Final rule: Definitions relating to, and registration of, money services businesses (64 FR 45438)
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45438 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
Alternative Methods of Compliance amendments revise the definitions of (K) an issuer, redeemer, or cashier of
(b) An alternative method of compliance or certain non-bank financial institutions travelers’ checks, checks, money orders, or
adjustment of the compliance time that for purposes of the Bank Secrecy Act similar instruments;
provides an acceptable level of safety may be and group the revised definitions * * * * *
used if approved by the Manager, Seattle together in a separate category called (R) a licensed sender of money;
Aircraft Certification Office (ACO), FAA, ‘‘money services businesses.’’ The * * * * *
Transport Airplane Directorate. Operators (Y) any business or agency which engages
shall submit their requests through an
amendments also require certain money
in any activity which the Secretary of the
appropriate FAA Principal Maintenance services businesses to register with the
Treasury determines, by regulation, to be an
Inspector, who may add comments and then Department of the Treasury and to activity which is similar to, related to, or a
send it to the Manager, Seattle ACO. maintain a current list of their agents for substitute for any activity in which any
Note 3: Information concerning the examination, on request, by any business described in this paragraph is
existence of approved alternative methods of appropriate law enforcement agency. authorized to engage; or
compliance with this AD, if any, may be The amendments regarding registration (Z) any other business designated by the
obtained from the Seattle ACO. and maintenance of agent lists by Secretary whose cash transactions have a
high degree of usefulness in criminal, tax, or
Special Flight Permits money services businesses reflect
regulatory matters.
(c) Special flight permits may be issued in changes to the law made by the Money
accordance with §§ 21.197 and 21.199 of the Laundering Suppression Act of 1994. 31 U.S.C. 5330. 31 U.S.C. 5330 was
Federal Aviation Regulations (14 CFR 21.197 added to the Bank Secrecy Act by
DATES: Effective Date: September 20, section 408 of the Money Laundering
and 21.199) to operate the airplane to a
location where the requirements of this AD 1999. Suppression Act of 1994 (the ‘‘Money
can be accomplished. Applicability Date: Registration of Laundering Suppression Act’’), Title IV
Incorporation by Reference money services businesses will not be of the Riegle Community Development
required prior to December 31, 2001, and Regulatory Improvement Act of
(d) The actions shall be done in accordance
and maintenance of the agent list will 1994, Public Law 103–325 (September
with Boeing Service Bulletin 757–25–0182,
Revision 1, dated June 12, 1997, or Boeing not be required prior to January 1, 2002. 23, 1994). Under that section, any
Service Bulletin 757–25–0200, dated January See § 103.41(f) of the final rule person who owns or controls a money
21, 1999; as applicable. This incorporation by contained in this document. services business (which the statute
reference was approved by the Director of the refers to as a ‘‘money transmitting
Federal Register in accordance with 5 U.S.C. FOR FURTHER INFORMATION CONTACT: business’’ 1), whether or not the business
552(a) and 1 CFR part 51. Copies may be Peter Djinis, Associate Director, is licensed as a money services business
obtained from Boeing Commercial Airplane FinCEN, (703) 905–3930; Charles in any State, must register the business
Group, P.O. Box 3707, Seattle, Washington Klingman, Financial Institutions Policy with the Secretary of the Treasury. 31
98124–2207. Copies may be inspected at the Specialist, FinCEN, (703) 905–3602; U.S.C. 5330(a). (A money services
FAA, Transport Airplane Directorate, 1601 Stephen R. Kroll, Chief Counsel,
Lind Avenue, SW., Renton, Washington; or at business required to be registered under
Cynthia L. Clark, Deputy Chief Counsel, 31 U.S.C. 5330 remains subject to any
the Office of the Federal Register, 800 North
Capitol Street, NW., suite 700, Washington,
and Albert R. Zarate and Christine L. State law requirements relating to the
DC. Schuetz, Attorney-Advisors, Office of operation of the business in the State. 31
(e) This amendment becomes effective on Chief Counsel, FinCEN, (703) 905–3590. U.S.C. 5330(a)(3).) The form and manner
September 24, 1999. SUPPLEMENTARY INFORMATION: of registration must be prescribed by
Issued in Renton, Washington, on August regulations.
13, 1999. I. Statutory Provisions—General The purpose of the registration
D.L. Riggin, requirement is to assist supervisory and
Acting Manager, Transport Airplane The Bank Secrecy Act, Titles I and II law enforcement agencies in the
Directorate, Aircraft Certification Service. of Public Law 91–508, as amended, enforcement of criminal, tax, and
[FR Doc. 99–21571 Filed 8–19–99; 8:45 am] codified at 12 U.S.C. 1829b, 12 U.S.C. regulatory laws and to prevent money
BILLING CODE 4910–13–U
1951–1959, and 31 U.S.C. 5311–5330, services businesses from engaging in
authorizes the Secretary of the Treasury, illegal activities. See, section 408(a), of
inter alia, to issue regulations requiring the Money Laundering Suppression Act.
DEPARTMENT OF THE TREASURY financial institutions to keep records 31 U.S.C. 5311 (Note). In requiring the
and file reports that are determined to registration of money services
Financial Crimes Enforcement have a high degree of usefulness in businesses, Congress found that such
Network criminal, tax, and regulatory matters, businesses are largely unregulated and
and to implement counter-money are frequently used in sophisticated
31 CFR Part 103 laundering programs and compliance schemes to transfer large amounts of
RIN 1506–AA09
procedures. Regulations implementing money that are the proceeds of unlawful
Title II of the Bank Secrecy Act enterprises and to evade the
Amendment to the Bank Secrecy Act (codified at 31 U.S.C. 5311–5330)
Regulations—Definitions Relating to, appear at 31 CFR Part 103. The 1 The statute uses the term ‘‘money transmitting
and Registration of, Money Services authority of the Secretary to administer business’’ to name those businesses subject to
Title II of the Bank Secrecy Act has been registration. See 31 U.S.C. 5330(a)(1) and (d)(1).
Businesses However, FinCEN believes that the statute’s use of
delegated to the Director of FinCEN. this term to refer to all the types of businesses
AGENCY: Financial Crimes Enforcement
31 U.S.C. 5312. The Bank Secrecy Act subject to registration and its later use of the nearly
Network (‘‘FinCEN’’), Treasury. identical term ‘‘money transmitting service’’ to refer
generally applies to financial
ACTION: Final rule. to a particular type of business subject to
institutions, a term broadly defined in registration, compare 31 U.S.C. 5330(d)(1)(A) with
SUMMARY: This document contains 31 U.S.C. 5312(a)(2)(A–Z). The statutory 31 U.S.C. 5330(d)(2), may lead to confusion.
definition includes, inter alia: Therefore, FinCEN has adopted the term ‘‘money
amendments to the regulations services business’’ in place of the term ‘‘money
implementing the statute generally * * * * * transmitting business’’ throughout this document
referred to as the Bank Secrecy Act. The (J) a currency exchange; and under the final rule.
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45439
requirements of Title II of the Bank require, and the list must be made a major, if little understood, part of the
Secrecy Act, the Internal Revenue Code available on request to any appropriate financial sector in the United States.4
of 1986, and other laws of the United law enforcement agency. See 31 U.S.C. The term ‘‘money services business’’
States. Congress also found that 5330(c)(1). Second, the Secretary is to refers to five distinctive types of
information on the identity of each establish by regulation, on the basis of financial services providers: currency
money services business and the names such criteria as the Secretary deems dealers or exchangers; check cashers;
of the persons who own or control, or appropriate, a threshold point for issuers of traveler’s checks, money
are officers or employees of, a money treating an agent of a money services orders, or stored value; sellers or
services business would have a high business as itself a money services redeemers of traveler’s checks, money
degree of usefulness in criminal, tax, or business for purposes of section 5330. orders, or stored value; and money
regulatory investigations and transmitters. (The five types of financial
Section 5330 prescribes a civil
proceedings. Id. services are complementary and are
The statute defines a ‘‘money penalty for any person who fails to
often provided together at a common
transmitting business’’ 2 as any business, comply with any requirement of 31
location.) These businesses are quite
other than the United States Postal U.S.C. 5330 or the regulations numerous; based on a study performed
Service, that is required to file reports thereunder. The penalty is $5,000 for for FinCEN by Coopers & Lybrand LLP
under 31 U.S.C. 5313 and that provides each violation; each day a violation of (now a part of PriceWaterhouse Coopers
check cashing, currency exchange, or 31 U.S.C. 5330 or the regulations LLP), they comprise approximately
money transmitting or remittance thereunder continues constitutes a 158,000 5 outlets or selling locations,
services,3, or issues or redeems money separate violation. 31 U.S.C. 5330(e). A and provide financial services involving
orders, traveler’s checks or other similar failure to comply with 31 U.S.C. 5330 or approximately $200 billion annually. To
instruments. 31 U.S.C. 5330(d)(1). the regulations under section 5330 may some significant extent, the customer
Depository institutions (as defined in 31 also result in a criminal penalty under base for such businesses lies in that part
U.S.C. 5313(g)), however, are not within 18 U.S.C. 1960. of the population that does not use
the classes of institutions required to Under section 5330, a money services traditional financial institutions,
register under the statute. 31 U.S.C. business must be registered not later primarily banks.
5330(d)(1)(C). than the end of the 180-day period Money services businesses, like
Section 5330 specifies the information beginning on the later of the date of banks, can be large or small. It is
that must be included as part of the enactment of the Money Laundering estimated that approximately eight
registration. 31 U.S.C. 5330(b). The Suppression Act of 1994 (September 23, business enterprises account for the
required information is— 1994), and the date on which the bulk of money services business
(1) The name and location of the business is established. 31 U.S.C. financial products (that is, money
business; 5330(a). On May 18, 1995, FinCEN transmissions, money orders, traveler’s
(2) The name and address of each checks, and check cashing and currency
issued a notice explaining that
person who owns or controls the exchange availability) sold within the
regulations prescribing the form and
business, is a director or officer of the United States, and also account, through
manner of registration would not
business, or otherwise participates in systems of agents, for the bulk of
require initial registration of money
the conduct of the affairs of the locations at which these financial
business; services businesses before the 90th day
following the effective date of the products are sold. Members of this first
(3) The name and address of any group include large firms, with
depository institution at which the implementing regulations. FinCEN
Notice 95–1. The notice further significant capitalization, that are
business maintains a transaction publicly traded on major securities
account (as defined in section explained that no penalty or other
compliance sanction would be imposed exchanges.
19(b)(1)(C) of the Federal Reserve Act); A far larger group of (on average) far
(4) An estimate of the volume of under the provisions of the Bank
smaller enterprises competes with the
business in the coming year, which Secrecy Act on account of the failure of
eight largest firms in a highly bifurcated
shall be reported annually to the any money services business to register
market for money services. In some
Secretary; and before the last date for initial
cases, these small enterprises are based
(5) Such other information as the registration specified by the
in one location with two to four
Secretary of the Treasury may require. implementing regulation.
employees. Moreover, the members of
Section 5330 contains two provisions this second group may provide both
directed explicitly at agents of money II. Money Services Businesses—General
financial services and unrelated
services businesses. First, a money The rulemaking of which this final products or services to the same sets of
services business must maintain a list rule is a part deals with a number of customers.6 Far less is known about this
containing the names and addresses of aspects of the application of the Bank
its agents and such other information Secrecy Act to money services 4 The Congress has long-recognized the need
about the agents as the Secretary may businesses. In conducting the generally to address problems of abuse by money
rulemaking, FinCEN and the launderers of ‘‘non-bank’’ financial institutions.
