Agency Information Collection Activities; Proposed Renewal; Comment Request; Renewal Without Change of the Customer Identification Program Regulatory Requirements for Certain Financial Institutions, 49425-49431 [2020-17694]
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
performance of the functions of the
agency, including whether the
information shall have practical utility;
(ii) the accuracy of the agency’s estimate
of the burden of the collection of
information; (iii) ways to enhance the
quality, utility, and clarity of the
information to be collected; (iv) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology; and (v) estimates of capital
or start-up costs and costs of operation,
maintenance, and purchase of services
to provide information.
Dated: August 7, 2020.
Michael Mosier,
Deputy Director, Financial Crimes
Enforcement Network.
[FR Doc. 2020–17696 Filed 8–12–20; 8:45 am]
BILLING CODE 4810–02–P
DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
Agency Information Collection
Activities; Proposed Renewal;
Comment Request; Renewal Without
Change of the Customer Identification
Program Regulatory Requirements for
Certain Financial Institutions
Financial Crimes Enforcement
Network (FinCEN), Treasury.
ACTION: Notice and request for
comments.
AGENCY:
As part of its continuing effort
to reduce paperwork and respondent
burden, FinCEN invites comments on
the proposed renewal, without change,
of currently approved information
collections found in existing Bank
Secrecy Act regulations requiring banks,
savings associations, credit unions,
certain non-federally regulated banks,
brokers or dealers in securities, mutual
funds, futures commission merchants,
and introducing brokers in
commodities, to develop and implement
customer identification programs
designed to allow the financial
institution to form a reasonable belief it
knows the true identity of each
customer. Although no changes are
proposed to the information collections
themselves, this request covers a future
expansion of the scope of the annual
burden and cost estimates associated
with these regulations. This request for
comments is made pursuant to the
Paperwork Reduction Act of 1995.
DATES: Written comments are welcome,
and must be received on or before
October 13, 2020.
SUMMARY:
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Comments may be
submitted by any of the following
methods:
• Federal E-rulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
Refer to Docket Number FINCEN–2020–
0010 and the specific Office of
Management and Budget (OMB) control
numbers 1506–0022, 1506–0026, 1506–
0033, and 1506–0034.
• Mail: Policy Division, Financial
Crimes Enforcement Network, P.O. Box
39, Vienna, VA 22183. Refer to Docket
Number FINCEN–2020–0010 and OMB
control numbers 1506–0022, 1506–0026,
1506–0033, and 1506–0034.
Please submit comments by one
method only. Comments will also be
incorporated into FinCEN’s review of
existing regulations, as provided by
Treasury’s 2011 Plan for Retrospective
Analysis of Existing Rules. All
comments submitted in response to this
notice will become a matter of public
record. Therefore, you should submit
only information that you wish to make
publicly available.
FOR FURTHER INFORMATION CONTACT: The
FinCEN Regulatory Support Section at
1–800–767–2825 or electronically at
frc@fincen.gov.
SUPPLEMENTARY INFORMATION:
ADDRESSES:
I. Statutory and Regulatory Provisions
The legislative framework generally
referred to as the Bank Secrecy Act
(BSA) consists of the Currency and
Financial Transactions Reporting Act of
1970, as amended by the Uniting and
Strengthening America by Providing
Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001
(USA PATRIOT Act) (Pub. L. 107–56)
and other legislation. The BSA is
codified at 12 U.S.C. 1829b, 12 U.S.C.
1951–1959, 31 U.S.C. 5311–5314 and
5316–5332, and notes thereto, with
implementing regulations at 31 CFR
Chapter X.
The BSA authorizes the Secretary of
the Treasury, inter alia, to require
financial institutions to keep records
and file reports that are determined to
have a high degree of usefulness in
criminal, tax, and regulatory matters, or
in the conduct of intelligence or
counter-intelligence activities, to protect
against international terrorism, and to
implement anti-money laundering
(AML) programs and compliance
procedures.1 Regulations implementing
Title II of the BSA appear at 31 CFR
Chapter X. The authority of the
1 Section 358 of the USA PATRIOT Act added
language expanding the scope of the BSA to
intelligence or counter-intelligence activities to
protect against international terrorism.
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49425
Secretary to administer the BSA has
been delegated to the Director of
FinCEN.2
31 U.S.C. 5318(l) requires FinCEN to
issue regulations prescribing minimum
standards for customer identification
programs (CIP) for financial
institutions.3 Regulations implementing
section 5318(l) are as follows: (i) Banks,
savings associations, credit unions, and
certain non-federally regulated banks
(31 CFR 1020.220); (ii) brokers or
dealers in securities (31 CFR 1023.220);
(iii) mutual funds (31 CFR 1024.220);
and (iv) futures commission merchants
and introducing brokers in commodities
(31 CFR 1026.220).
II. Paperwork Reduction Act of 1995
(PRA) 4
Title: Customer identification
programs (CIP) for certain financial
institutions (31 CFR 1020.220, 1023.220,
1024.220, and 1026.220).
OMB Control Numbers: 1506–0022,
1506–0026, 1506–0033, and 1506–
0034.5
Report Number: Not applicable.
Abstract: FinCEN is issuing this
notice to renew the OMB control
numbers for the CIP regulatory
requirements for certain financial
institutions.
Affected Public: Businesses or other
for-profit institutions, and non-profit
institutions.
Type of Review:
• Renewal without change of
currently approved information
collections.
• Propose for review and comment a
renewal of the portion of the PRA
2 Treasury Order 180–01 (re-affirmed Jan. 14,
2020).
3 Section 5318(l)(2) prescribes that the
regulations, at a minimum, require financial
institutions to implement reasonable procedures
for: (1) Verifying the identity of any person seeking
to open an account, to the extent reasonable and
practicable; (2) maintaining records of the
information used to verify the person’s identity,
including name, address, and other identifying
information; and (3) determining whether the
person appears on any lists of known or suspected
terrorists or terrorist organizations provided to the
financial institution by any government agency.
Section 5318(l)(3) further directed that the
regulations take into consideration the types of
accounts maintained by financial institutions, the
methods of opening accounts, and the types of
identifying information available.
4 Public Law 104–13, 44 U.S.C. 3506(c)(2)(A).
5 The CIP regulatory requirements are currently
covered under the following OMB control numbers:
1506–0022 (31 CFR 1026.220—Customer
identification programs for futures commission
merchants and introducing brokers); 1506–0026 (31
CFR 1020.220—Customer identification programs
for banks, savings associations, credit unions, and
certain non-federally regulated banks); 1506–0033
(31 CFR 1024.220—Customer identification
programs for mutual funds); and 1506–0034 (31
CFR 1023.220—Customer identification programs
for brokers or dealers in securities).
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burden that has been subject to notice
and comment in the past (the
‘‘traditional annual PRA burden’’).
• Propose for review and comment a
future expansion of the scope of the
PRA burden (the ‘‘supplemental annual
PRA burden’’).
Frequency: As required.
Estimated Number of Respondents:
16,938 financial institutions.6
Estimated Recordkeeping Burden:
In Part 1 of this notice, FinCEN
describes the breakdown of the
estimated number of financial
institutions, by type, and for certain
financial institutions, the estimated
number of new accounts opened per
year. In addition, Part 1 describes the
primary characteristics of covered
financial institutions’ CIP
requirements.7 In Part 2, FinCEN
proposes for review and comment a
renewal of the estimate of the traditional
annual PRA hourly burden, which
includes a scope and methodology
similar to that used in the past, with the
incorporation of cost estimates. The
scope and methodology used in the past
differed according to the type of covered
financial institution. In Part 3, FinCEN
proposes for review and comment a
methodology to estimate the hourly
burden and cost of a future estimate of
a supplemental annual PRA burden that
includes the full scope of CIP
requirements for all covered financial
institutions. Finally, in Part 4, FinCEN
solicits input from the public about: (a)
The accuracy of the estimate of the
traditional annual PRA burden; (b) the
method proposed for the calculation of
a future supplemental annual PRA
burden; (c) the criteria, metrics, and
most appropriate questions FinCEN
should consider when researching the
information to estimate the future
supplemental annual PRA burden,
according to the methodology proposed;
and (d) any other comments about the
regulations and the proposed current
and future hourly burden and cost
estimates of these requirements.
Part 1. Breakdown of the Financial
Institutions and Transactions Covered
by This Notice
The breakdown of financial
institutions and transactions, by type,
covered by this notice is reflected in
Table 1 below:
TABLE 1—BREAKDOWN OF FINANCIAL INSTITUTIONS AND TRANSACTIONS COVERED BY THIS NOTICE, BY TYPE OF
INSTITUTION
Estimated number of annual responses
Type of financial institution
Number of financial
institutions
Banks .....................................................................................................................................
Brokers or dealers in securities .............................................................................................
Futures commission merchants ............................................................................................
Introducing brokers in commodities ......................................................................................
Mutual funds ..........................................................................................................................
8 10,542
Totals ..............................................................................................................................
