products offered by the insurance
company.
(4) Provide for independent testing to
monitor and maintain an adequate
program, including testing to determine
compliance of the company’s insurance
agents and insurance brokers with their
obligations under the program. The
scope and frequency of the testing shall
be commensurate with the risks posed
by the insurance company’s covered
products. Such testing may be
conducted by a third party or by any
officer or employee of the insurance
company, other than the person
designated in paragraph (b)(2) of this
section.
(c) Anti-money laundering program
requirements for insurance companies
registered or required to register with the
Securities and Exchange Commission as
broker-dealers in securities. An
insurance company that is registered or
required to register with the Securities
and Exchange Commission as a brokerdealer in securities shall be deemed to
have satisfied the requirements of this
section for its broker-dealer activities to
the extent that the company is required
to establish and has established an antimoney laundering program pursuant to
§ 1023.210 of this Chapter and complies
with such program.
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(d) Compliance. Compliance with this
section shall be examined by the
Department of the Treasury, through the
Financial Crimes Enforcement Network
or its delegees, under the terms of the
Bank Secrecy Act. Failure to comply
with the requirements of this section
may constitute a violation of the Bank
Secrecy Act and of this chapter.
Subpart C—Reports Required To Be
Made By Insurance Companies
§ 1025.300
General.
Insurance companies are subject to
the reporting requirements set forth and
cross referenced in this subpart.
Insurance companies should also refer
to Subpart C of Part 1010 of this Chapter
for reporting requirements contained in
that subpart which apply to insurance
companies.
§ 1025.310
[Reserved]
§ 1025.315
[Reserved]
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§ 1025.320 Reports by insurance
companies of suspicious transactions.
(a) General. (1) Each insurance
company shall file with the Financial
Crimes Enforcement Network, to the
extent and in the manner required by
this section, a report of any suspicious
transaction involving a covered product
that is relevant to a possible violation of
law or regulation. An insurance
company may also file with the
Financial Crimes Enforcement Network
by using the form specified in paragraph
(b)(1) of this section or otherwise, a
report of any suspicious transaction that
it believes is relevant to the possible
violation of any law or regulation but
the reporting of which is not required by
this section.
(2) A transaction requires reporting
under this section if it is conducted or
attempted by, at, or through an
insurance company, and involves or
aggregates at least $5,000 in funds or
other assets, and the insurance company
knows, suspects, or has reason to
suspect that the transaction (or a pattern
of transactions of which the transaction
is a part):
(i) Involves funds derived from illegal
activity or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity (including,
without limitation, the ownership,
nature, source, location, or control of
such funds or assets) as part of a plan
to violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
(ii) Is designed, whether through
structuring or other means, to evade any
requirements of this chapter or of any
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other regulations promulgated under the
Bank Secrecy Act;
(iii) Has no business or apparent
lawful purpose or is not the sort in
which the particular customer would
normally be expected to engage, and the
insurance company knows of no
reasonable explanation for the
transaction after examining the available
facts, including the background and
possible purpose of the transaction; or
(iv) Involves use of the insurance
company to facilitate criminal activity.
(3)(i) An insurance company is
responsible for reporting suspicious
transactions conducted through its
insurance agents and insurance brokers.
Accordingly, an insurance company
shall establish and implement policies
and procedures reasonably designed to
obtain customer-related information
necessary to detect suspicious activity
from all relevant sources, including
from its insurance agents and insurance
brokers, and shall report suspicious
activity based on such information.
(ii) Certain insurance agents may have
a separate obligation to report
suspicious activity pursuant to other
provisions of this chapter. In those
instances, no more than one report is
required to be filed by the financial
institutions involved in the transaction,
as long as the report filed contains all
relevant facts, including the names of
both institutions and the words ‘‘joint
filing’’ in the narrative section, and both
institutions maintain a copy of the
report filed, along with any supporting
documentation.
(iii) An insurance company that
issues variable insurance products
funded by separate accounts that meet
the definition of a mutual fund in
§ 1024.320(a)(1) of this Chapter shall file
reports of suspicious transactions
pursuant to § 1024.320 of this Chapter.
(b) Filing procedures—(1) What to file.
A suspicious transaction shall be
reported by completing a Suspicious
Activity Report by Insurance Companies
(SAR–IC), and collecting and
maintaining supporting documentation
as required by paragraph (d) of this
section.
(2) Where to file. The SAR–IC shall be
filed with the Financial Crimes
Enforcement Network as indicated in
the instructions to the SAR–IC.
(3) When to file. A SAR–IC shall be
filed no later than 30 calendar days after
the date of the initial detection by the
insurance company of facts that may
constitute a basis for filing a SAR–IC
under this section. If no suspect is
identified on the date of such initial
detection, an insurance company may
delay filing a SAR–IC for an additional
30 calendar days to identify a suspect,
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65869
but in no case shall reporting be delayed
more than 60 calendar days after the
date of such initial detection. In
situations that require immediate
attention, such as terrorist financing or
ongoing money laundering schemes, the
insurance company shall immediately
notify by telephone an appropriate law
enforcement authority in addition to
filing timely a SAR–IC. Insurance
companies wishing voluntarily to report
suspicious transactions that may relate
to terrorist activity may call the
Financial Crimes Enforcement
Network’s Financial Institutions Hotline
at 1–866–556–3974 in addition to filing
timely a SAR–IC if required by this
section.
(c) Exception. An insurance company
is not required to file a SAR–IC to report
the submission to it of false or
fraudulent information to obtain a
policy or make a claim, unless the
company has reason to believe that the
false or fraudulent submission relates to
money laundering or terrorist financing.
(d) Retention of records. An insurance
company shall maintain a copy of any
SAR–IC filed and the original or
business record equivalent of any
supporting documentation for a period
of five years from the date of filing the
SAR–IC. Supporting documentation
shall be identified as such and
maintained by the insurance company
and shall be deemed to have been filed
with the SAR–IC. When an insurance
company has filed or is identified as a
filer in a joint Suspicious Activity
Report, the insurance company shall
maintain a copy of such joint report
(together with copies of any supporting
documentation) for a period of five
years from the date of filing. An
insurance company shall make all
supporting documentation available to
the Financial Crimes Enforcement
Network and any other appropriate law
enforcement agencies or supervisory
agencies upon request.
(e) Confidentiality of reports;
limitation of liability. No insurance
company, and no director, officer,
employee, agent, or broker of any
insurance company, who reports a
suspicious transaction under this
chapter (whether such a report is
required by this section or made
voluntarily), may notify any person
involved in the transaction that the
transaction has been reported, except to
the extent permitted by paragraph (a)(3)
of this section. Thus, any insurance
company subpoenaed or otherwise
requested to disclose a SAR–IC or the
information contained in a SAR–IC (or
a copy of a joint Suspicious Activity
Report filed with another financial
institution involved in the same
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transaction, including an insurance
agent), except where such disclosure is
requested by the Financial Crimes
Enforcement Network or another
appropriate law enforcement or
supervisory agency, shall decline to
produce the Suspicious Activity Report
or to provide any information that
would disclose that a Suspicious
Activity Report has been prepared or
filed, citing as authority 31 CFR
1025.320 and 31 U.S.C. 5318(g)(2), and
shall notify the Financial Crimes
Enforcement Network of any such
request and its response thereto. An
insurance company, and any director,
officer, employee, agent, or broker of
such insurance company, that makes a
report pursuant to this section,
including a joint report (whether such
report is required by this section or
made voluntarily) shall be protected
from liability for any disclosure
contained in, or for failure to disclose
the fact of, such report, or both, to the
extent provided by 31 U.S.C. 5318(g)(3).
(f) Compliance. Compliance with this
section shall be examined by the
Department of the Treasury, through the
Financial Crimes Enforcement Network
or its delegees, under the terms of the
Bank Secrecy Act. Failure to comply
with the requirements of this section
may constitute a violation of the
reporting rules of the Bank Secrecy Act
and of this chapter.
(g) Suspicious transaction reporting
requirements for insurance companies
registered or required to register with the
Securities and Exchange Commission as
broker-dealers in securities. An
insurance company that is registered or
required to register with the Securities
and Exchange Commission as a brokerdealer in securities shall be deemed to
have satisfied the requirements of this
section for its broker-dealer activities to
the extent that the company complies
with the reporting requirements
applicable to such activities pursuant to
§ 1023.320 of this Chapter.
(h) Applicability date. This section
applies to transactions occurring after
May 2, 2006.
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§ 1025.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
Refer to § 1010.330 of this Chapter for
rules regarding the filing of reports
relating to currency in excess of $10,000
received by insurance companies.
Subpart D—Records Required To Be
Maintained By Insurance Companies
§ 1025.400
General.
Insurance companies are subject to
the recordkeeping requirements set forth
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and cross referenced in this subpart.
Insurance companies should also refer
to Subpart D of Part 1010 of this Chapter
for recordkeeping requirements
contained in that subpart which apply
to insurance companies.
§ 1025.410
Recordkeeping.
Refer to § 1010.410.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1025.500
General.
Insurance companies are subject to
the special information sharing
procedures to deter money laundering
and terrorist activity requirements set
forth and cross referenced in this
subpart. Insurance companies should
also refer to Subpart E of Part 1010 of
this Chapter for special information
sharing procedures to deter money
laundering and terrorist activity
contained in that subpart which apply
to insurance companies.
§ 1025.520 Special information sharing
procedures to deter money laundering and
terrorist activity for insurance companies.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1025.530
[Reserved]
§ 1025.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Insurance Companies
Subpart C—Reports Required To Be Made
By Futures Commission Merchants and
Introducing Brokers in Commodities
1026.300 General.
1026.310 Reports of transactions in
currency.
1026.315 Exemptions.
1026.320 Reports by futures commission
merchants and introducing brokers in
commodities of suspicious transactions.
Subpart D—Records Required To Be
Maintained By Futures Commission
Merchants and Introducing Brokers in
Commodities
1026.400 General.
1026.410 Recordkeeping.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1026.500 General.
1026.520 Special information sharing
procedures to deter money laundering
and terrorist activity for futures
commission merchants and introducing
brokers in commodities.
1026.530 [Reserved]
1026.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Futures Commission Merchants and
Introducing Brokers in Commodities
1026.600 General.
1026.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
1026.620 Due diligence programs for
private banking accounts.
1026.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
1026.640 [Reserved]
1026.670 Summons or subpoena of foreign
bank records; Termination of
correspondent relationship.
§ 1025.600
[Reserved]
§ 1025.610
[Reserved]
§ 1025.620
[Reserved]
Subpart A—Definitions
§ 1025.630
[Reserved]
§ 1026.100
§ 1025.640
[Reserved]
§ 1025.670
[Reserved]
PART 1026—RULES FOR FUTURES
COMMISSION MERCHANTS AND
INTRODUCING BROKERS IN
COMMODITIES
Subpart A—Definitions
Sec.
1026.100 Definitions.
Subpart B—Programs
1026.200 General.
1026.210 Anti-money laundering program
requirements for futures commission
merchants and introducing brokers in
commodities.
1026.220 Customer identification program
requirements for futures commission
merchants and introducing brokers.
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Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1026. Unless otherwise
indicated, for the purposes of this Part:
(a) Account. For purposes of
§ 1026.220:
(1) Account means a formal
relationship with a futures commission
merchant, including, but not limited to,
those established to effect transactions
in contracts of sale of a commodity for
future delivery, options on any contract
of sale of a commodity for future
delivery, or options on a commodity.
(2) Account does not include:
(i) An account that the futures
commission merchant acquires through
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any acquisition, merger, purchase of
assets, or assumption of liabilities; or
(ii) An account opened for the
purpose of participating in an employee
benefit plan established under the
Employee Retirement Income Security
Act of 1974.
(b) Commodity means any good,
article, service, right, or interest
described in Section 1a(4) of the
Commodity Exchange Act (7 U.S.C.
1a(4)).
(c) Contract of sale means any sale,
agreement of sale or agreement to sell as
described in Section 1a(7) of the
Commodity Exchange Act (7 U.S.C.
1a(7)).
(d) Customer. For purposes of
§ 1026.220:
(1) Customer means:
(i) A person that opens a new account
with a futures commission merchant;
and
(ii) An individual who opens a new
account with a futures commission
merchant for:
(A) An individual who lacks legal
capacity; or
(B) An entity that is not a legal
person.
(2) Customer does not include:
(i) A financial institution regulated by
a Federal functional regulator or a bank
regulated by a state bank regulator;
(ii) A person described in
§ 1020.315(b)(2) through (4) of this
Chapter; or
(iii) A person that has an existing
account, provided the futures
commission merchant or introducing
broker has a reasonable belief that it
knows the true identity of the person.
(3) When an account is introduced to
a futures commission merchant by an
introducing broker, the person or
individual opening the account shall be
deemed to be a customer of both the
futures commission merchant and the
introducing broker for the purposes of
this section.
(e) Financial institution is defined at
31 U.S.C. 5312(a)(2) and (c)(1).
(f) Futures commission merchant
means any person registered or required
to be registered as a futures commission
merchant with the Commodity Futures
Trading Commission (‘‘CFTC’’) under
the Commodity Exchange Act (7 U.S.C.
1 et seq.), except persons who register
pursuant to Section 4f(a)(2) of the
Commodity Exchange Act (7 U.S.C.
6f(a)(2)).
(g) Introducing broker means any
person registered or required to be
registered as an introducing broker with
the CFTC under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), except
persons who register pursuant to
Section 4f(a)(2) of the Commodity
Exchange Act (7 U.S.C. 6f(a)(2)).
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(h) Option means an agreement,
contract or transaction described in
Section 1a(26) of the Commodity
Exchange Act (7 U.S.C. 1a(26)).
Subpart B—Programs
§ 1026.200
General.