2 Although the statutory term is ‘‘money See, e.g., Permanent Subcommittee on
transmitting business,’’ FinCEN has decided to use
Department of the Treasury are not only Investigations, Senate Comm. on Governmental
the term ‘‘money services business’’ in this rule. See following the mandate of Congress in Affairs, Current Trends in Money Laundering, S.
footnote 1, supra. the Money Laundering Suppression Act Rep. No. 123, 102d Cong., 2d Sess. (1992).
5 The number does not include Post Offices
3 The term ‘‘money transmitting service’’ includes
and the Annunzio-Wylie Anti-Money
accepting currency or funds denominated in the (which sell money orders and other money services
currency of any country and transmitting the
Laundering Act, Title XV of the Housing business financial products), participants in stored
currency or funds, or the value of the currency or and Community Development Act of value product trials, or sellers of various stored
funds, by any means through a financial agency or 1992, Public Law 102–550, but are more value or smart cards in use in, e.g., public
institution, a Federal Reserve Bank or other facility generally responding to the need to transportation systems.
of the Board of Governors of the Federal Reserve 6 Members of the second group may include, for
System, or an electronic funds transfer network. 31
update and more carefully tailor the example, a travel agency, courier service,
U.S.C. 5330(d)(2). application of the Bank Secrecy Act to convenience store, grocery or liquor store.
45440 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
second tier of firms than about the major The rules proposed in this portion of the were then made available by FinCEN to
providers of money service products.7 Notice were designed to implement the requesting parties.
Because money services businesses terms of 31 U.S.C. 5330. The first of the five meetings, which
primarily serve individuals, they have The Notice was one of three notices was held in Vienna, Virginia, dealt
grown to provide a set of financial of proposed rulemaking dealing with particularly with issues raised by the
products, albeit in large part for non- money services businesses issued on Notice, and the San Jose, California,
depository customers, that others look May 21, 1997. The second notice, 62 FR meeting dealt with the Notice’s
to banks to provide. For example, a 27900—27909, proposed to amend the treatment of stored value. The final
money services business customer who Bank Secrecy Act rules to require meeting, also held in Vienna, Virginia,
receives a paycheck can take his or her money transmitters, and issuers, sellers, dealt with the details of the various
check to a check casher to have it and redeemers of money orders and prototype compliance forms designed in
converted to cash. He or she can then traveler’s checks, to report suspicious connection with the issuance of both the
purchase money orders to pay his or her transactions to the Department of the Notice and the two related notices of
bills. Finally, he or she may choose to Treasury. The third notice, 62 FR proposed rulemaking and produced
send funds to relatives abroad, using the 27909–27917, proposed to add a special further discussion of the money services
services of a money transmitter. currency transaction reporting business registration requirements.
III. Notice of Proposed Rulemaking requirement—and related customer The comment period for the three
On May 21, 1997, FinCEN published verification requirements—for money notices of proposed rulemaking
a notice of proposed rulemaking, 62 FR transmitters involved in the originally ended on August 19, 1997,
27890—27900 (the ‘‘Notice’’), that transmission or other transfer of funds but it was extended to September 30,
described several proposed changes to to persons outside of the United States. 1997, by a notice published on July 30,
the Bank Secrecy Act rules of the The proposed rules were designed as 1997 (62 FR 40779). FinCEN received a
Department of the Treasury. First, the part of a coordinated approach to total of 82 comment letters on the three
Notice proposed amendment of 31 CFR dealing with abuse of money services notices of proposed rulemaking; 60
103.11 to revise definitions of certain businesses by criminals and to comment letters dealt in whole or in
non-bank financial services businesses strengthening the application of general part with issues raised by the Notice. Of
that had been treated as financial Bank Secrecy Act concepts to this part these, 17 were submitted by money
institutions for purposes of the Bank of the nation’s payment system. The services businesses and their affiliates,
Secrecy Act (or in the case of stored decision to deal with each rule 11 by banks or bank holding companies,
value, to add a definition of a product separately, rather than finalizing the 17 by financial institution trade
whose issuers, sellers, and redeemers rules as a group, reflects a number of associations, 5 by law firms, 5 by
would be so treated) and to group the practical and policy considerations, agencies of the United States
revised and new definitions together most importantly the desire to allow government, 2 by credit unions, and 3
under the heading money services time for the construction of the by private individuals.
business; the businesses involved necessary administrative and IV. Summary of Comments and
generally provide check cashing, compliance structures by both the Revisions
currency exchange, or money Department of the Treasury and the
transmitting services, or issue, sell, or money services businesses subject to the A. Introduction
redeem money orders, traveler’s checks, rules. As indicated in greater detail
The format of the final rule is
or other similar instruments. Second, below, following the Section-by-Section
generally consistent with the Notice.
the Notice proposed the addition to 31 Analysis, the Department of the
The terms of the final rule, however,
CFR part 103 of a set of new rules to Treasury is planning next to issue the
differ from the terms of the Notice in the
require certain money services rule relating to the reporting of
following significant respects:
businesses to register with the suspicious transactions, and will be
Department of the Treasury and, as part working with interested parties, Definitions
of the registration requirement, to independently of the rulemaking itself,
• The definition of money services
maintain a current list of their agents in to advance the preparation of guidance
business has been revised to exclude
a central location for examination by about particular patterns of suspicious
from treatment as money services
appropriate law enforcement agencies.8 activity of which money services
businesses for any purpose banks and
businesses must be aware.
7 For example, according to the Coopers & persons registered with, and regulated
FinCEN held five public meetings or examined by, the Securities and
Lybrand study, at the time of that study, two money
transmitters and two traveler’s check issuers made during the summer of 1997, in order to Exchange Commission or the
up approximately 97 per cent of their respective provide interested parties with the Commodity Futures Trading
known markets for non-bank money services. Three opportunity to present their views about Commission.
enterprises made up approximately 88 per cent of the potential effects of the three
the $100 billion in money orders sold annually • The definition of money transmitter
(through approximately 146,000 locations). The proposed regulations, as well as to
has been revised to make plain that the
retail foreign currency exchange sector was found provide FinCEN with additional
activity that makes one a money
by Coopers & Lybrand to be somewhat less information useful in preparing the final
concentrated, with the top two non-bank market transmitter must be carried on as a
rule.9 Transcripts of these meetings
participants accounting for 40 per cent of a known business and to provide a general
market that accounts for $10 billion. Check cashing limitation to the definition.
is the least concentrated of the business sectors; the through G were to be redesignated to reflect the
two largest non-bank check cashing businesses addition of new subpart D, and corresponding • The dollar thresholds for treatment
make up approximately 20 per cent of the market, changes were to be made to the references to such of persons as money services businesses
with a large number of competitors. redesignated sections in other portions of part 103. on account of activities related to check
8 The Notice proposed to place section 103.41 in 9 These public meetings were held in Vienna,
cashing, currency exchange, and money
a new subpart D, Special Rules for Money Services Virginia, on July 22, 1997; New York, New York,
Businesses, of Part 103, and to redesignate existing on July 28, 1997; San Jose, California, on August 1,
order, traveler’s checks, and stored
subparts D through F as subparts E through G of 1997; Chicago, Illinois, on August 15, 1997; and value transactions has been raised from
Part 103. The sections in redesignated subparts E Vienna, Virginia, on September 3, 1997. $500 to $1,000.
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45441
Registration relating to money services businesses registrable money services businesses is
• Registration will not be required concentrated on five matters: (i) The necessarily larger than the class of
prior to December 31, 2001. relationship between the general Bank money services businesses that were
• Persons are excluded from the Secrecy Act definitions and the both registrable and otherwise subject to
registration requirements to the extent language of 31 U.S.C. 5330(d)(1) and (2), the Bank Secrecy Act’s reporting and
that they are issuers, sellers, or defining the businesses required to recordkeeping rules.
redeemers of stored value products.10 register as money services businesses; FinCEN believes that this argument
• The requirement that agents whose (ii) whether the Notice properly invoked misperceives both the relationship of
gross transaction amount exceeds the authority required for a change in the registration provisions to the
$50,000 for any month must register has the general Bank Secrecy Act remainder of the Bank Secrecy Act and
been eliminated; registration by a definitions; (iii) the proposed inclusion the basis for the redefinition of money
person that is a money services business of businesses issuing, selling, or services business proposed in the
solely because that person serves as an redeeming stored value within the Notice. In enacting 31 U.S.C. 5330,
agent of another money services definition of ‘‘financial institution’’ for Congress made a direct finding that:
business is indefinitely deferred. Bank Secrecy Act purposes; (iv) the Money transmitting businesses are subject
• The agent list maintained by each treatment under the Notice of financial to the recordkeeping and reporting
money services business that offers its businesses subject to other federal requirements of subchapter II of chapter 53
products or services through agents regulatory systems; and (v) the of title 31. * * * Section 408(a)(1)(A) of the
must include an indication of each application of the money services Money Laundering Suppression Act, 31
month in the preceding 12 months in business definition to various kinds of U.S.C. 5330 (Note).
which the gross transaction amount of businesses whose activities include the Thus, Congress assumed that the sorts of
an agent exceeded $100,000. transmission of funds.11 businesses for which it was requiring
• A money services business is not 1. Relationship between 31 U.S.C. registration were precisely the sorts that
required to keep records required by 5312 and 31 U.S.C. 5330. Several would be (and indeed that were already)
section 103.41 in a centralized location commenters argued that the Department subject to the Bank Secrecy Act’s rules.
so long as the records are maintained in of the Treasury mistakenly relied upon FinCEN therefore believes that Congress
the United States and are readily the terms of 31 U.S.C. 5330, in seeking intended the definition of money
available at the request of FinCEN or to revise the definition of financial transmitting business to describe that
any appropriate law enforcement institution, as part of proposed 31 CFR class of enterprises that were both
agency; the agent list, however, must be 103.11(uu). These commenters asserted financial institutions and required to
maintained in a central location in the that the Notice reflected a register as money transmitting services
United States. misunderstanding of the relationship of (or money services businesses) and that
• Certain publicly traded businesses the general Bank Secrecy Act the harmonized definitions could not be
are not required to re-register before the definitional provision, 31 U.S.C. 5312,
end of their renewal period when there read to include any businesses that were
and the registration provisions. In their not otherwise eligible for treatment as
is a 10-per cent or more change in the view, the definition of the sorts of
ownership of such businesses. financial institutions under 31 U.S.C.
businesses required to be registered 5311. The purpose of the changes to the
• Agent lists must be updated
under 31 U.S.C. 5330 bore no definitions of financial institution was,
annually, as of January 1 of each year,
relationship to the definition of the in accordance with this understanding
rather than quarterly.