16,938
9 3,640
11 61
12 1,104
13 1,591
Number of new accounts
opened
Information not available.
9,000,000.10
Information not available.
Information not available.
20,000,000.14
29,000,000.
All covered financial institutions are
required to implement CIPs appropriate
for their size and type of business. The
CIP must include at minimum the
following five requirements:
(1) Written CIP (if a financial
institution is required to have an AML
program,15 the CIP must be part of the
written AML program); 16
(2) Identity verification procedures
(risk-based procedures for verifying the
identity of each customer to the extent
reasonable and practicable); 17
(3) Recordkeeping (procedures for
making and maintaining a record of all
information obtained under the CIP
requirements); 18
(4) Consultation of government lists
(procedures to determine whether the
customer appears on any list of known
or suspected terrorists or terrorist
organizations issued by any Federal
government agency, and designated as
such by Treasury in consultation with
the Federal functional regulators); 19 and
(5) Customer notice (procedures for
providing bank customers with
adequate notice that the bank is
requesting information to verify their
identities).20
The CIP may also include procedures
specifying when a financial institution
may rely on another financial institution
to perform any of the financial
6 Table 1 below sets forth a breakdown of the
types of financial institutions covered by this
notice.
7 The term ‘‘covered financial institution’’ applies
to all financial institutions with a CIP regulatory
requirement namely banks, savings associations,
credit unions, certain non-federally regulated
banks, brokers or dealers in securities, mutual
funds, futures commission merchants, and
introducing brokers in commodities.
8 According to the Federal Deposit Insurance
Corporation (FDIC) there were 5,103 FDIC-insured
banks as of March 31, 2020. According to the
Federal Reserve Board (FRB), there were 203 other
entities supervised by the FRB, as of June 16, 2020,
that fall within the definition of bank. (20 Edge Act
institutions, 15 agreement corporations, and 168
foreign banking organizations). According to the
National Credit Union Administration there were
5,236 federally regulated credit unions as of
December 31, 2019.
9 According to the Securities and Exchange
Commission (SEC), there were 3,640 brokers or
dealers in securities registered with the SEC, as of
March 31, 2020.
10 According to the SEC, there were
approximately 9,000,000 new accounts opened by
broker or dealers in securities in 2017, based on
forms filed with the SEC. The SEC provided this
estimate to FinCEN for the last renewal of OMB
control number 1506–0034 (83 FR 46012, Sept. 11,
2018). FinCEN was unable to obtain a more recent
estimate.
11 According to the Commodities and Futures
Trading Commission (CFTC), there were 61 futures
commission merchants registered with the CFTC, as
of March 31, 2020.
12 According to the CFTC, there were 1,104
introducing brokers in commodities registered with
the CFTC as of March 31, 2020.
13 According to the SEC, there were
approximately 1,591 mutual funds in 2017, based
on forms filed with the SEC. The SEC provided the
estimate to FinCEN for the last renewal of OMB
control number 1506–0033, 83 FR 46012 (Sept. 11,
2018). FinCEN was unable to obtain a more recent
estimate.
14 According to the SEC, there were
approximately 20,000,000 new mutual fund
accounts opened in 2017. The SEC provided this
estimate to FinCEN for the last renewal of OMB
control number 1506–0033, 83 FR 46012 (Sept. 11,
2018). FinCEN was unable to obtain a more recent
estimate.
15 31 CFR 1020.210; 1023.210; 1024.210; and
1026.210.
16 31 CFR 1020.220(a)(1); 1023.220(a)(1);
1024.220(a)(1); and 1026.220(a)(1).
17 31 CFR 1020.220(a)(2); 1023.220(a)(2);
1024.220(a)(2); and 1026.220(a)(2).
18 31 CFR 1020.220(a)(3); 1023.220(a)(3);
1024.220(a)(3); and 1026.220(a)(3).
19 31 CFR 1020.220(a)(4); 1023.220(a)(4);
1024.220(a)(4); and 1026.220(a)(4).
20 31 CFR 1020.220(a)(5); 1023.220(a)(5);
1024.220(a)(5); and 1026.220(a)(5).
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institution’s CIP procedures, provided
certain conditions are met.21
Part 2. Traditional Annual PRA Burden
and Cost
In the past, the scope of the
traditional annual PRA burden
estimates of the CIP differed according
to the type of financial institution
involved:
(a) For banks, futures commission
merchants, and introducing brokers in
commodities, due to the practical
challenges of obtaining the total number
of new accounts opened per year, the
estimate was limited to the annual
hourly burden of maintaining and
updating the written CIP, and providing
customers with adequate notice that the
financial institution was requesting
information to verify their identities.
The estimate did not take into account
the hourly burden of implementing the
other CIP requirements (i.e., verification
and recordkeeping requirements, and
consulting government lists).
(b) For brokers or dealers in securities
and mutual funds, where FinCEN
obtained the approximate numbers of
new accounts opened per year, the
estimate took into consideration the
annual hourly burden to implement the
CIP requirements for all new customers,
which included identity verification,
recordkeeping, and consulting
government lists. The estimate did not
take into account the hourly burden of
maintaining and updating the written
CIP or customer notification of CIP
requirements.
For purposes of this renewal and the
associated estimate of the traditional
annual PRA burden, FinCEN is making
the following assumptions:
(a) For banks, futures commission
merchants, and introducing brokers in
commodities:
i. FinCEN continues estimating the
annual hourly burden of maintaining
and updating the CIP at ten hours per
financial institution. This estimate
covers: (a) The hourly burden of
updating the CIP to take into
consideration any regulatory changes
and any modifications required as a
result of a financial institution making
changes to the type of accounts
maintained, the methods used to open
accounts, and the types of documentary
or non-documentary methods for
verifying identifying information the
financial institution intends to use; and
(b) presenting the updated CIP to the
appropriate level of management within
the financial institution for approval.
ii. FinCEN continues estimating the
hourly burden of providing customers
with notification of the CIP at one hour
annually per financial institution.
(b) For brokers or dealers in securities
and mutual funds:
i. FinCEN continues estimating the
hourly burden of obtaining and
verifying a customer’s identity (i.e.,
verification and recordkeeping
requirements, and consulting
government lists) at two minutes per
new account opened.
ii. FinCEN is also incorporating the
annual hourly burden of maintaining
and updating the CIP at ten hours per
financial institution. This estimate
covers: (a) The hourly burden of
updating the CIP to take into
consideration any regulatory changes
and any modifications required as a
result of a financial institution making
changes to the type of accounts
maintained, the methods used to open
accounts, and the types of documentary
or non-documentary methods for
verifying identifying information the
financial institution intends to use; and
(b) presenting the updated CIP to the
appropriate level of management within
the financial institution for approval.
iii. In addition, FinCEN is
incorporating an estimate of the hourly
burden of providing customers with
notification of the CIP at one hour
annually per financial institution.
Under these assumptions, FinCEN’s
estimate of the traditional annual PRA
burden is 1,152,985 hours, as detailed in
Tables 2 and 3.22
TABLE 2—HOURLY BURDEN ASSOCIATED WITH MAINTAINING AND UPDATING THE CIP AND CUSTOMER NOTIFICATION FOR
ALL COVERED FINANCIAL INSTITUTIONS
Number of
financial
institutions 23
Type of financial institution
Time per financial institution
Maintenance
(hours)
Total hourly burden
Notification
(hours)
Maintenance
Notification
Banks ...................................................................................
Futures commission merchants ...........................................
Introducing brokers in commodities .....................................
Brokers or dealers in securities ...........................................
Mutual funds ........................................................................
10,542
61
1,104
3,640
1,591
10
10
10
10
10
1
1
1
1
1
105,420
610
11,040
36,400
15,910
10,542
61
1,104
3,640
1,591
Totals ............................................................................
16,938
........................
........................
169,380
16,938
TABLE 3—HOURLY BURDEN ASSOCIATED WITH IMPLEMENTATION OF THE IDENTITY VERIFICATION, RECORDKEEPING, AND
CONSULTING GOVERNMENT LISTS REQUIREMENTS FOR BROKERS OR DEALERS IN SECURITIES AND MUTUAL FUNDS
Number of
financial
institutions 24
Type of financial institution
New accounts
per year
Time per
new account
(minutes)
Total hourly
burden *
Brokers or dealers in securities .......................................................................
Mutual funds ....................................................................................................
3,640
1,591
9,000,000
20,000,000
2
2
300,000
666,667
Totals ........................................................................................................
5,231
........................
........................
966,667
* New accounts per year times two minutes, divided by 60 minutes per hour
21 31 CFR 1020.220(a)(6); 1023.220(a)(6);
1024.220(a)(6); and 1026.220(a)(6).
22 The total estimate of the traditional annual PRA
burden is the summation of the total hourly burden
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of CIP maintenance (169,380), notification (16,938)
and implementation (966,667) as set out in Table
1 and 2.
23 As set out in Table 1 above.
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24 As
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set out in Table 1 above.
