Bank Secrecy Act Regulations: Definition of “Monetary Instrument”, 64049-64055 [2011-26743]

Download as PDF Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules rmajette on DSK29S0YB1PROD with PROPOSALS-1 Federal eRulemaking Portal: https:// www.regulations.gov. The proposed rule has been assigned Docket ID: OSM– 2010–0017. If you would like to submit comments through the Federal eRulemaking Portal, go to https:// www.regulations.gov and follow the instructions. Mail/Hand Delivery/Courier Mr. George Rieger, Chief,Pittsburgh Field Division,Office of Surface Mining Reclamation and Enforcement,Harrisburg Transportation Center,415 Market St., Suite 304,Harrisburg, Pennsylvania 17101,Telephone: (717) 782– 4036, Email: grieger@osmre.gov. Thomas Callaghan, P.G., Director, Bureau of Mining and Reclamation, Pennsylvania Department of Environmental Protection,Rachel Carson State Office Building,P.O. Box 8461,Harrisburg, Pennsylvania 17105–8461,Telephone: (717) 787– 5015, E-mail: tcallaghan@state.pa.us. Instructions: All submissions received must include the agency Docket ID (OSM–2010–0017) for this rulemaking. For detailed instructions on submitting comments and additional information, see the SUPPLEMENTARY INFORMATION section of this document. FOR FURTHER INFORMATION CONTACT: George Rieger, Telephone: (717) 782– 4036. E-mail: grieger@osmre.gov. SUPPLEMENTARY INFORMATION: On February 7, 2011 (76 FR 6587), we published a proposed rule that was in response to a required program amendment codified in the Federal regulations. The submission included information that Pennsylvania had submitted to demonstrate that sufficient funds exist to guarantee coverage of the full cost of land reclamation at all sites originally permitted and bonded under the now-defunct alternative bonding system. Pennsylvania requested that the program amendment be removed based on the information provided. On June 13, 2011, (Administrative Record Number PA 802.80), we received additional information from Pennsylvania regarding recent developments involving one permit that was transferred to another company, resulting in the posting of full-cost bond in an amount to cover the land reclamation obligation. Included with this submission is the mining permit, Part C (Authorization to Mine), and the calculation sheet documenting the bond amount. We are reopening and extending the comment period to incorporate subsequent information that we received from Pennsylvania regarding VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 one permit involving land reclamation obligations. Public Comment Procedures Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the submission satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the Pennsylvania program. Public Availability of Comments Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. We cannot ensure that comments received after the close of the comment period (see DATES) or sent to an address other than those listed above (see ADDRESSES) will be included in the docket for this rulemaking and considered. Electronic or Written Comments If you submit written comments, they should be specific, confined to issues pertinent to the proposed regulations, and explain the reason for any recommended change(s). We would appreciate all comments relating to this specific issue, but those most useful and likely to influence decisions on the final rule will be those that either involve personal experience or include citations to and analysis of the Surface Mining Control and Reclamation Act of 1977, its legislative history, its implementing regulations, case law, other State or Federal laws and regulations, data, technical literature, or other relevant publications. List of Subjects in 30 CFR Part 938 Intergovernmental relations, Surface mining, Underground mining. Dated: July 27, 2011. Thomas D. Shope, Regional Director,Appalachian Region. [FR Doc. 2011–26762 Filed 10–14–11; 8:45 am] BILLING CODE 4310–05–P PO 00000 64049 DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network 31 CFR Part 1010 RIN 1506–AB13 Bank Secrecy Act Regulations: Definition of ‘‘Monetary Instrument’’ Financial Crimes Enforcement Network (‘‘FinCEN’’), Treasury. AGENCY: ACTION: Notice of proposed rulemaking. FinCEN is proposing to amend the definition of ‘‘monetary instrument’’ in the Bank Secrecy Act (‘‘BSA’’) regulations for purposes of the international transport of currency and monetary instrument reporting requirement to include tangible prepaid access devices. SUMMARY: Written comments on this notice of proposed rulemaking must be submitted on or before December 16, 2011. DATES: You may submit comments, identified by RIN 1506–AB13, by any of the following methods: • Federal E-rulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. Include 1506–AB13 in the submission. Refer to Docket Number FINCEN–2011– 0003. • Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include 1506–AB13 in the body of the text. Please submit comments by one method only. Comments submitted in response to this notice of proposed rulemaking will become a matter of public record. Therefore, you should submit only information that you wish to make publicly available. Inspection of comments: Public comments received electronically or through the U.S. Postal Service sent in response to a notice and request for comment will be made available for public review as soon as possible on https://www.regulations.gov. Comments received may be physically inspected in the FinCEN reading room located in Vienna, Virginia. Reading room appointments are available weekdays (excluding holidays) between 10 a.m. and 3 p.m., by calling the Disclosure Officer at (703) 905–5034 (not a toll-free call). ADDRESSES: FOR FURTHER INFORMATION CONTACT: FinCEN, Regulatory Policy and Programs Division at (800) 949–2732 and select Option 1. SUPPLEMENTARY INFORMATION: Frm 00012 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1 64050 Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules I. Introduction A. Statutory Background The BSA, Titles I and II of Public Law 91–508, as amended, codified at 12 U.S.C. 1829b and 1951–1959, and 31 U.S.C. 5311–5314 and 5316–5332, authorizes the Secretary of the Treasury (the ‘‘Secretary’’) to issue regulations requiring financial institutions to keep records and file reports that the Secretary determines ‘‘have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence matters, including analysis to protect against international terrorism.’’ 1 The Secretary’s authority to administer the BSA and its implementing regulations has been delegated to the Director of FinCEN.2 FinCEN has interpreted the BSA through implementing regulations (‘‘BSA regulations’’ or ‘‘BSA rules’’) that appear at 31 CFR Chapter X.3 Reports on the international transportation and receipt of monetary instruments are among those authorized by the BSA.4 Pursuant to this authority, FinCEN has issued regulations requiring that a form be filed reporting the international transportation, mail, or shipment of currency or other monetary instruments in an aggregate amount that exceeds $10,000.5 The regulations, initially issued in 1972, are currently found at 31 CFR 1010.340, and the definition of ‘‘monetary instrument’’ is at 31 CFR 1010.100(dd). The term ‘‘monetary instrument’’ is defined in the BSA to include currency and a variety of bearer negotiable instruments, securities, and similar items, but does not specifically include any types of prepaid access devices.6 1 31 U.S.C. 5311. Treasury Order 180–01 (Sept. 26, 2002). 3 On October 26, 2010, FinCEN issued a final rule creating a new Chapter X in Title 31 of the Code of Federal Regulations for the BSA regulations. See 75 FR 65806 (October 26, 2010) (Transfer and Reorganization of Bank Secrecy Act Regulations Final Rule) (referred to herein as the ‘‘Chapter X Final Rule’’). The Chapter X Final Rule became effective on March 1, 2011. 4 31 U.S.C. 5316. 5 The report is filed on Form 105, ‘‘Report of International Transport of Currency or Monetary Instruments’’ (‘‘CMIR’’). 6 Specifically, 31 U.S.C. 5312(a)(3) defines ‘‘monetary instruments’’ to mean: (A) United States coins and currency; (B) as the Secretary may prescribe by regulation, coins and currency of a foreign country, travelers’ checks, bearer negotiable instruments, bearer investment securities, bearer securities, stock on which title is passed on delivery, and similar material; and (C) as the Secretary of the Treasury shall provide by regulation for purposes of sections 5316 and 5331, checks, drafts, notes, money orders, and other similar instruments which are drawn on or by a rmajette on DSK29S0YB1PROD with PROPOSALS-1 2 See VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 Nevertheless, FinCEN has regulatory authority to expand the definition of monetary instruments to include items deemed to be ‘‘similar materials’’ to coins and currency of a foreign country, travelers’ checks, bearer negotiable instruments, bearer investment securities, bearer securities, and stock on which title is passed on delivery.7 Pursuant to this authority, FinCEN is proposing to amend the definition of ‘‘monetary instrument’’ for purposes of the international transport of currency and monetary instrument reporting (‘‘CMIR’’) requirement at 31 CFR 1010.340 to include tangible prepaid access devices. On May 22, 2009, when FinCEN regulations still referred to stored value rather than prepaid access, the President signed the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 (‘‘CARD Act’’).8 Section 503 of the CARD Act required the issuance of ‘‘regulations in final form implementing the Bank Secrecy Act, regarding the sale, issuance, redemption, or international transport of stored value, including stored value cards.’’ 9 The CARD Act authorizes ‘‘regulations regarding international transport’’ of prepaid access devices, including ‘‘reporting requirements pursuant to Section 5316 of title 31, United States Code.’’ Pursuant to the BSA and CARD Act, FinCEN published the Notice of Proposed Rulemaking—Definitions and Other Regulations Relating to Prepaid Access on June 28, 2010 (‘‘Prepaid Access NPRM’’),10 and, on July 29, 2011, issued a Final Rule entitled ‘‘Definitions and Other Regulations Relating to Prepaid Access’’ (the ‘‘Prepaid Access Final Rule’’).11 The Final Rule contains definitions of ‘‘prepaid access’’ 12 and related terms and imposes registration, reporting, record-keeping, and anti-money foreign financial institution and are not in bearer form. (Emphasis added.) 7 Id. 8 P.L. 111–24 (May 22, 2009), 123 Stat. 1734. 9 Id., Sec. 503(a), (c). 10 75 FR 36589. The Prepaid Access NPRM discussed FinCEN’s engagement with the Department of Homeland Security and other members of the law enforcement community in an attempt to identify appropriate solutions regarding reporting of the international transport of prepaid access, see 75 FR 36593. 11 76 FR 45403. 12 The Final Rule defines ‘‘prepaid access’’ as access to funds or the value of funds that have been paid in advance and can be retrieved or transferred at some point in the future through an electronic device or vehicle, such as a card, code, electronic serial number, mobile identification number, or personal identification number. 31 CFR 1010.100(ww). The Final Rule replaces the term ‘‘stored value’’ with ‘‘prepaid access.’’ PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 laundering program requirements on providers and sellers of prepaid access. While the Final Rule does not address reporting requirements for prepaid access with respect to the international transport of monetary instruments pursuant to 31 CFR 1010.340 because it’s provisions provide definitions and requirements for money services businesses, it does provide the necessary first step before this rule could be proposed by creating a regulatory framework and definition of prepaid access. Congress enacted the requirements of the CARD Act because of the potential to substitute prepaid access for cash and other monetary instruments as a means to smuggle the proceeds of illegal activity into and out of the United States, as various reports and cases have suggested.13 In a May 13, 2009 statement, Senator Collins, introducing the amendment that added Section 503 to the CARD Act, stated: ‘‘[S]tored value cards have been used and are being used by Mexican drug cartels to smuggle their drug revenues back to Mexico. The Department of Justice estimates that up to $24 billion in cash is smuggled into Mexico each year from the United States and these stored value cards are one of the means by which the cash is smuggled back into Mexico. Stored value cards can be loaded anonymously by individuals who are involved in criminal enterprises, such as drug trafficking. The cards are then physically smuggled across the border and can be used to withdraw large quantities of cash from ATMs.’’ 14 The 2007 National Money Laundering Strategy stated that prepaid access is ‘‘* * * an emerging cash alternative for both legitimate consumers and money launderers alike.’’ 