Futures commission merchants and
introducing brokers in commodities are
subject to the program requirements set
forth and cross referenced in this
subpart. Futures commission merchants
and introducing brokers in commodities
should also refer to Subpart B of Part
1010 of this Chapter for program
requirements contained in that subpart
which apply to futures commission
merchants and introducing brokers in
commodities.
§ 1026.210 Anti-money laundering
program requirements for futures
commission merchants and introducing
brokers in commodities.
A financial institution regulated by a
self-regulatory organization shall be
deemed to satisfy the requirements of 31
U.S.C. 5318(h)(1) if:
(a) The financial institution complies
with the requirements of §§ 1010.610
and 1010.620 of this Chapter and any
applicable regulation of its Federal
functional regulator governing the
establishment and implementation of
anti-money laundering programs; and
(b)(1) The financial institution
implements and maintains an antimoney laundering program that
complies with the rules, regulations, or
requirements of its self-regulatory
organization governing such programs;
and
(2) The rules, regulations, or
requirements of the self-regulatory
organization have been approved, if
required, by the appropriate Federal
functional regulator.
§ 1026.220 Customer identification
programs for futures commission
merchants and introducing brokers.
(a) Customer identification program:
Minimum requirements—(1) In general.
Each futures commission merchant and
introducing broker must implement a
written Customer Identification Program
(CIP) appropriate for its size and
business that, at a minimum, includes
each of the requirements of paragraphs
(a)(1) through (a)(5) of this section. The
CIP must be a part of each futures
commission merchant’s and introducing
broker’s anti-money laundering
compliance program required under 31
U.S.C. 5318(h).
(2) Identity verification procedures.
The CIP must include risk-based
procedures for verifying the identity of
each customer to the extent reasonable
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and practicable. The procedures must
enable each futures commission
merchant and introducing broker to
form a reasonable belief that it knows
the true identity of each customer. The
procedures must be based on the futures
commission merchant’s or introducing
broker’s assessment of the relevant risks,
including those presented by the
various types of accounts maintained,
the various methods of opening
accounts, the various types of
identifying information available, and
the futures commission merchant’s or
introducing broker’s size, location and
customer base. At a minimum, these
procedures must contain the elements
described in paragraph (a)(2) of this
section.
(i)(A) Customer information required.
The CIP must include procedures for
opening an account that specify
identifying information that will be
obtained from each customer. Except as
permitted by paragraph (a)(2)(i)(B) of
this section, each futures commission
merchant and introducing broker must
obtain, at a minimum, the following
information prior to opening an
account:
(1) Name;
(2) Date of birth, for an individual;
(3) Address, which shall be:
(i) For an individual, a residential or
business street address;
(ii) For an individual who does not
have a residential or business street
address, an Army Post Office (APO) or
Fleet Post Office (FPO) box number, or
the residential or business street address
of a next of kin or another contact
individual; or
(iii) For a person other than an
individual (such as a corporation,
partnership or trust), a principal place
of business, local office or other
physical location; and
(4) Identification number, which shall
be:
(i) For a U.S. person, a taxpayer
identification number; or
(ii) For a non-U.S. person, one or more
of the following: A taxpayer
identification number, a passport
number and country of issuance, an
alien identification card number, or the
number and country of issuance of any
other government-issued document
evidencing nationality or residence and
bearing a photograph or similar
safeguard.
Note to Paragraph (a)(2)(i)(A)(4)(ii): When
opening an account for a foreign business or
enterprise that does not have an
identification number, the futures
commission merchant or introducing broker
must request alternative government-issued
documentation certifying the existence of the
business or enterprise.
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(B) Exception for persons applying for
a taxpayer identification number.
Instead of obtaining a taxpayer
identification number from a customer
prior to opening an account, the CIP
may include procedures for opening an
account for a customer that has applied
for, but has not received, a taxpayer
identification number. In this case, the
CIP must include procedures to confirm
that the application was filed before the
customer opens the account and to
obtain the taxpayer identification
number within a reasonable period of
time after the account is opened.
(ii) Customer verification. The CIP
must contain procedures for verifying
the identity of each customer, using
information obtained in accordance
with paragraph (a)(2)(i) of this section,
within a reasonable time before or after
the customer’s account is opened. The
procedures must describe when the
futures commission merchant or
introducing broker will use documents,
non-documentary methods, or a
combination of both methods, as
described in this paragraph (a)(2)(ii).
(A) Verification through documents.
For a futures commission merchant or
introducing broker relying on
documents, the CIP must contain
procedures that set forth the documents
the futures commission merchant or
introducing broker will use. These
documents may include:
(1) For an individual, an unexpired
government-issued identification
evidencing nationality or residence and
bearing a photograph or similar
safeguard, such as a driver’s license or
passport; and
(2) For a person other than an
individual (such as a corporation,
partnership or trust), documents
showing the existence of the entity,
such as certified articles of
incorporation, a government-issued
business license, a partnership
agreement, or a trust instrument.
(B) Verification through nondocumentary methods. For a futures
commission merchant or introducing
broker relying on non-documentary
methods, the CIP must contain
procedures that set forth the nondocumentary methods the futures
commission merchant or introducing
broker will use.
(1) These methods may include
contacting a customer; independently
verifying the customer’s identity
through the comparison of information
provided by the customer with
information obtained from a consumer
reporting agency, public database, or
other source; checking references with
other financial institutions; or obtaining
a financial statement.
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(2) The futures commission
merchant’s or introducing broker’s nondocumentary procedures must address
situations where an individual is unable
to present an unexpired governmentissued identification document that
bears a photograph or similar safeguard;
the futures commission merchant or
introducing broker is not familiar with
the documents presented; the account is
opened without obtaining documents;
the customer opens the account without
appearing in person at the futures
commission merchant or introducing
broker; and where the futures
commission merchant or introducing
broker is otherwise presented with
circumstances that increase the risk that
the futures commission merchant or
introducing broker will be unable to
verify the true identity of a customer
through documents.
(C) Additional verification for certain
customers. The CIP must address
situations where, based on the futures
commission merchant’s or introducing
broker’s risk assessment of a new
account opened by a customer that is
not an individual, the futures
commission merchant or introducing
broker will obtain information about
individuals with authority or control
over such account in order to verify the
customer’s identity. This verification
method applies only when the futures
commission merchant or introducing
broker cannot verify the customer’s true
identity after using the verification
methods described in paragraphs
(a)(2)(ii)(A) and (B) of this section.
(iii) Lack of verification. The CIP must
include procedures for responding to
circumstances in which the futures
commission merchant or introducing
broker cannot form a reasonable belief
that it knows the true identity of a
customer. These procedures should
describe:
(A) When an account should not be
opened;
(B) The terms under which a customer
may conduct transactions while the
futures commission merchant or
introducing broker attempts to verify the
customer’s identity;
(C) When an account should be closed
after attempts to verify a customer’s
identity have failed; and
(D) When the futures commission
merchant or introducing broker should
file a Suspicious Activity Report in
accordance with applicable law and
regulation.
(3) Recordkeeping. The CIP must
include procedures for making and
maintaining a record of all information
obtained under procedures
implementing paragraph (a) of this
section.
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(i) Required records. At a minimum,
the record must include:
(A) All identifying information about
a customer obtained under paragraph
(a)(2)(i) of this section;
(B) A description of any document
that was relied on under paragraph
(a)(2)(ii)(A) of this section noting the
type of document, any identification
number contained in the document, the
place of issuance, and if any, the date
of issuance and expiration date;
(C) A description of the methods and
the results of any measures undertaken
to verify the identity of a customer
under paragraphs (a)(2)(ii)(B) and (C) of
this section; and
(D) A description of the resolution of
each substantive discrepancy
discovered when verifying the
identifying information obtained.
(ii) Retention of records. Each futures
commission merchant and introducing
broker must retain the records made
under paragraph (a)(3)(i)(A) of this
section for five years after the account
is closed and the records made under
paragraphs (a)(3)(i)(B), (C), and (D) of
this section for five years after the
record is made. In all other respects, the
records must be maintained pursuant to
the provisions of 17 CFR 1.31.
(4) Comparison with government lists.
The CIP must include procedures for
determining whether a customer
appears on any list of known or
suspected terrorists or terrorist
organizations issued by any Federal
government agency and designated as
such by Treasury in consultation with
the Federal functional regulators. The
procedures must require the futures
commission merchant or introducing
broker to make such a determination
within a reasonable period of time after
the account is opened, or earlier if
required by another Federal law or
regulation or Federal directive issued in
connection with the applicable list. The
procedures also must require the futures
commission merchant or introducing
broker to follow all Federal directives
issued in connection with such lists.
(5)(i) Customer notice. The CIP must
include procedures for providing
customers with adequate notice that the
futures commission merchant or
introducing broker is requesting
information to verify their identities.
(ii) Adequate notice. Notice is
adequate if the futures commission
merchant or introducing broker
generally describes the identification
requirements of this section and
provides such notice in a manner
reasonably designed to ensure that a
customer is able to view the notice, or
is otherwise given notice, before
opening an account. For example,
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depending upon the manner in which
the account is opened, a futures
commission merchant or introducing
broker may post a notice in the lobby or
on its Web site, include the notice on its
account applications or use any other
form of written or oral notice.
(iii) Sample notice. If appropriate, a
futures commission merchant or
introducing broker may use the
following sample language to provide
notice to its customers:
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Important Information About Procedures for
Opening a New Account
To help the government fight the funding
of terrorism and money laundering activities,
Federal law requires all financial institutions
to obtain, verify, and record information that
identifies each person who opens an account.
What this means for you: When you open
an account, we will ask for your name,
address, date of birth and other information
that will allow us to identify you. We may
also ask to see your driver’s license or other
identifying documents.
(6) Reliance on another financial
institution. The CIP may include
procedures specifying when the futures
commission merchant or introducing
broker will rely on the performance by
another financial institution (including
an affiliate) of any procedures of its CIP,
with respect to any customer of the
futures commission merchant or
introducing broker that is opening an
account, or has established an account
or similar business relationship with the
other financial institution to provide or
engage in services, dealings, or other
financial transactions, provided that:
(i) Such reliance is reasonable under
the circumstances;
(ii) The other financial institution is
subject to a rule implementing 31 U.S.C.
5318(h), and is regulated by a Federal
functional regulator; and
(iii) The other financial institution
enters into a contract requiring it to
certify annually to the futures
commission merchant or introducing
broker that it has implemented its antimoney laundering program, and that it
will perform (or its agent will perform)
specified requirements of the futures
commission merchant’s or introducing
broker’s CIP.
(b) Exemptions. The CFTC, with the
concurrence of the Secretary, may by
order or regulation exempt any futures
commission merchant or introducing
broker that registers with the CFTC or
any type of account from the
requirements of this section. In issuing
such exemptions, the CFTC and the
Secretary shall consider whether the
exemption is consistent with the
purposes of the Bank Secrecy Act, and
in the public interest, and may consider
other necessary and appropriate factors.
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(c) Other requirements unaffected.
Nothing in this section relieves a futures
commission merchant or introducing
broker of its obligation to comply with
any other provision of this chapter,
including provisions concerning
information that must be obtained,
verified, or maintained in connection
with any account or transaction.
Subpart C—Reports Required To Be
Made by Futures Commission
Merchants and Introducing Brokers in
Commodities
§ 1026.300
General.
Futures commission merchants and
introducing brokers in commodities are
subject to the reporting requirements set
forth and cross referenced in this
subpart. Futures commission merchants
and introducing brokers in commodities
should also refer to Subpart C of Part
1010 of this Chapter for reporting
requirements contained in that subpart
which apply to futures commission
merchants and introducing brokers in
commodities.
§ 1026.310
currency.
Reports of transactions in
The reports of transactions in
currency requirements for futures
commission merchants and introducing
brokers in commodities are located in
subpart C of Part 1010 of this Chapter
and this subpart.
§ 1026.315
Exemptions.
Refer to § 1010.315 of this Chapter for
exemptions from the obligation to file
reports of transactions in currency for
futures commission merchants and
introducing brokers in commodities.
§ 1026.320 Reports by futures commission
merchants and introducing brokers in
commodities of suspicious transactions.
(a) General—(1) Every futures
commission merchant (‘‘FCM’’) and
introducing broker in commodities (‘‘IB–
C’’) within the United States shall file
with FinCEN, to the extent and in the
manner required by this section, a
report of any suspicious transaction
relevant to a possible violation of law or
regulation. An FCM or IB–C may also
file with FinCEN a report of any
suspicious transaction that it believes is
relevant to the possible violation of any
law or regulation but whose reporting is
not required by this section. Filing a
report of a suspicious transaction does
not relieve an FCM or IB–C from the
responsibility of complying with any
other reporting requirements imposed
by the CFTC or any registered futures
association or registered entity as those
terms are defined in the Commodity
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Exchange Act (‘‘CEA’’), 7 U.S.C. 21 and
7 U.S.C. 1a(29).
(2) A transaction requires reporting
under the terms of this section if it is
conducted or attempted by, at, or
through an FCM or IB–C, it involves or
aggregates funds or other assets of at
least $5,000, and the FCM or IB–C
knows, suspects, or has reason to
suspect that the transaction (or a pattern
of transactions of which the transaction
is a part):
(i) Involves funds derived from illegal
activity or is intended or conducted in
order to hide or disguise funds or assets
derived from illegal activity (including,
without limitation, the ownership,
nature, source, location, or control of
such funds or assets) as part of a plan
to violate or evade any Federal law or
regulation or to avoid any transaction
reporting requirement under Federal
law or regulation;
(ii) Is designed, whether through
structuring or other means, to evade any
requirements of this chapter or of any
other regulations promulgated under the
Bank Secrecy Act;
(iii) Has no business or apparent
lawful purpose or is not the sort in
which the particular customer would
normally be expected to engage, and the
FCM or IB–C knows of no reasonable
explanation for the transaction after
examining the available facts, including
the background and possible purpose of
the transaction; or
(iv) Involves use of the FCM or IB–C
to facilitate criminal activity.
