Financial Crimes Enforcement Network; Inflation Adjustment of Civil Monetary Penalties, 9370-9371 [2020-02526]

Download as PDF 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 khammond on DSKJM1Z7X2PROD with RULES * * * * * (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 VerDate Sep<11>2014 16:42 Feb 18, 2020 Jkt 250001 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 VerDate Sep<11>2014 16:42 Feb 18, 2020 Jkt 250001 PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 E:\FR\FM\19FER1.SGM 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]


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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

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