• For any agent that is an agent of the ‘‘financial institutions’’ covered by the of Congress’ intent and as stated in the
money services business maintaining remainder of the Bank Secrecy Act, and Notice (62 FR 27890 and 27891), to
the list before the first day of the month the designation of registrable businesses harmonize the two sets of rules by
beginning after February 16, 2000, the in 31 U.S.C. 5330 provides no modernizing the definitions of money
agent list need not include information independent authority for making such transmitter and the other terms included
about the year in which the agent first businesses otherwise subject to the Bank as components in the new money
became an agent and the agent’s Secrecy Act. In support of this services business subcategory of the
branches or subagents, but such argument, the commenters cited the general definition of ‘‘financial
information must be readily available at language at the beginning of 31 U.S.C. institution.’’
the request of FinCEN or any 5330(d) that the definitions of a money While the final definition of money
appropriate law enforcement agency. transmitting business and money transmitter tracks to some extent the
• The effective date of the registration transmitting service apply ‘‘[f]or language used in 31 U.S.C. 5330, this in
rule is September 20, 1999; the initial purposes of this section.’’ In addition, no way indicates a reliance upon that
registration must be filed, by December they cited the requirement that the section for authority, but instead
31, 2001, and the initial agent list must definition be limited only to a business indicates the Department of the
be prepared by January 1, 2002. that ‘‘is required to file reports under Treasury’s desire to follow Congress’
[31 U.S.C.] section 5313.’’ Thus, lead in construing the term ‘‘money
B. Comments on the Notice—Overview according to the commenters, the broad transmitter’’ in a way that reflects
and General Issues definitional language in section 5330 technological advances, and the need to
Definitions cannot be used to define a financial adapt the application of the Bank
institution for a Bank Secrecy Act Secrecy Act to the continually evolving
Comments on the proposed changes
purpose other than registration. This nature of the industry that comprehends
to the Bank Secrecy Act definitions
language further suggests, according to ‘‘financial institutions.’’
10 Although the final rule expressly excludes
the commenters, that the class of 31 U.S.C. 5312 does provide such
redeemers of stored value products, it should be authority, there is every reason for the
noted that as with redeemers of traveler’s checks 11 A related issue, whether and the extent to
definitions to be the same, and the
and money orders, FinCEN did not intend that the which it was necessary to define the term ‘‘agent’’
Notice would apply to redeemers of stored value as used both in the definition of money services
language of the preamble to the Notice,
products to the extent the products are taken in business and the registration provisions, is although not perhaps ideal, was
exchange for goods or general services. discussed below. sufficient to put the public on notice
45442 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
that both matters were at issue in the purposes of the Bank Secrecy Act denomination stored value devices or
rulemaking. regulations generally).’’ 62 FR 27893. the terms for possible tailored
2. Authority for Revisions to the Other commenters argued that the application of the registration or other
Definition of Financial Institution. definitional changes could not be made Bank Secrecy Act requirements to
Commenters argued that the Notice gave in any event without specific findings aspects of these emerging payment
insufficient indication that a general showing that the changes were required products.
exercise of Treasury’s authority to to fight money laundering. The 4. Other Regulated Financial
define financial institution for purposes purposes of the Bank Secrecy Act are Businesses. A number of commenters
of the Bank Secrecy Act in proposing 31 not so narrowly set. The statute is aimed argued that the final rule should
CFR 103.11(uu) was a subject of the at assuring the maintenance of records eliminate any possible application to
rulemaking. They also argued that no constituting a financial trail, and the other classes of financial institutions, of
findings had been made, or suggested by reporting of certain transactions, in each rules aimed at money services
the Notice, that the changes were case because the records and reports businesses; the argument was made by
required to fight money laundering, and ‘‘have a high degree of usefulness in banks, securities businesses subject to
that there was no basis in the record in criminal, tax, or regulatory the jurisdiction of the Securities and
any event for such findings. investigations and proceedings.’’ The Exchange Commission, and futures
Combining the new registration Congressional findings underlying the commission merchants and other
requirements with the rewriting of money services business registration businesses regulated by the Commodity
provisions of the financial institution rules adopt the same objective.12 Futures Trading Commission. (Banks
definition in a single document may 3. Stored Value. The final rule and brokers and dealers in securities
have led to a misunderstanding of the continues to treat ‘‘stored value’’ as a are, of course, already subject to the
reasons or basis for the definitional financial instrument whose issuers and Bank Secrecy Act.)
changes. However, as indicated above, sellers are financial institutions for Congress characterized money
FinCEN believes that the Notice made it purposes of the Bank Secrecy Act. services businesses as ‘‘largely
clear that the revision of existing Bank However, the final rule revises the unregulated,’’ and FinCEN believes that
Secrecy Act definitions involved in the Notice to exempt stored value issuers Congress generally did not find a need
components of money services business and sellers from any money services for the money services business regime
was proposed under the authority of 31 business registration obligation. Under under the Bank Secrecy Act to extend to
U.S.C. 5312 and for all purposes of the the circumstances, the only immediate other federally regulated financial
Bank Secrecy Act. See 62 FR 27890, consequence of the rule will be to make services providers. Accordingly, under
27893, and 27897. clear that currency transactions in the final rule, depository institutions, or
In addition, the changes made to the excess of $10,000 by stored value securities brokers and dealer, futures
definitions, with the exception of the issuers and sellers require reporting commission merchants, or other persons
addition of ‘‘stored value,’’ discussed under the Bank Secrecy Act (rather than registered with and regulated or
separately below, merely clarified the under section 6050I of the Internal examined by, the Securities and
scope of the coverage already inherent Revenue Code) and that businesses that Exchange Commission or the
in the existing language of the Bank participate as financial intermediaries in Commodity Futures Trading
Secrecy Act definitions. For example, transactions in which stored value is Commission are explicitly excluded
the definition of money transmitter transferred electronically may, if from the money services business
contained in 31 CFR 103.11(n)(5) otherwise covered, be subject to the definition. (For further discussion, see
(revised as of July 1, 1999), which rules requiring the maintenance of ‘‘Section-by-Section Analysis,’’ below.)
section 103.11(uu)(5) of the final rule records for funds transfers of $3,000 or 5. Application of Money Transmitter
will replace, stated that the term more. Definition to Other Businesses Whose
financial institution included: This limited treatment of stored Activities Include Transmission of
value—which frees the industry from Funds. A number of commenters sought
(5) A licensed transmitter of funds, or other registration requirements to which clarification of the definition of money
person engaged in the business of issuers and sellers of money orders and transmitter and objected to any
transmitting funds.
traveler’s checks will be subject— interpretation of the definition that
In adopting the revised definition, eliminates the ‘‘chilling effect’’ on the would cause to be classed as money
FinCEN is clarifying the meaning of the technology industry to which transmitters particular businesses that
term ‘‘person engaged in the business of commenters objected. The limited step simply transmit funds as part of their
transmitting funds’’ within the scope of that is being taken should create other business activities. Commenters
the interpretive range of the existing certainty as to the outlines of the Bank raising such issues included, for
language of the rule; in that context, Secrecy Act’s application to electronic example, operators of hedge funds and
adoption of the language provided by funds equivalents, while allowing public and private investment
the Congress in the registration further development prior to any companies, representatives of financial
provisions is appropriate—if not rulemaking that deals with more professionals, persons involved in real
mandated—in light of the Congress’ specific issues such as, for example, estate closing activities, bank credit card
view that it was itself simply explicating exemptions for ‘‘closed system’’ or small systems, clearing corporations and
the scope of the existing regulatory associations, insurance companies, and
language in requiring registration of 12 Information about the identity and ownership
bank holding companies and
certain types of financial institutions. of money services businesses ‘‘would have a high subsidiaries. All of these commenters
degree of usefulness in criminal, tax, or regulatory
Treasury, indeed, explicitly sought (and investigations or proceedings’’; the registration sought assurance that their businesses
received) comments on whether ‘‘it is requirement will assist federal and other law could not fall within the definition of
necessary or appropriate specifically to enforcement and supervisory authorities ‘‘to money transmitter in the Notice.
exclude certain activities from the scope effectively enforce the criminal tax, [sic] and FinCEN agrees that the breadth of the
regulatory laws and prevent such money services
of registration of money services businesses from engaging in illegal activities.’’ See
definition of money transmitter
businesses (and perhaps as well from section 408(a)(1)(C) and (a)(2) of the Money proposed in the Notice requires
the definition of money transmitter for Laundering Suppression Act, 31 U.S.C. 5330 (Note). limitation to avoid both unnecessary
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45443
burden and the extension of the Bank sell or redeem stored value products section 103.41 is inapplicable to
Secrecy Act to businesses whose money would not do so if they might be depository institutions such as banks
transmission activities either do not required to comply with the registration and credit unions.
involve significant intermediation or are requirements, and that the manner in Several commenters asked that non-
ancillary to the completion of other which the new products would be bank affiliates and subsidiaries of banks
transactions. But the varieties of marketed was not sufficiently settled to be excluded from the registration
methods by which funds are transmitted permit the design of a reasonable requirements.13 One commenter argued
and remitted by persons performing the registration system. that because these companies are
function of financial intermediary for Some commenters, however, agreed subject to regulation by the Federal
that purpose, as well as the pace of with the inclusion of businesses Reserve Board under the Bank Holding
financial change, make any rigid engaged in issuing or selling stored Company Act, they should be excluded.
definition both impossible and value products within the scope of the Another commenter recommended
inadvisable. Ultimately, the question of registration requirements. In general, excluding a bank’s non-bank affiliates
whether a particular person is in the these commenters believed it was and subsidiaries if they can demonstrate
‘‘business’’ of transmitting funds is a appropriate to subject non-bank that they have some type of Bank
question of facts and circumstances. The providers of electronic payment systems Secrecy Act compliance program in
final rule attempts to respond to the to Bank Secrecy Act requirements in place.
comments, as described in more detail order to treat purveyors of competing The Bank Secrecy Act rules, in
below, by providing a limitation on the financial services in the same manner. general, do not adopt a consolidated
scope of the definition to make clear The final rule excludes issuers, group approach to determining whether
that the acceptance and transmission of sellers, or redeemers of stored value a company is or is not subject to
funds as an integral part of the products from the registration particular Bank Secrecy Act provisions.
execution and settlement of a requirements. Although the final rule That is, the Bank Secrecy Act rules do
transaction other than the funds expressly excludes redeemers of stored not look to the status of a parent
transmission or transfer, for example, a value products, it should be noted that company in a bank holding company
bona fide sale of securities or other as with redeemers of traveler’s checks group for the purpose of determining
property, will not cause a person to be and money orders, FinCEN did not what rules a company owned by the
a money transmitter for purposes of the intend that the Notice would apply to parent must apply. For example, the
Bank Secrecy Act. redeemers of stored value products to Bank Secrecy Act regulations do not
the extent the products are taken in generally treat non-bank subsidiaries as
Registration exchange for goods or general services. falling within the definition of bank for
Comments on the proposed One commenter recommended that a purposes of the Bank Secrecy Act
registration requirements concentrated money services business should not be
regulations. Thus, the final rule
on four matters: (i) exclusions from required to register if it would qualify as
continues to require non-bank affiliates
those requirements, (ii) agent an exempt person under the currency
and subsidiaries to register and
registration, (iii) registration procedures, transaction reporting rules (31 CFR
maintain a list of their agents.
and (iv) the content and terms of the 103.22(d)). The final rule does not adopt
One commenter suggested that issuers
agent list. this suggestion. The suggestion would
of monetary instruments that are sold
1. Exclusions from the Registration exclude from registration, and
only through banks should be excluded
Requirements. The Notice excluded the consequently the agent list requirement,
from the registration requirements. In
following persons from the registration publicly traded money services
light of 31 CFR 103.29, which requires
requirements: the United States Postal businesses that could qualify as exempt
banks to keep records of certain
Service, depository institutions (as persons under 31 CFR 103.22(d).
transactions, the commenter believed
defined in 31 U.S.C. 5313(g)), the Because these publicly traded money
United States, a State or political there would be little informational value
services businesses operate through
subdivision of a State, or a person gained by requiring such issuers to
extensive networks of agents, which
registered with, and regulated or register. The final rule does not adopt
may not be exempt from currency
examined by, the Securities and transaction reporting, the suggestion this suggestion. The registration
Exchange Commission or the would seriously limit information about requirements are designed to create a
Commodity Futures Trading agents of money services businesses. comprehensive picture of money
Commission. In response to a specific Several commenters were concerned services businesses, which will provide
request for comment in the preamble to that because some credit unions provide law enforcement agencies with
the Notice, FinCEN received comments money transmitting services to their information either currently not
suggesting that other persons should be customers, and some banks might be available or not available in an
excluded from the registration acting as agents of a money services accessible format. Excluding an issuer
requirements. business, these depository institutions whose products are sold exclusively
A number of commenters asked that could be subject to the registration rules through banks would eliminate
issuers, sellers, or redeemers of stored in § 103.41. The commenters asked for information about a segment of this
value products be so excluded. Those clarification that banks and credit industry.
commenters were concerned that the unions are not required to be registered. One commenter questioned the
application of the registration Paragraph (a)(1) of § 103.41 of the Notice sufficiency of the rulemaking record
requirements to issuers of stored value provided that the section did not apply 13 The preamble to the Notice clarified that if a
products would cause the issuers to to depository institutions. The final rule bank has a non-bank subsidiary or affiliate (e.g. a
defer the development of such products, goes further and expressly excepts brother-sister subsidiary owned by the bank’s
or limit their design in commercially banks from the definition of money holding company) that itself engages in a money
undesirable ways simply in order to services business so that the sentence in services business (or a broker-dealer has a non-
broker-dealer affiliate that engages in a money
avoid the registration requirements. proposed paragraph (a)(1) relating to services business), the affiliate must register even
They were also concerned that depository institutions is no longer though the bank (or broker-dealer) is not required
businesses that might otherwise wish to necessary. Under the final rule, all of to register.
