Financial Crimes Enforcement Network; Inflation Adjustment of Civil Monetary Penalties, 9370-9371 [2020-02526]
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9370
Federal Register / Vol. 85, No. 33 / Wednesday, February 19, 2020 / Rules and Regulations
Register on Friday, December 6, 2019.
Treasury Decision 9885 implementing
the base erosion and anti-abuse tax,
designed to prevent the reduction of tax
liability by certain large corporate
taxpayers through certain payments
made to foreign related parties and
certain tax credits.
DATES: Effective date. This correction is
effective on February 19, 2020 and is
applicable on December 6, 2019.
FOR FURTHER INFORMATION CONTACT:
Concerning § 1.59A–9, Azeka J.
Abramoff, Sheila Ramaswamy, or Karen
Walny at (202) 317–6938; concerning
§ 1.6038A–2, Brad McCormack or
Anand Desai at (202) 317–6939 (not tollfree numbers).
SUPPLEMENTARY INFORMATION:
Background
The final regulations (TD 9885) that
are the subject of this correction are
under sections 59A and 6038A of the
Internal Revenue Code.
Need for Correction
As published December 6, 2019 (84
FR 66968), the final regulations (TD
9885; FR Doc. 2019–25744) contained
errors that may prove misleading and
therefore need to be corrected.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Correction of Publication
Accordingly, 26 CFR part 1 is
corrected by making the following
correcting amendments:
that has as a principal purpose of
avoiding a base erosion payment (or
reducing the amount of a base erosion
payment), the role of the intermediary
or intermediaries is disregarded as a
conduit, or the amount paid or accrued
to the intermediary is treated as a base
erosion payment, as appropriate.
*
*
*
*
*
(c) * * *
(2) * * *
(ii) * * * The arrangement between
FP, DC, and Corp A is deemed to result
in a $95x base erosion payment under
paragraph (b)(1) of this section because
DC’s payment to Corp A would have
been a base erosion payment if paid to
a foreign related party, and Corp A
makes a corresponding payment to FP
as part of the series of transactions that
has as a principal purpose of avoiding
a base erosion payment.
*
*
*
*
*
(5) * * *
(ii) * * * The transactions between
FP, DC, and Bank are deemed to result
in a base erosion payment under
paragraph (b)(1) of this section because
DC’s payment to Bank would have been
a base erosion payment if paid to a
foreign related party, and Bank makes a
corresponding payment to FP as part of
the series of transactions that has as a
principal purpose of avoiding a base
erosion payment.* * *
*
*
*
*
*
■ Par. 3. Section 1.6038A–2(g) is
amended by revising the third sentence
to read as follows:
§ 1.6038A–2
PART 1—INCOME TAXES
Requirement of return.
*
*
*
*
*
(g) * * * Paragraph (b)(7)(ix) of this
section applies to taxable years
beginning on or after June 7,
2021. * * *
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.59A–9 is amended
by revising the text of paragraphs (b)(1)
and (c)(2)(ii) and the first sentence of
paragraph (c)(5)(ii) to read as follows:
■
§ 1.59A–9 Anti-abuse and
recharacterization rules.
Martin V. Franks,
Chief, Publications and Regulations Branch,
Legal Processing Division, Associate Chief
Counsel, (Procedure and Administration).
[FR Doc. 2020–02652 Filed 2–18–20; 8:45 am]
BILLING CODE 4830–01–P
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*
*
*
*
*
(b) * * *
(1) * * * If a taxpayer pays or accrues
an amount to one or more
intermediaries (including an
intermediary unrelated to the taxpayer)
that would have been a base erosion
payment if paid or accrued to a foreign
related party, and one or more of the
intermediaries makes (directly or
indirectly) corresponding payments to
or for the benefit of a foreign related
party as part of a transaction (or series
of transactions), plan or arrangement
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
Financial Crimes Enforcement
Network; Inflation Adjustment of Civil
Monetary Penalties
Financial Crimes Enforcement
Network (‘‘FinCEN’’), Treasury.
ACTION: Final rule.
AGENCY:
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
FinCEN publishes this final
rule to reflect inflation adjustments to
its civil monetary penalties (‘‘CMPs’’) as
mandated by the Federal Civil Penalties
Inflation Adjustment Act of 1990, as
amended by the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015 (collectively referred to
herein as the ‘‘2015 Act’’). This rule
adjusts certain CMPs within the
jurisdiction of FinCEN to the maximum
amount required by the 2015 Act.