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To calculate the hourly burden
estimates in this notice, FinCEN
identified four roles and corresponding
staff positions involved in maintaining
and implementing the CIP: (i) General
oversight (board of directors and/or
senior management); (ii) general
supervision (providing process
oversight); (iii) direct supervision
(reviewing operational-level work and
cross-checking all or a sample of the
work product against supporting
documentation); and (iv) clerical work
(engaging in research and administrative
review, and recordkeeping).
FinCEN calculated the fully-loaded
hourly wage for each of these four roles
by taking the median wage as estimated
by the U.S. Bureau of Labor Statistics
(BLS), and computing an additional
benefits cost as follows: 25
TABLE 4—FULLY-LOADED HOURLY WAGE BY ROLE AND BLS JOB POSITION FOR ALL FINANCIAL INSTITUTIONS COVERED
BY THIS NOTICE
Role
BLS-code
Board of directors/senior management ........................
General supervision ......................................................
Direct supervision .........................................................
Clerical work (research, review, and recordkeeping) ...
11–1010
11–3031
13–1041
43–3099
Median hourly
wage
BLS-name
Chief Executive ........
Financial Manager ....
Compliance Officer ...
Financial Clerk .........
Benefit factor
$88.68
62.45
33.20
20.40
1.50
1.50
1.50
1.50
Fully-loaded
hourly wage
* $133.02
93.68
49.80
30.60
* $133.20 rounded to $133.00.
FinCEN estimates that, in general and
on average,26 each role would spend
different amounts of time on each
portion of the traditional annual PRA
burden, as follows:
(a) For annually maintaining and
updating the CIP, estimated at ten hours
per covered financial institution, the
cost of each hour of burden would be
broken down as follows: (i) One burden
hour at $133.00, representing the cost of
board of directors or senior management
review and approval, and (ii) nine hours
of work by other staff, averaging $48.00,
as set out in Table 5 below:
TABLE 5—WEIGHTED AVERAGE HOURLY COST OF MAINTAINING AND UPDATING THE CIP AND OBTAINING BOARD
APPROVAL FOR ALL COVERED FINANCIAL INSTITUTIONS
General
supervision
Direct
supervision
Clerical work
(case review)
%time
Hourly cost
%time
Hourly cost
%time
Hourly cost
Weighted
average
hourly cost
10%
$9.37
60%
$29.88
30%
$9.18
* $48.00
* $48.43 rounded to $48.00.
(b) For providing customers
notification of the CIP, estimated at one
hour per covered financial institution,
the cost of each hour of burden would
be $32.00, as set out in Table 6 below:
TABLE 6—WEIGHTED AVERAGE HOURLY COST OF PROVIDING CUSTOMER NOTIFICATION OF CIP FOR ALL COVERED
FINANCIAL INSTITUTIONS
General
supervision
Direct
supervision
Clerical work
(case review)
%time
Hourly cost
%time
Hourly cost
%time
Hourly cost
Weighted
average
hourly cost
0%
$0.00
5%
$2.49
95%
$29.07
* $32.00
* $31.56 rounded to $32.00.
(c) For obtaining and verifying
customers’ identification information
for purposes of implementing CIP,
estimated at two minutes per account,
per broker or dealer in securities or
mutual fund, the cost of each hour of
burden would be $33.00, as reflected in
Table 7 below:
25 The U.S. Bureau of Labor Statistics,
Occupational Employment Statistics-National, May
2019, available at https://www.bls.gov/oes/
tables.htm. The most recent data from the BLS
corresponds to May 2019. For the benefits
component of total compensation, see U.S. Bureau
of Labor Statistics, Employer’s Cost per Employee
Compensation as of December 2019, available at
https://www.bls.gov/news.release/ecec.nr0.htm. The
ratio between benefits and wages for financial
activities, credit intermediation and related
activities is $15.95 (hourly benefits)/$32.05 (hourly
wages) = 0.50. The benefit factor is 1 plus the
benefit/wages ratio, or 1.50. Multiplying each
hourly wage by the benefit factor produces the
fully-loaded hourly wage per position.
26 By ‘‘in general,’’ FinCEN means without regard
to outliers (e.g., financial institutions with CIPs
with complexities that are uncommonly higher or
lower than those of the population at large). By ‘‘on
average,’’ FinCEN means the mean of the
distribution of each subset of the population.
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TABLE 7—WEIGHTED AVERAGE HOURLY COST OF OBTAINING AND VERIFYING CUSTOMERS’ IDENTIFYING INFORMATION
FOR BROKERS OR DEALERS IN SECURITIES AND MUTUAL FUNDS
General
supervision
Direct
supervision
Clerical work
(case review)
%time
Hourly cost
%time
Hourly cost
%time
Hourly cost
Weighted
average
hourly cost
1%
$0.94
9%
$4.48
90%
$27.54
* $33.00
* $32.96 rounded to $33.00.
The total estimated cost of the
traditional annual PRA burden is
$42,011,997, as reflected in Table 8
below:
TABLE 8—TOTAL COST OF TRADITIONAL ANNUAL PRA BURDEN
Total burden
Hourly cost
Task
Total cost
Hours
Source
2
2
2
3
$
Source
Board of directors/senior management approval of CIP ...
Maintaining and updating the CIP .....................................
Customer notification of CIP .............................................
Implementing the CIP (identifying and verifying customer
information, maintain records, and consulting government lists).
* 16,938
* 152,442
16,938
966,667
Table
Table
Table
Table
...........
...........
...........
...........
$133.00
48.00
32.00
33.00
Totals ..........................................................................
1,152,985
.........................
........................
Table
Table
Table
Table
4
5
6
7
...........
...........
...........
...........
$2,252,754
7,317,216
542,016
31,900,011
.........................
42,011,997
* As explained in item (a) above, the ten hours required for maintaining and updating a written CIP is broken down as follows: One hour per
covered financial institution for senior management approval of the written CIP (16,938 covered financial institutions multiplied by one hour
equals 16,938 hours in total) at $133.00 an hour; and nine hours per covered financial institution for maintaining and updating the written CIP
(16,938 multiplied by nine hours equals 152,442 hours in total) at $48.00 an hour.
Part 3. Supplemental Annual PRA
Burden
In the future, FinCEN intends to add
a supplemental annual PRA burden
calculation for the CIP and apply the
same scope and criteria for estimating
annual PRA burden and cost to all
covered financial institutions. For
banks, futures commission merchants,
and introducing brokers in
commodities, the calculation of the
future supplemental annual PRA burden
will include adding an annual hourly
burden and cost estimate reflecting the
work involved in: Verifying the identity
of each customer; making and
maintaining a record of all information
obtained under the CIP; and
determining whether a new customer
appears on any list of known or
suspected terrorist organizations issued
by any Federal government agency.
FinCEN does not have the necessary
information to provide a tentative
estimate of these supplemental annual
PRA hourly burdens and costs within
the current notice. FinCEN also
recognizes that it does not have all the
necessary information to precisely
estimate the traditional annual PRA
burden. For that reason, FinCEN is
relying on estimates used in prior
renewals of OMB control numbers and
applicable regulations. FinCEN further
recognizes that after receiving public
VerDate Sep<11>2014
17:16 Aug 12, 2020
Jkt 250001
comments, the hourly burden and cost
estimates for the traditional annual PRA
burden may vary significantly. FinCEN
intends to conduct more granular
studies of the actions included in the
proposed scope of a supplemental
annual PRA burden in the near future,
to arrive at more precise estimates of net
BSA hourly burden and cost.27 The data
obtained in these studies also may result
in a significant variation of the
estimated traditional annual PRA hourly
burden.
Estimated Recordkeeping Burden:
Due to differences in the availability of
information, resulting in differences in
scope and criteria used to calculate the
burden estimates, the average estimated
annual PRA burden, measured in hours
per respondent, is (a) 11 hours for all
covered financial institutions to comply
with the CIP maintenance and notice
requirements (i.e., ten hours for
maintenance, and one hour for notice
27 Net hourly burden and cost are the burden and
cost a financial institution incurs to comply with
requirements that are unique to the BSA, and that
do not support any other business purpose or
regulatory obligation of the financial institution.
Burden for purposes of the PRA does not include
the time and financial resources needed to comply
with an information collection if the time and
resources are for things a business (or other person)
does in the ordinary course of its activities if the
agency demonstrates that the reporting activities
needed to comply are usual and customary. 5 CFR
1320.3(b)(2)
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Frm 00071
Fmt 4703
Sfmt 4703
per financial institution, as set out in
Table 2), and (b) 185 hours for brokers
and dealers in securities and mutual
funds to comply with the CIP
verification, recordkeeping, and
consulting government lists
requirements (i.e., the result of dividing
the total number of burden hours
(966,667) by the total number of
financial institutions (5,231), as set out
in Table 3).
Estimated Number of Respondents:
16,938, as set out in Table 1.
Estimated Total Annual Responses:
Due to the different scope and criteria
used for the estimates, the estimates are
(a) 16,938 for all covered financial
institutions; and (b) 29,000,000 new
accounts added per year by brokers or
dealers in securities, and mutual funds.