15 A U.S. Immigration and Customs Enforcement official cited a case example where ‘‘hundreds of [prepaid cards] were found concealed in a compartment similar to those used to conceal cash, drugs and other contraband. The cards are also being used by criminal organizations to cover ‘expenses’ incurred by their couriers as they transport cash, drugs and other contraband across the country * * * ’’ 16 This proposal addresses the money laundering and terrorist financing vulnerabilities illustrated by these examples. 13 See Money Laundering Using New Payment Methods, Financial Action Task Force, October 2010 (https://www.fatf-gafi.org/dataoecd/4/56/ 46705859.pdf ). 14 See 155 Cong. Rec. S5426–5427 15 See https://www.treasury.gov/resource-center/ terrorist-illicit-finance/Documents/nmls.pdf. 16 Statement of Kumar C. Kibble, Deputy Director, U.S. Immigration and Customs Enforcement, Department of Homeland Security, before the U.S. Senate Caucus on International Narcotics Control, March 9, 2011. E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules B. Legislative History of 31 U.S.C. 5316 The proposal is consistent with the legislative history of the definition of monetary instrument and the border reporting requirement. When Congress enacted the BSA, it defined ‘‘monetary instrument’’ for purposes of the international transport reporting requirement to mean: ‘‘* * * coin and currency of the United States, and in addition, such foreign coin and currencies, and such types of travelers checks, bearer negotiable instruments, bearer investment securities, bearer securities, and stock with title passing upon delivery, or the equivalent thereof, as the Secretary may by regulation specify for the purposes of the provision of this title to which the regulation relates.’’ 17 (Emphasis added.) rmajette on DSK29S0YB1PROD with PROPOSALS-1 The Treasury Department was a key proponent of the BSA, as part of which it advocated for a border reporting requirement for monetary instruments to include ‘‘U.S. currency or its equivalent, such as foreign currency, travelers checks, and other items which can pass freely by delivery,’’ (emphasis added) in order to remove a potential loophole in the reporting regime.18 The definition was amended when Congress revised and restated Title 31 of the United States Code by deleting the phrase ‘‘or the equivalent thereof’’ and substituting the phrase ‘‘or similar material.’’ 19 Congress expressly stated that this change was not intended to make a substantive change to the meaning and was done only for clarity.20 With this change, Congress 17 Section 203(l), Public Law 91–508, H.R. 15073 (Oct. 26, 1970). 18 Hearings before the Committee on Banking and Currency (House) regarding H.R. 15073, Statement of Eugene T. Rossides, Assistant Secretary of the Treasury for Enforcement and Operations (March 2, 1970), p. 151. In subsequent testimony, Assistant Secretary Rossides testified further with regard to the importance of including in the definition, in addition to U.S. currency and particular instruments, the phrase ‘‘or their equivalent’’: ‘‘The term ‘or their equivalent’ is necessary to permit the Secretary of the Treasury the necessary discretion to include other types of instruments which are easily transferrable which may not be in bearer form.’’ Hearings before the Subcommittee on Financial Institutions of the Committee on Banking and Currency (Senate) regarding S. 3678 and H.R. 15073 (June 8, 9, 10, and 11, 1970), Statement of Eugene T. Rossides, Assistant Secretary of the Treasury for Enforcement and Operations (June 9, 1970), p. 183 (internal citations omitted). (Emphasis in original.) 19 31 U.S.C. 5312(a)(3). 20 Public Law 97–258 (Sept. 13, 1982), enacting H.R. 6128 to revise, codify and enact without substantive change certain general and permanent laws related to money and finance as Title 31, United States Code. ‘‘This bill makes no substantive change in the law.’’ Committee Report No. 97–651 to H.R. 6128, p.28 (July 21, 1982) (In subsection (a)(3)(B), the words ‘‘in addition’’, and ‘‘and such types of’’ are omitted as surplus. The words ‘‘similar material’’ are substituted for ‘‘the equivalent thereof’’ for clarity). VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 articulated a preference for the phrase ‘‘similar material,’’ signaling that it more clearly explained the intent of the provision than the phrase ‘‘the equivalent thereof’’ in the original text. II. Meaning of ‘‘Similar Material’’ Based on this legislative history, it is clear that Congress was concerned with persons transferring monetary value anonymously across international borders, particularly in connection with criminal activity. Clearly, such activity at the time of enactment was primarily accomplished through the use of currency and other substitutes for currency, such as bearer negotiable instruments or securities. Accordingly, the definition contains a list of such substitutes for currency identified for this purpose. However, the definition is not limited to the listed items, but is expressly expanded to include other ‘‘similar material.’’ The authority to extend these reports to items similar to U.S. currency is consistent with the legislative purpose behind BSA reporting—facilitating the traceability of currency and its equivalents and eliminating anonymous international flows of money. FinCEN believes it is reasonable to conclude that items that can be used to accomplish the same anonymous transfer of monetary value Congress sought to reach are items properly within the scope of the term ‘‘monetary instrument.’’ Moreover, FinCEN finds that this interpretation is consistent with the purpose of the BSA to address gaps in the ability to trace the flow of currency and its equivalents through reporting requirements that are highly useful in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence matters, including analysis to protect against international terrorism.21 Prepaid access devices are ‘‘similar material’’ to the items listed in the definition of a monetary instrument in 31 U.S.C. 5312(b)(3), ‘‘travelers checks, bearer negotiable instruments, bearer investment securities, bearer securities, and stock with title passing upon delivery,’’ in that they can be used as a substitute for currency, the funds they provide access to are accessible by the bearer of the device, and they can be transferred from person to person without a record of the chain of title. In particular they are similar to traveler’s checks and bearer negotiable instruments such as cashier’s and certified checks. Although a traveler’s check has the formal characteristics of a negotiable 21 31 PO 00000 U.S.C. 5311. Frm 00014 Fmt 4702 Sfmt 4702 64051 instrument,22 it is used and accepted as ready cash because payment is guaranteed by the issuer, who has already received the value of the funds represented on the face of the check. Those funds are held in an account specifically for that purpose, although the account is not one established by the purchaser.23 Traveler’s checks are purchased from the issuer in advance of use and in amounts corresponding to specific denominations of United States or foreign currency. Under the Uniform Commercial Code (the ‘‘UCC’’), a negotiable instrument is an unconditional order or promise to pay a fixed or determinable amount of money to bearer or to order that is payable on demand or at a definite time.24 Rights and obligations contained in a negotiable instrument can be altered by endorsement. The ordinary manner in which the payee of a check endorses that check is by placing his or her signature on the back of it. An endorsement may be made after a specific direction (‘‘pay to Dolly Madison’’ or ‘‘for deposit only’’), called a qualified or restricted endorsement, or with no qualifying or restricting language, thereby making it payable to the holder, called a blank endorsement. A blank endorsement creates a bearer negotiable instrument, which is payable to whomever possesses it, just like most tangible prepaid access devices. Once endorsed in blank, a negotiable instrument can be transferred without any record of transfer. Common negotiable instruments include cashier’s and certified checks. A cashier’s check represents funds paid by the purchaser to a bank, as represented by the face value. The check is issued and certified by the bank on the bank’s own account (not that of the purchaser).25 The check will state the name of both purchaser and payee but because it is a negotiable instrument, it can be transformed into a bearer negotiable instrument by a blank endorsement. A cashier’s check does not depend on a private account and, therefore, is received as cash. Certified 22 See UCC 3–104(i) and 12 CFR 229.2(hh) (Availability of Funds and Collection of Checks (Regulation CC)). 23 Generally, traveler’s checks are thought of as being ‘‘safer than cash’’ because issuers promise to replace them if they are lost or stolen. Further, they have no expiration date and hold their face value until used. 24 See UCC § 3–104 (1990, unchanged in 2002 revisions). Technically, there is an additional requirement: that the order or promise not state any other undertaking or instruction by the person promising or ordering payment. 25 See UCC § 3–104(g) and 12 CFR 229.2(i) (Availability of Funds and Collection of Checks (Regulation CC)). E:\FR\FM\17OCP1.SGM 17OCP1 64052 Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules checks are similar in that the face value of the check represents funds paid by the purchaser to a bank, which is guaranteed for payment and can be converted into a bearer negotiable instrument.26 These instruments are similar to tangible prepaid access devices in that they are issued based on funds already received by the issuer, which is intended to facilitate immediate payment. The promises or orders underlying them are guaranteed for payment, giving them enhanced liquidity—the quintessential purpose of these instruments—enabling them to be treated as a substitute for cash. As bearer instruments, they are payable to whomever has possession, allowing transfers to be made with no record of the chain of ownership. Tangible prepaid access devices serve the identical purpose. In this context prepaid access devices serve as ready cash or the value of cash, and as a means of payment, are intended to provide the same (or superior) certainty as the bearer instruments listed in the definition of monetary instrument. The funds represented by prepaid access devices are payable to or readily usable by the bearer of the device, with no record necessary to track the chain of ownership. Consequently, FinCEN believes that prepaid access devices are ‘‘similar material’’ to those bearer instruments that are included in the definition of monetary instruments. rmajette on DSK29S0YB1PROD with PROPOSALS-1 III. Section-by-Section Analysis Under the Prepaid Access Final Rule, FinCEN regulations define the term ‘‘prepaid access’’ very broadly to mean ‘‘[a]ccess to funds or the value of funds that have been paid in advance and can be retrieved or transferred at some point in the future through an electronic device or vehicle, such as a card, code, electronic serial number, mobile identification number, or personal identification number.’’ 