DATES: Effective February 19, 2020.
FOR FURTHER INFORMATION CONTACT: The
FinCEN Resource Center at (800) 767–
2825 or email frc@fincen.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
In order to improve the effectiveness
of CMPs and to maintain their deterrent
effect, the Federal Civil Penalties
Inflation Adjustment Act of 1990, 28
U.S.C. 2461 note (‘‘Inflation Adjustment
Act’’), as amended by the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015 (Pub. L. 114–
74) (‘‘2015 Act’’), requires Federal
agencies to adjust each CMP provided
by law within the jurisdiction of the
agency. The 2015 Act requires agencies
to adjust the level of CMPs with an
initial ‘‘catch-up’’ adjustment through
an interim final rulemaking and to make
subsequent annual adjustments for
inflation, without needing to provide
notice and the opportunity for public
comment otherwise required by 5 U.S.C.
553. The 2015 Act provides that any
increase in a CMP shall apply to CMPs
that are assessed after the date the
increase takes effect, regardless of
whether the underlying violation
predated such increase.1
II. Method of Calculation
The method of calculating CMP
adjustments applied in this final rule is
required by the 2015 Act. Under the
2015 Act and the Office of Management
and Budget (‘‘OMB’’) guidance required
by the 2015 Act, annual inflation
adjustments subsequent to the initial
catch-up adjustment are to be based on
the percent change between the
Consumer Price Index for all Urban
Consumers (‘‘CPI–U’’) for the October
preceding the date of the adjustment
and the prior year’s October CPI–U. As
set forth in OMB Memorandum M–20–
05 of December 16, 2019, the adjustment
multiplier for 2020 is 1.01764. In order
to complete the 2020 annual
adjustment, each current CMP is
1 The increased CMPs, however, apply only with
respect to underlying violations occurring after the
date of enactment of the 2015 Act, i.e., after
November 2, 2015.
E:\FR\FM\19FER1.SGM
19FER1
9371
Federal Register / Vol. 85, No. 33 / Wednesday, February 19, 2020 / Rules and Regulations
multiplied by the 2020 adjustment
multiplier. Under the 2015 Act, any
increase in CMP must be rounded to the
nearest multiple of $1.
2. Regulatory Flexibility Act
Procedural Matters
Because no notice of proposed
rulemaking is required, the provisions
of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.) do not apply.
1. Administrative Procedure Act
3. Executive Order 12866
Section 701(b) of the 2015 Act
requires agencies, beginning in 2017, to
make annual adjustments for inflation to
CMPs without needing to provide notice
and the opportunity for public comment
required by 5 U.S.C. 553. Additionally,
the methodology used for adjusting
CMPs for inflation, effective 2017, is
provided by statute, with no discretion
provided to agencies regarding the
substance of the adjustments for
inflation to CMPs. FinCEN is charged
only with performing ministerial
computations to determine the dollar
amount of adjustments for inflation to
CMPs. Accordingly, prior public notice
and an opportunity for public comment
and a delayed effective date are not
required for this rule.
This rule is not a significant
regulatory action as defined in section
3.f of Executive Order 12866.
4. Paperwork Reduction Act
currencies, Gambling, Investigations,
Penalties, Reporting and recordkeeping
requirements, Securities, Terrorism.
For the reasons set forth in the
preamble, Part 1010 of Chapter X of title
31 of the Code of Federal Regulations is
amended as follows:
PART 1010—GENERAL PROVISIONS
1. The authority citation for part 1010
continues to read as follows:
■
The provisions of the Paperwork
Reduction Act of 1995, Public Law 104–
13, 44 U.S.C. Chapter 35, and its
implementing regulations, 5 CFR part
1320, do not apply to this rule because
there are no new or revised
recordkeeping or reporting
requirements.
Authority: 12 U.S.C. 1829b and 1951–1959;
31 U.S.C. 5311–5314 and 5316–5332; title III,
sec. 314, Pub. L. 107–56, 115 Stat. 307; sec.
701. Pub. L. 114–74, 129 Stat. 599.
2. Amend § 1010.821 by revising
Table 1 to read as follows:
■
List of Subjects in 31 CFR Part 1010
§ 1010.821
Penalty adjustment and table.