Estimated Total Annual
Recordkeeping Burden: The estimated
total annual PRA burden is 1,152,985
hours, as set out in Tables 2 and 3.
Estimated Total Annual
Recordkeeping Cost: The estimated total
annual PRA cost is $42,011,997, as set
out in Table 8.
An Agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid OMB control number.
Records required to be retained under
the BSA must be retained for five years.
E:\FR\FM\13AUN1.SGM
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
Part 4. Request for Comments
(a) Specific request for comments on
the revised traditional annual PRA
burden and cost.
FinCEN invites comments on any
aspect of the revision of the traditional
annual PRA burden, as set out in Part
2 of this notice. In particular, FinCEN
seeks comments on the adequacy of: (i)
FinCEN’s assumptions underlying its
estimate of the burden; (ii) the estimated
number of hours required by each
portion of the burden; and (iii) the
organizational levels of the financial
institution engaged in each portion of
the burden, their estimated hourly
remuneration, and the estimated
proportion of participation by time at
each level. FinCEN encourages
commenters to include any publicly
available source for alternative estimates
or methodologies.
(b) Specific request for comments on
the proposed criteria for determining
the scope of a supplemental annual
PRA hourly burden and cost estimate.
FinCEN invites comments on any
aspect of the criteria for a future
estimate of the supplemental annual
PRA burden, as set out in Part 3 of this
notice.
(c) Specific request for comments on
the criteria and methodology needed to
obtain information to realistically
estimate the supplemental annual PRA
hourly burden and cost.
FinCEN invites comments on the most
appropriate and comprehensive means
of questioning financial institutions
about the hourly burden and cost
attributable solely to CIP-related
activities (i.e., the hourly burden and
cost of complying with the
recordkeeping requirements imposed
exclusively by the BSA, which are not
used to satisfy contractual obligations,
other regulatory requirements, or
business purposes of the financial
institution). For example, depending on
the nature of the account, a financial
institution may be collecting and
maintaining some of the same customer
identification information required by
the CIP in order to satisfy other
obligations including (i) protecting the
financial institution from fraud against
itself or its customers, (ii) complying
with other non-BSA regulatory
requirements such as those imposed by
the specific federal functional regulator,
or (iii) improving the financial
institution’s marketing efforts or the
quality of its managerial information
products.
The estimate of the annual PRA
hourly burden and cost of the CIP must
take into consideration only the effort
involved in obtaining those data
VerDate Sep<11>2014
17:16 Aug 12, 2020
Jkt 250001
elements that are used exclusively for
complying with CIP requirements.
Given the obvious complexity in
determining what portion of the effort to
include in the estimate, FinCEN seeks
comments from the public about how
best to frame the questions and define
the requirements, according to the
business uses of financial institutions
covered by this notice. Also, due to the
evident difficulty involved in estimating
the number of new accounts opened
during the year, as a proxy for new
accountholders subject to CIP
requirements, FinCEN welcomes any
suggestions as to how to derive this
estimate by using publicly available
financial information.
(d) Specific questions for comment
associated with the five CIP
requirements:
(1) Written CIP—If a bank is required
to have an AML program, the CIP must
be part of the AML program.
• On average, how long does it take
your financial institution to revise its
written CIP annually?
• Does the process require review and
approval by senior management?
• How long does it take your financial
institution to go through the internal
governance process to get the CIP
approved?
• How much time on an annual basis
does the compliance team spend
training the business units or other
compliance members on the CIP and
associated updates?
(2) Identity verification procedures—
the CIP must include risk-based
procedures for verifying the identity of
each customer to the extent reasonable
and practicable.
• On average how many new
accounts does your financial institution
open per year?
Æ How many accounts are for new
customers?
Æ How many accounts are new
personal accounts?
Æ How many accounts are new
business accounts?
• How long does it take your financial
institution to open a new account for an
existing customer?
• How long does it take your financial
institution to conduct identity
verification procedures for a new
personal or business account?
• Is the collection of customer
identification information exclusively to
comply with the CIP requirements, or is
it also to comply with other regulatory
requirements or for other business
reasons?
(3) Recordkeeping—the CIP must
include procedures for making and
maintaining a record of all information
obtained under the CIP requirements.
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Frm 00072
Fmt 4703
Sfmt 4703
• Are all CIP records stored
electronically? If not, please provide
details as to the type of storage method
used.
• How long does it take to store a
customer’s CIP information
electronically?
• How long does it take to store a
customer’s CIP information by other
means?
• Is the process of storing CIP
information an automated or manual
process at your financial institution?
• Does your financial institution have
to invest in specific technology to
maintain these records? If so, what is
the cost of implementation and
maintenance annually?
• Is the technology exclusively to
comply with the CIP, or is it also to
comply with other regulatory
requirements?
(4) Consulting government lists—the
CIP must include procedures for
determining whether the customer
appears on any list of known or
suspected terrorists or terrorist
organizations issued by any Federal
government agency, and designated as
such by Treasury in consultation with
the Federal functional regulators.
• How long does it take your financial
institution to check a new customer
against suspected terrorist lists issued
by the Federal government?
• Do you use an automated system, a
hybrid of an automated system and
manual process, or a completely manual
process to conduct the searches?
• Does your financial institution have
to invest in specific technology to
conduct the searches? If so, what is the
cost of implementation and
maintenance annually?
• Is the consultation of government
lists exclusively to comply with the CIP
requirements, or does it overlap with
other regulatory requirements?
• What other regulatory or business
requirements overlap with the CIP
requirements for your financial
institution?
(5) Customer notice—the CIP must
include procedures for providing bank
customers with adequate notice that the
bank is requesting information to verify
their identities.
• How does you financial institution
provide notification to customers of CIP
requirements?
• Does your financial institution use
a sign-in the institution’s offices, notices
contained in account opening
documents, including electronic
notification in the case of online
account opening, or general
notifications on the institution’s
website, or a combination of both?
E:\FR\FM\13AUN1.SGM
13AUN1
Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
• How often does your financial
institution update the notice to
customers regarding CIP?
• What governance process does the
financial institution follow prior to
making a new update?
(6) The CIP is not required to, but may
also include procedures specifying when
a financial institution may rely on
another financial institution to perform
any of the financial institution’s CIP
procedures, if certain conditions are
met.
• What percentage of the time does
your financial institution rely on
another financial institution or
associated affiliate to conduct CIP on
new customers?
• What is the burden on your
financial institution to vet another
financial institution or associated
affiliate, annually, in order to rely on
them to conduct CIP? What are your
vetting process criteria?
(e) General request for comments.
Comments submitted in response to
this notice will be summarized and/or
included in the request for OMB
approval. All comments will become a
matter of public record. Comments are
invited on: (i) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(ii) the accuracy of the agency’s estimate
of the burden of the collection of
information; (iii) ways to enhance the
quality, utility, and clarity of the
information to be collected; (iv) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology; and (v) estimates of capital
or start-up costs and costs of operation,
maintenance, and purchase of services
to provide information.
SUMMARY:
Dated: August 7, 2020.
Michael Mosier,
Deputy Director, Financial Crimes
Enforcement Network.
AGENCY:
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Open Meeting of the Taxpayer
Advocacy Panel Taxpayer
Communications Project Committee
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of Meeting.
17:16 Aug 12, 2020
Jkt 250001
[FR Doc. 2020–17671 Filed 8–12–20; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Open Meeting of the Taxpayer
Advocacy Panel’s Notices and
Correspondence Project Committee
An open meeting of the
Taxpayer Advocacy Panel’s Notices and
Correspondence Project Committee will
be conducted. The Taxpayer Advocacy
Panel is soliciting public comments,
ideas, and suggestions on improving
customer service at the Internal Revenue
Service.
DATES: The meeting will be held
Wednesday, September 9, 2020.
FOR FURTHER INFORMATION CONTACT:
Robert Rosalia at 1–888–912–1227 or
(718) 834–2203.
SUPPLEMENTARY INFORMATION: Notice is
hereby given pursuant to Section
SUMMARY:
BILLING CODE 4810–02–P
VerDate Sep<11>2014
Dated: August 7, 2020.
Kevin Brown,
Acting Director, Taxpayer Advocacy Panel.
Internal Revenue Service (IRS)
Treasury.
ACTION: Notice of Meeting.
[FR Doc. 2020–17694 Filed 8–12–20; 8:45 am]
AGENCY:
An open meeting of the
Taxpayer Advocacy Panel’s Taxpayer
Communications Project Committee will
be conducted. The Taxpayer Advocacy
Panel is soliciting public comments,
ideas, and suggestions on improving
customer service at the Internal Revenue
Service.
DATES: The meeting will be held
Tuesday, September 8, 2020.
FOR FURTHER INFORMATION CONTACT:
Cedric Jeans at 1–888–912–1227 or 901–
707–3935.