(3) The obligation to identify and
properly and timely to report a
suspicious transaction rests with each
FCM and IB–C involved in the
transaction, provided that no more than
one report is required to be filed by any
of the FCMs or IB–Cs involved in a
particular transaction, so long as the
report filed contains all relevant facts.
(b) Filing procedures—(1) What to file.
A suspicious transaction shall be
reported by completing a Suspicious
Activity Report by Securities and
Futures Industries (‘‘SAR–SF’’), and
collecting and maintaining supporting
documentation as required by paragraph
(d) of this section.
(2) Where to file. The SAR–SF shall be
filed with FinCEN in a central location,
to be determined by FinCEN, as
indicated in the instructions to the
SAR–SF.
(3) When to file. A SAR–SF shall be
filed no later than 30 calendar days after
the date of the initial detection by the
reporting FCM or IB–C of facts that may
constitute a basis for filing a SAR–SF
under this section. If no suspect is
identified on the date of such initial
detection, an FCM or IB–C may delay
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filing a SAR–SF for an additional 30
calendar days to identify a suspect, but
in no case shall reporting be delayed
more than 60 calendar days after the
date of such initial detection. In
situations involving violations that
require immediate attention, such as
terrorist financing or ongoing money
laundering schemes, the FCM or IB–C
shall immediately notify by telephone
an appropriate law enforcement
authority in addition to filing timely a
SAR–SF. FCMs and IB–Cs wishing
voluntarily to report suspicious
transactions that may relate to terrorist
activity may call FinCEN’s Financial
Institutions Hotline at 1–866–556–3974
in addition to filing timely a SAR–SF if
required by this section. The FCM or
IB–C may also, but is not required to,
contact the CFTC to report in such
situations.
(c) Exceptions—(1) An FCM or IB–C is
not required to file a SAR–SF to
report—
(i) A robbery or burglary committed or
attempted of the FCM or IB–C that is
reported to appropriate law enforcement
authorities;
(ii) A violation otherwise required to
be reported under the CEA (7 U.S.C. 1
et seq.), the regulations of the CFTC (17
CFR chapter I), or the rules of any
registered futures association or
registered entity as those terms are
defined in the CEA, 7 U.S.C. 21 and 7
U.S.C. 1a(29), by the FCM or IB–C or
any of its officers, directors, employees,
or associated persons, other than a
violation of 17 CFR 42.2, as long as such
violation is appropriately reported to
the CFTC or a registered futures
association or registered entity.
(2) An FCM or IB–C may be required
to demonstrate that it has relied on an
exception in paragraph (c)(1) of this
section, and must maintain records of
its determinations to do so for the
period specified in paragraph (d) of this
section. To the extent that a Form 8–R,
8–T, U–5, or any other similar form
concerning the transaction is filed
consistent with CFTC, registered futures
association, or registered entity rules, a
copy of that form will be a sufficient
record for the purposes of this
paragraph (c)(2).
(d) Retention of records. An FCM or
IB–C shall maintain a copy of any SAR–
SF filed and the original or business
record equivalent of any supporting
documentation for a period of five years
from the date of filing the SAR–SF.
Supporting documentation shall be
identified as such and maintained by
the FCM or IB–C, and shall be deemed
to have been filed with the SAR–SF. An
FCM or IB–C shall make all supporting
documentation available to FinCEN, the
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CFTC, or any other appropriate law
enforcement agency or regulatory
agency, and, for purposes of paragraph
(g) of this section, to any registered
futures association, registered entity, or
self-regulatory organization (‘‘SRO’’) (as
defined in section 3(a)(26) of the
Securities Exchange Act of 1934, 15
U.S.C. 78c(a)(26)), upon request.
(e) Confidentiality of reports. No
financial institution, and no director,
officer, employee, or agent of any
financial institution, who reports a
suspicious transaction under this
chapter, may notify any person involved
in the transaction that the transaction
has been reported, except to the extent
permitted by paragraph (a)(3) of this
section. Thus, any person subpoenaed
or otherwise requested to disclose a
SAR–SF or the information contained in
a SAR–SF, except where such
disclosure is requested by FinCEN, the
CFTC, another appropriate law
enforcement or regulatory agency, or for
purposes of paragraph (g) of this section,
a registered futures association,
registered entity, or SRO shall decline to
produce the SAR–SF or to provide any
information that would disclose that a
SAR–SF has been prepared or filed,
citing this paragraph and 31 U.S.C.
5318(g)(2), and shall notify FinCEN of
any such request and its response
thereto.
(f) Limitation of liability. An FCM or
IB–C, and any director, officer,
employee, or agent of such FCM or IB–
C, that makes a report of any possible
violation of law or regulation pursuant
to this section or any other authority (or
voluntarily) shall not be liable to any
person under any law or regulation of
the United States (or otherwise to the
extent also provided in 31 U.S.C.
5318(g)(3), including in any arbitration
or reparations proceeding) for any
disclosure contained in, or for failure to
disclose the fact of, such report.
(g) Examination and enforcement.
Compliance with this section shall be
examined by the Department of the
Treasury, through FinCEN or its
delegates, under the terms of the Bank
Secrecy Act. Reports filed under this
section or § 1023.320 of this Chapter
(including any supporting
documentation), and documentation
demonstrating reliance on an exception
under paragraph (c) of this section or
§ 1023.320 of this Chapter, shall be
made available, upon request, to the
CFTC, Securities and Exchange
Commission, and any registered futures
association, registered entity, or SRO,
examining an FCM, IB–C, or broker or
dealer in securities for compliance with
the requirements of this section or
§ 1023.320 of this Chapter. Failure to
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satisfy the requirements of this section
may constitute a violation of the
reporting rules of the BSA or of this
chapter.
(h) Applicability date. This section
applies to transactions occurring after
May 18, 2004.
Subpart D—Records Required To Be
Maintained By Futures Commission
Merchants and Introducing Brokers in
Commodities
§ 1026.400
General.
Futures commission merchants and
introducing brokers in commodities are
subject to the recordkeeping
requirements set forth and cross
referenced in this subpart. Futures
commission merchants and introducing
brokers in commodities should also
refer to Subpart D of Part 1010 of this
Chapter for recordkeeping requirements
contained in that subpart which apply
to futures commission merchants and
introducing brokers in commodities.
§ 1026.410
Recordkeeping.
Refer to § 1010.410 of this Chapter.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1026.500
General.
Futures commission merchants and
introducing brokers in commodities are
subject to the special information
sharing procedures to deter money
laundering and terrorist activity
requirements set forth and cross
referenced in this subpart. Futures
commission merchants and introducing
brokers in commodities should also
refer to Subpart E of Part 1010 of this
Chapter for special information sharing
procedures to deter money laundering
and terrorist activity contained in that
subpart which apply to futures
commission merchants and introducing
brokers in commodities.
§ 1026.520 Special information sharing
procedures to deter money laundering and
terrorist activity for futures commission
merchants and introducing brokers in
commodities.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1026.530
[Reserved]
§ 1026.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
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Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Futures Commission
Merchants and Introducing Brokers in
Commodities
§ 1026.600
General.
Futures commission merchants and
introducing brokers in commodities are
subject to the special standards of
diligence; prohibitions; and special
measures requirements set forth and
cross referenced in this subpart. Futures
commission merchants and introducing
brokers in commodities should also
refer to Subpart F of Part 1010 of this
Chapter for special standards of
diligence; prohibitions; and special
measures contained in that subpart
which apply to futures commission
merchants and introducing brokers in
commodities.
§ 1026.610 Due diligence programs for
correspondent accounts for foreign
financial institutions.
(a) Refer to § 1010.610 of this Chapter.
(b) [Reserved]
§ 1026.620 Due diligence programs for
private banking accounts.
§ 1026.630 Prohibition on correspondent
accounts for foreign shell banks; records
concerning owners of foreign banks and
agents for service of legal process.
(a) Refer to § 1010.630 of this Chapter.
(b) [Reserved]
[Reserved]
§ 1026.670 Summons or subpoena of
foreign bank records; Termination of
correspondent relationship.
(a) Refer to § 1010.670 of this Chapter.
(b) [Reserved]
PART 1027—RULES FOR DEALERS IN
PRECIOUS METALS, PRECIOUS
STONES, OR JEWELS
Subpart A—Definitions
Sec.
1027.100 Definitions.
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Subpart B—Programs
1027.200 General.
1027.210 Anti-money laundering programs
for dealers in precious metals, precious
stones, or jewels.
Subpart C—Reports Required To Be Made
By Dealers in Precious Metals, Precious
Stones, or Jewels
1027.300 General.
1027.310 [Reserved]
1027.315 [Reserved]
1027.320 [Reserved]
1027.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
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Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1027.500 General.
1027.520 Special information sharing
procedures to deter money laundering
and terrorist activity for dealers in
precious metals, precious stones, or
jewels.
1027.530 [Reserved]
1027.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Dealers in Precious Metals, Precious
Stones, or Jewels
1027.600 [Reserved]
1027.610 [Reserved]
1027.620 [Reserved]
1027.630 [Reserved]
1027.640 [Reserved]
1027.670 [Reserved]
Subpart A—Definitions
§ 1027.100
(a) Refer to § 1010.620 of this Chapter.
(b) [Reserved]
§ 1026.640
Subpart D—Records Required To Be
Maintained By Dealers in Precious Metals,
Precious Stones, or Jewels
1027.400 General.
1027.410 Recordkeeping.
Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1027. Unless otherwise
indicated, for purposes of this Part:
(a) Covered goods means:
(1) Jewels (as defined in paragraph (c)
of this section);
(2) Precious metals (as defined in
paragraph (d) of this section);
(3) Precious stones (as defined in
paragraph (e) of this section); and
(4) Finished goods (including, but not
limited to, jewelry, numismatic items,
and antiques), that derive 50 percent or
more of their value from jewels,
precious metals, or precious stones
contained in or attached to such
finished goods;
(b) Dealer. (1) Except as provided in
paragraphs (b)(2) and (b)(3) of this
section, the term ‘‘dealer’’ means a
person engaged within the United States
as a business in the purchase and sale
of covered goods and who, during the
prior calendar or tax year:
(i) Purchased more than $50,000 in
covered goods; and
(ii) Received more than $50,000 in
gross proceeds from the sale of covered
goods.
(2) For purposes of this section, the
term ‘‘dealer’’ does not include:
(i) A retailer (as defined in paragraph
(f) of this section), unless the retailer,
during the prior calendar or tax year,
purchased more than $50,000 in
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65875
covered goods from persons other than
dealers or other retailers (such as
members of the general public or foreign
sources of supply); or
(ii) A person licensed or authorized
under the laws of any State (or political
subdivision thereof) to conduct business
as a pawnbroker, but only to the extent
such person is engaged in pawn
transactions (including the sale of pawn
loan collateral).
(3) For purposes of paragraph (b) of
this section, the terms ‘‘purchase’’ and
‘‘sale’’ do not include a retail transaction
in which a retailer or a dealer accepts
from a customer covered goods, the
value of which the retailer or dealer
credits to the account of the customer,
and the retailer or dealer does not
provide funds to the customer in
exchange for such covered goods.
(4) For purposes of paragraph (b) of
this section and § 1027.210(a), the terms
‘‘purchase’’ and ‘‘sale’’ do not include the
purchase of jewels, precious metals, or
precious stones that are incorporated
into machinery or equipment to be used
for industrial purposes, and the
purchase and sale of such machinery or
equipment.
(5) For purposes of applying the
$50,000 thresholds in paragraphs (b)(1)
and (b)(2)(i) of this section to finished
goods defined in paragraph (a)(4) of this
section, only the value of jewels,
precious metals, or precious stones
contained in, or attached to, such goods
shall be taken into account.
(c) Jewel means an organic substance
with gem quality market-recognized
beauty, rarity, and value, and includes
pearl, amber, and coral.
(d) Precious metal means:
(1) Gold, iridium, osmium, palladium,
platinum, rhodium, ruthenium, or
silver, having a level of purity of 500 or
more parts per thousand; and
(2) An alloy containing 500 or more
parts per thousand, in the aggregate, of
two or more of the metals listed in
paragraph (d)(1) of this section.
(e) Precious stone means a substance
with gem quality market-recognized
beauty, rarity, and value, and includes
diamond, corundum (including rubies
and sapphires), beryl (including
emeralds and aquamarines),
chrysoberyl, spinel, topaz, zircon,
tourmaline, garnet, crystalline and
cryptocrystalline quartz, olivine peridot,
tanzanite, jadeite jade, nephrite jade,
spodumene, feldspar, turquoise, lapis
lazuli, and opal.
(f) Retailer means a person engaged
within the United States in the business
of sales primarily to the public of
covered goods.
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Subpart B—Programs
§ 1027.200
General.
Dealers in precious metals, precious
stones, or jewels are subject to the
program requirements set forth and
cross referenced in this subpart. Dealers
in precious metals, precious stones, or
jewels should also refer to Subpart B of
Part 1010 of this Chapter for program
requirements contained in that subpart
which apply to dealers in precious
metals, precious stones, or jewels.
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§ 1027.210 Anti-money laundering
programs for dealers in precious metals,
precious stones, or jewels.
(a) Anti-money laundering program
requirement. (1) Each dealer shall
develop and implement a written antimoney laundering program reasonably
designed to prevent the dealer from
being used to facilitate money
laundering and the financing of terrorist
activities through the purchase and sale
of covered goods. The program must be
approved by senior management. A
dealer shall make its anti-money
laundering program available to the
Department of Treasury through FinCEN
or its designee upon request.
(2) To the extent that a retailer’s
purchases from persons other than
dealers and other retailers exceeds the
$50,000 threshold contained in
§ 1027.100(b)(2)(i), the anti-money
laundering compliance program
required of the retailer under this
paragraph need only address such
purchases.
