NPRM: Imposition of special measure against Liberty Reserve S.A. (78 FR 34008)
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
34008 Federal Register / Vol. 78, No. 109 / Thursday, June 6, 2013 / Proposed Rules
policy that the United States would not responsibilities between Federal assessing proliferation risks, and will
engage in nuclear fuel reprocessing agencies, and the NRC’s extensive continue to address proliferation risks
because of concerns about nuclear experience dealing with domestic and in the NRC’s comprehensive regulations
proliferation. international nuclear safety security for physical security, information
The NRC agrees that the petition matters through established security, material control and
mixes technical and licensing issues communications channels. Based on accounting, cyber security, and export
that are within the scope of the NRC’s this review, the NRC has determined control.
domestic licensing process with broader that its existing licensing framework is Dated at Rockville, Maryland, this 31st day
aspects of the U.S. Government’s adequate to address proliferation of May 2013.
nuclear nonproliferation policy. While concerns. Requiring a separate license-
For the Nuclear Regulatory Commission.
the NRC’s comprehensive licensing by-license nuclear proliferation
framework is adequate to address assessment would not enhance the Annette L. Vietti-Cook,
proliferation concerns in domestic NRC’s ability to carry out its statutory Secretary of the Commission.
licensing, other Executive Branch responsibility to protect the public [FR Doc. 2013–13444 Filed 6–5–13; 8:45 am]
agencies have the primary responsibility health and safety and promote the BILLING CODE 7590–01–P
to address broader U.S. Government common defense and security.
foreign policy initiatives and Comment Category 19: The Nuclear
proliferation impacts outside of the Threat Initiative (NTI). DEPARTMENT OF THE TREASURY
NRC’s domestic licensing activities. Two comment letters included
As discussed in response to petition comments in this category. Both Financial Crimes Enforcement Network
Assertion 1, the NRC agrees that the commenters stated their support for the
NPAS required under Section 123 of the efforts of the NTI (also supported by 31 CFR Part 1010
AEA is required in the context of a former Senators Richard Lugar and Sam
RIN 1506–AB23
bilateral agreement negotiated between Nunn), which supports the worldwide
the United States and another nation safeguarding of all fissile materials that Imposition of Special Measure Against
governing the peaceful use of nuclear could be used to do harm to our Nation. Liberty Reserve S.A. as a Financial
energy. The NPAS does not address the Institution of Primary Money
NRC Response to Comment Category 19
domestic licensing actions of the NRC. Laundering Concern
Comment Category 18: Requiring a Comments advocating support for the
proliferation assessment would be NTI are outside the scope of this AGENCY: Financial Crimes Enforcement
feasible and would not be overly petition because they are unrelated to Network (FinCEN), Treasury.
burdensome nor significantly impact the petitioner’s request that the NRC ACTION: Notice of proposed rulemaking.
licensing timelines. require its ENR facility license
Two comment letters supporting the applicants to perform a nuclear SUMMARY: In a finding, notice of which
petition included comments in this proliferation assessment. Nonetheless, was published elsewhere in this issue of
category. One commenter stated that a the NRC notes that its comprehensive the Federal Register (Notice of Finding),
nuclear proliferation assessment is licensing framework requires the the Director of FinCEN found that
feasible and should not be perceived as safeguarding of fissile material in Liberty Reserve S.A. (Liberty Reserve) is
overly burdensome to the licensing domestic licensing activities. a financial institution operating outside
process. A commenter stated that GLE of the United States that is of primary
V. Determination of Petition money laundering concern. FinCEN is
carried out its own proliferation
assessment of the proposed SILEX laser The NRC has reviewed the petition issuing this notice of proposed
enrichment facility without creating and the public comments. For the rulemaking (NPRM) to propose the
delays or jeopardizing classified or reasons set forth in this document, the imposition of a special measure against
proprietary information. Another NRC is denying the petition under 10 Liberty Reserve.
commenter stated that it is highly CFR 2.803. The NRC disagrees that an DATES: Written comments on this NPRM
doubtful that the addition of a applicant seeking an ENR facility must be submitted on or before August
proliferation assessment requirement license should be required to conduct a 5, 2013.
would significantly alter licensees’ nuclear proliferation assessment. The ADDRESSES: You may submit comments,
timelines. petitioner has not shown that the NRC’s identified by RIN 1506–AB23, by any of
comprehensive licensing framework the following methods:
NRC Response to Comment Category 18 fails to adequately address proliferation • Federal E-rulemaking Portal: http://
The NRC has determined that risks associated with the licensing of an www.regulations.gov. Follow the
preparation of a nuclear proliferation ENR facility. Additionally, the instructions for submitting comments.
assessment is not necessary because it petitioner has not shown that ENR Include RIN 1506–AB23 in the
would not provide meaningful applicants have a particular insight on submission.
information beyond that which is proliferation issues or have access to the • Mail: The Financial Crimes
already available to the NRC when intelligence resources, capabilities and Enforcement Network, P.O. Box 39,
conducting a domestic licensing information that would enable them to Vienna, VA 22183. Include RIN 1506–
proceeding. This determination was prepare a meaningful proliferation AB23 in the body of the text. Please
made independent of the time and assessment that would assist the NRC in submit comments by one method only.