SUPPLEMENTARY INFORMATION: Notice is
hereby given pursuant to Section
10(a)(2) of the Federal Advisory
Committee Act, 5 U.S.C. App. (1988)
that a meeting of the Taxpayer
Advocacy Panel Taxpayer
Communications Project Committee will
be held Tuesday, September 8, 2020, at
12:00 p.m. Eastern Time. The public is
invited to make oral comments or
submit written statements for
consideration. Due to limited time and
structure of meeting, notification of
intent to participate must be made with
Cedric Jeans. For more information
please contact Cedric Jeans at 1–888–
912–1227 or 901–707–3935, or write
TAP Office, 5333 Getwell Road,
Memphis, TN 38118 or contact us at the
website: https://www.improveirs.org. The
agenda will include various IRS issues.
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
49431
10(a)(2) of the Federal Advisory
Committee Act, 5 U.S.C. App. (1988)
that an open meeting of the Taxpayer
Advocacy Panel’s Notices and
Correspondence Project Committee will
be held Wednesday, September 9, 2020,
at 1:00 p.m. Eastern Time. The public is
invited to make oral comments or
submit written statements for
consideration. Due to limited time and
structure of meeting, notification of
intent to participate must be made with
Robert Rosalia. For more information
please contact Robert Rosalia at 1–888–
912–1227 or (718) 834–2203, or write
TAP Office, 2 Metrotech Center, 100
Myrtle Avenue, Brooklyn, NY 11201 or
contact us at the website: https://
www.improveirs.org. The agenda will
include various IRS issues.
Dated: August 7, 2020.
Kevin Brown,
Acting Director, Taxpayer Advocacy Panel.
[FR Doc. 2020–17665 Filed 8–12–20; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Open Meeting of the Taxpayer
Advocacy Panel’s Tax Forms and
Publications Project Committee
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of meeting.
AGENCY:
An open meeting of the
Taxpayer Advocacy Panel’s (TAP) Tax
Forms and Publications Project
Committee will be conducted. The TAP
is soliciting public comments, ideas,
and suggestions on improving customer
service at the Internal Revenue Service.
DATES: The meeting will be held
Wednesday, September 9, 2020.
FOR FURTHER INFORMATION CONTACT: Fred
Smith at 1–888–912–1227 or (202) 317–
3087.
SUPPLEMENTARY INFORMATION: Notice is
hereby given pursuant to Section
10(a)(2) of the Federal Advisory
Committee Act, 5 U.S.C. App. (1988)
that a meeting of the Taxpayer
Advocacy Panel’s Tax Forms and
Publications Project Committee will be
held Wednesday, September 9, 2020 at
12:00 p.m. Eastern Time. The public is
invited to make oral comments or
submit written statements for
consideration. Due to limited time and
structure of meeting, notification of
intent to participate must be made with
Fred Smith. For more information
please contact Fred Smith at 1–888–
912–1227 or (202) 317–3087, or write
SUMMARY:
E:\FR\FM\13AUN1.SGM
13AUN1
Agencies
[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Notices]
[Pages 49425-49431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17694]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
Agency Information Collection Activities; Proposed Renewal;
Comment Request; Renewal Without Change of the Customer Identification
Program Regulatory Requirements for Certain Financial Institutions
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice and request for comments.
-----------------------------------------------------------------------
SUMMARY: As part of its continuing effort to reduce paperwork and
respondent burden, FinCEN invites comments on the proposed renewal,
without change, of currently approved information collections found in
existing Bank Secrecy Act regulations requiring banks, savings
associations, credit unions, certain non-federally regulated banks,
brokers or dealers in securities, mutual funds, futures commission
merchants, and introducing brokers in commodities, to develop and
implement customer identification programs designed to allow the
financial institution to form a reasonable belief it knows the true
identity of each customer. Although no changes are proposed to the
information collections themselves, this request covers a future
expansion of the scope of the annual burden and cost estimates
associated with these regulations. This request for comments is made
pursuant to the Paperwork Reduction Act of 1995.
DATES: Written comments are welcome, and must be received on or before
October 13, 2020.
ADDRESSES: Comments may be submitted by any of the following methods:
Federal E-rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2020-0010 and the specific Office of Management and Budget (OMB)
control numbers 1506-0022, 1506-0026, 1506-0033, and 1506-0034.
Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2020-0010 and OMB control numbers 1506-0022, 1506-0026, 1506-0033, and
1506-0034.
Please submit comments by one method only. Comments will also be
incorporated into FinCEN's review of existing regulations, as provided
by Treasury's 2011 Plan for Retrospective Analysis of Existing Rules.
All comments submitted in response to this notice will become a matter
of public record. Therefore, you should submit only information that
you wish to make publicly available.
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section
at 1-800-767-2825 or electronically at [email protected].
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Provisions
The legislative framework generally referred to as the Bank Secrecy
Act (BSA) consists of the Currency and Financial Transactions Reporting
Act of 1970, as amended by the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (USA PATRIOT Act) (Pub. L. 107-56) and other
legislation. The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-
1959, 31 U.S.C. 5311-5314 and 5316-5332, and notes thereto, with
implementing regulations at 31 CFR Chapter X.
The BSA authorizes the Secretary of the Treasury, inter alia, to
require financial institutions to keep records and file reports that
are determined to have a high degree of usefulness in criminal, tax,
and regulatory matters, or in the conduct of intelligence or counter-
intelligence activities, to protect against international terrorism,
and to implement anti-money laundering (AML) programs and compliance
procedures.\1\ Regulations implementing Title II of the BSA appear at
31 CFR Chapter X. The authority of the Secretary to administer the BSA
has been delegated to the Director of FinCEN.\2\
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\1\ Section 358 of the USA PATRIOT Act added language expanding
the scope of the BSA to intelligence or counter-intelligence
activities to protect against international terrorism.
\2\ Treasury Order 180-01 (re-affirmed Jan. 14, 2020).
---------------------------------------------------------------------------
31 U.S.C. 5318(l) requires FinCEN to issue regulations prescribing
minimum standards for customer identification programs (CIP) for
financial institutions.\3\ Regulations implementing section 5318(l) are
as follows: (i) Banks, savings associations, credit unions, and certain
non-federally regulated banks (31 CFR 1020.220); (ii) brokers or
dealers in securities (31 CFR 1023.220); (iii) mutual funds (31 CFR
1024.220); and (iv) futures commission merchants and introducing
brokers in commodities (31 CFR 1026.220).
---------------------------------------------------------------------------
\3\ Section 5318(l)(2) prescribes that the regulations, at a
minimum, require financial institutions to implement reasonable
procedures for: (1) Verifying the identity of any person seeking to
open an account, to the extent reasonable and practicable; (2)
maintaining records of the information used to verify the person's
identity, including name, address, and other identifying
information; and (3) determining whether the person appears on any
lists of known or suspected terrorists or terrorist organizations
provided to the financial institution by any government agency.
Section 5318(l)(3) further directed that the regulations take into
consideration the types of accounts maintained by financial
institutions, the methods of opening accounts, and the types of
identifying information available.
---------------------------------------------------------------------------
II. Paperwork Reduction Act of 1995 (PRA) \4\
---------------------------------------------------------------------------
\4\ Public Law 104-13, 44 U.S.C. 3506(c)(2)(A).
---------------------------------------------------------------------------
Title: Customer identification programs (CIP) for certain financial
institutions (31 CFR 1020.220, 1023.220, 1024.220, and 1026.220).
OMB Control Numbers: 1506-0022, 1506-0026, 1506-0033, and 1506-
0034.\5\
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\5\ The CIP regulatory requirements are currently covered under
the following OMB control numbers: 1506-0022 (31 CFR 1026.220--
Customer identification programs for futures commission merchants
and introducing brokers); 1506-0026 (31 CFR 1020.220--Customer
identification programs for banks, savings associations, credit
unions, and certain non-federally regulated banks); 1506-0033 (31
CFR 1024.220--Customer identification programs for mutual funds);
and 1506-0034 (31 CFR 1023.220--Customer identification programs for
brokers or dealers in securities).
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Report Number: Not applicable.
Abstract: FinCEN is issuing this notice to renew the OMB control
numbers for the CIP regulatory requirements for certain financial
institutions.
Affected Public: Businesses or other for-profit institutions, and
non-profit institutions.
Type of Review:
Renewal without change of currently approved information
collections.
Propose for review and comment a renewal of the portion of
the PRA
[[Page 49426]]
burden that has been subject to notice and comment in the past (the
``traditional annual PRA burden'').
Propose for review and comment a future expansion of the
scope of the PRA burden (the ``supplemental annual PRA burden'').
Frequency: As required.
Estimated Number of Respondents: 16,938 financial institutions.\6\
---------------------------------------------------------------------------
\6\ Table 1 below sets forth a breakdown of the types of
financial institutions covered by this notice.