(b) Minimum requirements. At a
minimum, the anti-money laundering
program shall:
(1) Incorporate policies, procedures,
and internal controls based upon the
dealer’s assessment of the money
laundering and terrorist financing risks
associated with its line(s) of business.
Policies, procedures, and internal
controls developed and implemented by
a dealer under this section shall include
provisions for complying with the
applicable requirements of the Bank
Secrecy Act (31 U.S.C. 5311 et seq.), and
this chapter.
(i) For purposes of making the risk
assessment required by paragraph (b)(1)
of this section, a dealer shall take into
account all relevant factors including,
but not limited to:
(A) The type(s) of products the dealer
buys and sells, as well as the nature of
the dealer’s customers, suppliers,
distribution channels, and geographic
locations;
(B) The extent to which the dealer
engages in transactions other than with
established customers or sources of
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supply, or other dealers subject to this
rule; and
(C) Whether the dealer engages in
transactions for which payment or
account reconciliation is routed to or
from accounts located in jurisdictions
that have been identified by the
Department of State as a sponsor of
international terrorism under 22 U.S.C.
2371; designated as non-cooperative
with international anti-money
laundering principles or procedures by
an intergovernmental group or
organization of which the United States
is a member and with which
designation the United States
representative or organization concurs;
or designated by the Secretary of the
Treasury pursuant to 31 U.S.C. 5318A as
warranting special measures due to
money laundering concerns.
(ii) A dealer’s program shall
incorporate policies, procedures, and
internal controls to assist the dealer in
identifying transactions that may
involve use of the dealer to facilitate
money laundering or terrorist financing,
including provisions for making
reasonable inquiries to determine
whether a transaction involves money
laundering or terrorist financing, and for
refusing to consummate, withdrawing
from, or terminating such transactions.
Factors that may indicate a transaction
is designed to involve use of the dealer
to facilitate money laundering or
terrorist financing include, but are not
limited to:
(A) Unusual payment methods, such
as the use of large amounts of cash,
multiple or sequentially numbered
money orders, traveler’s checks, or
cashier’s checks, or payment from third
parties;
(B) Unwillingness by a customer or
supplier to provide complete or accurate
contact information, financial
references, or business affiliations;
(C) Attempts by a customer or
supplier to maintain an unusual degree
of secrecy with respect to the
transaction, such as a request that
normal business records not be kept;
(D) Purchases or sales that are
unusual for the particular customer or
supplier, or type of customer or
supplier; and
(E) Purchases or sales that are not in
conformity with standard industry
practice.
(2) Designate a compliance officer
who will be responsible for ensuring
that:
(i) The anti-money laundering
program is implemented effectively;
(ii) The anti-money laundering
program is updated as necessary to
reflect changes in the risk assessment,
requirements of this chapter, and further
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guidance issued by the Department of
the Treasury; and
(iii) Appropriate personnel are trained
in accordance with paragraph (b)(3) of
this section.
(3) Provide for on-going education
and training of appropriate persons
concerning their responsibilities under
the program.
(4) Provide for independent testing to
monitor and maintain an adequate
program. The scope and frequency of
the testing shall be commensurate with
the risk assessment conducted by the
dealer in accordance with paragraph
(b)(1) of this section. Such testing may
be conducted by an officer or employee
of the dealer, so long as the tester is not
the person designated in paragraph
(b)(2) of this section or a person
involved in the operation of the
program.
(c) Implementation date. A dealer
must develop and implement an antimoney laundering program that
complies with the requirements of this
section on or before the later of January
1, 2006, or six months after the date a
dealer becomes subject to the
requirements of this section.
Subpart C—Reports Required To Be
Made by Dealers in Precious Metals,
Precious Stones, or Jewels
§ 1027.300
General.
Dealers in precious metals, precious
stones, or jewels are subject to the
reporting requirements set forth and
cross referenced in this subpart. Dealers
in precious metals, precious stones, or
jewels should also refer to Subpart C of
Part 1010 of this Chapter for reporting
requirements contained in that subpart
which apply to dealers in precious
metals, precious stones, or jewels.
§ 1027.310
[Reserved]
§ 1027.315
[Reserved]
§ 1027.320
[Reserved]
§ 1027.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
Refer to § 1010.330 of this Chapter for
rules regarding the filing of reports
relating to currency in excess of $10,000
received by dealers in precious metals,
precious stones, or jewels.
Subpart D—Records Required To Be
Maintained By Dealers in Precious
Metals, Precious Stones, or Jewels
§ 1027.400
General.
Dealers in precious metals, precious
stones, or jewels are subject to the
recordkeeping requirements set forth
and cross referenced in this subpart.
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Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Rules and Regulations
Dealers in precious metals, precious
stones, or jewels should also refer to
Subpart D of Part 1010 of this Chapter
for recordkeeping requirements
contained in that subpart which apply
to dealers in precious metals, precious
stones, or jewels.
§ 1027.410
Recordkeeping.
Subpart D—Records Required To Be
Maintained by Operators of Credit Card
Systems
1028.400 General.
1028.410 Recordkeeping.
Refer to § 1010.410 of this Chapter.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1027.500
General.
Dealers in precious metals, precious
stones, or jewels are subject to the
special information sharing procedures
to deter money laundering and terrorist
activity requirements set forth and cross
referenced in this subpart. Dealers in
precious metals, precious stones, or
jewels should also refer to Subpart E of
Part 1010 of this Chapter for special
information sharing procedures to deter
money laundering and terrorist activity
contained in that subpart which apply
to dealers in precious metals, precious
stones, or jewels.
§ 1027.520 Special information sharing
procedures to deter money laundering and
terrorist activity for dealers in precious
metals, precious stones, or jewels.
(a) Refer to § 1010.520 of this Chapter.
(b) [Reserved]
§ 1027.530
[Reserved]
§ 1027.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Dealers in Precious
Metals, Precious Stones, or Jewels
§ 1027.600
[Reserved]
§ 1027.610
[Reserved]
§ 1027.620
[Reserved]
§ 1027.630
[Reserved]
§ 1027.640
[Reserved]
§ 1027.670
[Reserved]
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PART 1028—RULES FOR OPERATORS
OF CREDIT CARD SYSTEMS
Subpart A—Definitions
Sec.
1028.100 Definitions.
Subpart B—Programs
1028.200 General.
1028.210 Anti-money laundering programs
for operators of credit card systems.
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Subpart C—Reports Required To Be Made
by Operators of Credit Card Systems
1028.300 General.
1028.310 [Reserved]
1028.315 [Reserved]
1028.320 [Reserved]
1028.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
Subpart E—Special Information Sharing
Procedures To Deter Money Laundering
and Terrorist Activity
1028.500 General.
1028.520 Special information sharing
procedures to deter money laundering
and terrorist activity for operators of
credit card systems.
1028.530 [Reserved]
1028.540 Voluntary information sharing
among financial institutions.
Subpart F—Special Standards of Diligence;
Prohibitions, and Special Measures for
Operators of Credit Card Systems
1028.600 [Reserved]
1028.610 [Reserved]
1028.620 [Reserved]
1028.630 [Reserved]
1028.640 [Reserved]
1028.670 [Reserved]
Subpart A—Definitions
§ 1028.100
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American Samoa, or the U.S. Virgin
Islands.
(2) The term foreign bank does not
include:
(i) A U.S. agency or branch of a
foreign bank; and
(ii) An insured bank organized under
the laws of a territory of the United
States, Puerto Rico, Guam, American
Samoa, or the U.S. Virgin Islands.
(d) Issuing institution means a person
authorized by the operator of a credit
card system to issue the operator’s
credit card.
(e) Operator of a credit card system
means any person doing business in the
United States that operates a system for
clearing and settling transactions in
which the operator’s credit card,
whether acting as a credit or debit card,
is used to purchase goods or services or
to obtain a cash advance. To fall within
this definition, the operator must also
have authorized another person
(whether located in the United States or
not) to be an issuing or acquiring
institution for the operator’s credit card.
(f) Operator’s credit card means a
credit card capable of being used in the
United States that:
(1) Has been issued by an issuing
institution; and
(2) Can be used in the operator’s
credit card system.
Subpart B—Programs
Definitions.
Refer to § 1010.100 of this Chapter for
general definitions not noted herein. To
the extent there is a differing definition
in § 1010.100 of this Chapter, the
definition in this Section is what
applies to Part 1028. Unless otherwise
indicated, for purposes of this Part:
(a) Acquiring institution means a
person authorized by the operator of a
credit card system to contract, directly
or indirectly, with merchants or other
persons to process transactions,
including cash advances, involving the
operator’s credit card.
(b) Credit card has the same meaning
as in 15 U.S.C. 1602(k). It includes
charge cards as defined in 12 CFR
226.2(15).
(c) Foreign bank means any
organization that is organized under the
laws of a foreign country; engages in the
business of banking; is recognized as a
bank by the bank supervisory or
monetary authority of the country of its
organization or the country of its
principal banking operations; and
receives deposits in the regular course
of its business. For purposes of this
definition:
(1) The term foreign bank includes a
branch of a foreign bank in a territory
of the United States, Puerto Rico, Guam,
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§ 1028.200
General.
Operators of credit card systems are
subject to the program requirements set
forth and cross referenced in this
subpart. Operators of credit card
systems should also refer to Subpart B
of Part 1010 of this Chapter for program
requirements contained in that subpart
which apply to operators of credit card
systems.
§ 1028.210 Anti-money laundering
programs for operators of credit card
systems.
(a) Anti-money laundering program
requirement. Effective July 24, 2002,
each operator of a credit card system
shall develop and implement a written
anti-money laundering program
reasonably designed to prevent the
operator of a credit card system from
being used to facilitate money
laundering and the financing of terrorist
activities. The program must be
approved by senior management.
Operators of credit card systems must
make their anti-money laundering
programs available to the Department of
the Treasury or the appropriate Federal
regulator for review.
(b) Minimum requirements. At a
minimum, the program must:
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(1) Incorporate policies, procedures,
and internal controls designed to ensure
the following:
(i) That the operator does not
authorize, or maintain authorization for,
any person to serve as an issuing or
acquiring institution without the
operator taking appropriate steps, based
upon the operator’s money laundering
or terrorist financing risk assessment, to
guard against that person issuing the
operator’s credit card or acquiring
merchants who accept the operator’s
credit card in circumstances that
facilitate money laundering or the
financing of terrorist activities;
(ii) For purposes of making the risk
assessment required by paragraph
(b)(1)(i) of this section, the following
persons are presumed to pose a
heightened risk of money laundering or
terrorist financing when evaluating
whether and under what circumstances
to authorize, or to maintain
authorization for, any such person to
serve as an issuing or acquiring
institution:
(A) A foreign shell bank that is not a
regulated affiliate, as those terms are
defined in § 1010.605(g) and (n) of this
Chapter;
(B) A person appearing on the
Specially Designated Nationals List
issued by Treasury’s Office of Foreign
Assets Control;
(C) A person located in, or operating
under a license issued by, a jurisdiction
whose government has been identified
by the Department of State as a sponsor
of international terrorism under 22
U.S.C. 2371;
(D) A foreign bank operating under an
offshore banking license, other than a
branch of a foreign bank if such foreign
bank has been found by the Board of
Governors of the Federal Reserve
System under the Bank Holding
Company Act (12 U.S.C. 1841, et seq.)
or the International Banking Act (12
U.S.C. 3101, et seq.) to be subject to
comprehensive supervision or
regulation on a consolidated basis by
the relevant supervisors in that
jurisdiction;
(E) A person located in, or operating
under a license issued by, a jurisdiction
that has been designated as
noncooperative with international antimoney laundering principles or
procedures by an intergovernmental
group or organization of which the
United States is a member, with which
designation the United States
representative to the group or
organization concurs; and
(F) A person located in, or operating
under a license issued by, a jurisdiction
that has been designated by the
Secretary of the Treasury pursuant to 31
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U.S.C. 5318A as warranting special
measures due to money laundering
concerns;
(iii) That the operator is in
compliance with all applicable
provisions of subchapter II of chapter 53
of title 31, United States Code and this
chapter;
(2) Designate a compliance officer
who will be responsible for assuring
that:
(i) The anti-money laundering
program is implemented effectively;
(ii) The anti-money laundering
program is updated as necessary to
reflect changes in risk factors or the risk
assessment, current requirements of this
chapter, and further guidance issued by
the Department of the Treasury; and
(iii) Appropriate personnel are trained
in accordance with paragraph (b)(3) of
this section;
(3) Provide for education and training
of appropriate personnel concerning
their responsibilities under the program;
and
(4) Provide for an independent audit
to monitor and maintain an adequate
program. The scope and frequency of
the audit shall be commensurate with
the risks posed by the persons
authorized to issue or accept the
operator’s credit card. Such audit may
be conducted by an officer or employee
of the operator, so long as the reviewer
is not the person designated in
paragraph (b)(2) of this section or a
person involved in the operation of the
program.
Subpart C—Reports Required To Be
Made by Operators of Credit Card
Systems
§ 1028.300
General.
Operators of credit card systems are
subject to the reporting requirements set
forth and cross referenced in this
subpart. Operators of credit card
systems should also refer to Subpart C
of Part 1010 of this Chapter for reporting
requirements contained in that subpart
which apply to operators of credit card
systems.
§ 1028.310
General.
Operators of credit card systems are
subject to the recordkeeping
requirements set forth and cross
referenced in this subpart. Operators of
credit card systems should also refer to
Subpart D of Part 1010 of this Chapter
for recordkeeping requirements
contained in that subpart which apply
to operators of credit card systems.
§ 1028.410
Recordkeeping.
Refer to § 1010.410 of this Chapter.
Subpart E—Special Information
Sharing Procedures To Deter Money
Laundering and Terrorist Activity
§ 1028.500
General.