45444 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
with respect to the registration of check with a more neutral term such as selling Commenters argued that because a
cashers. According to the commenter, outlet. A number of commenters argued money services business includes
nothing in the record, including the that they did not believe that the terms information about its agents on its agent
New York enforcement operations and of the contracts under which they list, no agent should be required to
geographic targeting orders discussed in authorize persons to sell their money register independently with Treasury.
the May 21, 1997 notices of proposed services products should be read to treat Instead, several of these commenters
rulemaking, supports the proposition those persons as agents. argued, a money services business
that the check cashing function has been FinCEN believes that the relationship should register its agents with Treasury,
or is being abused by the illicit drug between issuers or service providers and or as one commenter suggested, should
industry and criminal money persons at the point of sale for particular simply submit its agent lists to the
laundering. The comment fails to take products is governed by the law of Treasury Department.
into account the fact that Congress agency, and that in most (if not all) This registration requirement for
specifically included check cashers cases the businesses at which these agents reflected the terms of 31 U.S.C.
among those businesses that are products or services are sold to the 5330(c)(2). That paragraph states that:
required to register with the Department public are non-servant agents of the The Secretary of the Treasury shall
of the Treasury when it enacted 31 issuers or service providers 14; thus, prescribe regulations establishing, on the
U.S.C. 5330. such businesses must be included on basis of such criteria as the Secretary
A commenter also recommended that the agent lists required to be maintained determines to be appropriate, a threshold
check cashers should not be required to with respect to ‘‘agents’’ by 31 U.S.C. point for treating an agent of a money
register if they engage in other money transmitting business as a money
5330(c)(1)(A). As indicated elsewhere in transmitting business for purposes of [section
services business activities, for example, this preamble, Congress’s use of the
money transmitting, as an agent for 5330].
term ‘‘agent’’ in 31 U.S.C. 5330 indicates
others. The commenter indicated that a similar understanding. Thus, it is The mandate to require registration of
approximately 90 per cent of check expected that a money services business ‘‘large agents’’ was tempered both by the
cashers are also agents for money will include on the agent list any grant to the Secretary of discretion to fix
transmitters and would be included on businesses it authorizes to sell its the criteria defining registrable agents,
the agent lists of the transmitters. The money services or money products. and by a Congressional statement, in the
final rule does not adopt this The bulk of the comments on the Conference Report accompanying the
recommendation. Section 5330 does not registration requirement concerned the bill, that:
contemplate that businesses that registration of businesses whose status The intent of the Conferees is to eliminate
conduct money services activities on as money services businesses derived the need for all agents of money transmitting
their own behalf will be excluded from solely from the fact that they sold businesses to register with the Secretary.
registration simply because they also act Such massive registration of thousands of
products or services issued or agents would only create another needless
as agents for other money services
performed by others. The Notice had and costly administrative burden. This
businesses.
One commenter suggested that, in the required independent registration of legislation is designed to reduce unnecessary
future, ‘‘wire transmitters’’ should be such agent businesses if the volume of paperwork, not create additional
exempt from state registration money services products or services administrative burdens for law enforcement.
requirements if the transmitters comply sold or performed through such The statute’s agent registration
with federal registration requirements. businesses was $50,000 in any month. requirement permits the identification
FinCEN is interested in sharing Commenters questioned the level of of significant points for the movement
information, and otherwise coordinating the proposed registration threshold. of funds into the financial system,
with, state regulators to reduce Most of these commenters believed that especially points at which one or more
administrative burden, but 31 U.S.C. the threshold was too low and money services business products or
5330(a)(3) states that the federal recommended increasing the threshold services are grouped together (as, for
registration requirements ‘‘shall not be to at least $100,000 a month or example, in so-called ‘‘giro houses’’).
construed as superseding any preferably $500,000 a month (or But selecting criteria that will further
requirement of State law relating to $500,000 a month, annualized). One that objective in a cost efficient manner
money [services] businesses operating commenter, however, recommended is difficult at best. Money services
in such State.’’ lowering the threshold to $25,000 a business volume levels are unlikely to
2. Agent Registration. Commenters month or even zero. Another commenter be uniform throughout the nation, and
raised a number of issues about agent suggested that a threshold based on an even within particular areas variations
registration. Most of the comments annual rather than a monthly amount can reflect the size of an agent’s other
sought a clarification of the meaning of would be less likely to cause agents to business rather than any absolute
the term ‘‘agent,’’ sought an increase in meet the threshold because of seasonal variation from a theoretical norm.
the dollar amount of the registration or holiday sales. As explained below, Rather than attempting to set criteria
threshold, and questioned the need for the final rule defers agent registration on the basis of imperfect knowledge, the
agent registration. and thus eliminates the registration Department of the Treasury has decided
The Notice did not contain a specific threshold. to defer any implementation of the agent
definition of the term ‘‘agent’’ for registration provisions. Instead, money
purposes of the money services business 14 Of course, in cases in which the products or
services businesses are asked simply to
registration rules, including the services are offered at branches of the issuers or note on the agent lists they are required
providers, the individuals involved are likely
requirement that a list of agents be servants of the issuers or providers. (It has long to maintain the months in the preceding
maintained by each money services been clear that an ‘‘agent’’ of a financial institution twelve month period in which every
business as part of its registration is itself a financial institution. See, 31 CFR agent generated a volume of money
requirement. Instead the Notice spoke 103.11(n).) FinCEN is aware of few, if any, claims services business products of more than
prior to the issuance of the Notice, that the language
simply of ‘‘agents.’’ Commenters in section 103.11(n) does not fully comprehend $100,000.
recommended that the term ‘‘agent’’ be businesses at which money services products were Thus, under the final rule, a firm that
defined or that the term be replaced sold to the public. is a money services business solely
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45445
because it offers products or services on exclude the release of information (other examination authority). With respect to
behalf of another money services than perhaps limited statistical any agent that becomes an agent on or
business need not now register with the information) about agents of money after the first day of the month
Department of the Treasury. It should be services businesses. beginning after February 16, 2000, the
noted that a firm that both offers 4. Agent List. Most of the commenters list must include all of the requested
products or services on behalf of addressing the agent list requirement information, including the date the
another money services business and in recommended that a money services agent first becomes an agent and the
addition offers its own money services business be permitted to provide less agent’s branches or subagents.
products or services (that is, exchanges information than the Notice required. As indicated above, one additional
currency, cashes checks, or transmits The commenters argued that element is added to the information
funds for customers through channels or information not now on agent lists required to be included in the agent list.
mechanisms of its own) is required prepared for state licensing purposes— That element is the notation of each
independently to register under this rule especially information about the year in month in the 12-month period
(and, to the extent that it is an agent, which an agent first became an agent immediately preceding January 1, 2002,
must be carried on the agent list of and about the agent’s transaction and each January 1 thereafter, in which
another money services business as accounts—would be difficult to provide. the gross transaction amount of the
well). The commenters indicated they would agent’s sale of products or services
3. Registration Procedures. The Notice either have to compile the rest of the offered by the money services business
set forth the general requirement to information from other records (which maintaining the list exceeded $100,000.
register a money services business and might not be in electronic format, or in Setting the requirement at $100,000
to report on the registration form the a format, electronic or otherwise, that generally limits it to agents doing more
information required by section 5330(b) was easily retrievable) or request the than $1 million of money services
and any other information required by necessary information from their agents. business transactions annually, is an
the form. In the preamble to the Notice, Some commenters suggested that money amount suggested in the comments as a
FinCEN noted its understanding that services businesses be permitted to threshold for agent registration, and
information required to be included on provide all the requested information gives knowledge about agent volume
the registration form (and on the agent prospectively rather than trying to which can be evaluated to determine
list) might include privileged and gather the information for existing whether the implementation of agent
confidential trade secrets, commercial, agents. Alternatively, commenters registration should continue to be
and financial information. FinCEN also suggested that the information required deferred. That requirement is
explained that while Congress affirmed to be included on the agent list should prospective, does not take effect for at
in the legislative history that be limited to the same information that least 18 months, and involves a single
confidential proprietary or trade secret a money services business must provide recordkeeping threshold. Moreover, the
information provided by registrants may about its agents for state licensing requirement involves only information
be disclosed only subject to applicable purposes. Generally this information that must flow to each money services
law, Congress anticipated that certain includes only the name of the agent, the business in the performance of its
information derived from the agent’s locations, and the services the normal business functions, and the
registration material would be made agent provides.15 addition of this element to the agent list
available to the public, but in a manner The final rule continues generally to derives from the elimination from the
that balances the need to protect require that the information requested rule of the most heavily criticized
confidential business information and by the Notice must be included on the element of the original proposal, the
the need for the public to have access agent list. In response to the comments, agent registration requirement.
to information about businesses on however, the final rule provides that
which the public relies. H.R. Conf. Rep. with respect to any agent that is an V. Section-by-Section Analysis
No. 652, 103 Cong., 2d Sess. 192–93 agent of the money services business A. 103.11—Meaning of Terms
(1994). FinCEN specifically invited maintaining the list before the first day
comment on how to make certain of the month beginning after February 1. 31 CFR 103.11(c)(7)—Definition of
information provided by registrants 16, 2000, the list need not include ‘‘Bank’’
available to the public without revealing information about the year in which the One component of the definition of
confidential business information. agent first became an agent and the ‘‘bank’’ in 31 CFR 103.11(c) speaks of
Several commenters expressed agent’s branches or subagents. Such ‘‘[a]ny other organization chartered
concerns about the need, for information must be made available, under the banking laws of any State and
competitive reasons, to avoid disclosure however, upon the request of FinCEN or subject to the supervision of the bank
to the public of confidential information any other appropriate law enforcement supervisory authorities of a State.’’ In
on the registration form or agent list, agency (including, without limitation, many states, various money services
particularly information about business the examination function of the Internal businesses are licensed or examined by
volume and the dollar size of Revenue Service in its capacity as state banking departments. In order to
transactions. FinCEN will not release delegee of Bank Secrecy Act avoid any confusion about the
confidential information on the interaction of the ‘‘bank’’ and ‘‘money
registration form or agent list except as 15 More than one commenter argued that requiring services business’’ definitions, the
required or permitted by law. Moreover, the information requested on the agent list exceeds phrase ‘‘(except a money services
before FinCEN releases any other FinCEN’s authority under 31 U.S.C. 5330.