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resources involved in preparing such an making an informed licensing decision. • Comments submitted in response to
assessment. This determination was also Furthermore, proliferation risks have this NPRM will become a matter of
made by reviewing the petition, the and will continue to be assessed and public record. Therefore, you should
public comments, the information addressed by the responsible agencies submit only information that you wish
sources available to the NRC related to within the Executive Branch. The NRC to make publicly available.
the current threat environment, the will continue to engage with and Inspection of comments: Public
existing comprehensive licensing support the Executive Branch agencies comments received electronically or
framework, the division of with primary responsibility for through the U.S. Postal Service sent in
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Federal Register / Vol. 78, No. 109 / Thursday, June 6, 2013 / Proposed Rules 34009
response to a notice and request for factors relevant to the Finding and to to detect potential suspicious activity.
comment will be made available for selecting the special measure proposed As explained in more detail in the
public review as soon as possible on in this NPRM, the Director of FinCEN section-by-section analysis below,
http://www.regulations.gov. Comments proposes to impose the special measure financial institutions should be able to
received may be physically inspected in authorized by section 5318A(b)(5) (the leverage these current screening and
the FinCEN reading room located in fifth special measure). In connection reporting procedures to detect
Vienna, Virginia. Reading room with this action, FinCEN consulted with transactions involving Liberty Reserve.
appointments are available weekdays representatives of the Federal functional As a corollary to this measure, covered
(excluding holidays) between 10 a.m. regulators, the Department of Justice, financial institutions also would be
and 3 p.m., by calling the Disclosure and the Department of State, among required to take reasonable steps to
Officer at (703) 905–5034 (not a toll-free others. apply special due diligence, as set forth
call). B. Discussion of Section 311 Factors below, to all of their correspondent
FOR FURTHER INFORMATION CONTACT: The accounts to help ensure that no such
FinCEN regulatory helpline at (800) In determining which special account is being used to provide
949–2732 and select Option 6. measures to implement to address the services to Liberty Reserve. This would
primary money laundering concern, involve a minimal burden in
SUPPLEMENTARY INFORMATION:
FinCEN considered the following transmitting a one-time notice to certain
I. Statutory Provisions factors. foreign correspondent account holders
On October 26, 2001, the President 1. Whether Similar Action Has Been or concerning the prohibition on
signed into law the Uniting and Will Be Taken by Other Nations or processing transactions involving
Strengthening America by Providing Multilateral Groups Against Liberty Liberty Reserve through the U.S.
Appropriate Tools Required to Intercept Reserve correspondent account, but otherwise is
and Obstruct Terrorism Act of 2001 (the Other countries or multilateral groups not expected to impose a significant
USA PATRIOT Act), Public Law 107– have not yet taken action similar to additional burden upon U.S. financial
56. Title III of the USA PATRIOT Act those proposed in this rulemaking that institutions.
amends the anti-money laundering would: (1) Prohibit domestic financial 3. The Extent to Which the Proposed
provisions of the Bank Secrecy Act institutions and agencies from opening Action or Timing of the Action Would
(BSA), codified at 12 U.S.C. 1829b, 12 or maintaining a correspondent account Have a Significant Adverse Systemic
U.S.C. 1951–1959, and 31 U.S.C. 5311– for or on behalf of a foreign bank if such Impact on the International Payment,
5314, 5316–5332, to promote the correspondent account is being used to Clearance, and Settlement System, or on
prevention, detection, and prosecution process transactions involving Liberty Legitimate Business Activities of Liberty
of international money laundering and Reserve; and (2) require those domestic Reserve
the financing of terrorism. Regulations financial institutions and agencies to
implementing the BSA appear at 31 CFR screen their correspondents in a manner The requirements proposed in this
Chapter X. The authority of the that is reasonably designed to guard NPRM would target Liberty Reserve
Secretary of the Treasury (the Secretary) against processing transactions specifically; they would not target a
to administer the BSA and its involving Liberty Reserve. FinCEN class of financial transactions (such as
implementing regulations has been encourages other countries to take wire transfers) or a particular
delegated to the Director of FinCEN. similar action based on the information jurisdiction. Liberty Reserve is not a
Section 311 of the USA PATRIOT Act major participant in the international
contained in this notice and the
(Section 311), codified at 31 U.S.C. payment system and is not relied upon
Finding.