Operators of credit card systems are
subject to the special information
sharing procedures to deter money
laundering and terrorist activity
requirements set forth and cross
referenced in this subpart. Operators of
credit card systems should also refer to
Subpart E of Part 1010 of this Chapter
for special information sharing
procedures to deter money laundering
and terrorist activity contained in that
subpart which apply to operators of
credit card systems.
§ 1028.520 Special information sharing
procedures to deter money laundering and
terrorist activity for operators of credit card
systems.
(a) Refer to § 1010.520.
(b) [Reserved]
§ 1028.530
[Reserved]
§ 1028.540 Voluntary information sharing
among financial institutions.
(a) Refer to § 1010.540 of this Chapter.
(b) [Reserved]
[Reserved]
§ 1028.320
§ 1028.400
[Reserved]
§ 1028.315
Subpart D—Records Required To Be
Maintained By Operators of Credit
Card Systems
[Reserved]
§ 1028.330 Reports relating to currency in
excess of $10,000 received in a trade or
business.
Refer to § 1010.330 of this Chapter for
rules regarding the filing of reports
relating to currency in excess of $10,000
received by operators of credit card
systems.
PO 00000
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Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Rules and Regulations
Subpart F—Special Standards of
Diligence; Prohibitions; and Special
Measures for Operators of Credit Card
Systems
§ 1028.600
[Reserved]
§ 1028.610
[Reserved]
§ 1028.620
[Reserved]
§ 1028.630
[Reserved]
§ 1028.640
[Reserved]
§ 1028.670
[Reserved]
PARTS 1029–1099 [RESERVED]
Dated: October 7, 2010.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement
Network.
[FR Doc. 2010–25914 Filed 10–25–10; 8:45 am]
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65879
Agencies
[Federal Register Volume 75, Number 206 (Tuesday, October 26, 2010)]
[Rules and Regulations]
[Pages 65806-65879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-25914]
[[Page 65805]]
-----------------------------------------------------------------------
Part III
Department of the Treasury
-----------------------------------------------------------------------
Financial Crimes Enforcement Network
-----------------------------------------------------------------------
31 CFR Part 103
31 CFR Chapter X
-----------------------------------------------------------------------
Transfer and Reorganization of Bank Secrecy Act Regulations; Final Rule
Federal Register / Vol. 75 , No. 206 / Tuesday, October 26, 2010 /
Rules and Regulations
[[Page 65806]]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 103
31 CFR Chapter X
RIN 1506-AA92
Transfer and Reorganization of Bank Secrecy Act Regulations
AGENCY: Financial Crimes Enforcement Network (FinCEN), Department of
the Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: FinCEN is issuing this final rule to move the Bank Secrecy Act
(BSA) regulations to a new chapter in the Code of Federal Regulations
(CFR). The new chapter contains the BSA regulations, which are
generally reorganized by financial industry. Moving the BSA regulations
to a new chapter and organizing the chapter by financial industry
creates a user-friendly way to find regulations applicable to a
particular financial industry. This new organization within the new
chapter also allows for the renumbering of the BSA regulations in a
manner that makes it easier to find regulatory requirements than under
the numbering system currently used in the existing regulations. FinCEN
also makes minor technical changes to the BSA regulations such as
updating mailing addresses and points of contact.
DATES: Effective Date: March 1, 2011.
FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs
Division, FinCEN (800) 949-2732 and select option 6.
SUPPLEMENTARY INFORMATION:
I. Background
On November 7, 2008, FinCEN published a proposal to transfer and
reorganize its regulations as part of an ongoing effort to increase the
efficiency and effectiveness of its regulatory oversight.\1\ Moving the
regulations to a new chapter within Title 31 provides FinCEN with the
opportunity to restructure its regulations so that they can readily be
identified as being specific to a particular regulated industry or as
being generally applicable to all regulated industries or covered
persons. FinCEN received eight public comments on the Chapter X NPRM,
which will be discussed below in the Section-by-Section Analysis.
---------------------------------------------------------------------------
\1\ See 73 FR 66414 (November 7, 2008) (Transfer and
Reorganization of Bank Secrecy Act Regulations) (referred to herein
as the ``Chapter X NPRM'').
---------------------------------------------------------------------------
Making the regulatory obligations more clear in their structure and
more readily accessible to regulated institutions facilitates
compliance and thereby advances the purposes of the BSA. Additionally,
the transfer of FinCEN's regulations allows for better integration with
the government-wide eRulemaking program.
Since publication of the Chapter X NPRM, FinCEN has further
improved public access to its rulemaking and non-rulemaking documents.
On November 17, 2009, FinCEN issued a Final Rule amending the
procedures for publicly issuing an administrative ruling relating to
the BSA.\2\ Since the effective date of that Final Rule (December 17,
2009), FinCEN posts administrative rulings with precedential value on
its Web site, rather than publishing them in the Federal Register.
FinCEN believes that posting administrative rulings with precedential
value on FinCEN's Web site will make those rulings easier to find. All
administrative rulings with precedential value will be available by
mail to any person who makes a written request that specifically
identifies the administrative ruling that is sought.
---------------------------------------------------------------------------
\2\ See 74 FR 59096 (November 17, 2009) (Final Rule for amending
the Bank Secrecy Act Regulations Administrative Ruling System)
(hereinafter, the ``Administrative Ruling Final Rule'').
---------------------------------------------------------------------------
Subsequent to the publication of the Chapter X NPRM, FinCEN
published several final rules, e.g., the Administrative Ruling Final
Rule. All final rules that were published in the timeframe between the
Chapter X NPRM and this Final Rule have been incorporated into FinCEN's
regulations in the Chapter X format.
II. Effective Date
The effective date of this Final Rule will be March 1, 2011.
III. Section-by-Section Analysis
A. Technical Corrections
In the Chapter X NPRM, FinCEN proposed to make non-substantive
technical corrections to the BSA implementing regulations. These
corrections included updating titles and offices to represent
organizational changes within the Treasury Department and FinCEN,
changing mailing addresses, and updating names of Federal government
agencies. The comments that FinCEN received relating to the technical
corrections were comments or suggestions that would substantively alter
the BSA. Because such comments are outside the scope of this
rulemaking, FinCEN did not make any changes on the basis of those
comments.
On April 14, 2010, FinCEN issued a final rule to include mutual
funds within the general definition of ``financial institution'' in the
BSA regulations.\3\ In that rule, FinCEN finalized two definitions of
the term ``mutual fund,'' one for the general definition section and
the other for the anti-money laundering program rules for mutual
funds.\4\ Although the two definitions contain minor textual
differences, they were not intended to and do not have substantive
distinctions. Similarly, there are textual differences between those
two definitions and the definition of mutual fund used for the
regulations implementing the Customer Identification Program
requirements for mutual funds. Again, the textual differences were not
intended to and do not signify substantive distinctions. Therefore, in
order to be consistent and eliminate the textual anomalies within the
various definitions for mutual fund that are currently within Part 103,
the text of the definition of mutual fund from the Part 103 Customer
Identification Programs for Mutual Funds will now be used as the
definition of mutual fund in Chapter X for all purposes, except as
provided in the regulatory text for the special measures provisions of
Subpart F of the General Provisions Part.
---------------------------------------------------------------------------
\3\ See 75 FR 19241 (April 14, 2010) (Final Rule defining Mutual
Funds as Financial Institutions).
\4\ See Id.
---------------------------------------------------------------------------
B. Restructuring and Numbering Logic
As discussed in the Chapter X NPRM, FinCEN is restructuring its
regulations to make them more accessible for covered individuals and
financial institutions. Chapter X is comprised of a General Provisions
Part and separate financial institution specific Parts for those
financial institutions subject to FinCEN regulations. The General
Provisions Part (Part 1010) contains regulatory requirements that apply
to more than one type of financial institution, and in some cases,
individuals. The financial institution specific Parts contain
regulatory requirements specific to a particular type of financial
institution. Each Part, whether general or specific, contains similarly
titled and ordered Subparts. For consistency across all Parts and to
facilitate ease of reference, FinCEN has renumbered its regulations so
that the same numbering format is used for the regulations in each
Subpart.
[[Page 65807]]
The comments received by FinCEN were generally supportive of
FinCEN's effort to organize the BSA implementing regulations into an
easier to follow format. Some commenters noted that the renumbering
format could serve to minimize any misunderstanding regarding whether a
particular industry has a specific regulatory requirement.
One commenter noted the structure of Chapter X is problematic
because users would be required to refer to both the industry-specific
Part, as well as the General Provisions Part to determine regulatory
requirements. Some commenters noted that a potential problem with the
structure of Chapter X and the location of the definitions is that it
would require users to flip back and forth between Parts to confirm
both the definitions and requirements. While there will be some cross-
referencing between Parts for financial institutions, FinCEN concluded
that the structure of Chapter X is best for identifying the current
regulatory requirements for each type of financial institution and any
future regulatory changes.
Some commenters requested that all definitions be placed in the
General Provisions Part, thus limiting the need for cross-referencing.
FinCEN considered this suggestion while drafting this Final Rule but
ultimately found the approach unworkable because it created large sub-
categories of definitions that diluted the contextual distinction that
applies to certain defined terms. For example, the definition for
``account,'' as one commenter noted, has several different meanings.
The reason for these definitional differences lies not only with the
products and services the covered institution offers, but also with the
specific regulatory obligations involved. Placing all definitions of
``account'' in the General Definitions Subpart of Part 1010, as
requested by the commenter, would require several sub-definitions to
reference the applicable regulations. So in the case of the term
``account,'' by removing ``account'' from the definition section in the
rules implementing Section 312 of the USA PATRIOT Act and placing them
in the General Definitions Subpart of Part 1010, the needed context as
to why the definition is different is lost. While there may be some
cross-referencing of definitions with the implementation of Chapter X,
keeping the definitional structure as proposed helps provide context as
to why words are defined differently.
Many of the comments FinCEN received on the Chapter X NPRM were
substantive in nature or suggested changes that would alter industry
regulatory requirements. One commenter suggested removing dates in the
regulations that were perceived as no longer relevant, such as the
dates in the Civil Penalties provisions of the previous 31 CFR 103.57.
While some dates in the regulations appear to be so long-standing as to
be obsolete, they still represent substantive differences in compliance
obligations and corresponding penalties. All comments to the Chapter X
NPRM that requested a substantive change, or would result in a
substantive change, are considered outside the scope of this rulemaking
and have not been incorporated into this Final Rule.
C. Removal of Appendices to 31 CFR Part 103
In the Chapter X NPRM, FinCEN did not publish the Appendices in 31
CFR Part 103. In the preamble to the Chapter X NPRM, FinCEN proposed to
publish those Appendices that would be transferred to Chapter X in a
subsequent notice of proposed rulemaking. After a further review of the
Appendices, FinCEN determined that it was not necessary to issue a
second notice of proposed rulemaking for the Appendices located in 31
CFR Part 103. This is because, as described in more detail below,
FinCEN has determined that none of the Appendices will need to be
included in Chapter X; instead, the material contained in the
Appendices that is still required by the regulations will be made
available on FinCEN's Web site. The following is a description of the
disposition of each 31 CFR Part 103 Appendix:
Appendix A to 31 CFR Part 103
As part of the Administrative Ruling Final Rule, certain
administrative rulings contained in Appendix A to 31 CFR Part 103
(proposed as Appendix D to Chapter X) have been posted on FinCEN's Web
site and others were formally rescinded.\5\ As stated in the preamble
to the Administrative Ruling Final Rule, some of the administrative
rulings included in Appendix A to 31 CFR Part 103 remain FinCEN's
interpretation of the applicable rules and maintain their precedential
value; therefore, those rulings have been posted to the FinCEN Web
site. Because FinCEN has chosen to post administrative rulings on its
public Web site, FinCEN will not be publishing the proposed Appendix D
to Chapter X in this Final Rule. In the Administrative Ruling Final
Rule, FinCEN did not indicate whether Administrative Ruling 88-2 would
be posted on the FinCEN public Web site or rescinded. Administrative
Ruling 88-2 has been posted on the FinCEN public Web site. The
disposition of this particular ruling was inadvertently omitted from
the Administrative Ruling Final Rule.
---------------------------------------------------------------------------
\5\ See 74 FR 59096, 59097 (November 17, 2009). See also https://www.fincen.gov/statutes_regs/rulings/.
---------------------------------------------------------------------------
Appendix B to 31 CFR Part 103
The requirement for a financial institution to provide FinCEN with
the certification currently found in Appendix B to 31 CFR Part 103
(Certification for Purposes of Section 314(b) of the USA PATRIOT Act
and 31 CFR 103.110) prior to sharing information under 31 CFR 103.110
(new 31 CFR 1010.540) was replaced in September 2002 with a requirement
to provide notice to FinCEN prior to such information sharing.\6\
Although the certification requirement was replaced with a notice
requirement, the Certification contained at Appendix B to 31 CFR Part
103 was not removed from the CFR. FinCEN's removal of the Certification
in this Final Rule is a technical correction, rather than a substantive
change. The Certification contained at Appendix B to 31 CFR Part 103
will not be transferred to Chapter X and the Certification will not be
made available on FinCEN's public Web site. As indicated above,
financial institutions providing notice to FinCEN prior to sharing
information under new 31 CFR 1010.540 shall continue to do so using the
notice that is currently provided on FinCEN's public Web site.\7\
---------------------------------------------------------------------------
\6\ See 67 FR 60579, 60580 (September 26, 2002) (Final Rule for
Special Information Sharing Procedures to Deter Money Laundering and
Terrorist Activity).
\7\ See https://www.fincen.gov/statutes_regs/patriot/section314b.html.
---------------------------------------------------------------------------
Appendix C to 31 CFR Part 103
For similar reasons, FinCEN is removing Appendix C to 31 CFR Part
103 (proposed Appendix E to Chapter X). The interpretative guidance
contained within Appendix C to 31 CFR Part 103 are posted on FinCEN's
public Web site and will not be published in the CFR.\8\
---------------------------------------------------------------------------
\8\ See https://www.fincen.gov/statutes_regs/guidance/2000_2004.html.