According to the commenters, FinCEN may ask for
business)’’ has been added to 31 CFR
information that may be included on the the agent’s name and address only. Although 103.11(c)(7).
registration form or agent list, FinCEN section 5330 specifically requires the agent’s name
will work with money services and address, the section does not constrain 2. 31 CFR 103.11(n)(3)—Definition of
businesses to establish specific FinCEN’s authority in the manner suggested by the Financial Institution to Include ‘‘Money
procedures for release of such commenters. Section 5330 authorizes FinCEN to Services Business’’
request, in addition to the name and address, ‘‘such
information to the public. FinCEN other information about such agents as the The final rule retains the addition of
anticipates that such procedures would Secretary may require.’’ 31 U.S.C. 5330(c)(1)(A). a new category called ‘‘money services
45446 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
business’’ to the definition of financial subsidiaries. As explained in greater being amended specifically to exclude
institution. The new category includes detail at ‘‘Exclusion from the banks that offer services in dealing or
the financial institutions previously Registration Requirement’’ above, the exchanging currency to their customers
defined at 31 CFR 103.11(n)(3), (4), (5), Bank Secrecy Act rules at present as an adjunct to their regular services.
and (10), and will permit these operate on an individual entity rather (2) Check casher. The definition of
institutions to be referred to, when than a consolidated group basis; so long check casher is also unchanged, other
necessary, by one convenient term. as that is so, each corporation in a than for the increase of the $500
FinCEN believes this restructuring of controlled group must be analyzed threshold to $1,000. Several
the definition of financial institution separately to determine its commenters suggested that the
will clarify, and facilitate flexibility in characterization under the Bank Secrecy threshold should be lowered rather than
the administration of, the Bank Secrecy Act and its rules. raised; however, the registration of
Act regulations. (As a result of this Thresholds. The Notice contained a businesses that only cash checks,
restructuring, 31 CFR 103.11(n)(4), (5), threshold of $500 for any person any especially those that do so as an
and (10) will be deleted, and 31 CFR day at or below which a business accommodation for customers and then
103.11(n)(6), (7), (8) and (9) will be otherwise included within the in an amount of $1,000 or less per day,
redesignated as 31 CFR 103.11(n)(4), (5), definition of a currency dealer or is not necessary at this time to
(6) and (7)). exchanger, a check casher, or an issuer, accomplish the Congressional intent
seller, or redeemer of money orders, behind section 5330.
3. 31 CFR 103.11(uu)—Definition of traveler’s checks or stored value would (3) Issuer of traveler’s checks, money
Money Services Business not be a money services business. In the orders, or stored value. The definition of
This section defines money services final rule that threshold has been raised issuer of traveler’s checks or money
business. The term includes each agent, in each case to $1,000 for any person orders or stored value is also unchanged
agency, branch, or office within the any day in one or more transactions. other than for the increase of the $500
United States of any person doing The addition of explicit floors in the threshold to $1,000.16
business, whether or not on a regular definitions relating to currency (4) Seller or redeemer of traveler’s
basis or as an organized business exchange and check cashing businesses checks, money orders, or stored value.
concern, in one or more of the capacities is an attempt to eliminate from Bank The definition of seller or redeemer of
listed in (1)–(6) below. (It should be Secrecy Act treatment those businesses, traveler’s checks or money orders or
noted that only one registration form per such as grocery stores and hotels, that stored value is also unchanged other
money services business is required.) cash checks or exchange currency as an than for the increase of the $500
Regulated Businesses. The definition accommodation to customers who are threshold to $1,000.
of ‘‘money services business’’ excludes otherwise purchasing goods, services, or The $1,000 floor in 31 CFR
persons registered with, and regulated lodging from the businesses involved. 103.11(uu)(4) replaces the definitional
or examined by, the Securities and (Of course, currency exchange and floor (of $150,000 sold in instruments
Exchange Commission or the check cashing businesses that exceed per 30-day period) for selling agents in
Commodity Futures Trading the threshold become subject to the 31 CFR 103.11(n)(4). The $150,000
Commission. This provision excludes general Bank Secrecy Act reporting and limitation produces a great deal of
from the new regulatory structure for recordkeeping requirements if the unnecessary complexity (dealing with
money services businesses the financial amounts involved are sufficiently high the movement of particular businesses
services businesses regulated by those to implicate particular reporting or into or out of the scope of the Bank
agencies. The exclusion from the recordkeeping thresholds, for example, Secrecy Act) and does not, in FinCEN’s
definition does not apply to issuers the $10,000 threshold for currency view, any longer provide a meaningful
whose securities offerings are registered transaction reporting.) threshold for distinguishing between
with the SEC under the Securities Act In determining whether the $1,000 businesses that ought to, or that need
of 1933 or companies whose securities definitional floor is met in the case of not, incorporate appropriate Bank
are registered with the Commission a particular definition, different money Secrecy Act rules into their operations
under the Securities Exchange Act of services provided by the same business (or the operations they undertake on
1934. The companies themselves are not are not aggregated. Thus, for example, a behalf of their principals). Moreover, the
registered with the SEC, and these hotel that in fact limits its check cashing operation of the $150,000 limitation
entities are not intended to be excluded services to $650 for a customer on any would exclude from Bank Secrecy Act
from the rule’s definition of money day and in fact limits its currency treatment particular transactions (for
services businesses because the exchange services to $600 for a example purchases of money orders of
Commission neither regulates nor customer on any day does not meet the more than $3,000 under the customer
examines the business activities of those $1,000 definitional floor for check verification and recordkeeping rules of
companies. Instead, it establishes, by cashers or for currency exchangers. 31 CFR 103.29, or transactions in excess
regulation, disclosure, accounting, and (1) Currency dealer or exchanger. The of $10,000 under the currency
other related standards for them. definition of currency dealer or transaction reporting rules of 31 CFR
Accordingly, businesses that engage in exchanger is unchanged, other than for 103.22) that ought not be so excluded,
the activities described in 31 CFR the increase of the $500 threshold to regardless of the overall volume of sales
103.11(uu) are not excluded from the $1,000. The Notice invited comment on of a particular business.
definition merely because their shares whether the old definition of currency The definition in 31 CFR
are publicly held and registered with dealer or exchanger appearing at 31 CFR 103.11(uu)(4) extends to ‘‘redeemers’’ of
the SEC. 103.11(i) was still necessary in light of money orders and traveler’s checks only
Several commenters asked that any the carve out of banks from the insofar as the instruments involved are
exemption for depository institutions or recordkeeping requirements of 31 CFR
16 The definition eliminates the phrase ‘‘similar
other regulated businesses be extended 103.37. In response to comments, that
instruments’’ in response to comments that said the
to holding companies or subsidiaries of definition is removed from 31 CFR phrase was too vague. The phrase has also been
those businesses—for example to bank 103.11(i), but the language of the eliminated from the definition of seller or
holding companies or bank operating recordkeeping rules of 31 CFR 103.37 is redeemers.
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45447
redeemed for monetary value—that is, 4. 31 CFR 103.11(vv)—Definition of products or services (that is, exchanges
for currency or monetary or other Stored Value currency, cashes checks, or transmits
negotiable or other instruments. The The definition of stored value is funds for customers through channels or
taking of the instruments in exchange unchanged. Given the determination to mechanisms of its own), the firm must
for goods or general services is not a exclude stored value from the register independently.
redemption for purposes of these rules. registration requirements, FinCEN does 3. 31 CFR 103.41(a)(3)—Agent Status.
(See, however, 26 CFR 1.6050I– not believe that it is necessary now to
1(c)(1)(ii)(B) for situations in which The final rule provides that the
exclude particular ‘‘closed systems’’ determination of whether a person is an
certain traveler’s checks or money from the limited application of the Bank
orders (among other instruments) may agent depends on all the facts and
Secrecy Act to such instruments, or to circumstances.
be treated as currency, if taken in issue a threshold exclusion based upon
exchange for certain goods or services, the maximum value capable of storage 4. 31 CFR 103.41(b)(1)—Registration
for purposes of the requirement that on particular media. It agrees that Procedures; In General
businesses not subject to the rules in 31 consideration of both such steps would
CFR part 103 report transactions in The Notice set forth the general
be appropriate if the treatment of stored requirement to register a money services
currency in excess of $10,000.)
value under the Bank Secrecy Act were business and to report on the
(5) Money transmitter. The definition
of money transmitter continues to to be expanded at a future date. registration form the information
reflect the determination that the B. 103.41—Registration of Money required by 31 U.S.C. 5330 and any
definitions of that term for purposes of Services Businesses other information required by the form.
the general Bank Secrecy Act rules and A draft of the registration form was
the registration rules should be the 1. 31 CFR 103.41(a)(1)—Registration discussed at a public meeting in
same. As noted above, a limitation on Requirement; In General September 1997. Although this section
the definition has been added to clarify The final rule continues to provide of the preamble discusses comments on
insofar as possible the reach of the that a money services business (whether the draft form, money services
definition, when it is combined with the or not licensed as a money services businesses should bear in mind that
general limitation on the scope of business by any State) must register FinCEN expects to continue to work
money services business.17 Particular with the Department of the Treasury with the money services business
classes or subclasses of money and, as part of that registration, must industry to develop the registration
transmitters can be excluded from the maintain a list of its agents. The final form. As part of that process, FinCEN
operation of the definition for particular rule expressly excludes from the will publish in the Federal Register a
substantive rules (as for example the registration and list requirements the separate notice regarding the form.
proposed rule relating to the reporting following persons: the United States A commenter pointed out that for
of suspicious activities by money Postal Service, an agency of the United certain items, for example, the name
transmitters excluded from its coverage States, of any State, or of any political and address of directors, the
sellers or transmitters of stored value or subdivision of a State, and any person instructions to the draft form discussed
other advanced electronic payment to the extent that the person is an issuer, at the September 1997 public meeting
system products). seller, or redeemer of stored value. request a more limited set of
(6) United States Postal Service. The Unlike the Notice, the final rule does information than could be required
definition of United States Postal not expressly exclude from the under section 5330(b). The commenter
Service has not been changed. Thus, registration and list requirements a asked that the information requested by
unlike the prior regulation, which depository institution (as defined in 31 the final rule be limited in the same
treated the United States Postal Service U.S.C. 5313(g)) or a person registered manner as in the instructions to the
as a financial institution only with with, and regulated or examined by, the form. Accordingly, the final rule
respect to the sale of money orders, the Securities and Exchange Commission continues to set forth the general
final rule treats the Postal Service as a (SEC) or the Commodity Futures requirement to register and report the
financial institution with respect to its Trading Commission (CFTC). Such an information required by 31 U.S.C. 5330,
provision of any money services express exclusion in paragraph (a)(1) of but the words ‘‘to the extent required by
products. The Postal Service, in its section 103.41 is unnecessary because the form’’ have been added after the
comments, requested clarification of the the final rule revises the definition of words ‘‘the information required by 31
status of an ‘‘international postal money money services businesses to exclude U.S.C. 5330.’’ A similar change has been
order’’ under the rules. FinCEN believes those persons. made regarding the identity of the
that that topic is not appropriate for person who is responsible for filing the
treatment in a general rule.18 2. 103.41(a)(2)—Agent Registration registration form.