Authority delegations (Government
agencies), Administrative practice and
procedure, Banks, banking, Brokers,
Currency, Foreign banking, Foreign
*
*
*
*
*
(b) * * *
TABLE 1 OF § 1010.821—PENALTY ADJUSTMENT TABLE
U.S. Code citation
Civil monetary penalty description
12 U.S.C. 1829b(j) ......................................
Relating to Recordkeeping Violations For Funds Transfers.
Willful or Grossly Negligent Recordkeeping Violations .....
Failure to Terminate Correspondent Relationship with
Foreign Bank.
General Civil Penalty Provision for Willful Violations of
Bank Secrecy Act Requirements.
Foreign Financial Agency Transaction—Non-Willful Violation of Transaction.
Foreign Financial Agency Transaction—Willful Violation
of Transaction.
Negligent Violation by Financial Institution or Non-Financial Trade or Business.
Pattern of Negligent Activity by Financial Institution or
Non-Financial Trade or Business.
Violation of Certain Due Diligence Requirements, Prohibition on Correspondent Accounts for Shell Banks, and
Special Measures.
Civil Penalty for Failure to Register as Money Transmitting Business.
12 U.S.C. 1955 ...........................................
31 U.S.C. 5318(k)(3)(C) ..............................
31 U.S.C. 5321(a)(1) ...................................
31 U.S.C. 5321(a)(5)(B)(i) ...........................
31 U.S.C. 5321(a)(5)(C)(i)(I) .......................
31 U.S.C. 5321(a)(6)(A) ..............................
31 U.S.C. 5321(a)(6)(B) ..............................
31 U.S.C. 5321(a)(7) ...................................
31 U.S.C. 5330(e) .......................................
Penalties as last
amended by
statute
khammond on DSKJM1Z7X2PROD with RULES
Jamal El-Hindi
Deputy Director, Financial Crimes
Enforcement Network.
[FR Doc. 2020–02526 Filed 2–18–20; 8:45 am]
BILLING CODE 4810–02–P
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19FER1
Maximum penalty
amounts or range
of minimum and
maximum penalty
amounts for penalties assessed on
or after February
19, 2020
$10,000
$21,410
10,000
10,000
21,410
14,482
25,000
¥100,000
10,000
58,328
¥233,313
13,481
100,000
134,806
500
1,166
50,000
90,743
1,000,000
1,448,191
5,000
8,606
]]>Agencies
[Federal Register Volume 85, Number 33 (Wednesday, February 19, 2020)]
[Rules and Regulations]
[Pages 9370-9371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02526]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
Financial Crimes Enforcement Network; Inflation Adjustment of
Civil Monetary Penalties
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: FinCEN publishes this final rule to reflect inflation
adjustments to its civil monetary penalties (``CMPs'') as mandated by
the Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015 (collectively referred to herein as the ``2015
Act''). This rule adjusts certain CMPs within the jurisdiction of
FinCEN to the maximum amount required by the 2015 Act.
DATES: Effective February 19, 2020.
FOR FURTHER INFORMATION CONTACT: The FinCEN Resource Center at (800)
767-2825 or email [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
In order to improve the effectiveness of CMPs and to maintain their
deterrent effect, the Federal Civil Penalties Inflation Adjustment Act
of 1990, 28 U.S.C. 2461 note (``Inflation Adjustment Act''), as amended
by the Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015 (Pub. L. 114-74) (``2015 Act''), requires Federal agencies
to adjust each CMP provided by law within the jurisdiction of the
agency. The 2015 Act requires agencies to adjust the level of CMPs with
an initial ``catch-up'' adjustment through an interim final rulemaking
and to make subsequent annual adjustments for inflation, without
needing to provide notice and the opportunity for public comment
otherwise required by 5 U.S.C. 553. The 2015 Act provides that any
increase in a CMP shall apply to CMPs that are assessed after the date
the increase takes effect, regardless of whether the underlying
violation predated such increase.\1\
---------------------------------------------------------------------------
\1\ The increased CMPs, however, apply only with respect to
underlying violations occurring after the date of enactment of the
2015 Act, i.e., after November 2, 2015.
---------------------------------------------------------------------------
II. Method of Calculation
The method of calculating CMP adjustments applied in this final
rule is required by the 2015 Act. Under the 2015 Act and the Office of
Management and Budget (``OMB'') guidance required by the 2015 Act,
annual inflation adjustments subsequent to the initial catch-up
adjustment are to be based on the percent change between the Consumer
Price Index for all Urban Consumers (``CPI-U'') for the October
preceding the date of the adjustment and the prior year's October CPI-
U. As set forth in OMB Memorandum M-20-05 of December 16, 2019, the
adjustment multiplier for 2020 is 1.01764. In order to complete the
2020 annual adjustment, each current CMP is
[[Page 9371]]
multiplied by the 2020 adjustment multiplier. Under the 2015 Act, any
increase in CMP must be rounded to the nearest multiple of $1.