27 While the devices or vehicles that can provide access to prepaid funds are potentially limitless, this proposal is narrowly focused on tangible prepaid access devices transported, mailed, or shipped across the border of the United States. A. Proposed 31 CFR 1010.100(dd) Pursuant to FinCEN’s authority under 31 U.S.C. 5312, FinCEN proposes to amend 31 CFR 1010.100 by revising the definition of ‘‘monetary instrument’’ as that term is used for purposes of complying with the CMIR requirement 26 12 CFR 229.2(j) (Availability of Funds and Collection of Checks (Regulation CC)). 27 31 CFR 1010.100(ww). VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 at § 1010.340. In particular, the proposed revisions would add prepaid access devices to the BSA definition of monetary instrument by revising 31 CFR 1010.100(dd)(2) and add a new 31 CFR 1010.100(dd)(3) that would incorporate the exclusions for warehouse receipts and bills of lading, currently found at 31 CFR 1010.100(dd)(2), as well as adding exclusions for credit and debit cards. The proposed revisions to 31 CFR 1010.100(dd) would: (a) Expand the definition to include tangible prepaid access devices; (b) limit the application of the expanded definition to tangible prepaid access only for purposes of the CMIR reporting requirement at § 1010.340; (c) establish that the value of any such prepaid access device would be determined by the amount of the funds available through the device at the time of physical transportation, mail or shipment into or out of the United States; and (d) clarify that credit cards and debit cards are not a form of monetary instrument for BSA purposes. 1. Proposed 31 CFR 1010.100(dd)(2) The proposed revision to 31 CFR 1010.100(dd)(2) would provide that, for purposes of the CMIR regulations issued pursuant to 31 U.S.C. 5316, the definition of monetary instrument includes tangible prepaid access devices. The proposed inclusion of ‘‘tangible prepaid access devices’’ within ‘‘monetary instrument’’ is limited in scope to CMIR filing obligations found at 31 CFR 1010.340 and related BSA rules involving the definitions, penalty, seizure, and enforcement provisions that refer to those obligations. This proposed regulation is not intended to extend to tangible prepaid access devices the record keeping and other reporting requirements applicable to monetary instruments under other provisions of the BSA regulations. The term ‘‘tangible prepaid access device’’ is defined at 31 CFR 1010.100(dd)(2) to mean ‘‘any physical item that can be transported, mailed, or shipped into or out of the United States and the use of which is dedicated to obtaining access to prepaid funds or the value of funds by the possessor in any manner without regard to whom the prepaid access is issued.’’ This definition includes the predominant forms of prepaid devices such as general-use prepaid cards, gift cards, store cards, payroll cards, and government benefit cards. It also includes cell phones and other tangible devices to the extent that they themselves, or an item built into or attached to them, provide access to prepaid funds or the value of funds by PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 being readable by a device employed for the purpose by merchants. The proposed definition does not reach intangible vehicles for accessing prepaid funds or the value of funds, such as codes and PINs. It also does not reach tangible items that may be incidental to obtaining access to intangible prepaid access, such as laptop computers, Webenabled cell phones, or other devices that are not dedicated to accessing specific prepaid funds. The proposed revision to 31 CFR 1010.100(dd)(2) would also provide that the point in time at which the value of a tangible prepaid access device is measured is the time at which it crosses into or out of the United States. For purposes of complying with the CMIR reporting requirement at § 1010.340, the proposed definition would establish that the balance available through any such access device as a monetary instrument ‘‘at the time of the physical transportation, mail, or shipment into or out of the United States’’ would be the reportable value. In cases of mail or shipment, there is a presumption that the value available through the device remains the same throughout the period of shipment. 2. Proposed 31 CFR 1010.100(dd)(3) The proposed revisions clarify that credit and debit cards are not a form of monetary instrument for BSA purposes. For this purpose the proposed definition adopts the definition of credit card used in the consumer credit protection law 28 and Truth-In-Lending Act regulations (Regulation Z),29 which define the term to mean any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, property, labor, or services on credit. With respect to debit cards, the proposed definition adopts the portion of the definition of debit card used in the consumer credit protection law,30 which defines the term to mean any card, or other payment code or device, issued or approved for use through a payment card network to debit an individual’s asset account (regardless of the purpose for which the account is established), whether authorization is based on signature, PIN, or other means. The proposed definition would not adopt the rest of the debit card definition in the consumer credit protection law that goes on to include general-use prepaid cards and exclude paper checks.31 Debit cards associated with a bank account are not included 28 15 U.S.C. 1602(k). CFR 226.2(15). 30 15 U.S.C. 1693o–2(c)(2)(A). 31 15 U.S.C. 1693o–2(c)(2)(B) and (C). 29 12 E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules within the meaning of the term monetary instrument. B. Proposed 31 CFR 1010.340(c)(10) The proposed regulation would add new 31 CFR 1010.340(c)(10) to exclude from the reporting requirement the international transportation, mail, or shipment of tangible prepaid access devices by a business or its agent offering such products prior to their delivery to a seller for sale to the public. This provision mirrors the exclusion for a traveler’s check issuer or its agent found at 31 CFR 1010.340(c)(7). The phrase ‘‘[a] business participating in the offering of tangible prepaid access devices or its agent’’ is intended to include all of the participants in a prepaid access program and their agents, if any. The proposed rule is only intended to capture tangible prepaid access devices that have been purchased for use, loaded with funds, and ‘‘activated’’ by whatever process a particular prepaid program requires for loaded funds to be made available for use. rmajette on DSK29S0YB1PROD with PROPOSALS-1 IV. Questions for Public Comment A. There may be obstacles to law enforcement identifying prepaid access devices and verifying the available balance. Branded open loop prepaid access devices can be indistinguishable from credit and debit cards, making it difficult for border agents and other law enforcement authorities to identify prepaid access devices. Various impediments, such as the Right to Financial Privacy Act 32 or state privacy laws involving individuals’ bank records, may make it difficult to determine the available balance of an underlying prepaid access device, since the value is not generally indicated on its face.33 Further, where the prepaid access device takes a novel form (not a card or chip), law enforcement may not be prepared with a device to read the available balance. Moreover, since a holder of certain prepaid access devices may experience difficulties in retrieving records concerning the prepaid access device, a declaration concerning available balance may be unintentionally inaccurate. The holder may also not be directly responsible for adding value to the prepaid program, which could also result in a declaration concerning the available balance being unintentionally inaccurate. FinCEN requests comment on these and any other potential obstacles to law 32 12 U.S.C. 3401, et seq. Credit CARD Act of 2009 and Prepaid Cards, Payment Cards Center Note, Federal Reserve Bank of Philadelphia, August 2009. 33 The VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 enforcement identifying prepaid access devices and verifying the accessible value, including suggestions as to how they may be addressed. B. Prepaid access devices vary in form and function, including closed loop cards that can be used only at a specific store or merchant, or for a specific service, and cannot be used at ATMs to access cash. These cards typically bear no information identifying the cardholder, so they can be used by anyone who possesses the card. Although their limited functionality may mitigate their potential use as a money laundering device as they cannot be used as a cash access device, they might be sold outright for cash. Should these closed loop cards continue to be subject to a border declaration obligation as proposed? Should other types of lower-risk prepaid access devices that are not considered prepaid programs under the final prepaid rule be excluded from the definition of monetary instruments, such as government-funded, limited-value, or payroll cards? C. Branded open loop reloadable cards are the prepaid access device most similar to debit cards, some allowing both cash access via ATMs and the ability to conduct transactions at a physical point of sale or online. Currently, in the United States, debit cards and open loop prepaid access cards that bear a global network brand (e.g., MasterCard and Visa), are exclusively issued by depository institutions. Depository institutions are already subject to a full slate of antimoney laundering (‘‘AML’’) obligations, including a customer identification program rule.34 Consequently, these cards may bear the name, embossed on the front of the card, of the person to whom the card has been issued in the same manner as a debit or credit card. Should branded open loop reloadable prepaid cards with the name of the person to whom the card has been issued embossed on the front of the card be subject to border declaration as monetary instruments? D. Certain prepaid access programs, whether open or closed loop, allow value to be added remotely to the funds accessible via the card or other device. The effect is that someone other than the holder can add value to the funds available to the holder. This is a typical arrangement, for example, when parents give a prepaid access card to a child away at school or when migrant laborers use a prepaid access device to provide financial support to family members who remain in the home country. In 34 31 PO 00000 CFR 1020.220. Frm 00016 Fmt 4702 Sfmt 4702 64053 these circumstances, a prepaid access card or device may cross the border out of or into the United States without an available balance, but may later, when funds are added to the prepaid access device, be able to access value. Should the border declaration obligation be associated with the value immediately available to a prepaid access device at the time the device enters or leaves the country or should the declaration obligation apply to the potential maximum value available via the prepaid access device? E. Payment technology is a fast moving industry, with new programs and access devices and methods constantly in development. There may soon be the potential for a code or password, or object not typically associated with payment system access (e.g., cell phone or key fob), to be brought into or taken out of the United States and used to access cash drawn from a prepaid access program either via an ATM or otherwise. Should the border declaration apply to codes, passwords, and other intangibles as well as to any tangible object that is dedicated to accessing prepaid funds? Should it only apply to cards, or also to cell phones, key fobs, or other tangible objects that include a device that enables them to function in a similar manner to ‘‘swiping’’ a magnetic stripe card? F. FinCEN also specifically requests comments identifying any additional costs associated with the completion of the CMIR form as a result of this proposed rule. G. FinCEN requests comment regarding whether it is appropriate to exempt, in proposed 31 CFR 1010.340(c)(10), the international transport mail or shipment by a prepaid access business or its agents of tangible prepaid access devices prior to their delivery to a seller for sale to the public. This provision would parallel the exemption for traveler’s checks found at 31 CFR 1010.340(c)(7). H. FinCEN requests comment on whether devices that require a PIN number for a point of sale or for ATM use should be excluded as intangible prepaid access. V. Regulatory Flexibility Act When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (RFA) requires the agency to ‘‘prepare and make available for public comment an initial regulatory flexibility analysis’’ that will ‘‘describe the impact of the proposed rule on small entities.’’ (5 U.S.C. 603(a)). Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a E:\FR\FM\17OCP1.SGM 17OCP1 64054 Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules significant economic impact on a substantial number of small entities. The proposed rule will apply to all persons, a term that includes individuals and entities of all sizes, if they conduct a reportable action under the rule. The proposed rule is targeted at obtaining reports from individuals transporting over $10,000 in currency, tangible prepaid access devices, or other monetary instruments into or out of the United States. FinCEN estimates that the number of reports filed by small entities will be few and not impact a substantial number of those entities.35 FinCEN estimates that the proposed rule will result in a total of 8,000 annual reports.36 The majority of these reports will be filed by individuals. FinCEN estimates that each report will take 11 minutes to complete. FinCEN does not believe that this proposed rule will have a significant economic impact on a substantial number of small entities. Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605) and the reasons stated above, it is hereby certified that this proposed rule will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. FinCEN invites comments on the impact of this proposed rule on small entities. VI. Paperwork Reduction Act rmajette on DSK29S0YB1PROD with PROPOSALS-1 The collection of information contained in this proposed rule has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Under the Paperwork Reduction Act, an agency may not conduct or sponsor, and an individual is not required to respond to, a collection of information unless it displays a valid OMB control number. Comments on the information collection should be sent to the Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Office of Management and Budget, Paperwork Reduction Project (1506), Washington, DC 20503, or by the Internet to 35 FinCEN has exempted the presale transportation of prepaid devices, thus limiting the majority of instances when an entity, as opposed to an individual, would have been required to report. 36 In 2010, 200,000 CMIRs were filed. Of those CMIRs filed, 32,000 indicated monetary instruments crossed the border. By comparing the transaction volumes of prepaid devices with other monetary instruments, FinCEN determined that the proposed rule will increase the number of CMIRs indicating monetary instruments by 25% or 8,000 reports. Because the average burden per report is 11 minutes, the proposed rule will increase the collection by 1,467 hours. VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 oira_submission@omb.eop.gov with a copy to the Financial Crimes Enforcement Network by mail or as part of the comments through the Internet. Comments are welcome and must be received by December 16, 2011. Report of International Transportation of Currency or Monetary Instruments (31 CFR 1010.340).Office of Management and Budget Control Number: 1506–0014. (FinCEN Form 105) This information is required to be provided pursuant to 31 U.S.C. 5316(a). Information collected on the CMIR is made available, in accordance with strict safeguards, to appropriate criminal law enforcement and regulatory personnel in the official performance of their duties. The information collected is of use in investigations involving international and domestic money laundering, tax evasion, fraud, and other financial crimes. The collection of information is mandatory. Records required to be retained under the Bank Secrecy Act must be retained for five years. In 2009, OMB approved FinCEN for 51,333 hours under OMB control number 1506–0014. The collection of reports on the international transportation of prepaid devices will add to the estimated burden by 1,467 hours.37 However, the actual annual reporting activity since 2009 (36,667 hours) has been notably less than the amount approved by OMB in 2009 (51,333 hours). To accommodate for this difference and provide a more accurate estimate going forward, FinCEN is reducing the overall burden for this collection by 7,333 hours. Therefore, as proposed, the net reduction to the overall approved burden under OMB Control Number 1506–0014 is 5,866 hours. Description of Respondents: Individuals, business or other for-profit institutions, and not-for-profit institutions involved in the international transport of monetary instruments. Estimated Number of Respondents: The rule decreases the number of reports by 32,000. Estimated Average Annual Burden Hours per Respondent: The estimated average annual burden associated with the reporting requirement in 31 CFR 1020.340 is 11 minutes. Estimated Total Annual Recordkeeping Burden: 45,467 hours. Request for Comments: FinCEN specifically invite comments on: (a) Whether the proposed recordkeeping requirements are necessary for the proper performance of the mission of 37 Id. PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 the FinCEN, and whether the information shall have practical utility; (b) the accuracy of FinCEN’s estimate of the burden of the proposed recordkeeping requirement; (c) ways to enhance the quality, utility, and clarity of the information required, and (d) how the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology. VII. Executive Orders 12866 and 13563 Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rule is not a significant regulatory action. Accordingly, a formal review by the Office of Management and Budget is not required. VIII. 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 205 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. List of Subjects in 31 CFR Parts 1010 Administrative practice and procedure, Banks, Banking, Brokers, Currency, Foreign banking, Foreign currencies, Gambling, Investigations, Penalties, Reporting and recordkeeping requirements, Securities, Terrorism. Proposed Amendments to the Regulations For the reasons stated in the preamble, FinCEN proposes to amend 31 CFR part 1010 as follows: E:\FR\FM\17OCP1.SGM 17OCP1 Federal Register / Vol. 76, No. 200 / Monday, October 17, 2011 / Proposed Rules PART 1010—GENERAL PROVISIONS 1. The authority citation for part 1010 continues to read as follows: Authority: 12 U.S.C. 1829b and 1951– 1959; 31 U.S.C. 5311–5314, 5316–5332; Title V, section 503, Pub. L. 111–24. 2. Amend § 1010.100 as follows: a. Revise paragraph (dd)(2); and b. Add paragraph (dd)(3). § 1010.100 Dated: October 11, 2011. James H. Freis, Jr., Director, Financial Crimes Enforcement Network. [FR Doc. 2011–26743 Filed 10–14–11; 8:45 am] BILLING CODE 4810–02–P ENVIRONMENTAL PROTECTION AGENCY General definitions. 40 CFR Part 2 * * * * * (dd) * * * (2) For the purposes of complying with the currency and monetary instrument reporting requirements issued pursuant to 31 U.S.C. 5316, the term monetary instruments also includes any tangible prepaid access device. The term ‘‘tangible prepaid access device’’ means any physical item that can be transported, mailed, or shipped into or out of the United States and the use of which is dedicated to obtaining access to prepaid funds or the value of funds by the possessor in any manner without regard to whom the prepaid access is issued. The value of any such prepaid access device is the amount of the funds available to which the device provides access at the time of physical transportation, mail, or shipment into or out of the United States. (3) Monetary instruments do not include warehouse receipts, bills of lading, credit cards (as defined in as in 15 U.S.C. 1602(k), including cards defined in 12 CFR 226.2(15)), or debit cards (as defined in 15 U.S.C. 1693o2(c)(2)(A)). * * * * * 3. Amend § 1010.340 by adding paragraph (c)(10) to read as follows: § 1010.340 Reports of transportation of currency or monetary instruments. * * * * * (c) * * * (10) A business participating in the offering of prepaid access or its agent with respect to the transportation of tangible prepaid access devices prior to their delivery to selling agents for eventual sale to the public; * * * * * [EPA–HQ–OAR–2009–0924; FRL–9479–7] Special Rules Governing Certain Information Obtained Under the Clean Air Act: Technical Correction Environmental Protection Agency (EPA). ACTION: Proposed rule. AGENCY: The EPA is proposing to correct an erroneous reference in EPA’s procedures for handling data collected under the Mandatory Greenhouse Gas Reporting Rule, which are provided in the Special Rules Governing Certain Information Obtained under the Clean Air Act. The proposed correction would not change any requirements for entities regulated under the Mandatory Greenhouse Gas Reporting Rule or the final confidentiality determinations EPA has made for such data. In the ‘‘Rules and Regulations’’ section of this Federal Register, we are making this correction as a direct final rule without a prior proposed rule. If we receive no adverse comment, we will not take further action on this proposed rule. DATES: Written comments must be received on or before November 16, 2011. SUMMARY: Submit your comments, identified by Docket ID No. EPA–HQ– OAR–2009–0924, by mail to Environmental Protection Agency, EPA Docket Center (EPA/DC), Mailcode 6102T, Attention Docket ID No. EPA– HQ–OAR–2009–0924, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Please include a total of two copies. Comments may also be submitted electronically or through hand delivery/courier by following the detailed instructions in the ADDRESSES ADDRESSES: 64055 section of the direct final rule located in the rules section of this Federal Register. FOR FURTHER INFORMATION CONTACT: Carole Cook, Climate Change Division, Office of Atmospheric Programs (MC– 6207J), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: (202) 343–9263; fax number: (202) 343–2342; e-mail address: GHGReportingRule@epa.gov. For technical information and implementation materials, please go to the Web site https://www.epa.gov/ climatechange/emissions/ ghgrulemaking.html. To submit a question, select Rule Help Center, then select Contact Us. SUPPLEMENTARY INFORMATION: I. Why is EPA issuing this proposed rule? This document proposes to correct an erroneous reference in special rules governing certain information obtained under the Clean Air Act (40 CFR part 2, subpart B). We have published a direct final rule making this correction in the ‘‘Rules and Regulations’’ section of this Federal Register because we view this as a noncontroversial action and anticipate no adverse comment. We have explained our reasons for this action in the preamble to the direct final rule. If we receive no adverse comment, we will not take further action on this proposed rule. If the EPA receives adverse comment, we will withdraw the direct final rule and it will not take effect. We would address all public comments in any subsequent final rule based on this proposed rule. We do not intend to institute a second comment period on this action. Any parties interested in commenting must do so by the comment deadline listed in the DATES section of this document. For further information, please see the information provided in the ADDRESSES section of this document. II. Does this action apply to me? Regulated Entities. Entities potentially affected by this proposed action include those listed in Table 1 of this preamble: rmajette on DSK29S0YB1PROD with PROPOSALS-1 TABLE 1—EXAMPLES OF AFFECTED ENTITIES BY CATEGORY Category NAICS Examples of affected facilities General Stationary Fuel Combustion Sources .......................... .......................... Facilities operating boilers, process heaters, incinerators, turbines, and internal combustion engines. Extractors of crude petroleum and natural gas. Manufacturers of lumber and wood products. Pulp and paper mills. Chemical manufacturers. Petroleum refineries, and manufacturers of coal products. 211 321 322 325 324 VerDate Mar<15>2010 13:46 Oct 14, 2011 Jkt 226001 PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 E:\FR\FM\17OCP1.SGM 17OCP1