As noted above, the final rule defers Section 5330(b) provides that the
17 The term ‘‘money transmitter’’ in 31 CFR
indefinitely implementation of a registration shall include an ‘‘estimate
103.11(uu)(5) is not necessarily synonymous with of the volume of business in the coming
the term ‘‘transmittor’s financial institution’’ in
requirement that a money services
existing 31 CFR 103.11(mm). The term business that offers products or services year (which shall be reported annually
‘‘transmittor’s financial institution’’ in existing 31 as an agent on behalf of another money to the Secretary).’’ The instructions to
CFR 103.11(mm) was designed with a narrower services business register with the the draft form thus require an estimate
purpose in mind—’’to preserve as much uniformity of business volume. Several comments
as possible’’ between the special rules for
Department of the Treasury if the former
recordkeeping for wire transfers and the language firm exceeds a ‘‘threshold point’’ set by objected to the business volume
of Article 4A of the Uniform Commercial Code. See the Secretary. If, however, a firm in requirement, and one commenter asked
60 FR 220 (January 3, 1995). addition to offering products or services for clarification of how an annual
18 This comment, like a number of other
on behalf of another money services estimate would be made when the form
comments, concerns the application of these rules is filed only every other year.
in specific situations, for example, armored car business, offers its own money services
companies. FinCEN does not believe it is
Because section 5330 specifically
appropriate to resolve those fact specific situations willing to consider them in the context of specific, requires, as part of the registration
in the context of a general rulemaking, but is fact based inquiries. information, that a money services
45448 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
business make an estimate of its be increased from two years to five in ownership (rather than 10 per cent)
business volume, FinCEN anticipates years. would be a more appropriate standard
that the form will continue to require for requiring re-registration. The final
6. 31 CFR 103.41(b)(3)—Due Date
the estimate. Although a money services rule does not adopt this suggestion
business is required to make an annual Paragraph (b)(3) of the final rule sets because it would permit significant
estimate of its business volume, FinCEN forth the due date for filing the changes in the ownership of smaller
anticipates that the registration form registration form for the initial money services businesses, which are
will not require the estimate to be registration period and each renewal generally subject to little federal
reported on the form itself but will period. The Notice would have required oversight, to take place between renewal
permit the business to retain the the registration form for the initial periods without Treasury’s knowledge.
estimate in its records and make it registration period to be filed by the end One commenter recommended that
available upon request. Thus, the of the 180-day period beginning on the ‘‘wire transmitters’’ be exempted from
annual estimate requirement may be later of (i) the date on which the final the re-registration requirements if the
satisfied even though the registration rules are published in the Federal transmitters are required to re-register
form is required to be filed only every Register, and (ii) the date the business by state law. The final rule does not
other year. is established. Commenters asked for adopt this recommendation. FinCEN
One commenter urged that money more time to file the initial registration believes that it is important to establish
services businesses be permitted to file form. The final rule does not require the uniform, national registration
the registration form electronically. initial registration form to be filed until requirements for money services
FinCEN will consider this December 31, 2001. businesses.
recommendation as it works to finalize 7. 31 CFR 103.41(b)(4)—Events 8. 31 CFR 103.41(c)—Persons Required
the form and the filing procedures for Requiring Reregistration to File Registration Form
the form. Paragraph (b)(4) of the final rule The Notice provided that, as required
The Notice required a money services continues to provide that a money by 31 U.S.C. 5330(a), any person who
business to retain, at a central location services business must be re-registered owns or controls a money services
in the United States, a copy of any before the end of a renewal period upon business shares the responsibility for
registration form the business files and the occurrence of certain events. That seeing that the business is registered.
to report that location on the form. One paragraph requires re-registration if the (Only one registration form, however, is
commenter recommended that as an money services business experiences a required to be filed for each registration
alternative to the requirement to keep change in ownership or control that period.) Commenters pointed out that
information in a centralized file, a requires re-registration under a State the instructions to the draft form take a
money services business be required law registration program for money more limited approach, requiring only
only to have access to information services businesses, more than 10 per certain owners or controlling persons to
within a reasonable period of time. One cent of its voting power or equity register. Paragraph (c) of the final rule
commenter requested that money interests is transferred (except in the addresses this difference by adding the
services businesses be permitted to keep case of certain publicly-traded language ‘‘to the extent provided by the
records concerning registration outside businesses, as explained below), or the form’’ after the language ‘‘any person
the United States, provided that the number of its agents increases by more who owns or controls.’’
information was readily available at the than 50 per cent during any registration
request of FinCEN or any appropriate 9. 31 CFR 103.41(d)(1)—List of Agents;
period.
law enforcement agency. One commenter argued that publicly- In General
The final rule continues to require traded companies should not be Paragraph (d)(1) of the final rule
records concerning registration to be required to re-register when required by provides that a money services business
maintained in the United States. The state law or when there is a more than must prepare and maintain a list of its
final rule does not require a money 50 per cent increase in the their agents. agents, and must revise the agent list to
services business to keep records in a The final rule continues to require contain current information. The Notice
central location so long as information publicly-traded companies to register in required the agent list to be revised each
is readily available at the request of these situations. quarter. Several commenters objected to
FinCEN or any appropriate law Several commenters suggested that re- the requirement to make quarterly
enforcement agency; however, the agent registration was unnecessary in the case updates of the agent list, arguing that
list must be maintained in a central of a 10 per cent change in ownership of annual updates are more reasonable.
location in the United States. publicly-traded companies. One of the One commenter, however, stated that
commenters suggested that because a 10 quarterly updates of internal records of
5. 31 CFR 103.41(b)(2)—Registration
per cent change in ownership of a seller information could be required
Period
publicly-traded company would require without any additional burden. The
Paragraph (b)(2) of the final rule a filing with the Securities and final rule requires annual updates of the
continues to provide that after an initial Exchange Commission, law enforcement agent list.
registration period of two calendar agencies could get information about the The Notice provided that the list of
years, the registration must be renewed ownership change from the filing. The agents is not filed with the registration
every two years. One commenter asked final rule provides that a money services form but is maintained at the location in
that the registration and renewal periods business is not required to re-register the United States reported on the
be increased to five years. Given the before the end of its regular registration registration form. Several commenters
frequency of change in this segment of or renewal period on account of a 10 per asked that the final rule clarify that an
the financial industry and law cent ownership change if that change agent list need not be kept in the United
enforcement’s need for relatively must be reported to the Securities and States so long as the list is readily
current information about these Exchange Commission. available. As indicated above, the agent
businesses, FinCEN does not believe the One commenter suggested that for list must be maintained in the United
registration and renewal periods should smaller businesses, a 50 per cent change States.
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45449
Upon request, a money services retained for five years. Thus, the final particular ‘‘prinicipal’’. Thus, money
business must make its list of agents rule continues to require agent lists to services business are not expected to
available to FinCEN and any other be maintained for five years. obtain information about the gross
appropriate law enforcement agency One commenter recommended that transaction amount for business their
(including, without limitation, the FinCEN allow past lists to be agents may conduct for other principals
examination function of the Internal substituted, in the discretion of the or to disaggregate information about the
Revenue Service in its capacity as money services business, with any gross transaction amount of any agent
delegee of Bank Secrecy Act ‘‘readily accessible’’ records of the that conducts business for more than
examination authority). One commenter information no longer on the current one principal and provides a principal
stated that the requirement to make the list. The final rule does not adopt this with an aggregate figure reflecting
agent list available to law enforcement recommendation. The revisions the final business conducted for both principals.
is vague and potentially burdensome. rule makes regarding the information on To allow time to intregrate information,
This commenter suggested that it would the agent list and the decrease from the final rule provides that information
be preferable to route all law quarterly to annual revisions to the about agent volume must be current
enforcement requests for the lists agent list will reduce the amount of within 45 days of the due date of the
through FinCEN, which would then information that has to be retained. list.
evaluate both the appropriateness of the For any agent that is an agent of the
requests and the bona fides of the law 10. 31 CFR 103.41(d)(2)—Information money services business maintaining
enforcement agency. Included on the List of Agents the list before the first day of the month
The maintenance and ready The final rule provides that the beginning after February 16, 2000, the
availability of ‘‘agent lists and other following information must be included final rule does not require the following
information’’ is a crucial part of the on the agent list— information to be included on the list:
scheme of 31 U.S.C. 5330. But it is (i) The name of the agent, including the year in which the agent first became
equally true that a system in which any trade names or doing-business-as an agent and the agent’s branches or
money services businesses are overrun names, subagents. Such information must be
by duplicative or otherwise burdensome (ii) The address of the agent, made available upon the request of
requests is in no one’s interest. In including street address, city, state, and FinCEN and any other appropriate law
response to the comment, and in light ZIP code, enforcement agency (including, without
of the fact that 31 U.S.C. 5330(c)(1)(B) (iii) The telephone number of the limitation, the examination function of
authorizes the Secretary of the Treasury agent, the Internal Revenue Service in its
to issue rules defining the terms of law (iv) The type of service or services capacity as delegee of Bank Secrecy Act
enforcement access to agent list (sale or redemption of money orders, examination authority).
information, the final rule states that traveler’s checks, check sales, check Several commenters asked that the
requests for agent list information shall cashing, currency exchange, and money final rule clarify that a money services
be coordinated through FinCEN in the transmitting) the agent provides, business is not required to include on
manner and to the extent determined by (v) A listing of the months in the 12 its agent list any agent that is a
FinCEN. Such coordination will (i) months immediately preceding the date depository institution. The final rule
avoid the imposition of unnecessary of the most recent agent list in which expressly excepts banks from the
burden on money services businesses, the gross transaction amount of the definition of money services business.
(ii) ensure the confidentiality of agent with respect to financial products Thus, a money services business is not
sensitive business information, and (iii) or services issued by the money services required to include on its agent list any
facilitate the orderly administration of business maintaining the agent list agent that is a depository institution.
the agent list requirement. exceeded $100,000. For this purpose, Another commenter suggested that
The same commenter also suggested the money services gross transaction only agents in the United States should
that agent lists could voluntarily be filed amount is the agent’s gross amount be included on the agent list. FinCEN
by money services businesses with the (excluding fees and commission) agrees that only agents doing business
Department of the Treasury, under a received from transaction of one or more in the United States should be included
system in which law enforcement businesses described in § 103.11(uu), on the agent list.