---------------------------------------------------------------------------
Estimated Recordkeeping Burden:
In Part 1 of this notice, FinCEN describes the breakdown of the
estimated number of financial institutions, by type, and for certain
financial institutions, the estimated number of new accounts opened per
year. In addition, Part 1 describes the primary characteristics of
covered financial institutions' CIP requirements.\7\ In Part 2, FinCEN
proposes for review and comment a renewal of the estimate of the
traditional annual PRA hourly burden, which includes a scope and
methodology similar to that used in the past, with the incorporation of
cost estimates. The scope and methodology used in the past differed
according to the type of covered financial institution. In Part 3,
FinCEN proposes for review and comment a methodology to estimate the
hourly burden and cost of a future estimate of a supplemental annual
PRA burden that includes the full scope of CIP requirements for all
covered financial institutions. Finally, in Part 4, FinCEN solicits
input from the public about: (a) The accuracy of the estimate of the
traditional annual PRA burden; (b) the method proposed for the
calculation of a future supplemental annual PRA burden; (c) the
criteria, metrics, and most appropriate questions FinCEN should
consider when researching the information to estimate the future
supplemental annual PRA burden, according to the methodology proposed;
and (d) any other comments about the regulations and the proposed
current and future hourly burden and cost estimates of these
requirements.
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\7\ The term ``covered financial institution'' applies to all
financial institutions with a CIP regulatory requirement namely
banks, savings associations, credit unions, certain non-federally
regulated banks, brokers or dealers in securities, mutual funds,
futures commission merchants, and introducing brokers in
commodities.
---------------------------------------------------------------------------
Part 1. Breakdown of the Financial Institutions and Transactions
Covered by This Notice
The breakdown of financial institutions and transactions, by type,
covered by this notice is reflected in Table 1 below:
Table 1--Breakdown of Financial Institutions and Transactions Covered by This Notice, by Type of Institution
----------------------------------------------------------------------------------------------------------------
Estimated number of annual responses
----------------------------------------------------------------------
Type of financial institution Number of financial
institutions Number of new accounts opened
----------------------------------------------------------------------------------------------------------------
Banks.................................... \8\ 10,542 Information not available.
Brokers or dealers in securities......... \9\ 3,640 9,000,000.\10\
Futures commission merchants............. \11\ 61 Information not available.
Introducing brokers in commodities....... \12\ 1,104 Information not available.
Mutual funds............................. \13\ 1,591 20,000,000.\14\
----------------------------------------------------------------------
Totals............................... 16,938 29,000,000.
----------------------------------------------------------------------------------------------------------------
All covered financial institutions are required to implement CIPs
appropriate for their size and type of business. The CIP must include
at minimum the following five requirements:
---------------------------------------------------------------------------
\8\ According to the Federal Deposit Insurance Corporation
(FDIC) there were 5,103 FDIC-insured banks as of March 31, 2020.
According to the Federal Reserve Board (FRB), there were 203 other
entities supervised by the FRB, as of June 16, 2020, that fall
within the definition of bank. (20 Edge Act institutions, 15
agreement corporations, and 168 foreign banking organizations).
According to the National Credit Union Administration there were
5,236 federally regulated credit unions as of December 31, 2019.
\9\ According to the Securities and Exchange Commission (SEC),
there were 3,640 brokers or dealers in securities registered with
the SEC, as of March 31, 2020.
\10\ According to the SEC, there were approximately 9,000,000
new accounts opened by broker or dealers in securities in 2017,
based on forms filed with the SEC. The SEC provided this estimate to
FinCEN for the last renewal of OMB control number 1506-0034 (83 FR
46012, Sept. 11, 2018). FinCEN was unable to obtain a more recent
estimate.
\11\ According to the Commodities and Futures Trading Commission
(CFTC), there were 61 futures commission merchants registered with
the CFTC, as of March 31, 2020.
\12\ According to the CFTC, there were 1,104 introducing brokers
in commodities registered with the CFTC as of March 31, 2020.
\13\ According to the SEC, there were approximately 1,591 mutual
funds in 2017, based on forms filed with the SEC. The SEC provided
the estimate to FinCEN for the last renewal of OMB control number
1506-0033, 83 FR 46012 (Sept. 11, 2018). FinCEN was unable to obtain
a more recent estimate.
\14\ According to the SEC, there were approximately 20,000,000
new mutual fund accounts opened in 2017. The SEC provided this
estimate to FinCEN for the last renewal of OMB control number 1506-
0033, 83 FR 46012 (Sept. 11, 2018). FinCEN was unable to obtain a
more recent estimate.
---------------------------------------------------------------------------
(1) Written CIP (if a financial institution is required to have an
AML program,\15\ the CIP must be part of the written AML program); \16\
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\15\ 31 CFR 1020.210; 1023.210; 1024.210; and 1026.210.
\16\ 31 CFR 1020.220(a)(1); 1023.220(a)(1); 1024.220(a)(1); and
1026.220(a)(1).
---------------------------------------------------------------------------
(2) Identity verification procedures (risk-based procedures for
verifying the identity of each customer to the extent reasonable and
practicable); \17\
---------------------------------------------------------------------------
\17\ 31 CFR 1020.220(a)(2); 1023.220(a)(2); 1024.220(a)(2); and
1026.220(a)(2).
---------------------------------------------------------------------------
(3) Recordkeeping (procedures for making and maintaining a record
of all information obtained under the CIP requirements); \18\
---------------------------------------------------------------------------
\18\ 31 CFR 1020.220(a)(3); 1023.220(a)(3); 1024.220(a)(3); and
1026.220(a)(3).
---------------------------------------------------------------------------
(4) Consultation of government lists (procedures to determine
whether the customer appears on any list of known or suspected
terrorists or terrorist organizations issued by any Federal government
agency, and designated as such by Treasury in consultation with the
Federal functional regulators); \19\ and
---------------------------------------------------------------------------
\19\ 31 CFR 1020.220(a)(4); 1023.220(a)(4); 1024.220(a)(4); and
1026.220(a)(4).
---------------------------------------------------------------------------
(5) Customer notice (procedures for providing bank customers with
adequate notice that the bank is requesting information to verify their
identities).\20\
---------------------------------------------------------------------------
\20\ 31 CFR 1020.220(a)(5); 1023.220(a)(5); 1024.220(a)(5); and
1026.220(a)(5).
---------------------------------------------------------------------------
The CIP may also include procedures specifying when a financial
institution may rely on another financial institution to perform any of
the financial
[[Page 49427]]
institution's CIP procedures, provided certain conditions are met.\21\
---------------------------------------------------------------------------
\21\ 31 CFR 1020.220(a)(6); 1023.220(a)(6); 1024.220(a)(6); and
1026.220(a)(6).
---------------------------------------------------------------------------
Part 2. Traditional Annual PRA Burden and Cost
In the past, the scope of the traditional annual PRA burden
estimates of the CIP differed according to the type of financial
institution involved:
(a) For banks, futures commission merchants, and introducing
brokers in commodities, due to the practical challenges of obtaining
the total number of new accounts opened per year, the estimate was
limited to the annual hourly burden of maintaining and updating the
written CIP, and providing customers with adequate notice that the
financial institution was requesting information to verify their
identities. The estimate did not take into account the hourly burden of
implementing the other CIP requirements (i.e., verification and
recordkeeping requirements, and consulting government lists).
(b) For brokers or dealers in securities and mutual funds, where
FinCEN obtained the approximate numbers of new accounts opened per
year, the estimate took into consideration the annual hourly burden to
implement the CIP requirements for all new customers, which included
identity verification, recordkeeping, and consulting government lists.
The estimate did not take into account the hourly burden of maintaining
and updating the written CIP or customer notification of CIP
requirements.
For purposes of this renewal and the associated estimate of the
traditional annual PRA burden, FinCEN is making the following
assumptions:
(a) For banks, futures commission merchants, and introducing
brokers in commodities:
i. FinCEN continues estimating the annual hourly burden of
maintaining and updating the CIP at ten hours per financial
institution. This estimate covers: (a) The hourly burden of updating
the CIP to take into consideration any regulatory changes and any
modifications required as a result of a financial institution making
changes to the type of accounts maintained, the methods used to open
accounts, and the types of documentary or non-documentary methods for
verifying identifying information the financial institution intends to
use; and (b) presenting the updated CIP to the appropriate level of
management within the financial institution for approval.
ii. FinCEN continues estimating the hourly burden of providing
customers with notification of the CIP at one hour annually per
financial institution.
(b) For brokers or dealers in securities and mutual funds:
i. FinCEN continues estimating the hourly burden of obtaining and
verifying a customer's identity (i.e., verification and recordkeeping
requirements, and consulting government lists) at two minutes per new
account opened.
ii. FinCEN is also incorporating the annual hourly burden of
maintaining and updating the CIP at ten hours per financial
institution. This estimate covers: (a) The hourly burden of updating
the CIP to take into consideration any regulatory changes and any
modifications required as a result of a financial institution making
changes to the type of accounts maintained, the methods used to open
accounts, and the types of documentary or non-documentary methods for
verifying identifying information the financial institution intends to
use; and (b) presenting the updated CIP to the appropriate level of
management within the financial institution for approval.
iii. In addition, FinCEN is incorporating an estimate of the hourly
burden of providing customers with notification of the CIP at one hour
annually per financial institution.