Agencies

[Federal Register Volume 76, Number 200 (Monday, October 17, 2011)]
[Proposed Rules]
[Pages 64049-64055]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26743]

=======================================================================
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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

RIN 1506-AB13

Bank Secrecy Act Regulations: Definition of ``Monetary
Instrument''

AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: FinCEN is proposing to amend the definition of ``monetary
instrument'' in the Bank Secrecy Act (``BSA'') regulations for purposes
of the international transport of currency and monetary instrument
reporting requirement to include tangible prepaid access devices.

DATES: Written comments on this notice of proposed rulemaking must be
submitted on or before December 16, 2011.

ADDRESSES: You may submit comments, identified by RIN 1506-AB13, by any
of the following methods:
Federal E-rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Include 1506-AB13 in
the submission. Refer to Docket Number FINCEN-2011-0003.
Mail: FinCEN, P.O. Box 39, Vienna, VA 22183. Include 1506-
AB13 in the body of the text. Please submit comments by one method
only. Comments submitted in response to this notice of proposed
rulemaking will become a matter of public record. Therefore, you should
submit only information that you wish to make publicly available.
Inspection of comments: Public comments received electronically or
through the U.S. Postal Service sent in response to a notice and
request for comment will be made available for public review as soon as
possible on https://www.regulations.gov. Comments received may be
physically inspected in the FinCEN reading room located in Vienna,
Virginia. Reading room appointments are available weekdays (excluding
holidays) between 10 a.m. and 3 p.m., by calling the Disclosure Officer
at (703) 905-5034 (not a toll-free call).

FOR FURTHER INFORMATION CONTACT: FinCEN, Regulatory Policy and Programs
Division at (800) 949-2732 and select Option 1.

SUPPLEMENTARY INFORMATION:

[[Page 64050]]

I. Introduction

A. Statutory Background

The BSA, Titles I and II of Public Law 91-508, as amended, codified
at 12 U.S.C. 1829b and 1951-1959, and 31 U.S.C. 5311-5314 and 5316-
5332, authorizes the Secretary of the Treasury (the ``Secretary'') to
issue regulations requiring financial institutions to keep records and
file reports that the Secretary determines ``have a high degree of
usefulness in criminal, tax, or regulatory investigations or
proceedings, or in the conduct of intelligence or counterintelligence
matters, including analysis to protect against international
terrorism.'' \1\ The Secretary's authority to administer the BSA and
its implementing regulations has been delegated to the Director of
FinCEN.\2\ FinCEN has interpreted the BSA through implementing
regulations (``BSA regulations'' or ``BSA rules'') that appear at 31
CFR Chapter X.\3\
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\1\ 31 U.S.C. 5311.
\2\ See Treasury Order 180-01 (Sept. 26, 2002).
\3\ On October 26, 2010, FinCEN issued a final rule creating a
new Chapter X in Title 31 of the Code of Federal Regulations for the
BSA regulations. See 75 FR 65806 (October 26, 2010) (Transfer and
Reorganization of Bank Secrecy Act Regulations Final Rule) (referred
to herein as the ``Chapter X Final Rule''). The Chapter X Final Rule
became effective on March 1, 2011.
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Reports on the international transportation and receipt of monetary
instruments are among those authorized by the BSA.\4\ Pursuant to this
authority, FinCEN has issued regulations requiring that a form be filed
reporting the international transportation, mail, or shipment of
currency or other monetary instruments in an aggregate amount that
exceeds $10,000.\5\ The regulations, initially issued in 1972, are
currently found at 31 CFR 1010.340, and the definition of ``monetary
instrument'' is at 31 CFR 1010.100(dd).
---------------------------------------------------------------------------

\4\ 31 U.S.C. 5316.
\5\ The report is filed on Form 105, ``Report of International
Transport of Currency or Monetary Instruments'' (``CMIR'').
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The term ``monetary instrument'' is defined in the BSA to include
currency and a variety of bearer negotiable instruments, securities,
and similar items, but does not specifically include any types of
prepaid access devices.\6\ Nevertheless, FinCEN has regulatory
authority to expand the definition of monetary instruments to include
items deemed to be ``similar materials'' to coins and currency of a
foreign country, travelers' checks, bearer negotiable instruments,
bearer investment securities, bearer securities, and stock on which
title is passed on delivery.\7\ Pursuant to this authority, FinCEN is
proposing to amend the definition of ``monetary instrument'' for
purposes of the international transport of currency and monetary
instrument reporting (``CMIR'') requirement at 31 CFR 1010.340 to
include tangible prepaid access devices.
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\6\ Specifically, 31 U.S.C. 5312(a)(3) defines ``monetary
instruments'' to mean:
(A) United States coins and currency;
(B) as the Secretary may prescribe by regulation, coins and
currency of a foreign country, travelers' checks, bearer negotiable
instruments, bearer investment securities, bearer securities, stock
on which title is passed on delivery, and similar material; and
(C) as the Secretary of the Treasury shall provide by regulation
for purposes of sections 5316 and 5331, checks, drafts, notes, money
orders, and other similar instruments which are drawn on or by a
foreign financial institution and are not in bearer form. (Emphasis
added.)
\7\ Id.
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On May 22, 2009, when FinCEN regulations still referred to stored
value rather than prepaid access, the President signed the Credit Card
Accountability Responsibility and Disclosure (CARD) Act of 2009 (``CARD
Act'').\8\ Section 503 of the CARD Act required the issuance of
``regulations in final form implementing the Bank Secrecy Act,
regarding the sale, issuance, redemption, or international transport of
stored value, including stored value cards.'' \9\ The CARD Act
authorizes ``regulations regarding international transport'' of prepaid
access devices, including ``reporting requirements pursuant to Section
5316 of title 31, United States Code.''
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\8\ P.L. 111-24 (May 22, 2009), 123 Stat. 1734.
\9\ Id., Sec. 503(a), (c).
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Pursuant to the BSA and CARD Act, FinCEN published the Notice of
Proposed Rulemaking--Definitions and Other Regulations Relating to
Prepaid Access on June 28, 2010 (``Prepaid Access NPRM''),\10\ and, on
July 29, 2011, issued a Final Rule entitled ``Definitions and Other
Regulations Relating to Prepaid Access'' (the ``Prepaid Access Final
Rule'').\11\ The Final Rule contains definitions of ``prepaid access''
\12\ and related terms and imposes registration, reporting, record-
keeping, and anti-money laundering program requirements on providers
and sellers of prepaid access. While the Final Rule does not address
reporting requirements for prepaid access with respect to the
international transport of monetary instruments pursuant to 31 CFR
1010.340 because it's provisions provide definitions and requirements
for money services businesses, it does provide the necessary first step
before this rule could be proposed by creating a regulatory framework
and definition of prepaid access.
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\10\ 75 FR 36589. The Prepaid Access NPRM discussed FinCEN's
engagement with the Department of Homeland Security and other
members of the law enforcement community in an attempt to identify
appropriate solutions regarding reporting of the international
transport of prepaid access, see 75 FR 36593.
\11\ 76 FR 45403.
\12\ The Final Rule defines ``prepaid access'' as access to
funds or the value of funds that have been paid in advance and can
be retrieved or transferred at some point in the future through an
electronic device or vehicle, such as a card, code, electronic
serial number, mobile identification number, or personal
identification number. 31 CFR 1010.100(ww). The Final Rule replaces
the term ``stored value'' with ``prepaid access.''
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Congress enacted the requirements of the CARD Act because of the
potential to substitute prepaid access for cash and other monetary
instruments as a means to smuggle the proceeds of illegal activity into
and out of the United States, as various reports and cases have
suggested.\13\ In a May 13, 2009 statement, Senator Collins,
introducing the amendment that added Section 503 to the CARD Act,
stated:
---------------------------------------------------------------------------

\13\ See Money Laundering Using New Payment Methods, Financial
Action Task Force, October 2010 (https://www.fatf-gafi.org/dataoecd/4/56/46705859.pdf ).