---------------------------------------------------------------------------
Appendix A to Subpart H of 31 CFR Part 103
Appendix A to Subpart H of 31 CFR Part 103 contains the Notice for
Purposes of Subsection 314(b) of the USA Patriot Act and 31 CFR
103.110. This Notice is currently available on the FinCEN public Web
site and will not be published in the Code of Federal Regulations as
part of Chapter X.
[[Page 65808]]
Financial institutions that are required to provide notice to FinCEN
for purposes of the new 31 CFR 1010.540 can access the notice via the
FinCEN Web site. This notice will be made available by mail to any
financial institution that specifically requests a paper copy of the
notice.
Appendix A and Appendix B to Subpart I of 31 CFR Part 103
FinCEN is also removing Appendix A to Subpart I of 31 CFR Part 103
and Appendix B to Subpart I of 31 CFR Part 103.\9\ The forms contained
in Appendix A to Subpart I of 31 CFR Part 103 and Appendix B to Subpart
I of 31 CFR Part 103 will be provided to the public via FinCEN's Web
site in a manner that will be more easily accessible and usable than
being printed in the CFR.
---------------------------------------------------------------------------
\9\ Appendix A to Subpart I of 31 CFR Part 103 (proposed as
Appendix B to Chapter X) is the Certification Regarding
Correspondent Accounts. Appendix B to Subpart I of 31 CFR Part 103
(proposed as Appendix C to Chapter X) is the Recertification
Regarding Correspondent Accounts for Foreign Banks. These Appendices
will not appear in Chapter X.
---------------------------------------------------------------------------
D. Chapter X Distribution Table
For convenience, FinCEN is providing a table summarizing the
distribution of the 31 CFR Part 103 provisions to the final layout of
Chapter X as follows:
Distribution Table
------------------------------------------------------------------------
31 CFR Parts 1000-1099 (Chapter
31 CFR Part 103 Section X) Section
------------------------------------------------------------------------
103.11................................. 1010.100.
103.12................................. 1010.301.
103.15(a)-(g).......................... 1024.320(a)-(g).
103.16(a).............................. Deleted.
103.16(b)-(i).......................... 1025.320(a)-(h).
103.17(a)-(h).......................... 1026.320(a)-(h).
103.18(a)-(f).......................... 1020.320(a)-(f).
103.19(a)-(h).......................... 1023.320(a)-(h).
103.20(a)-(f).......................... 1022.320(a)-(f).
103.21(a)-(g).......................... 1021.320(a)-(g).
103.22(a).............................. Deleted.
103.22(b)(1)........................... 1010.311.
103.22(b)(2)(i)-(iii).................. 1021.311(a)-(c).
103.22(c)(1)&(2)....................... 1010.313(a)&(b).
103.22(c)(3)........................... 1021.313.
103.22(d)(1) Sentences 1 and 3......... 1020.315(a).
103.22(d)(1) Sentence 2................ 1010.315.
103.22(d)(2)-(9)....................... 1020.315(b)-(i).
103.23(a)-(d).......................... 1010.340(a)-(d).
103.24................................. 1010.350.
103.25(a)-(e).......................... 1010.360(a)-(e).
103.26(a)-(d).......................... 1010.370(a)-(d).
103.27(a)(1)........................... 1010.306(a)(1).
103.27(a)(2)........................... Deleted.
103.27(a)(3)&(4)....................... 1010.306(a)(2)&(3).
103.27(b)-(e).......................... 1010.306(b)-(e).
103.28................................. 1010.312.
103.29(a)-(c).......................... 1010.415(a)-(c).
103.30(a)-(c).......................... 1010.330(a)-(c).
103.30(d)(1)(i)-(iv)................... 1021.330(a)-(d).
103.30(d)(2)........................... 1010.330(d)(2).
103.30(d)(3)........................... 1010.330(d)(1).
103.30(e).............................. 1010.330(e).
103.31................................. 1010.401.
103.32................................. 1010.420.
103.33(a)-(d).......................... 1010.410(a)-(d).
103.33(e).............................. 1020.410(a).
103.33(f)&(g).......................... 1010.410(e)&(f).
103.34(a)&(b).......................... 1020.410(b)&(c).
103.35(a)&(b).......................... 1023.410(a)&(b).
103.36(a)-(c).......................... 1021.410(a)-(c).
103.37(a)-(c).......................... 1022.410(a)-(c).
103.38(a)-(d).......................... 1010.430(a)-(d).
103.39................................. 1010.440.
103.41(a)-(f).......................... 1022.380(a)-(f).
103.51................................. 1010.980.
103.52(a)&(b).......................... 1010.940(a)&(b).
103.53(a)-(f).......................... 1010.950(a)-(f).
103.54................................. 1010.960.
103.55(a)-(c).......................... 1010.970(a)-(c).
103.56(a)-(g).......................... 1010.810(a)-(g).
103.57(a)-(h).......................... 1010.820(a)-(h).
103.58................................. 1010.830.
103.59(a)-(d).......................... 1010.840(a)-(d).
103.60(a)-(c).......................... 1010.850(a)-(c).
103.61................................. 1010.920.
103.62(a)-(c).......................... 1010.930(a)-(c).
[[Page 65809]]
103.63(a)-(c).......................... 1010.314(a)-(c).
103.64(a).............................. 1021.210(b).
103.64(b)(1)........................... 1021.100(a).
103.64(b)(2)........................... 1021.100(b).
103.64(b)(3)........................... 1021.100(c).
103.64(b)(4)........................... 1021.100(d).
103.64(b)(5)........................... 1021.100(e).
103.71................................. 1010.911.
103.72(a)-(c).......................... 1010.912(a)-(c).
103.73(a)&(b).......................... 1010.913(a)&(b).
103.74(a)-(c).......................... 1010.914(a)-(c).
103.75(a)-(c).......................... 1010.915(a)-(c).
103.76................................. 1010.916.
103.77................................. 1010.917.
103.80................................. 1010.710.
103.81(a)-(e).......................... 1010.711(a)-(e).
103.82................................. 1010.712.
103.83(a)&(b).......................... 1010.713(a)&(b).
103.84................................. 1010.714.
103.85................................. 1010.715.
103.86(a)-(d).......................... 1010.716(a)-(d).
103.87(a)&(b).......................... 1010.717(a)&(b).
103.90(a).............................. 1010.505(b).
103.90(b).............................. 1010.505(c).
103.90(c).............................. 1010.505(a).
103.90(d).............................. 1010.505(d).
103.100(a)(1).......................... Deleted.
103.100(a)(2).......................... 1010.520(a)(1).
103.100(a)(3).......................... Deleted.
103.100(a)(4).......................... 1010.520(a)(2).
103.100(b)............................. 1010.520(b).
103.110(a)(1).......................... Deleted.
103.110(a)(2)&(3)...................... 1010.540(a)(1)&(2).
103.110(b)-(d)......................... 1010.540(b)-(d).
103.120(a)(1).......................... 1020.100(d)(1).
1023.100(e)(1).
103.120(a)(2).......................... 1010.100(r).
103.120(a)(3).......................... 1010.100(tt).
103.120(a)(4).......................... Deleted.
103.120(b)............................. 1020.210.
103.120(c)(1)&(2)...................... 1023.210(a)&(b).
1026.210(b)(1)&(2).
103.120(d)............................. 1021.210(a).
103.121(a)(1).......................... 1020.100(a).
103.121(a)(2).......................... 1020.100(b).
103.121(a)(3).......................... 1020.100(c).
103.121(a)(4).......................... Deleted.
103.121(a)(5).......................... 1020.100(d)(2).
103.121(a)(6).......................... 1010.100(yy).
103.121(a)(7).......................... 1010.100(iii).
103.121(a)(8).......................... 1010.100(iii).
103.121(b)-(d)......................... 1020.220(a)-(c).
103.122(a)(1).......................... 1023.100(a).
103.122(a)(2).......................... 1023.100(b).
103.122(a)(3).......................... 1023.100(c).
103.122(a)(4).......................... 1023.100(d).
103.122(a)(5).......................... Deleted.
103.122(a)(6).......................... 1023.100(e).
103.122(a)(7).......................... Deleted.
103.122(a)(8).......................... Deleted.
103.122(a)(9).......................... Deleted.
103.122(b)-(d)......................... 1023.220(a)-(c).
103.123(a)(1).......................... 1026.100(a).
103.123(a)(2).......................... Deleted.
103.123(a)(3).......................... 1026.100(b).
103.123(a)(4).......................... 1026.100(c).
103.123(a)(5).......................... 1026.100(d).
103.123(a)(6).......................... Deleted.
103.123(a)(7).......................... 1026.100(e).
103.123(a)(8).......................... 1026.100(f).
103.123(a)(9).......................... 1026.100(g).
103.123(a)(10)......................... 1026.100(h).
[[Page 65810]]
103.123(a)(11)......................... Deleted.
103.123(a)(12)......................... Deleted.
103.123(a)(13)......................... Deleted.
103.123(b)-(d)......................... 1026.220(a)-(c).
103.125(a)-(e)......................... 1022.210(a)-(e).
103.130(a)............................. Deleted.
103.130(b)&(c)......................... 1024.210(a)&(b).
103.131(a)(1).......................... 1024.100(a).
103.131(a)(2).......................... 1024.100(c).
103.131(a)(3).......................... 1010.100(r).
103.131(a)(4).......................... 1024.100(d).
103.131(a)(5).......................... 1010.100(gg).
103.131(a)(6).......................... 1010.100(iii).
103.131(a)(7).......................... 1010.100(yy).
103.131(a)(8).......................... 1010.100(iii).
103.131(b)-(d)......................... 1024.220(a)-(c).
103.135(a)(1).......................... 1028.100(e).
103.135(a)(2).......................... 1028.100(d).
103.135(a)(3).......................... 1028.100(a).
103.135(a)(4).......................... 1028.100(f).
103.135(a)(5).......................... 1028.100(b).
103.135(a)(6).......................... 1028.100(c).
103.135(b)&(c)......................... 1028.210(a)&(b).
103.137(a)(1).......................... 1025.100(a).
103.137(a)(2).......................... Deleted.
103.137(a)(3).......................... Deleted.
103.137(a)(4).......................... 1025.100(b).
103.137(a)(5).......................... 1025.100(c).
103.137(a)(6).......................... 1025.100(d).
103.137(a)(7).......................... 1025.100(e).
103.137(a)(8).......................... 1025.100(f).
103.137(a)(9).......................... 1025.100(g).
103.137(a)(10)......................... 1025.100(h).
103.137(a)(11)......................... Deleted.
103.137(a)(12)......................... Deleted.
103.137(b)-(e)......................... 1025.210(a)-(d).
103.140(a)(1).......................... 1027.100(a).
103.140(a)(2).......................... 1027.100(b).
103.140(a)(3).......................... 1027.100(c).
103.140(a)(4).......................... 1027.100(d).
103.140(a)(5).......................... 1027.100(e).
103.140(a)(6).......................... Deleted.
103.140(a)(7).......................... 1027.100(f).
103.140(b)-(d)......................... 1027.210(a)-(c).
103.170(a)-(d)......................... 1010.205(a)-(d).
103.175(a)............................. 1010.100(c).
103.175(b)............................. 1010.605(a).
103.175(c)............................. 1010.605(b).
103.175(d)............................. 1010.605(c).
103.175(e)............................. 1010.605(d).
103.175(f)............................. 1010.605(e).
103.175(g)............................. Deleted.
103.175(h)............................. 1010.605(f).
103.175(i)............................. 1010.605(g).
103.175(j)............................. 1010.605(h).
103.175(k)............................. 1010.605(i).
103.175(l)............................. 1010.605(j).
103.175(m)............................. 1010.605(k).
103.175(n)............................. 1010.605(l).
103.175(o)............................. 1010.605(m).
103.175(p)............................. 1010.605(n).
103.175(q)............................. 1010.605(o).
103.175(r)............................. 1010.605(p).
103.175(s)............................. Deleted.
103.175(t)............................. Deleted.
103.176(a)-(g)......................... 1010.610(a)-(g).
103.177(a)-(f)......................... 1010.630(a)-(f).
103.178(a)-(e)......................... 1010.620(a)-(e).
103.185(a)-(f)......................... 1010.670(a)-(f).
103.186(a)(1).......................... 1010.651(a)(2).
103.186(a)(2).......................... 1010.651(a)(3).
103.186(a)(3).......................... 1010.651(a)(1).
[[Page 65811]]
103.186(b)............................. 1010.651(b).
103.187(a)(1).......................... 1010.652(a)(2).
103.187(a)(2).......................... 1010.652(a)(3).
103.187(a)(3).......................... 1010.652(a)(4).
103.187(a)(4).......................... 1010.652(a)(1).
103.187(b)............................. 1010.652(b).
103.188(a)(1).......................... 1010.653(a)(1).
103.188(a)(2).......................... 1010.653(a)(2).
103.188(a)(3).......................... 1010.653(a)(3).
103.188(a)(4).......................... 1010.653(a)(4).
103.188(b)............................. 1010.653(b).
103.192(a)(1).......................... 1010.654(a)(1).
103.192(a)(2).......................... 1010.654(a)(2).
103.192(a)(3).......................... 1010.654(a)(3).
103.192(a)(4).......................... 1010.654(a)(4).
103.192(b)............................. 1010.654(b).
103.193(a)(1).......................... 1010.655(a)(1).
103.193(a)(2).......................... 1010.655(a)(2).
103.193(a)(3).......................... 1010.655(a)(3).
103.193(a)(4).......................... 1010.655(a)(4).
103.193(b)............................. 1010.655(b).
Appendix A to Subpart H................ Deleted. Notice is available on
FinCEN's public Web site.
Appendix A to Subpart I................ Deleted. Certification will be
available on the FinCEN public
Web site.