Under these assumptions, FinCEN's estimate of the traditional
annual PRA burden is 1,152,985 hours, as detailed in Tables 2 and
3.\22\
---------------------------------------------------------------------------
\22\ The total estimate of the traditional annual PRA burden is
the summation of the total hourly burden of CIP maintenance
(169,380), notification (16,938) and implementation (966,667) as set
out in Table 1 and 2.
\23\ As set out in Table 1 above.
\24\ As set out in Table 1 above.
Table 2--Hourly Burden Associated With Maintaining and Updating the CIP and Customer Notification for All
Covered Financial Institutions
----------------------------------------------------------------------------------------------------------------
Number of Time per financial institution Total hourly burden
financial ---------------------------------------------------------------
Type of financial institution institutions Maintenance Notification
\23\ (hours) (hours) Maintenance Notification
----------------------------------------------------------------------------------------------------------------
Banks........................... 10,542 10 1 105,420 10,542
Futures commission merchants.... 61 10 1 610 61
Introducing brokers in 1,104 10 1 11,040 1,104
commodities....................
Brokers or dealers in securities 3,640 10 1 36,400 3,640
Mutual funds.................... 1,591 10 1 15,910 1,591
-------------------------------------------------------------------------------
Totals...................... 16,938 .............. .............. 169,380 16,938
----------------------------------------------------------------------------------------------------------------
Table 3--Hourly Burden Associated With Implementation of the Identity Verification, Recordkeeping, and
Consulting Government Lists Requirements for Brokers or Dealers in Securities and Mutual Funds
----------------------------------------------------------------------------------------------------------------
Number of
financial New accounts Time per new Total hourly
Type of financial institution institutions per year account burden *
\24\ (minutes)
----------------------------------------------------------------------------------------------------------------
Brokers or dealers in securities................ 3,640 9,000,000 2 300,000
Mutual funds.................................... 1,591 20,000,000 2 666,667
---------------------------------------------------------------
Totals...................................... 5,231 .............. .............. 966,667
----------------------------------------------------------------------------------------------------------------
* New accounts per year times two minutes, divided by 60 minutes per hour
[[Page 49428]]
To calculate the hourly burden estimates in this notice, FinCEN
identified four roles and corresponding staff positions involved in
maintaining and implementing the CIP: (i) General oversight (board of
directors and/or senior management); (ii) general supervision
(providing process oversight); (iii) direct supervision (reviewing
operational-level work and cross-checking all or a sample of the work
product against supporting documentation); and (iv) clerical work
(engaging in research and administrative review, and recordkeeping).
FinCEN calculated the fully-loaded hourly wage for each of these
four roles by taking the median wage as estimated by the U.S. Bureau of
Labor Statistics (BLS), and computing an additional benefits cost as
follows: \25\
---------------------------------------------------------------------------
\25\ The U.S. Bureau of Labor Statistics, Occupational
Employment Statistics-National, May 2019, available at https://www.bls.gov/oes/tables.htm. The most recent data from the BLS
corresponds to May 2019. For the benefits component of total
compensation, see U.S. Bureau of Labor Statistics, Employer's Cost
per Employee Compensation as of December 2019, available at https://www.bls.gov/news.release/ecec.nr0.htm. The ratio between benefits
and wages for financial activities, credit intermediation and
related activities is $15.95 (hourly benefits)/$32.05 (hourly wages)
= 0.50. The benefit factor is 1 plus the benefit/wages ratio, or
1.50. Multiplying each hourly wage by the benefit factor produces
the fully-loaded hourly wage per position.
Table 4--Fully-Loaded Hourly Wage by Role and BLS Job Position for All Financial Institutions Covered by This
Notice
----------------------------------------------------------------------------------------------------------------
Median hourly Fully-loaded
Role BLS-code BLS-name wage Benefit factor hourly wage
----------------------------------------------------------------------------------------------------------------
Board of directors/senior 11-1010 Chief Executive... $88.68 1.50 * $133.02
management.
General supervision............ 11-3031 Financial Manager. 62.45 1.50 93.68
Direct supervision............. 13-1041 Compliance Officer 33.20 1.50 49.80
Clerical work (research, 43-3099 Financial Clerk... 20.40 1.50 30.60
review, and recordkeeping).
----------------------------------------------------------------------------------------------------------------
* $133.20 rounded to $133.00.
FinCEN estimates that, in general and on average,\26\ each role
would spend different amounts of time on each portion of the
traditional annual PRA burden, as follows:
---------------------------------------------------------------------------
\26\ By ``in general,'' FinCEN means without regard to outliers
(e.g., financial institutions with CIPs with complexities that are
uncommonly higher or lower than those of the population at large).
By ``on average,'' FinCEN means the mean of the distribution of each
subset of the population.
---------------------------------------------------------------------------
(a) For annually maintaining and updating the CIP, estimated at ten
hours per covered financial institution, the cost of each hour of
burden would be broken down as follows: (i) One burden hour at $133.00,
representing the cost of board of directors or senior management review
and approval, and (ii) nine hours of work by other staff, averaging
$48.00, as set out in Table 5 below:
Table 5--Weighted Average Hourly Cost of Maintaining and Updating the CIP and Obtaining Board Approval for All Covered Financial Institutions
--------------------------------------------------------------------------------------------------------------------------------------------------------
General supervision Direct supervision Clerical work (case review)
----------------------------------------------------------------------------------------------------------------------------------- Weighted average
%time Hourly cost %time Hourly cost %time Hourly cost hourly cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
10% $9.37 60% $29.88 30% $9.18 * $48.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
* $48.43 rounded to $48.00.
(b) For providing customers notification of the CIP, estimated at
one hour per covered financial institution, the cost of each hour of
burden would be $32.00, as set out in Table 6 below:
Table 6--Weighted Average Hourly Cost of Providing Customer Notification of CIP for All Covered Financial Institutions
--------------------------------------------------------------------------------------------------------------------------------------------------------
General supervision Direct supervision Clerical work (case review)
----------------------------------------------------------------------------------------------------------------------------------- Weighted average
%time Hourly cost %time Hourly cost %time Hourly cost hourly cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
0% $0.00 5% $2.49 95% $29.07 * $32.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
* $31.56 rounded to $32.00.
(c) For obtaining and verifying customers' identification
information for purposes of implementing CIP, estimated at two minutes
per account, per broker or dealer in securities or mutual fund, the
cost of each hour of burden would be $33.00, as reflected in Table 7
below:
[[Page 49429]]
Table 7--Weighted Average Hourly Cost of Obtaining and Verifying Customers' Identifying Information for Brokers or Dealers in Securities and Mutual
Funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
General supervision Direct supervision Clerical work (case review)
----------------------------------------------------------------------------------------------------------------------------------- Weighted average
%time Hourly cost %time Hourly cost %time Hourly cost hourly cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
1% $0.94 9% $4.48 90% $27.54 * $33.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
* $32.96 rounded to $33.00.
The total estimated cost of the traditional annual PRA burden is
$42,011,997, as reflected in Table 8 below:
Table 8--Total Cost of Traditional Annual PRA Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total burden Hourly cost
Task ------------------------------------------------------------------------------------------------ Total cost
Hours Source $ Source
--------------------------------------------------------------------------------------------------------------------------------------------------------
Board of directors/senior management * 16,938 Table 2....................... $133.00 Table 4....................... $2,252,754
approval of CIP.
Maintaining and updating the CIP........ * 152,442 Table 2....................... 48.00 Table 5....................... 7,317,216
Customer notification of CIP............ 16,938 Table 2....................... 32.00 Table 6....................... 542,016
Implementing the CIP (identifying and 966,667 Table 3....................... 33.00 Table 7....................... 31,900,011
verifying customer information,
maintain records, and consulting
government lists).
---------------------------------------------------------------------------------------------------------------
Totals.............................. 1,152,985 .............................. .............. .............................. 42,011,997
--------------------------------------------------------------------------------------------------------------------------------------------------------
* As explained in item (a) above, the ten hours required for maintaining and updating a written CIP is broken down as follows: One hour per covered
financial institution for senior management approval of the written CIP (16,938 covered financial institutions multiplied by one hour equals 16,938
hours in total) at $133.00 an hour; and nine hours per covered financial institution for maintaining and updating the written CIP (16,938 multiplied
by nine hours equals 152,442 hours in total) at $48.00 an hour.
Part 3. Supplemental Annual PRA Burden
In the future, FinCEN intends to add a supplemental annual PRA
burden calculation for the CIP and apply the same scope and criteria
for estimating annual PRA burden and cost to all covered financial
institutions. For banks, futures commission merchants, and introducing
brokers in commodities, the calculation of the future supplemental
annual PRA burden will include adding an annual hourly burden and cost
estimate reflecting the work involved in: Verifying the identity of
each customer; making and maintaining a record of all information
obtained under the CIP; and determining whether a new customer appears
on any list of known or suspected terrorist organizations issued by any
Federal government agency.