``[S]tored value cards have been used and are being used by
Mexican drug cartels to smuggle their drug revenues back to Mexico.
The Department of Justice estimates that up to $24 billion in cash
is smuggled into Mexico each year from the United States and these
stored value cards are one of the means by which the cash is
smuggled back into Mexico. Stored value cards can be loaded
anonymously by individuals who are involved in criminal enterprises,
such as drug trafficking. The cards are then physically smuggled
across the border and can be used to withdraw large quantities of
cash from ATMs.'' \14\
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\14\ See 155 Cong. Rec. S5426-5427

The 2007 National Money Laundering Strategy stated that prepaid
access is ``* * * an emerging cash alternative for both legitimate
consumers and money launderers alike.'' \15\ A U.S. Immigration and
Customs Enforcement official cited a case example where
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\15\ See https://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/nmls.pdf.

``hundreds of [prepaid cards] were found concealed in a compartment
similar to those used to conceal cash, drugs and other contraband.
The cards are also being used by criminal organizations to cover
`expenses' incurred by their couriers as they transport cash, drugs
and other contraband across the country * * * '' \16\
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\16\ Statement of Kumar C. Kibble, Deputy Director, U.S.
Immigration and Customs Enforcement, Department of Homeland
Security, before the U.S. Senate Caucus on International Narcotics
Control, March 9, 2011.

This proposal addresses the money laundering and terrorist
financing vulnerabilities illustrated by these examples.

[[Page 64051]]

B. Legislative History of 31 U.S.C. 5316

The proposal is consistent with the legislative history of the
definition of monetary instrument and the border reporting requirement.
When Congress enacted the BSA, it defined ``monetary instrument'' for
purposes of the international transport reporting requirement to mean:

``* * * coin and currency of the United States, and in addition,
such foreign coin and currencies, and such types of travelers
checks, bearer negotiable instruments, bearer investment securities,
bearer securities, and stock with title passing upon delivery, or
the equivalent thereof, as the Secretary may by regulation specify
for the purposes of the provision of this title to which the
regulation relates.'' \17\ (Emphasis added.)
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\17\ Section 203(l), Public Law 91-508, H.R. 15073 (Oct. 26,
1970).

The Treasury Department was a key proponent of the BSA, as part of
which it advocated for a border reporting requirement for monetary
instruments to include ``U.S. currency or its equivalent, such as
foreign currency, travelers checks, and other items which can pass
freely by delivery,'' (emphasis added) in order to remove a potential
loophole in the reporting regime.\18\
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\18\ Hearings before the Committee on Banking and Currency
(House) regarding H.R. 15073, Statement of Eugene T. Rossides,
Assistant Secretary of the Treasury for Enforcement and Operations
(March 2, 1970), p. 151. In subsequent testimony, Assistant
Secretary Rossides testified further with regard to the importance
of including in the definition, in addition to U.S. currency and
particular instruments, the phrase ``or their equivalent'': ``The
term `or their equivalent' is necessary to permit the Secretary of
the Treasury the necessary discretion to include other types of
instruments which are easily transferrable which may not be in
bearer form.'' Hearings before the Subcommittee on Financial
Institutions of the Committee on Banking and Currency (Senate)
regarding S. 3678 and H.R. 15073 (June 8, 9, 10, and 11, 1970),
Statement of Eugene T. Rossides, Assistant Secretary of the Treasury
for Enforcement and Operations (June 9, 1970), p. 183 (internal
citations omitted). (Emphasis in original.)
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The definition was amended when Congress revised and restated Title
31 of the United States Code by deleting the phrase ``or the equivalent
thereof'' and substituting the phrase ``or similar material.'' \19\
Congress expressly stated that this change was not intended to make a
substantive change to the meaning and was done only for clarity.\20\
With this change, Congress articulated a preference for the phrase
``similar material,'' signaling that it more clearly explained the
intent of the provision than the phrase ``the equivalent thereof'' in
the original text.
---------------------------------------------------------------------------

\19\ 31 U.S.C. 5312(a)(3).
\20\ Public Law 97-258 (Sept. 13, 1982), enacting H.R. 6128 to
revise, codify and enact without substantive change certain general
and permanent laws related to money and finance as Title 31, United
States Code. ``This bill makes no substantive change in the law.''
Committee Report No. 97-651 to H.R. 6128, p.28 (July 21, 1982) (In
subsection (a)(3)(B), the words ``in addition'', and ``and such
types of'' are omitted as surplus. The words ``similar material''
are substituted for ``the equivalent thereof'' for clarity).
---------------------------------------------------------------------------

II. Meaning of ``Similar Material''

Based on this legislative history, it is clear that Congress was
concerned with persons transferring monetary value anonymously across
international borders, particularly in connection with criminal
activity. Clearly, such activity at the time of enactment was primarily
accomplished through the use of currency and other substitutes for
currency, such as bearer negotiable instruments or securities.
Accordingly, the definition contains a list of such substitutes for
currency identified for this purpose. However, the definition is not
limited to the listed items, but is expressly expanded to include other
``similar material.''
The authority to extend these reports to items similar to U.S.
currency is consistent with the legislative purpose behind BSA
reporting--facilitating the traceability of currency and its
equivalents and eliminating anonymous international flows of money.
FinCEN believes it is reasonable to conclude that items that can be
used to accomplish the same anonymous transfer of monetary value
Congress sought to reach are items properly within the scope of the
term ``monetary instrument.'' Moreover, FinCEN finds that this
interpretation is consistent with the purpose of the BSA to address
gaps in the ability to trace the flow of currency and its equivalents
through reporting requirements that are highly useful in criminal, tax,
or regulatory investigations or proceedings, or in the conduct of
intelligence or counterintelligence matters, including analysis to
protect against international terrorism.\21\
---------------------------------------------------------------------------

\21\ 31 U.S.C. 5311.
---------------------------------------------------------------------------

Prepaid access devices are ``similar material'' to the items listed
in the definition of a monetary instrument in 31 U.S.C. 5312(b)(3),
``travelers checks, bearer negotiable instruments, bearer investment
securities, bearer securities, and stock with title passing upon
delivery,'' in that they can be used as a substitute for currency, the
funds they provide access to are accessible by the bearer of the
device, and they can be transferred from person to person without a
record of the chain of title. In particular they are similar to
traveler's checks and bearer negotiable instruments such as cashier's
and certified checks.
Although a traveler's check has the formal characteristics of a
negotiable instrument,\22\ it is used and accepted as ready cash
because payment is guaranteed by the issuer, who has already received
the value of the funds represented on the face of the check. Those
funds are held in an account specifically for that purpose, although
the account is not one established by the purchaser.\23\ Traveler's
checks are purchased from the issuer in advance of use and in amounts
corresponding to specific denominations of United States or foreign
currency.
---------------------------------------------------------------------------

\22\ See UCC 3-104(i) and 12 CFR 229.2(hh) (Availability of
Funds and Collection of Checks (Regulation CC)).
\23\ Generally, traveler's checks are thought of as being
``safer than cash'' because issuers promise to replace them if they
are lost or stolen. Further, they have no expiration date and hold
their face value until used.
---------------------------------------------------------------------------

Under the Uniform Commercial Code (the ``UCC''), a negotiable
instrument is an unconditional order or promise to pay a fixed or
determinable amount of money to bearer or to order that is payable on
demand or at a definite time.\24\ Rights and obligations contained in a
negotiable instrument can be altered by endorsement. The ordinary
manner in which the payee of a check endorses that check is by placing
his or her signature on the back of it. An endorsement may be made
after a specific direction (``pay to Dolly Madison'' or ``for deposit
only''), called a qualified or restricted endorsement, or with no
qualifying or restricting language, thereby making it payable to the
holder, called a blank endorsement. A blank endorsement creates a
bearer negotiable instrument, which is payable to whomever possesses
it, just like most tangible prepaid access devices. Once endorsed in
blank, a negotiable instrument can be transferred without any record of
transfer.
---------------------------------------------------------------------------

\24\ See UCC Sec. 3-104 (1990, unchanged in 2002 revisions).
Technically, there is an additional requirement: that the order or
promise not state any other undertaking or instruction by the person
promising or ordering payment.
---------------------------------------------------------------------------

Common negotiable instruments include cashier's and certified
checks. A cashier's check represents funds paid by the purchaser to a
bank, as represented by the face value. The check is issued and
certified by the bank on the bank's own account (not that of the
purchaser).\25\ The check will state the name of both purchaser and
payee but because it is a negotiable instrument, it can be transformed
into a bearer negotiable instrument by a blank endorsement. A cashier's
check does not depend on a private account and, therefore, is received
as cash. Certified

[[Page 64052]]

checks are similar in that the face value of the check represents funds
paid by the purchaser to a bank, which is guaranteed for payment and
can be converted into a bearer negotiable instrument.\26\
---------------------------------------------------------------------------

\25\ See UCC Sec. 3-104(g) and 12 CFR 229.2(i) (Availability of
Funds and Collection of Checks (Regulation CC)).
\26\ 12 CFR 229.2(j) (Availability of Funds and Collection of
Checks (Regulation CC)).
---------------------------------------------------------------------------

These instruments are similar to tangible prepaid access devices in
that they are issued based on funds already received by the issuer,
which is intended to facilitate immediate payment. The promises or
orders underlying them are guaranteed for payment, giving them enhanced
liquidity--the quintessential purpose of these instruments--enabling
them to be treated as a substitute for cash. As bearer instruments,
they are payable to whomever has possession, allowing transfers to be
made with no record of the chain of ownership. Tangible prepaid access
devices serve the identical purpose. In this context prepaid access
devices serve as ready cash or the value of cash, and as a means of
payment, are intended to provide the same (or superior) certainty as
the bearer instruments listed in the definition of monetary instrument.
The funds represented by prepaid access devices are payable to or
readily usable by the bearer of the device, with no record necessary to
track the chain of ownership. Consequently, FinCEN believes that
prepaid access devices are ``similar material'' to those bearer
instruments that are included in the definition of monetary
instruments.