Appendix B to Subpart I................ Deleted. Re-certification will
be available on the FinCEN
public Web site.
Appendix A to Part 103................. Deleted. Administrative Rulings
with precedential value have
been posted on the FinCEN
public Web site.
Appendix B to Part 103................. Deleted. Certification will no
longer be available.
Appendix C to Part 103................. Deleted. Interpretive guidance
will be posted on the FinCEN
public Web site.
------------------------------------------------------------------------
IV. Regulatory Matters
A. Executive Order 12866
It has been determined that this rulemaking is not a significant
regulatory action for purposes of Executive Order 12866. Accordingly, a
regulatory impact analysis is not required.
B. Unfunded Mandates Reform Act of 1995
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 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 and has concluded that on
balance the rule provides the most cost-effective and least burdensome
alternative to achieve the objectives of the rule.
C. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (RFA) (5 U.S.C. 602 et
seq.), FinCEN certifies that this final regulation likely will not have
a significant economic impact on a substantial number of small
entities. The regulatory changes in this final rule merely restructure
and re-codify existing regulations and do not alter current regulatory
obligations.
FinCEN believes the costs that may arise as a result of
restructuring these regulations will be confined to training,
publication and computer programming. The new regulatory structure will
require financial institution compliance personnel to be retrained to
assure familiarity with the new numbering format but does not require
changes to program, recordkeeping, or reporting requirements. FinCEN
has attempted to mitigate any substantial costs of retraining by
providing a Distribution Table.
Publication costs incurred to reproduce informational materials
supplied by financial institutions to customers and the public should
be minimized by the time interval afforded between the proposed rule,
analysis and publication of this final rule.
FinCEN's analysis of the small entities that are subject to this
regulation indicates that the vast majority of such entities file paper
reports with FinCEN. These entities should incur no additional filing
costs because they will continue to obtain the most current copy of the
form available on the FinCEN Web site to file a report. For financial
institutions that file electronically using computer programs, the
citation to Chapter X should not have an effect on completion of the
required fields contained in FinCEN forms. As an example, FinCEN's Form
104, the Currency Transaction Report, will require the same completion
of each field in the same order. While the underlying regulatory
citations may be changing, the completion of FinCEN forms will not.
D. Paperwork Reduction Act
This regulation contains no new information collection requirements
subject to review and approval by the Office of Management and Budget
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d) et seq.).
The information collection requirements for the Bank Secrecy Act,
currently codified at 31 CFR Part 103, were previously approved by the
Office of Management and Budget under OMB Control numbers 1506-0001
through 1506-0046. Under the Paperwork Reduction Act, an agency may not
conduct or sponsor and a person is not required to respond to a
collection of information
[[Page 65812]]
unless it displays a valid OMB control number.
List of Subjects in 31 CFR Part 103 and 31 CFR Parts 1010 and 1020
Through 1028
Administrative practice and procedure, Banks, banking, Brokers,
Currency, Foreign banking, Foreign currencies, Gambling,
Investigations, Penalties, Reporting and recordkeeping requirements,
Securities, Terrorism.
Department of the Treasury
31 CFR Chapter I
Authority and Issuance
0
For the reasons set forth above, under the authority of 12 U.S.C. 1829b
and 1951-1959; 31 U.S.C. 5311-5314, 5316-5332; title III, sec. 314,
Pub. L. 107-56, 115 Stat. 307, Part 103 of Title 31 of the Code of
Federal Regulations is removed.
Department of the Treasury
Financial Crimes Enforcement Network
31 CFR Chapter X
Authority and Issuance
0
For the reasons set forth above, Chapter X, consisting of parts 1000
through 1099, is added to Title 31 to read as follows:
CHAPTER X--FINANCIAL CRIMES ENFORCEMENT NETWORK, DEPARTMENT OF THE
TREASURY
PARTS 1000-1009 [RESERVED]
PART 1010--GENERAL PROVISIONS
Subpart A--General Definitions
Sec.
1010.100 General definitions.
Subpart B--Programs
1010.200 General.
1010.205 Exempted anti-money laundering programs for certain
financial institutions.
1010.210 Anti-money laundering programs.
1010.220 Customer identification program requirements.
Subpart C--Reports Required To Be Made
1010.300 General.
1010.301 Determination by the Secretary.
1010.305 [Reserved]
1010.306 Filing of reports.
1010.310 Reports of transactions in currency.
1010.311 Filing obligations for reports of transactions in currency.
1010.312 Identification required.
1010.313 Aggregation.
1010.314 Structured transactions.
1010.315 Exemptions for non-bank financial institutions.
1010.320 Reports of suspicious transactions.
1010.330 Reports relating to currency in excess of $10,000 received
in a trade or business.
1010.340 Reports of transportation of currency or monetary
instruments.
1010.350 Reports of foreign financial accounts.
1010.360 Reports of transactions with foreign financial agencies.
1010.370 Reports of certain domestic coin and currency transactions.
Subpart D--Records Required To Be Maintained
1010.400 General.
1010.401 Determination by the Secretary.
1010.405 [Reserved]
1010.410 Records to be made and retained by financial institutions.
1010.415 Purchases of bank checks and drafts, cashier's checks,
money orders and traveler's checks.
1010.420 Records to be made and retained by persons having financial
interests in foreign financial accounts.
1010.430 Nature of records and retention period.
1010.440 Person outside the United States.
Subpart E--Special Information Sharing Procedures To Deter Money
Laundering and Terrorist Activity
1010.500 General.
1010.505 Definitions.
1010.520 Information sharing between government agencies and
financial institutions.
1010.530 [Reserved]
1010.540 Voluntary information sharing among financial institutions.
Subpart F--Special Standards of Diligence; Prohibitions; and Special
Measures
1010.600 General.
Special Due Diligence for Correspondent Accounts and Private Banking
Accounts
1010.605 Definitions.
1010.610 Due diligence programs for correspondent accounts for
foreign financial institutions.
1010.620 Due diligence programs for private banking accounts.
1010.630 Prohibition on correspondent accounts for foreign shell
banks; records concerning owners of foreign banks and agents for
service of legal process.
1010.640 [Reserved]
Special Measures Under Section 311 of the USA Patriot Act and Law
Enforcement Access to Foreign Bank Records
1010.651 Special measures against Burma.
1010.652 Special measures against Myanmar Mayflower Bank and Asia
Wealth Bank.
1010.653 Special measures against Commercial Bank of Syria.
1010.654 Special measures against VEF Bank.
1010.655 Special measures against Banco Delta Asia.
1010.670 Summons or subpoena of foreign bank records; Termination of
correspondent relationship.
Subpart G--Administrative Rulings
1010.710 Scope.
1010.711 Submitting requests.
1010.712 Nonconforming requests.
1010.713 Oral communications.
1010.714 Withdrawing requests.
1010.715 Issuing rulings.
1010.716 Modifying or rescinding rulings.
1010.717 Disclosing information.
Subpart H--Enforcement; Penalties; and Forfeiture
1010.810 Enforcement.
1010.820 Civil penalty.
1010.830 Forfeiture of currency or monetary instruments.
1010.840 Criminal penalty.
1010.850 Enforcement authority with respect to transportation of
currency or monetary instruments.
Subpart I--Summons
1010.911 General.
1010.912 Persons who may issue summons.
1010.913 Contents of summons.
1010.914 Service of summons.
1010.915 Examination of witnesses and records.
1010.916 Enforcement of summons.
1010.917 Payment of expenses.
Subpart J--Miscellaneous
1010.920 Access to records.
1010.930 Rewards for informants.
1010.940 Photographic or other reproductions of Government
obligations.
1010.950 Availability of information.
1010.960 Disclosure.
1010.970 Exceptions, exemptions, and reports.
1010.980 Dollars as including foreign currency.
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314,
5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307.
Subpart A--General Definitions
Sec. 1010.100 General definitions.
When used in this chapter and in forms prescribed under this
chapter, where not otherwise distinctly expressed or manifestly
incompatible with the intent thereof, terms shall have the meanings
ascribed in this subpart. Terms applicable to a particular type of
financial institution or specific part or subpart of this chapter are
located in that part or subpart. Terms may have different meanings in
different parts or subparts.
(a) Accept. A receiving financial institution, other than the
recipient's financial institution, accepts a transmittal order by
executing the transmittal order. A recipient's financial institution
accepts a transmittal order by paying the recipient, by notifying the
recipient of the receipt of the order or by otherwise becoming
obligated to carry out the order.
(b) At one time. For purposes of Sec. 1010.340 of this part, a
person who
[[Page 65813]]
transports, mails, ships or receives; is about to or attempts to
transport, mail or ship; or causes the transportation, mailing,
shipment or receipt of monetary instruments, is deemed to do so ``at
one time'' if:
(1) That person either alone, in conjunction with or on behalf of
others;
(2) Transports, mails, ships or receives in any manner; is about to
transport, mail or ship in any manner; or causes the transportation,
mailing, shipment or receipt in any manner of;
(3) Monetary instruments;
(4) Into the United States or out of the United States;
(5) Totaling more than $10,000;
(6)(i) On one calendar day; or
(ii) If for the purpose of evading the reporting requirements of
Sec. 1010.340, on one or more days.
(c) Attorney General. The Attorney General of the United States.
(d) Bank. Each agent, agency, branch or office within the United
States of any person doing business in one or more of the capacities
listed below:
(1) A commercial bank or trust company organized under the laws of
any State or of the United States;
(2) A private bank;
(3) A savings and loan association or a building and loan
association organized under the laws of any State or of the United
States;
(4) An insured institution as defined in section 401 of the
National Housing Act;
(5) A savings bank, industrial bank or other thrift institution;
(6) A credit union organized under the law of any State or of the
United States;
(7) Any other organization (except a money services business)
chartered under the banking laws of any state and subject to the
supervision of the bank supervisory authorities of a State;
(8) A bank organized under foreign law;
(9) Any national banking association or corporation acting under
the provisions of section 25(a) of the Act of Dec. 23, 1913, as added
by the Act of Dec. 24, 1919, ch. 18, 41 Stat. 378, as amended (12
U.S.C. 611-32).
(e) Bank Secrecy Act. The Currency and Foreign Transactions
Reporting Act, its amendments, and the other statutes relating to the
subject matter of that Act, have come to be referred to as the Bank
Secrecy Act. These statutes are codified at 12 U.S.C. 1829b, 12 U.S.C.
1951-1959, 18 U.S.C. 1956, 18 U.S.C. 1957, 18 U.S.C. 1960, and 31
U.S.C. 5311-5314 and 5316-5332 and notes thereto.
(f) Beneficiary. The person to be paid by the beneficiary's bank.
(g) Beneficiary's bank. The bank or foreign bank identified in a
payment order in which an account of the beneficiary is to be credited
pursuant to the order or which otherwise is to make payment to the
beneficiary if the order does not provide for payment to an account.
(h) Broker or dealer in securities. A broker or dealer in
securities, registered or required to be registered with the Securities
and Exchange Commission under the Securities Exchange Act of 1934,
except persons who register pursuant to section 15(b)(11) of the
Securities Exchange Act of 1934.
(i) Business day. As used in this chapter with respect to banks,
business day means that day, as normally communicated to its depository
customers, on which a bank routinely posts a particular transaction to
its customer's account.
(j) Commodity. Any good, article, service, right, or interest
described in section 1a(4) of the Commodity Exchange Act (``CEA''), 7
U.S.C. 1a(4).
(k) Common carrier. Any person engaged in the business of
transporting individuals or goods for a fee who holds himself out as
ready to engage in such transportation for hire and who undertakes to
do so indiscriminately for all persons who are prepared to pay the fee
for the particular service offered.
(l) Contract of sale. Any sale, agreement of sale, or agreement to
sell as described in section 1a(7) of the CEA, 7 U.S.C. 1a(7).
(m) Currency. The coin and paper money of the United States or of
any other country that is designated as legal tender and that
circulates and is customarily used and accepted as a medium of exchange
in the country of issuance. Currency includes U.S. silver certificates,
U.S. notes and Federal Reserve notes. Currency also includes official
foreign bank notes that are customarily used and accepted as a medium
of exchange in a foreign country.
(n) Deposit account. Deposit accounts include transaction accounts
described in paragraph (ccc) of this section, savings accounts, and
other time deposits.
(o) Domestic. When used herein, refers to the doing of business
within the United States, and limits the applicability of the provision
where it appears to the performance by such institutions or agencies of
functions within the United States.
(p) Established customer. A person with an account with the
financial institution, including a loan account or deposit or other
asset account, or a person with respect to which the financial
institution has obtained and maintains on file the person's name and
address, as well as taxpayer identification number (e.g., social
security or employer identification number) or, if none, alien
identification number or passport number and country of issuance, and
to which the financial institution provides financial services relying
on that information.
(q) Execution date. The day on which the receiving financial
institution may properly issue a transmittal order in execution of the
sender's order. The execution date may be determined by instruction of
the sender but cannot be earlier than the day the order is received,
and, unless otherwise determined, is the day the order is received. If
the sender's instruction states a payment date, the execution date is
the payment date or an earlier date on which execution is reasonably
necessary to allow payment to the recipient on the payment date.
(r) Federal functional regulator.
(1) The Board of Governors of the Federal Reserve System;
(2) The Office of the Comptroller of the Currency;
(3) The Board of Directors of the Federal Deposit Insurance
Corporation;
(4) The Office of Thrift Supervision;
(5) The National Credit Union Administration;
(6) The Securities and Exchange Commission; or
(7) The Commodity Futures Trading Commission.
(s) FinCEN. FinCEN means the Financial Crimes Enforcement Network,
a bureau of the Department of the Treasury.