FinCEN does not have the necessary information to provide a
tentative estimate of these supplemental annual PRA hourly burdens and
costs within the current notice. FinCEN also recognizes that it does
not have all the necessary information to precisely estimate the
traditional annual PRA burden. For that reason, FinCEN is relying on
estimates used in prior renewals of OMB control numbers and applicable
regulations. FinCEN further recognizes that after receiving public
comments, the hourly burden and cost estimates for the traditional
annual PRA burden may vary significantly. FinCEN intends to conduct
more granular studies of the actions included in the proposed scope of
a supplemental annual PRA burden in the near future, to arrive at more
precise estimates of net BSA hourly burden and cost.\27\ The data
obtained in these studies also may result in a significant variation of
the estimated traditional annual PRA hourly burden.
---------------------------------------------------------------------------
\27\ Net hourly burden and cost are the burden and cost a
financial institution incurs to comply with requirements that are
unique to the BSA, and that do not support any other business
purpose or regulatory obligation of the financial institution.
Burden for purposes of the PRA does not include the time and
financial resources needed to comply with an information collection
if the time and resources are for things a business (or other
person) does in the ordinary course of its activities if the agency
demonstrates that the reporting activities needed to comply are
usual and customary. 5 CFR 1320.3(b)(2)
---------------------------------------------------------------------------
Estimated Recordkeeping Burden: Due to differences in the
availability of information, resulting in differences in scope and
criteria used to calculate the burden estimates, the average estimated
annual PRA burden, measured in hours per respondent, is (a) 11 hours
for all covered financial institutions to comply with the CIP
maintenance and notice requirements (i.e., ten hours for maintenance,
and one hour for notice per financial institution, as set out in Table
2), and (b) 185 hours for brokers and dealers in securities and mutual
funds to comply with the CIP verification, recordkeeping, and
consulting government lists requirements (i.e., the result of dividing
the total number of burden hours (966,667) by the total number of
financial institutions (5,231), as set out in Table 3).
Estimated Number of Respondents: 16,938, as set out in Table 1.
Estimated Total Annual Responses: Due to the different scope and
criteria used for the estimates, the estimates are (a) 16,938 for all
covered financial institutions; and (b) 29,000,000 new accounts added
per year by brokers or dealers in securities, and mutual funds.
Estimated Total Annual Recordkeeping Burden: The estimated total
annual PRA burden is 1,152,985 hours, as set out in Tables 2 and 3.
Estimated Total Annual Recordkeeping Cost: The estimated total
annual PRA cost is $42,011,997, as set out in Table 8.
An Agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid OMB control number. Records required to be
retained under the BSA must be retained for five years.
[[Page 49430]]
Part 4. Request for Comments
(a) Specific request for comments on the revised traditional annual
PRA burden and cost.
FinCEN invites comments on any aspect of the revision of the
traditional annual PRA burden, as set out in Part 2 of this notice. In
particular, FinCEN seeks comments on the adequacy of: (i) FinCEN's
assumptions underlying its estimate of the burden; (ii) the estimated
number of hours required by each portion of the burden; and (iii) the
organizational levels of the financial institution engaged in each
portion of the burden, their estimated hourly remuneration, and the
estimated proportion of participation by time at each level. FinCEN
encourages commenters to include any publicly available source for
alternative estimates or methodologies.
(b) Specific request for comments on the proposed criteria for
determining the scope of a supplemental annual PRA hourly burden and
cost estimate.
FinCEN invites comments on any aspect of the criteria for a future
estimate of the supplemental annual PRA burden, as set out in Part 3 of
this notice.
(c) Specific request for comments on the criteria and methodology
needed to obtain information to realistically estimate the supplemental
annual PRA hourly burden and cost.
FinCEN invites comments on the most appropriate and comprehensive
means of questioning financial institutions about the hourly burden and
cost attributable solely to CIP-related activities (i.e., the hourly
burden and cost of complying with the recordkeeping requirements
imposed exclusively by the BSA, which are not used to satisfy
contractual obligations, other regulatory requirements, or business
purposes of the financial institution). For example, depending on the
nature of the account, a financial institution may be collecting and
maintaining some of the same customer identification information
required by the CIP in order to satisfy other obligations including (i)
protecting the financial institution from fraud against itself or its
customers, (ii) complying with other non-BSA regulatory requirements
such as those imposed by the specific federal functional regulator, or
(iii) improving the financial institution's marketing efforts or the
quality of its managerial information products.
The estimate of the annual PRA hourly burden and cost of the CIP
must take into consideration only the effort involved in obtaining
those data elements that are used exclusively for complying with CIP
requirements. Given the obvious complexity in determining what portion
of the effort to include in the estimate, FinCEN seeks comments from
the public about how best to frame the questions and define the
requirements, according to the business uses of financial institutions
covered by this notice. Also, due to the evident difficulty involved in
estimating the number of new accounts opened during the year, as a
proxy for new accountholders subject to CIP requirements, FinCEN
welcomes any suggestions as to how to derive this estimate by using
publicly available financial information.
(d) Specific questions for comment associated with the five CIP
requirements:
(1) Written CIP--If a bank is required to have an AML program, the
CIP must be part of the AML program.
On average, how long does it take your financial
institution to revise its written CIP annually?
Does the process require review and approval by senior
management?
How long does it take your financial institution to go
through the internal governance process to get the CIP approved?
How much time on an annual basis does the compliance team
spend training the business units or other compliance members on the
CIP and associated updates?
(2) Identity verification procedures--the CIP must include risk-
based procedures for verifying the identity of each customer to the
extent reasonable and practicable.
On average how many new accounts does your financial
institution open per year?
[cir] How many accounts are for new customers?
[cir] How many accounts are new personal accounts?
[cir] How many accounts are new business accounts?
How long does it take your financial institution to open a
new account for an existing customer?
How long does it take your financial institution to
conduct identity verification procedures for a new personal or business
account?
Is the collection of customer identification information
exclusively to comply with the CIP requirements, or is it also to
comply with other regulatory requirements or for other business
reasons?
(3) Recordkeeping--the CIP must include procedures for making and
maintaining a record of all information obtained under the CIP
requirements.
Are all CIP records stored electronically? If not, please
provide details as to the type of storage method used.
How long does it take to store a customer's CIP
information electronically?
How long does it take to store a customer's CIP
information by other means?
Is the process of storing CIP information an automated or
manual process at your financial institution?
Does your financial institution have to invest in specific
technology to maintain these records? If so, what is the cost of
implementation and maintenance annually?
Is the technology exclusively to comply with the CIP, or
is it also to comply with other regulatory requirements?
(4) Consulting government lists--the CIP must include procedures
for determining whether the customer appears on any list of known or
suspected terrorists or terrorist organizations issued by any Federal
government agency, and designated as such by Treasury in consultation
with the Federal functional regulators.
How long does it take your financial institution to check
a new customer against suspected terrorist lists issued by the Federal
government?
Do you use an automated system, a hybrid of an automated
system and manual process, or a completely manual process to conduct
the searches?
Does your financial institution have to invest in specific
technology to conduct the searches? If so, what is the cost of
implementation and maintenance annually?
Is the consultation of government lists exclusively to
comply with the CIP requirements, or does it overlap with other
regulatory requirements?
What other regulatory or business requirements overlap
with the CIP requirements for your financial institution?
(5) Customer notice--the CIP must include procedures for providing
bank customers with adequate notice that the bank is requesting
information to verify their identities.
How does you financial institution provide notification to
customers of CIP requirements?
Does your financial institution use a sign-in the
institution's offices, notices contained in account opening documents,
including electronic notification in the case of online account
opening, or general notifications on the institution's website, or a
combination of both?
[[Page 49431]]
How often does your financial institution update the
notice to customers regarding CIP?
What governance process does the financial institution
follow prior to making a new update?
(6) The CIP is not required to, but may also include procedures
specifying when a financial institution may rely on another financial
institution to perform any of the financial institution's CIP
procedures, if certain conditions are met.
What percentage of the time does your financial
institution rely on another financial institution or associated
affiliate to conduct CIP on new customers?
What is the burden on your financial institution to vet
another financial institution or associated affiliate, annually, in
order to rely on them to conduct CIP? What are your vetting process
criteria?
(e) General request for comments.
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval. All comments will
become a matter of public record. Comments are invited on: (i) Whether
the collection of information is necessary for the proper performance
of the functions of the agency, including whether the information shall
have practical utility; (ii) the accuracy of the agency's estimate of
the burden of the collection of information; (iii) ways to enhance the
quality, utility, and clarity of the information to be collected; (iv)
ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology; and (v) estimates
of capital or start-up costs and costs of operation, maintenance, and
purchase of services to provide information.
Dated: August 7, 2020.
Michael Mosier,
Deputy Director, Financial Crimes Enforcement Network.
[FR Doc. 2020-17694 Filed 8-12-20; 8:45 am]
BILLING CODE 4810-02-P