III. Section-by-Section Analysis

Under the Prepaid Access Final Rule, FinCEN regulations define the
term ``prepaid access'' very broadly to mean ``[a]ccess to funds or the
value of funds that have been paid in advance and can be retrieved or
transferred at some point in the future through an electronic device or
vehicle, such as a card, code, electronic serial number, mobile
identification number, or personal identification number.'' \27\ While
the devices or vehicles that can provide access to prepaid funds are
potentially limitless, this proposal is narrowly focused on tangible
prepaid access devices transported, mailed, or shipped across the
border of the United States.
---------------------------------------------------------------------------

\27\ 31 CFR 1010.100(ww).
---------------------------------------------------------------------------

A. Proposed 31 CFR 1010.100(dd)

Pursuant to FinCEN's authority under 31 U.S.C. 5312, FinCEN
proposes to amend 31 CFR 1010.100 by revising the definition of
``monetary instrument'' as that term is used for purposes of complying
with the CMIR requirement at Sec. 1010.340. In particular, the
proposed revisions would add prepaid access devices to the BSA
definition of monetary instrument by revising 31 CFR 1010.100(dd)(2)
and add a new 31 CFR 1010.100(dd)(3) that would incorporate the
exclusions for warehouse receipts and bills of lading, currently found
at 31 CFR 1010.100(dd)(2), as well as adding exclusions for credit and
debit cards. The proposed revisions to 31 CFR 1010.100(dd) would: (a)
Expand the definition to include tangible prepaid access devices; (b)
limit the application of the expanded definition to tangible prepaid
access only for purposes of the CMIR reporting requirement at Sec.
1010.340; (c) establish that the value of any such prepaid access
device would be determined by the amount of the funds available through
the device at the time of physical transportation, mail or shipment
into or out of the United States; and (d) clarify that credit cards and
debit cards are not a form of monetary instrument for BSA purposes.
1. Proposed 31 CFR 1010.100(dd)(2)
The proposed revision to 31 CFR 1010.100(dd)(2) would provide that,
for purposes of the CMIR regulations issued pursuant to 31 U.S.C. 5316,
the definition of monetary instrument includes tangible prepaid access
devices.
The proposed inclusion of ``tangible prepaid access devices''
within ``monetary instrument'' is limited in scope to CMIR filing
obligations found at 31 CFR 1010.340 and related BSA rules involving
the definitions, penalty, seizure, and enforcement provisions that
refer to those obligations. This proposed regulation is not intended to
extend to tangible prepaid access devices the record keeping and other
reporting requirements applicable to monetary instruments under other
provisions of the BSA regulations.
The term ``tangible prepaid access device'' is defined at 31 CFR
1010.100(dd)(2) to mean ``any physical item that can be transported,
mailed, or shipped into or out of the United States and the use of
which is dedicated to obtaining access to prepaid funds or the value of
funds by the possessor in any manner without regard to whom the prepaid
access is issued.'' This definition includes the predominant forms of
prepaid devices such as general-use prepaid cards, gift cards, store
cards, payroll cards, and government benefit cards. It also includes
cell phones and other tangible devices to the extent that they
themselves, or an item built into or attached to them, provide access
to prepaid funds or the value of funds by being readable by a device
employed for the purpose by merchants. The proposed definition does not
reach intangible vehicles for accessing prepaid funds or the value of
funds, such as codes and PINs. It also does not reach tangible items
that may be incidental to obtaining access to intangible prepaid
access, such as laptop computers, Web-enabled cell phones, or other
devices that are not dedicated to accessing specific prepaid funds.
The proposed revision to 31 CFR 1010.100(dd)(2) would also provide
that the point in time at which the value of a tangible prepaid access
device is measured is the time at which it crosses into or out of the
United States. For purposes of complying with the CMIR reporting
requirement at Sec. 1010.340, the proposed definition would establish
that the balance available through any such access device as a monetary
instrument ``at the time of the physical transportation, mail, or
shipment into or out of the United States'' would be the reportable
value. In cases of mail or shipment, there is a presumption that the
value available through the device remains the same throughout the
period of shipment.
2. Proposed 31 CFR 1010.100(dd)(3)
The proposed revisions clarify that credit and debit cards are not
a form of monetary instrument for BSA purposes. For this purpose the
proposed definition adopts the definition of credit card used in the
consumer credit protection law \28\ and Truth-In-Lending Act
regulations (Regulation Z),\29\ which define the term to mean any card,
plate, coupon book, or other credit device existing for the purpose of
obtaining money, property, labor, or services on credit. With respect
to debit cards, the proposed definition adopts the portion of the
definition of debit card used in the consumer credit protection
law,\30\ which defines the term to mean any card, or other payment code
or device, issued or approved for use through a payment card network to
debit an individual's asset account (regardless of the purpose for
which the account is established), whether authorization is based on
signature, PIN, or other means. The proposed definition would not adopt
the rest of the debit card definition in the consumer credit protection
law that goes on to include general-use prepaid cards and exclude paper
checks.\31\ Debit cards associated with a bank account are not included

[[Page 64053]]

within the meaning of the term monetary instrument.
---------------------------------------------------------------------------

\28\ 15 U.S.C. 1602(k).
\29\ 12 CFR 226.2(15).
\30\ 15 U.S.C. 1693o-2(c)(2)(A).
\31\ 15 U.S.C. 1693o-2(c)(2)(B) and (C).
---------------------------------------------------------------------------

B. Proposed 31 CFR 1010.340(c)(10)

The proposed regulation would add new 31 CFR 1010.340(c)(10) to
exclude from the reporting requirement the international
transportation, mail, or shipment of tangible prepaid access devices by
a business or its agent offering such products prior to their delivery
to a seller for sale to the public. This provision mirrors the
exclusion for a traveler's check issuer or its agent found at 31 CFR
1010.340(c)(7). The phrase ``[a] business participating in the offering
of tangible prepaid access devices or its agent'' is intended to
include all of the participants in a prepaid access program and their
agents, if any. The proposed rule is only intended to capture tangible
prepaid access devices that have been purchased for use, loaded with
funds, and ``activated'' by whatever process a particular prepaid
program requires for loaded funds to be made available for use.

IV. Questions for Public Comment

A. There may be obstacles to law enforcement identifying prepaid
access devices and verifying the available balance. Branded open loop
prepaid access devices can be indistinguishable from credit and debit
cards, making it difficult for border agents and other law enforcement
authorities to identify prepaid access devices. Various impediments,
such as the Right to Financial Privacy Act \32\ or state privacy laws
involving individuals' bank records, may make it difficult to determine
the available balance of an underlying prepaid access device, since the
value is not generally indicated on its face.\33\ Further, where the
prepaid access device takes a novel form (not a card or chip), law
enforcement may not be prepared with a device to read the available
balance. Moreover, since a holder of certain prepaid access devices may
experience difficulties in retrieving records concerning the prepaid
access device, a declaration concerning available balance may be
unintentionally inaccurate. The holder may also not be directly
responsible for adding value to the prepaid program, which could also
result in a declaration concerning the available balance being
unintentionally inaccurate. FinCEN requests comment on these and any
other potential obstacles to law enforcement identifying prepaid access
devices and verifying the accessible value, including suggestions as to
how they may be addressed.
---------------------------------------------------------------------------

\32\ 12 U.S.C. 3401, et seq.
\33\ The Credit CARD Act of 2009 and Prepaid Cards, Payment
Cards Center Note, Federal Reserve Bank of Philadelphia, August
2009.
---------------------------------------------------------------------------

B. Prepaid access devices vary in form and function, including
closed loop cards that can be used only at a specific store or
merchant, or for a specific service, and cannot be used at ATMs to
access cash. These cards typically bear no information identifying the
cardholder, so they can be used by anyone who possesses the card.
Although their limited functionality may mitigate their potential use
as a money laundering device as they cannot be used as a cash access
device, they might be sold outright for cash. Should these closed loop
cards continue to be subject to a border declaration obligation as
proposed? Should other types of lower-risk prepaid access devices that
are not considered prepaid programs under the final prepaid rule be
excluded from the definition of monetary instruments, such as
government-funded, limited-value, or payroll cards?
C. Branded open loop reloadable cards are the prepaid access device
most similar to debit cards, some allowing both cash access via ATMs
and the ability to conduct transactions at a physical point of sale or
online. Currently, in the United States, debit cards and open loop
prepaid access cards that bear a global network brand (e.g., MasterCard
and Visa), are exclusively issued by depository institutions.
Depository institutions are already subject to a full slate of anti-
money laundering (``AML'') obligations, including a customer
identification program rule.\34\ Consequently, these cards may bear the
name, embossed on the front of the card, of the person to whom the card
has been issued in the same manner as a debit or credit card. Should
branded open loop reloadable prepaid cards with the name of the person
to whom the card has been issued embossed on the front of the card be
subject to border declaration as monetary instruments?
---------------------------------------------------------------------------