agencies obtain access through (vi) The name and address of any Commenters indicated that because of
Treasury, rather than by seeking depository institution at which the the way they currently maintain
information from the money services agent maintains a transaction account information about their agents and the
businesses that chose to file such lists. (as defined in 12 U.S.C. 461(b)(1)(C)) for need to devote computer programming
FinCEN believes that such a system has all or part of the funds received in or for resources to the Year 2000 problem in
merit, and it intends to work with the its money services business whether in general, they would need more time
affected businesses to develop such a the name of the agent or of the money than allowed by the Notice to prepare
system, during the period provided for services business for which the agent the initial list of their agents. The final
implementation of this rule prior to acts or whose products it sells, rule does not require the preparation of
January 1, 2002. (vii) The year in which the agent first the initial agent list to be completed
The Notice provided that the original became an agent of the money services until January 1, 2002. This change
list of agents and any revised list must business, and should provide sufficient time for
be retained for five years, as specified in (viii) The number of branches or money services businesses to prepare
31 CFR 103.38(d). Commenters objected subagents the agent has. their agent lists.
to the requirement to retain lists of As noted above, the final rule requires
agents for five years. As indicated a money services business to include VI. Other Pending Notices of Proposed
above, the requirement to update agent information about the months in the Rulemaking Concerning Money
lists has been relaxed from quarterly preceding 12-month period in which its Services Businesses
updates to annual updates. Further, the agent’s gross transaction amount The second rule proposed on May 21,
Bank Secrecy Act rules generally require exceeded $100,000. Again, the $100,000 1997 (the ‘‘Proposed SAR Rule’’), would
Bank Secrecy Act information to be need reflect only business done for the require money transmitters, and issuers,
45450 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
sellers, and redeemers of money orders consider a reasonable number of information will be used to locate agents
and traveler’s checks to report regulatory alternatives before of money services businesses to ensure
suspicious transactions to the promulgating a rule. FinCEN has that they are complying with the
Department of the Treasury. See 62 FR determined that it is not required to provisions of the Bank Secrecy Act. The
27900–27909. Suspicious activity prepare a written statement under information will also be used by law
reporting by all classes of financial section 202 and has concluded that on enforcement agencies in the
institutions covered by the Bank balance this final rule provides the most enforcement of criminal, tax, and
Secrecy Act is an essential part of the cost-effective and least burdensome regulatory laws and to prevent money
government’s counter-money laundering alternative to achieve the objectives of services businesses from engaging in
efforts generally and its efforts to the rule. illegal activities. The collection of
strengthen counter-money laundering information is mandatory. The likely
IX. Regulatory Flexibility Act
controls at money services businesses in recordkeepers are businesses.
particular. The Department of the FinCEN certifies that this rule will not The estimated average burden
Treasury is committed to producing the have a significant economic impact on associated with the collection of
most cost-effective reporting regime, for a substantial number of small entities. information in this final rule is 130
both law enforcement and the industries FinCEN anticipates that the provisions hours per recordkeeper.
involved. To permit effective of the rule generally excluding agents of Comments concerning the accuracy of
implementation, suspicious activity money services businesses from this burden estimate and suggestions for
reporting by the relevant classes of registration will limit the impact of the reducing this burden should be directed
money services businesses will not rule on small businesses. Further, most to the Financial Crimes Enforcement
begin until the initial registration of the recordkeeping and reporting Network, Department of the Treasury,
process is complete. requirements that would be imposed by 2070 Chain Bridge Road, Suite 200,
The Department also believes that it is the rule concern information already Vienna, VA 22187, and to OMB,
critical to provide written guidance found in routine business records. For Attention: Desk Officer for the
about what must be reported, at the time example, as part of their business Department of Treasury, FinCEN, Office
the final rule is issued. It intends to records, money services businesses (to of Information and Regulatory Affairs,
work with the money transmission, the extent such businesses are small Washington, D.C. 20503.
money order, and traveler’s check entities) will generally have information
List of Subjects in 31 CFR Part 103
industries to shape that guidance, needed for the required agent list, such
independent of the rulemaking itself. as the name and addresses of their Administrative practice and
That work should be assisted by the agents and agent transaction account procedure, Authority delegations
information gathered during initial information, because such information (Government agencies), Banks and
stages of implementation of the is necessary to establish and maintain banking, Currency, Foreign banking,
registration rule. the relationship between the businesses Foreign currencies, Gambling,
The third rule proposed on May 21, and their agents. In addition to Investigations, Law enforcement,
1997 (the ‘‘Proposed Special CTR recordkeeping and reporting Penalties, Reporting and recordkeeping
Rule’’), would add a special currency requirements, other requirements of the requirements, Securities, Taxes.
transaction reporting requirement—and rule may also be satisfied with Amendment
related customer verification information that is currently available.
For example, many businesses currently For the reasons set forth above in the
requirements—for money transmitters
have policies in place regarding the preamble, 31 CFR part 103 is amended
involved in the transmission or other
maximum dollar amount of a money as follows:
transfer of funds to persons outside the
United States. See 62 FR 27909–27917. service transaction they will perform for PART 103—FINANCIAL
Action on the Proposed Special CTR a customer, such as the maximum RECORDKEEPING AND REPORTING
Rule is being deferred, but it is not being amount for which a business will cash OF CURRENCY AND FOREIGN
withdrawn at this time. a check, which may help (assuming the TRANSACTIONS
policy is observed) them determine
VII. Executive Order 12866 whether they have exceeded the $1,000 1. The authority citation for part 103
The Department of the Treasury has floor in several of the definitions in the continues to read as follows:
determined that this final rule is not a rule. Authority: 12 U.S.C. 1829b and 1951–1959;
significant regulatory action under 31 U.S.C. 5311–5330.
Executive Order 12866. X. Paperwork Reduction Act
The collection of information 2. Section 103.11 is amended by—
VIII. Unfunded Mandates Act of 1995 a. Revising paragraph (c)(7),
contained in this final regulation has b. Removing and reserving paragraph
Statement been reviewed and approved by the (i),
Section 202 of the Unfunded Office of Management and Budget c. Revising paragraph (n)(3),
Mandates Reform Act of 1995 (OMB) in accordance with the d. Removing paragraphs (n)(4), (n)(5),
(‘‘Unfunded Mandates Act’’), Public requirements of the Paperwork and (n)(10),
Law 104–4 (March 22, 1995), requires Reduction Act (44 U.S.C. 3507(d)) under e. Redesignating paragraphs (n)(6),
that an agency prepare a budgetary control number 1506–0013. An agency (n)(7), (n)(8), and (n)(9) as paragraphs
impact statement before promulgating a may not conduct or sponsor, and a (n)(4), (n)(5), (n)(6), and (n)(7)
rule that includes a federal mandate that person is not required to respond to, a respectively,
may result in expenditure by state, local collection of information unless it f. In newly redesignated paragraphs
and tribal governments, in the aggregate, displays a valid control number (n)(5) and (n)(6), removing the period at
or by the private sector, of $100 million assigned by OMB. the end of the paragraph and adding a
or more in any one year. If a budgetary The collection of information in this semicolon in its place,
impact statement is required, section final rule is in 31 CFR 103.41(d). This g. In newly redesignated paragraph
202 of the Unfunded Mandates Act also information is required to be provided (n)(7), removing ‘‘;.’’ and adding a
requires an agency to identify and pursuant to 31 U.S.C. 5330. This period in its place, and
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45451
h. Adding new paragraphs (uu) and instruments for an amount greater than New subparts
Old subparts and sections
(vv). $1,000 in currency or monetary or other subpart D and sections
The revised and added paragraphs instruments from, any person on any subpart E
read as follows: day in one or more transactions).
(5) Money transmitter—(i) In general. 103.62 ................................... 103.72
§ 103.11 Meaning of terms. 103.63 ................................... 103.73
Money transmitter: 103.64 ................................... 103.74
* * * * * (A) Any person, whether or not 103.65 ................................... 103.75
(c) Bank. * * * licensed or required to be licensed, who 103.66 ................................... 103.76
(7) Any other organization (except a engages as a business in accepting 103.67 ................................... 103.77
money services business) chartered currency, or funds denominated in Subpart F Subpart G
under the banking laws of any state and currency, and transmits the currency or 103.70 ................................... 103.80
subject to the supervision of the bank funds, or the value of the currency or 103.71 ................................... 103.81
supervisory authorities of a State; funds, by any means through a financial 103.72 ................................... 103.82
103.73 ................................... 103.83
* * * * * agency or institution, a Federal Reserve 103.74 ................................... 103.84
(n) Financial institution. * * * Bank or other facility of one or more 103.75 ................................... 103.85
(3) A money services business as Federal Reserve Banks, the Board of 103.76 ................................... 103.86
defined in paragraph (uu) of this Governors of the Federal Reserve 103.77 ................................... 103.87
section; System, or both, or an electronic funds
transfer network; or 4. Add a new subpart D to part 103
* * * * *
(B) Any other person engaged as a to read as follows:
(uu) Money services business. Each
agent, agency, branch, or office within business in the transfer of funds. Subpart D—Special Rules for Money
(ii) Facts and circumstances; Services Businesses
the United States of any person doing
Limitation. Whether a person ‘‘engages
business, whether or not on a regular Sec.
as a business’’ in the activities described 103.41 Registration of money services
basis or as an organized business
in paragraph (uu)(5)(i) of this section is businesses.
concern, in one or more of the capacities
a matter of facts and circumstances.
listed in paragraphs (uu)(1) through
Generally, the acceptance and Subpart D—Special Rules for Money
(uu)(6) of this section. Notwithstanding
transmission of funds as an integral part Services Businesses
the preceding sentence, the term
of the execution and settlement of a
‘‘money services business’’ shall not § 103.41 Registration of money services
transaction other than the funds
include a bank, nor shall it include a businesses.
transmission itself (for example, in
person registered with, and regulated or (a) Registration requirement—(1) In
connection with a bona fide sale of
examined by, the Securities and general. Except as provided in
securities or other property), will not
Exchange Commission or the paragraph (a)(2) of this section, relating
cause a person to be a money
Commodity Futures Trading to agents, each money services business
transmitter within the meaning of
Commission. (whether or not licensed as a money
paragraph (uu)(5)(i) of this section.
(1) Currency dealer or exchanger. A (6) United States Postal Service. The services business by any State) must
currency dealer or exchanger (other than United States Postal Service, except register with the Department of the
a person who does not exchange with respect to the sale of postage or Treasury and, as part of that registration,
currency in an amount greater than philatelic products. maintain a list of its agents as required
$1,000 in currency or monetary or other (vv) Stored value. Funds or monetary by 31 U.S.C. 5330 and this section. This
instruments for any person on any day value represented in digital electronics section does not apply to the United
in one or more transactions). format (whether or not specially States Postal Service, to agencies of the
(2) Check casher. A person engaged in encrypted) and stored or capable of United States, of any State, or of any
the business of a check casher (other storage on electronic media in such a political subdivision of a State, or to a
than a person who does not cash checks way as to be retrievable and transferable person to the extent that the person is
in an amount greater than $1,000 in electronically. an issuer, seller, or redeemer of stored
currency or monetary or other 3. Part 103 is further amended by value.
instruments for any person on any day redesignating the following subparts (2) Agents. A person that is a money
in one or more transactions). and sections as follows: services business solely because that
(3) Issuer of traveler’s checks, money person serves as an agent of another
orders, or stored value. An issuer of New subparts money services business, see
Old subparts and sections
traveler’s checks, money orders, or, subpart D and sections § 103.11(uu), is not required to register
stored value (other than a person who subpart E under this section, but a money services
does not issue such checks or money business that engages in activities
103.41 ................................... 103.51
orders or stored value in an amount 103.42 ................................... 103.52
described in § 103.11(uu) both on its
greater than $1,000 in currency or 103.43 ................................... 103.53 own behalf and as an agent for others
monetary or other instruments to any 103.44 ................................... 103.54 must register under this section. For
person on any day in one or more 103.45 ................................... 103.55 example, a supermarket corporation that
transactions). 103.46 ................................... 103.56 acts as an agent for an issuer of money
(4) Seller or redeemer of traveler’s 103.47 ................................... 103.57 orders and performs no other services of
checks, money orders, or stored value. A 103.48 ................................... 103.58 a nature and value that would cause the
seller or redeemer of traveler’s checks, 103.49 ................................... 103.59 corporation to be a money services
103.50 ................................... 103.60 business, is not required to register; the
money orders, or stored value (other
103.51 ................................... 103.61
than a person who does not sell such 103.52 ................................... 103.62
answer would be the same if the
checks or money orders or stored value 103.53 ................................... 103.63 supermarket corporation served as an
in an amount greater than $1,000 in 103.54 ................................... 103.64 agent both of a money order issuer and
currency or monetary or other Subpart E Subpart F of a money transmitter. However,
instruments to or redeem such 103.61 ................................... 103.71 registration would be required if the
45452 Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations
supermarket corporation, in addition to registered under this section. In appropriate law enforcement agency
acting as an agent of an issuer of money addition, if there is a transfer of more (including, without limitation, the
orders, cashed checks or exchanged than 10 percent of the voting power or examination function of the Internal
currencies (other than as an agent for equity interests of a money services Revenue Service in its capacity as
another business) in an amount greater business (other than a money services delegee of Bank Secrecy Act
than $1,000 in currency or monetary or business that must report such transfer examination authority). Requests for
other instruments for any person on any to the Securities and Exchange information made pursuant to the
day, in one or more transactions. Commission), the money services preceding sentence shall be coordinated
(3) Agency status. The determination business must be re-registered under through FinCEN in the manner and to
whether a person is an agent depends this section. Finally, if a money services the extent determined by FinCEN. The
on all the facts and circumstances. business experiences a more than 50-per original list of agents and any revised
(b) Registration procedures—(1) In cent increase in the number of its agents list must be retained for the period
general. (i) A money services business during any registration period, the specified in § 103.38(d).