Procedural Matters
1. Administrative Procedure Act
Section 701(b) of the 2015 Act requires agencies, beginning in
2017, to make annual adjustments for inflation to CMPs without needing
to provide notice and the opportunity for public comment required by 5
U.S.C. 553. Additionally, the methodology used for adjusting CMPs for
inflation, effective 2017, is provided by statute, with no discretion
provided to agencies regarding the substance of the adjustments for
inflation to CMPs. FinCEN is charged only with performing ministerial
computations to determine the dollar amount of adjustments for
inflation to CMPs. Accordingly, prior public notice and an opportunity
for public comment and a delayed effective date are not required for
this rule.
2. Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, the
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do
not apply.
3. Executive Order 12866
This rule is not a significant regulatory action as defined in
section 3.f of Executive Order 12866.
4. Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1995, Public Law
104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR
part 1320, do not apply to this rule because there are no new or
revised recordkeeping or reporting requirements.
List of Subjects in 31 CFR Part 1010
Authority delegations (Government agencies), Administrative
practice and procedure, Banks, banking, Brokers, Currency, Foreign
banking, Foreign currencies, Gambling, Investigations, Penalties,
Reporting and recordkeeping requirements, Securities, Terrorism.
For the reasons set forth in the preamble, Part 1010 of Chapter X
of title 31 of the Code of Federal Regulations is amended as follows:
PART 1010--GENERAL PROVISIONS
0
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
and 5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307;
sec. 701. Pub. L. 114-74, 129 Stat. 599.
0
2. Amend Sec. 1010.821 by revising Table 1 to read as follows:
Sec. 1010.821 Penalty adjustment and table.
* * * * *
(b) * * *
Table 1 of Sec. 1010.821--Penalty Adjustment Table
----------------------------------------------------------------------------------------------------------------
Maximum penalty
amounts or range
of minimum and
Penalties as last maximum penalty
U.S. Code citation Civil monetary penalty amended by amounts for
description statute penalties
assessed on or
after February
19, 2020
----------------------------------------------------------------------------------------------------------------
12 U.S.C. 1829b(j)...................... Relating to Recordkeeping $10,000 $21,410
Violations For Funds Transfers.
12 U.S.C. 1955.......................... Willful or Grossly Negligent 10,000 21,410
Recordkeeping Violations.
31 U.S.C. 5318(k)(3)(C)................. Failure to Terminate 10,000 14,482
Correspondent Relationship with
Foreign Bank.
31 U.S.C. 5321(a)(1).................... General Civil Penalty Provision 25,000 58,328
for Willful Violations of Bank -100,000 -233,313
Secrecy Act Requirements.
31 U.S.C. 5321(a)(5)(B)(i).............. Foreign Financial Agency 10,000 13,481
Transaction--Non-Willful
Violation of Transaction.
31 U.S.C. 5321(a)(5)(C)(i)(I)........... Foreign Financial Agency 100,000 134,806
Transaction--Willful Violation
of Transaction.
31 U.S.C. 5321(a)(6)(A)................. Negligent Violation by Financial 500 1,166
Institution or Non-Financial
Trade or Business.
31 U.S.C. 5321(a)(6)(B)................. Pattern of Negligent Activity by 50,000 90,743
Financial Institution or Non-
Financial Trade or Business.
31 U.S.C. 5321(a)(7).................... Violation of Certain Due 1,000,000 1,448,191
Diligence Requirements,
Prohibition on Correspondent
Accounts for Shell Banks, and
Special Measures.
31 U.S.C. 5330(e)....................... Civil Penalty for Failure to 5,000 8,606
Register as Money Transmitting
Business.
----------------------------------------------------------------------------------------------------------------
Jamal El-Hindi
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2020-02526 Filed 2-18-20; 8:45 am]
BILLING CODE 4810-02-P