\34\ 31 CFR 1020.220.
---------------------------------------------------------------------------

D. Certain prepaid access programs, whether open or closed loop,
allow value to be added remotely to the funds accessible via the card
or other device. The effect is that someone other than the holder can
add value to the funds available to the holder. This is a typical
arrangement, for example, when parents give a prepaid access card to a
child away at school or when migrant laborers use a prepaid access
device to provide financial support to family members who remain in the
home country. In these circumstances, a prepaid access card or device
may cross the border out of or into the United States without an
available balance, but may later, when funds are added to the prepaid
access device, be able to access value. Should the border declaration
obligation be associated with the value immediately available to a
prepaid access device at the time the device enters or leaves the
country or should the declaration obligation apply to the potential
maximum value available via the prepaid access device?
E. Payment technology is a fast moving industry, with new programs
and access devices and methods constantly in development. There may
soon be the potential for a code or password, or object not typically
associated with payment system access (e.g., cell phone or key fob), to
be brought into or taken out of the United States and used to access
cash drawn from a prepaid access program either via an ATM or
otherwise. Should the border declaration apply to codes, passwords, and
other intangibles as well as to any tangible object that is dedicated
to accessing prepaid funds? Should it only apply to cards, or also to
cell phones, key fobs, or other tangible objects that include a device
that enables them to function in a similar manner to ``swiping'' a
magnetic stripe card?
F. FinCEN also specifically requests comments identifying any
additional costs associated with the completion of the CMIR form as a
result of this proposed rule.
G. FinCEN requests comment regarding whether it is appropriate to
exempt, in proposed 31 CFR 1010.340(c)(10), the international transport
mail or shipment by a prepaid access business or its agents of tangible
prepaid access devices prior to their delivery to a seller for sale to
the public. This provision would parallel the exemption for traveler's
checks found at 31 CFR 1010.340(c)(7).
H. FinCEN requests comment on whether devices that require a PIN
number for a point of sale or for ATM use should be excluded as
intangible prepaid access.

V. Regulatory Flexibility Act

When an agency issues a rulemaking proposal, the Regulatory
Flexibility Act (RFA) requires the agency to ``prepare and make
available for public comment an initial regulatory flexibility
analysis'' that will ``describe the impact of the proposed rule on
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA allows an
agency to certify a rule, in lieu of preparing an analysis, if the
proposed rulemaking is not expected to have a

[[Page 64054]]

significant economic impact on a substantial number of small entities.
The proposed rule will apply to all persons, a term that includes
individuals and entities of all sizes, if they conduct a reportable
action under the rule. The proposed rule is targeted at obtaining
reports from individuals transporting over $10,000 in currency,
tangible prepaid access devices, or other monetary instruments into or
out of the United States. FinCEN estimates that the number of reports
filed by small entities will be few and not impact a substantial number
of those entities.\35\
---------------------------------------------------------------------------

\35\ FinCEN has exempted the presale transportation of prepaid
devices, thus limiting the majority of instances when an entity, as
opposed to an individual, would have been required to report.
---------------------------------------------------------------------------

FinCEN estimates that the proposed rule will result in a total of
8,000 annual reports.\36\ The majority of these reports will be filed
by individuals. FinCEN estimates that each report will take 11 minutes
to complete. FinCEN does not believe that this proposed rule will have
a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------

\36\ In 2010, 200,000 CMIRs were filed. Of those CMIRs filed,
32,000 indicated monetary instruments crossed the border. By
comparing the transaction volumes of prepaid devices with other
monetary instruments, FinCEN determined that the proposed rule will
increase the number of CMIRs indicating monetary instruments by 25%
or 8,000 reports. Because the average burden per report is 11
minutes, the proposed rule will increase the collection by 1,467
hours.
---------------------------------------------------------------------------

Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605) and the
reasons stated above, it is hereby certified that this proposed rule
will not have a significant economic impact on a substantial number of
small entities. Accordingly, a regulatory flexibility analysis is not
required. FinCEN invites comments on the impact of this proposed rule
on small entities.

VI. Paperwork Reduction Act

The collection of information contained in this proposed rule has
been submitted to the Office of Management and Budget for review in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)). Under the Paperwork Reduction Act, an agency may not conduct
or sponsor, and an individual is not required to respond to, a
collection of information unless it displays a valid OMB control
number. Comments on the information collection should be sent to the
Desk Officer for the Department of the Treasury, Office of Information
and Regulatory Affairs, Office of Management and Budget, Paperwork
Reduction Project (1506), Washington, DC 20503, or by the Internet to
oira_submission@omb.eop.gov with a copy to the Financial Crimes
Enforcement Network by mail or as part of the comments through the
Internet. Comments are welcome and must be received by December 16,
2011.
Report of International Transportation of Currency or Monetary
Instruments (31 CFR 1010.340).Office of Management and Budget Control
Number: 1506-0014. (FinCEN Form 105)
This information is required to be provided pursuant to 31 U.S.C.
5316(a). Information collected on the CMIR is made available, in
accordance with strict safeguards, to appropriate criminal law
enforcement and regulatory personnel in the official performance of
their duties. The information collected is of use in investigations
involving international and domestic money laundering, tax evasion,
fraud, and other financial crimes. The collection of information is
mandatory. Records required to be retained under the Bank Secrecy Act
must be retained for five years. In 2009, OMB approved FinCEN for
51,333 hours under OMB control number 1506-0014. The collection of
reports on the international transportation of prepaid devices will add
to the estimated burden by 1,467 hours.\37\ However, the actual annual
reporting activity since 2009 (36,667 hours) has been notably less than
the amount approved by OMB in 2009 (51,333 hours). To accommodate for
this difference and provide a more accurate estimate going forward,
FinCEN is reducing the overall burden for this collection by 7,333
hours. Therefore, as proposed, the net reduction to the overall
approved burden under OMB Control Number 1506-0014 is 5,866 hours.
---------------------------------------------------------------------------

\37\ Id.
---------------------------------------------------------------------------

Description of Respondents: Individuals, business or other for-
profit institutions, and not-for-profit institutions involved in the
international transport of monetary instruments.
Estimated Number of Respondents: The rule decreases the number of
reports by 32,000.
Estimated Average Annual Burden Hours per Respondent: The estimated
average annual burden associated with the reporting requirement in 31
CFR 1020.340 is 11 minutes.
Estimated Total Annual Recordkeeping Burden: 45,467 hours.
Request for Comments: FinCEN specifically invite comments on: (a)
Whether the proposed recordkeeping requirements are necessary for the
proper performance of the mission of the FinCEN, and whether the
information shall have practical utility; (b) the accuracy of FinCEN's
estimate of the burden of the proposed recordkeeping requirement; (c)
ways to enhance the quality, utility, and clarity of the information
required, and (d) how the burden of complying with the proposed
collection of information may be minimized, including through the
application of automated collection techniques or other forms of
information technology.

VII. Executive Orders 12866 and 13563

Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
This rule is not a significant regulatory action. Accordingly, a formal
review by the Office of Management and Budget is not required.

VIII. 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 205
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.

List of Subjects in 31 CFR Parts 1010

Administrative practice and procedure, Banks, Banking, Brokers,
Currency, Foreign banking, Foreign currencies, Gambling,
Investigations, Penalties, Reporting and recordkeeping requirements,
Securities, Terrorism.

Proposed Amendments to the Regulations

For the reasons stated in the preamble, FinCEN proposes to amend 31
CFR part 1010 as follows:

[[Page 64055]]

PART 1010--GENERAL PROVISIONS

1. The authority citation for part 1010 continues to read as
follows:

Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314,
5316-5332; Title V, section 503, Pub. L. 111-24.

2. Amend Sec. 1010.100 as follows:
a. Revise paragraph (dd)(2); and
b. Add paragraph (dd)(3).

Sec. 1010.100 General definitions.

* * * * *
(dd) * * *
(2) For the purposes of complying with the currency and monetary
instrument reporting requirements issued pursuant to 31 U.S.C. 5316,
the term monetary instruments also includes any tangible prepaid access
device. The term ``tangible prepaid access device'' means any physical
item that can be transported, mailed, or shipped into or out of the
United States and the use of which is dedicated to obtaining access to
prepaid funds or the value of funds by the possessor in any manner
without regard to whom the prepaid access is issued. The value of any
such prepaid access device is the amount of the funds available to
which the device provides access at the time of physical
transportation, mail, or shipment into or out of the United States.
(3) Monetary instruments do not include warehouse receipts, bills
of lading, credit cards (as defined in as in 15 U.S.C. 1602(k),
including cards defined in 12 CFR 226.2(15)), or debit cards (as
defined in 15 U.S.C. 1693o-2(c)(2)(A)).
* * * * *
3. Amend Sec. 1010.340 by adding paragraph (c)(10) to read as
follows:

Sec. 1010.340 Reports of transportation of currency or monetary
instruments.

* * * * *
(c) * * *
(10) A business participating in the offering of prepaid access or
its agent with respect to the transportation of tangible prepaid access
devices prior to their delivery to selling agents for eventual sale to
the public;
* * * * *

Dated: October 11, 2011.
James H. Freis, Jr.,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2011-26743 Filed 10-14-11; 8:45 am]
BILLING CODE 4810-02-P

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