must be registered by filing such form money services business must be re- (2) Information included on the list of
as FinCEN may specify with the Detroit registered under this section. The agents—(i) In general. Except as
Computing Center of the Internal registration form must be filed not later provided in paragraph (d)(2)(ii) of this
Revenue Service (or such other location than 180 days after such change in section, a money services business must
as the form may specify). The ownership, transfer of voting power or include the following information with
information required by 31 U.S.C. equity interests, or increase in agents. respect to each agent on the list
5330(b) and any other information The calendar year in which the change, (including any revised list) of its
required by the form must be reported transfer, or increase occurs is treated as agents—
in the manner and to the extent required the first year of a new two-year (A) The name of the agent, including
by the form. registration period. any trade names or doing-business-as
(ii) A branch office of a money
(c) Persons required to file the names;
services business is not required to file
registration form. Under 31 U.S.C. (B) The address of the agent,
its own registration form. A money
5330(a), any person who owns or including street address, city, state, and
services business must, however, report
controls a money services business is ZIP code;
information about its branch locations
responsible for registering the business; (C) The telephone number of the
or offices as provided by the
however, only one registration form is agent;
instructions to the registration form.
(iii) A money services business must required to be filed for each registration (D) The type of service or services
retain a copy of any registration form period. A person is treated as owning or (money orders, traveler’s checks, check
filed under this section and any controlling a money services business sales, check cashing, currency exchange,
registration number that may be for purposes of filing the registration and money transmitting) the agent
assigned to the business at a location in form only to the extent provided by the provides;
the United States and for the period form. If more than one person owns or (E) A listing of the months in the 12
specified in § 103.38(d). controls a money services business, the months immediately preceding the date
(2) Registration period. A money owning or controlling persons may enter of the most recent agent list in which
services business must be registered for into an agreement designating one of the gross transaction amount of the
the initial registration period and each them to register the business. The agent with respect to financial products
renewal period. The initial registration failure of the designated person to or services issued by the money services
period is the two-calendar-year period register the money services business business maintaining the agent list
beginning with the calendar year in does not, however, relieve any of the exceeded $100,000. For this purpose,
which the money services business is other persons who own or control the the money services gross transaction
first required to be registered. However, business of liability for the failure to amount is the agent’s gross amount
the initial registration period for a register the business. See paragraph (e) (excluding fees and commissions)
money services business required to of this section, relating to consequences received from transactions of one or
register by December 31, 2001 (see of the failure to comply with 31 U.S.C. more businesses described in
paragraph (b)(3) of this section) is the 5330 or this section. § 103.11(uu);
two-calendar year period beginning (d) List of agents—(1) In general. A (F) The name and address of any
2002. Each two-calendar-year period money services business must prepare depository institution at which the
following the initial registration period and maintain a list of its agents. The agent maintains a transaction account
is a renewal period. initial list of agents must be prepared by (as defined in 12 U.S.C. 461(b)(1)(C)) for
(3) Due date. The registration form for January 1, 2002, and must be revised all or part of the funds received in or for
the initial registration period must be each January 1, for the immediately the financial products or services issued
filed on or before the later of December preceding 12 month period; for money by the money services business
31, 2001, and the end of the 180-day services businesses established after maintaining the list, whether in the
period beginning on the day following December 31, 2001, the initial agent list agent’s or the business principal’s name;
the date the business is established. The must be prepared by the due date of the (G) The year in which the agent first
registration form for a renewal period initial registration form and must be became an agent of the money services
must be filed on or before the last day revised each January 1 for the business; and
of the calendar year preceding the immediately preceding 12-month (H) The number of branches or
renewal period. period. The list is not filed with the subagents the agent has.
(4) Events requiring re-registration. If registration form but must be (ii) Special rules. Information about
a money services business registered as maintained at the location in the United agent volume must be current within 45
such under the laws of any State States reported on the registration form days of the due date of the agent list.
experiences a change in ownership or under paragraph (b)(1) of this section. The information described by
control that requires the business to be Upon request, a money services paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of
re-registered under State law, the money business must make its list of agents this section is not required to be
services business must also be re- available to FinCEN and any other included in an agent list with respect to
Federal Register / Vol. 64, No. 161 / Friday, August 20, 1999 / Rules and Regulations 45453
any person that is an agent of the money § 103.57 [Amended] ‘‘§ 103.71’’ from the first sentence and
services business maintaining the list 8. Newly redesignated § 103.57 is adding the language ‘‘§ 103.81’’ in its
before the first day of the month amended by: place.
beginning after February 16, 2000 so a. In paragraph (d) removing the
long as the information described by language ‘‘§ 103.48’’ and adding the § 103.83 [Amended]
paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of language ‘‘§ 103.58’’ in its place. 15. Paragraph (b) of newly
this section is made available upon the b. In the first sentence of paragraph (e) redesignated § 103.83 is amended by:
request of FinCEN and any other removing the language ‘‘§ 103.53’’ and a. In the first sentence removing the
appropriate law enforcement agency adding the language ‘‘§ 103.63’’ in its language ‘‘§ 103.71’’ and adding the
(including, without limitation, the place. language ‘‘§ 103.81’’ in its place.
examination function of the Internal b. In the last sentence removing the
§ 103.72 [Amended]
Revenue Service in its capacity as language ‘‘§ 103.71’’ and adding the
9. Newly redesignated § 103.72 is language ‘‘§ 103.81’’ in its place.
delegee of Bank Secrecy Act
amended by removing the language
examination authority).
‘‘§ 103.61’’ from the introductory text § 103.85 [Amended]
(e) Consequences of failing to comply and adding the language ‘‘§ 103.71’’ in 16. Newly redesignated § 103.85 is
with 31 U.S.C. 5330 or the regulations its place. amended by removing the language
thereunder. It is unlawful to do business ‘‘§ 103.71’’ from the first sentence and
without complying with 31 U.S.C. 5330 § 103.73 [Amended]
adding the language ‘‘§ 103.81’’ in its
and this section. A failure to comply 10. Newly redesignated § 103.73 is place.
with the requirements of 31 U.S.C 5330 amended by:
or this section includes the filing of a. In paragraph (a) introductory text § 103.86 [Amended]
false or materially incomplete removing the language ‘‘§ 103.61’’ and 17. Newly redesignated § 103.86 is
information in connection with the adding the language ‘‘§ 103.71’’ in its amended by:
registration of a money services place. a. In paragraph (a) introductory text
business. Any person who fails to b. In paragraph (a)(1) removing the removing the language ‘‘§ 103.75’’ and
comply with any requirement of 31 language ‘‘§ 103.62’’ and adding the
adding the language ‘‘§ 103.85’’ in its
U.S.C. 5330 or this section shall be language ‘‘§ 103.72’’ in its place.
place.
liable for a civil penalty of $5,000 for c. In paragraph (b) introductory text
removing the language ‘‘§ 103.61’’ and b. In the second sentence of paragraph
each violation. Each day a violation of (b) removing the language ‘‘§ 103.71’’
31 U.S.C. 5330 or this section continues adding the language ‘‘§ 103.71’’ in its
place. and adding the language ‘‘§ 103.81’’ in
constitutes a separate violation. In its place.
addition, under 31 U.S.C. 5320, the d. In paragraph (b)(1) removing the
Secretary of the Treasury may bring a language ‘‘§ 103.62’’ and adding the Dated: August 17, 1999.
civil action to enjoin the violation. See language ‘‘§ 103.72’’ in its place. James F. Sloan,
18 U.S.C. 1960 for a criminal penalty for Director, Financial Crimes Enforcement
§ 103.74 [Amended]
failure to comply with the registration Network.
11. Newly redesignated § 103.74 is
requirements of 31 U.S.C. 5330 or this [FR Doc. 99–21667 Filed 8–18–99; 8:45 am]
amended by removing the language
section. ‘‘§ 103.62’’ from paragraph (a) and BILLING CODE 4820–03–P
(f) Effective date. This section is adding the language ‘‘§ 103.72’’ in its
effective September 20, 1999. place.
Registration of money services DEPARTMENT OF DEFENSE
businesses under this section will not be § 103.75 [Amended]
required prior to December 31, 2001. 12. Newly redesignated § 103.75 is Office of the Secretary
amended by:
§ 103.36 [Amended] a. In the first sentence of paragraph (a) 32 CFR Part 199
5. Paragraph (b)(10) of § 103.36 is removing the language ‘‘§ 103.62’’ and [DoD 6010.8–R]
amended by removing the language adding the language ‘‘§ 103.72’’ in its
place. RIN–0720–AA49
‘‘§ 103.54(a)’’ and adding the language
‘‘§ 103.64(a)’’ in its place. b. In paragraph (c) introductory text
removing the language ‘‘103.62(a)’’ and Civilian Health and Medical Program of
6. Section 103.37 is amended by the Uniformed Service (CHAMPUS);
adding the language ‘‘103.72(a)’’ in its
adding a new paragraph (c) to read as Prosthetic Devices
place and removing the language
follows:
‘‘§ 103.62 (b) or (c)’’ and adding the AGENCY: Office of the Secretary, DoD.
§ 103.37 Additional records to be made language ‘‘§ 103.72 (b) or (c)’’ in its
ACTION: Interim final rule.
and retained by currency dealers or place.
exchangers. SUMMARY: This interim final rule
§ 103.76 [Amended]
* * * * * implements section 702 of the National
13. Newly redesignated § 103.76 is
(c) This section does not apply to Defense Authorization Act for fiscal
amended by:
banks that offer services in dealing or a. In the first sentence removing the Year 1998 (Pub. L. 105–85), which
changing currency to their customers as language ‘‘§ 103.62’’ and adding the authorizes purchase of prosthetic
an adjunct to their regular service. language ‘‘§ 103.72’’ in its place. devices, as determined by the Secretary
b. In the second sentence removing of Defense, to be necessary because of
§ 103.56 [Amended] significant conditions resulting from
the language ‘‘§ 103.62(a)’’ and adding
7. Paragraph (b)(7) of newly the language ‘‘§ 103.72(a)’’ in its place. trauma, congenital anomalies, or
redesignated § 103.56 is amended by disease. The act changes the existing
removing the language ‘‘§ 103.48’’ and § 103.82 [Amended] limited provisions for prosthetic
adding the language ‘‘§ 103.58’’ in its 14. Newly redesignated § 103.82 is devices, expands coverage to include
place. amended by removing the language cost sharing of other prostheses, e.g.,