(t) Financial institution. Each agent, agency, branch, or office
within the United States of any person doing business, whether or not
on a regular basis or as an organized business concern, in one or more
of the capacities listed below:
(1) A bank (except bank credit card systems);
(2) A broker or dealer in securities;
(3) A money services business as defined in paragraph (ff) of this
section;
(4) A telegraph company;
(5)(i) Casino. A casino or gambling casino that: Is duly licensed
or authorized to do business as such in the United States, whether
under the laws of a State or of a Territory or Insular Possession of
the United States, or under the Indian Gaming Regulatory Act or other
Federal, State, or tribal law or arrangement affecting Indian lands
(including, without limitation, a casino operating on the assumption or
under the view that no such authorization is required for casino
operation on Indian lands); and has gross annual gaming revenue in
excess of $1 million. The
[[Page 65814]]
term includes the principal headquarters and every domestic branch or
place of business of the casino.
(ii) For purposes of this paragraph (t)(5), ``gross annual gaming
revenue'' means the gross gaming revenue received by a casino, during
either the previous business year or the current business year of the
casino. A casino or gambling casino which is a casino for purposes of
this chapter solely because its gross annual gaming revenue exceeds
$1,000,000 during its current business year, shall not be considered a
casino for purposes of this chapter prior to the time in its current
business year that its gross annual gaming revenue exceeds $1,000,000.
(iii) Any reference in this chapter, other than in this paragraph
(t)(5) and in paragraph (t)(6) of this section, to a casino shall also
include a reference to a card club, unless the provision in question
contains specific language varying its application to card clubs or
excluding card clubs from its application;
(6)(i) Card club. A card club, gaming club, card room, gaming room,
or similar gaming establishment that is duly licensed or authorized to
do business as such in the United States, whether under the laws of a
State, of a Territory or Insular Possession of the United States, or of
a political subdivision of any of the foregoing, or under the Indian
Gaming Regulatory Act or other Federal, State, or tribal law or
arrangement affecting Indian lands (including, without limitation, an
establishment operating on the assumption or under the view that no
such authorization is required for operation on Indian lands for an
establishment of such type), and that has gross annual gaming revenue
in excess of $1,000,000. The term includes the principal headquarters
and every domestic branch or place of business of the establishment.
The term ``casino,'' as used in this chapter shall include a reference
to ``card club'' to the extent provided in paragraph (t)(5)(iii) of
this section.
(ii) For purposes of this paragraph (t)(6), ``gross annual gaming
revenue'' means the gross revenue derived from or generated by customer
gaming activity (whether in the form of per-game or per-table fees,
however computed, rentals, or otherwise) and received by an
establishment, during either the establishment's previous business year
or its current business year. A card club that is a financial
institution for purposes of this chapter solely because its gross
annual revenue exceeds $1,000,000 during its current business year,
shall not be considered a financial institution for purposes of this
chapter prior to the time in its current business year when its gross
annual revenue exceeds $1,000,000;
(7) A person subject to supervision by any state or Federal bank
supervisory authority;
(8) A futures commission merchant;
(9) An introducing broker in commodities; or
(10) A mutual fund.
(u) Foreign bank. A bank organized under foreign law, or an agency,
branch or office located outside the United States of a bank. The term
does not include an agent, agency, branch or office within the United
States of a bank organized under foreign law.
(v) Foreign financial agency. A person acting outside the United
States for a person (except for a country, a monetary or financial
authority acting as a monetary or financial authority, or an
international financial institution of which the United States
Government is a member) as a financial institution, bailee, depository
trustee, or agent, or acting in a similar way related to money, credit,
securities, gold, or a transaction in money, credit, securities, or
gold.
(w) Funds transfer. The series of transactions, beginning with the
originator's payment order, made for the purpose of making payment to
the beneficiary of the order. The term includes any payment order
issued by the originator's bank or an intermediary bank intended to
carry out the originator's payment order. A funds transfer is completed
by acceptance by the beneficiary's bank of a payment order for the
benefit of the beneficiary of the originator's payment order. Funds
transfers governed by the Electronic Fund Transfer Act of 1978 (Title
XX, Pub. L. 95-630, 92 Stat. 3728, 15 U.S.C. 1693, et seq.), as well as
any other funds transfers that are made through an automated
clearinghouse, an automated teller machine, or a point-of-sale system,
are excluded from this definition.
(x) Futures commission merchant. Any person registered or required
to be registered as a futures commission merchant with the Commodity
Futures Trading Commission (``CFTC'') under the CEA, except persons who
register pursuant to section 4f(a)(2) of the CEA, 7 U.S.C. 6f(a)(2).
(y) Indian Gaming Regulatory Act. The Indian Gaming Regulatory Act
of 1988, codified at 25 U.S.C. 2701-2721 and 18 U.S.C. 1166-68.
(z) Intermediary bank. A receiving bank other than the originator's
bank or the beneficiary's bank.
(aa) Intermediary financial institution. A receiving financial
institution, other than the transmittor's financial institution or the
recipient's financial institution. The term intermediary financial
institution includes an intermediary bank.
(bb) Introducing broker-commodities. Any person registered or
required to be registered as an introducing broker with the CFTC under
the CEA, except persons who register pursuant to section 4f(a)(2) of
the CEA, 7 U.S.C. 6f(a)(2).
(cc) Investment security. An instrument which:
(1) Is issued in bearer or registered form;
(2) Is of a type commonly dealt in upon securities exchanges or
markets or commonly recognized in any area in which it is issued or
dealt in as a medium for investment;
(3) Is either one of a class or series or by its terms is divisible
into a class or series of instruments; and
(4) Evidences a share, participation or other interest in property
or in an enterprise or evidences an obligation of the issuer.
(dd) Monetary instruments. (1) Monetary instruments include:
(i) Currency;
(ii) Traveler's checks in any form;
(iii) All negotiable instruments (including personal checks,
business checks, official bank checks, cashier's checks, third-party
checks, promissory notes (as that term is defined in the Uniform
Commercial Code), and money orders) that are either in bearer form,
endorsed without restriction, made out to a fictitious payee (for the
purposes of Sec. 1010.340), or otherwise in such form that title
thereto passes upon delivery;
(iv) Incomplete instruments (including personal checks, business
checks, official bank checks, cashier's checks, third-party checks,
promissory notes (as that term is defined in the Uniform Commercial
Code), and money orders) signed but with the payee's name omitted; and
(v) Securities or stock in bearer form or otherwise in such form
that title thereto passes upon delivery.
(2) Monetary instruments do not include warehouse receipts or bills
of lading.
(ee) [Reserved]
(ff) Money services business. Each agent, agency, branch, or office
within the United States of any person doing business, whether or not
on a regular basis or as an organized business concern, in one or more
of the capacities listed in paragraphs (ff)(1) through (ff)(6) of this
section. Notwithstanding the preceding sentence, the term ``money
services business'' shall not include a bank, nor shall it include a
person registered with, and regulated or
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examined by, the Securities and Exchange Commission or the Commodity
Futures Trading Commission.
(1) Currency dealer or exchanger. A currency dealer or exchanger
(other than a person who does not exchange currency in an amount
greater than $1,000 in currency or monetary or other instruments for
any person on any day in one or more transactions).
(2) Check casher. A person engaged in the business of a check
casher (other than a person who does not cash checks in an amount
greater than $1,000 in currency or monetary or other instruments for
any person on any day in one or more transactions).
(3) Issuer of traveler's checks, money orders, or stored value. An
issuer of traveler's checks, money orders, or, stored value (other than
a person who does not issue such checks or money orders or stored value
in an amount greater than $1,000 in currency or monetary or other
instruments to any person on any day in one or more transactions).
(4) Seller or redeemer of traveler's checks, money orders, or
stored value. A seller or redeemer of traveler's checks, money orders,
or stored value (other than a person who does not sell such checks or
money orders or stored value in an amount greater than $1,000 in
currency or monetary or other instruments to or redeem such instruments
for an amount greater than $1,000 in currency or monetary or other
instruments from, any person on any day in one or more transactions).
(5) Money transmitter--(i) In general. Money transmitter:
(A) Any person, whether or not licensed or required to be licensed,
who engages as a business in accepting currency, or funds denominated
in currency, and transmits the currency or funds, or the value of the
currency or funds, by any means through a financial agency or
institution, a Federal Reserve Bank or other facility of one or more
Federal Reserve Banks, the Board of Governors of the Federal Reserve
System, or both, or an electronic funds transfer network; or
(B) Any other person engaged as a business in the transfer of
funds.
(ii) Facts and circumstance: Limitation. Whether a person ``engages
as a business'' in the activities described in paragraph (ff)(5)(i) of
this section is a matter of facts and circumstances. Generally, the
acceptance and transmission of funds as an integral part of the
execution and settlement of a transaction other than the funds
transmission itself (for example, in connection with a bona fide sale
of securities or other property), will not cause a person to be a money
transmitter within the meaning of paragraph (ff)(5)(i) of this section.
(6) U.S. Postal Service. The United States Postal Service, except
with respect to the sale of postage or philatelic products.
(gg) Mutual fund. An ``investment company'' (as the term is defined
in section 3 of the Investment Company Act (15 U.S.C. 80a-3)) that is
an ``open-end company'' (as that term is defined in section 5 of the
Investment Company Act (15 U.S.C. 80a-5)) that is registered or is
required to register with the Commission under section 8 of the
Investment Company Act (15 U.S.C. 80a-8).
(hh) Option on a commodity. Any agreement, contract, or transaction
described in section 1a(26) of the CEA, 7 U.S.C. 1a(26).
(ii) Originator. The sender of the first payment order in a funds
transfer.
(jj) Originator's bank. The receiving bank to which the payment
order of the originator is issued if the originator is not a bank or
foreign bank, or the originator if the originator is a bank or foreign
bank.
(kk) Payment date. The day on which the amount of the transmittal
order is payable to the recipient by the recipient's financial
institution. The payment date may be determined by instruction of the
sender, but cannot be earlier than the day the order is received by the
recipient's financial institution and, unless otherwise prescribed by
instruction, is the date the order is received by the recipient's
financial institution.
(ll) Payment order. An instruction of a sender to a receiving bank,
transmitted orally, electronically, or in writing, to pay, or to cause
another bank or foreign bank to pay, a fixed or determinable amount of
money to a beneficiary if:
(1) The instruction does not state a condition to payment to the
beneficiary other than time of payment;
(2) The receiving bank is to be reimbursed by debiting an account
of, or otherwise receiving payment from, the sender; and
(3) The instruction is transmitted by the sender directly to the
receiving bank or to an agent, funds transfer system, or communication
system for transmittal to the receiving bank.
(mm) Person. An individual, a corporation, a partnership, a trust
or estate, a joint stock company, an association, a syndicate, joint
venture, or other unincorporated organization or group, an Indian Tribe
(as that term is defined in the Indian Gaming Regulatory Act), and all
entities cognizable as legal personalities.
(nn) Receiving bank. The bank or foreign bank to which the sender's
instruction is addressed.
(oo) Receiving financial institution. The financial institution or
foreign financial agency to which the sender's instruction is
addressed. The term receiving financial institution includes a
receiving bank.
(pp) Recipient. The person to be paid by the recipient's financial
institution. The term recipient includes a beneficiary, except where
the recipient's financial institution is a financial institution other
than a bank.
(qq) Recipient's financial institution. The financial institution
or foreign financial agency identified in a transmittal order in which
an account of the recipient is to be credited pursuant to the
transmittal order or which otherwise is to make payment to the
recipient if the order does not provide for payment to an account. The
term recipient's financial institution includes a beneficiary's bank,
except where the beneficiary is a recipient's financial institution.
(rr) Secretary. The Secretary of the Treasury or any person duly
authorized by the Secretary to perform the function mentioned.
(ss) Security. Security means any instrument or interest described
in section 3(a)(10) of the Securities Exchange Act of 1934, 15 U.S.C.
78c(a)(10).
(tt) Self-regulatory organization:
(1) Shall have the same meaning as provided in section 3(a)(26) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)); and
(2) Means a ``registered entity'' or a ``registered futures
association'' as provided in section 1a(29) or 17, respectively, of the
Commodity Exchange Act (7 U.S.C. 1a(29), 21).
(uu) Sender. The person giving the instruction to the receiving
financial institution.
(vv) State. The States of the United States and, wherever necessary
to carry out the provisions of this chapter, the District of Columbia.
(ww) Stored value. Funds or monetary value represented in digital
electronics format (whether or not specially encrypted) and stored or
capable of storage on electronic media in such a way as to be
retrievable and transferable electronically.
(xx) Structure (structuring). For purposes of Sec. 1010.314, a
person structures a transaction if that person, acting alone, or in
conjunction with, or on behalf of, other persons, conducts or attempts
to conduct one or more
[[Page 65816]]
transactions in currency, in any amount, at one or more financial
institutions, on one or more days, in any manner, for the purpose of
evading the reporting requirements under Sec. Sec. 1010.311, 1010.313,
1020.315, 1021.311 and 1021.313 of this chapter. ``In any manner''
includes, but is not limited to, the breaking down of a single sum of
currency exceeding $10,000 into smaller sums, including sums at or
below $10,000, or the conduct of a transaction, or series of currency
transactions at or below $10,000. The transaction or transactions need
not exceed the $10,000 reporting threshold at any single financial
institution on any single day in order to constitute structuring within
the meaning of this definition.
(yy) Taxpayer Identification Number. Taxpayer Identification Number
(``TIN'') is defined by section 6109 of the Internal Revenue Code of
1986 (26 U.S.C. 6109) and the Internal Revenue Service regulations
implementing that section (e.g., social security number or employer
identification number).
(zz) Territories and Insular Possessions. The Commonwealth of
Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth
of the Northern Mariana Islands, and all other territories and
possessions of the United States other than the Indian lands and the
District of Columbia.
(aaa) [Reserved]
(bbb) Transaction. (1) Except as provided in paragraph (bbb)(2) of
this section, transaction means a purchase, sale, loan, pledge, gift,
transfer, delivery, or other disposition, and with respect to a
financial institution includes a