5318A, grants the Director of FinCEN by the international banking community
the authority, upon finding that 2. Whether the Imposition of the Fifth for clearance or settlement services.
reasonable grounds exist for concluding Special Measure Would Create a Thus, the imposition of the fifth special
that a foreign jurisdiction, institution, Significant Competitive Disadvantage, measure against Liberty Reserve would
class of transaction, or type of account Including Any Undue Cost or Burden not have a significant adverse systemic
is of ‘‘primary money laundering Associated With Compliance, for impact on the international payment,
concern,’’ to require domestic financial Financial Institutions Organized or clearance, and settlement system. As
institutions and financial agencies to Licensed in the United States discussed further in the Notice of
take certain ‘‘special measures’’ to The fifth special measure proposed by Finding, there appears to be little or no
address the primary money laundering this rulemaking would prohibit covered incentive for legitimate use of Liberty
concern. financial institutions from opening or Reserve, due to its structure, associated
II. Imposition of Special Measure maintaining correspondent accounts for fees, and lack of basic protections for
Against Liberty Reserve as a Financial or on behalf of a foreign bank if such users.
Institution of Primary Money correspondent account is being used to 4. The Effect of the Proposed Action on
Laundering Concern process transactions involving Liberty United States National Security and
Reserve after the effective date of the Foreign Policy
A. Special Measure final rule implementing the fifth special
As noticed elsewhere in this issue of measure. U.S. financial institutions The exclusion of Liberty Reserve from
the Federal Register, on May 28, 2013, generally apply some level of screening the U.S. financial system as required by
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the Director of FinCEN found that and (when required) reporting of their the fifth special measure would enhance
Liberty Reserve is a financial institution transactions and accounts, often through national security by making it more
operating outside the United States that the use of commercially-available difficult for money launderers, other
is of primary money laundering concern software such as that used for criminals or terrorists to access the U.S.
(Finding). Based upon that Finding, the compliance with the economic financial system. More generally, the
Director of FinCEN is authorized to sanctions programs administered by the imposition of the fifth special measure
impose one or more special measures. Office of Foreign Assets Control (OFAC) would complement the U.S.
Following the consideration of all of the Department of the Treasury and Government’s worldwide efforts to
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34010 Federal Register / Vol. 78, No. 109 / Thursday, June 6, 2013 / Proposed Rules
expose and disrupt international money introducing brokers-commodities, and 2. Special Due Diligence for
laundering and terrorism financing. investment companies that are open-end Correspondent Accounts to Prohibit Use
Therefore, pursuant to the Finding companies (‘‘mutual funds’’), FinCEN is As a corollary to the prohibition on
that Liberty Reserve is a financial also using the same definition of maintaining correspondent accounts
institution operating outside of the ‘‘account’’ for purposes of this rule as that are being used to process
United States of primary money was established for these entities in the transactions involving Liberty Reserve,
laundering concern, and after final rule implementing the provisions section 1010.660(b)(2) of the proposed
conducting the required consultations of section 312 of the USA PATRIOT Act rule would require a covered financial
and weighing the relevant factors, the requiring enhanced due diligence for institution to apply special due
Director of FinCEN proposes to impose correspondent accounts maintained for diligence to all of its foreign
the fifth special measure. certain foreign banks.2 correspondent accounts that is
III. Section-by-Section Analysis for 3. Covered Financial Institution reasonably designed to guard against
Imposition of the Fifth Special Measure processing transactions involving
Section 1010.660(a)(3) of the Liberty Reserve. That special due
A. 1010.660(a)—Definitions proposed rule would define ‘‘covered diligence must include notifying those
1. Liberty Reserve financial institution’’ with the same foreign correspondent account holders
definition used in the final rule that the covered financial institution
Section 1010.660(a)(1) of the implementing the provisions of section
proposed rule would define Liberty knows or has reason to know provide
312 of the USA PATRIOT Act,3 which services to Liberty Reserve that such
Reserve to include all branches, offices, in general includes the following:
and subsidiaries of Liberty Reserve S.A. correspondents may not provide Liberty
• An insured bank (as defined in Reserve with access to the
operating in Costa Rica or in any other
section 3(h) of the Federal Deposit correspondent account maintained at
jurisdiction.
Covered financial institutions should Insurance Act (12 U.S.C. 1813(h)); the covered financial institution and
take commercially reasonable measures • a commercial bank; implementing appropriate risk-based
to determine whether a customer is a • an agency or branch of a foreign procedures to identify transactions
branch, office, or subsidiary of Liberty bank in the United States; involving Liberty Reserve.
Reserve. • a Federally insured credit union; A covered financial institution may
satisfy the notification requirement by
2. Correspondent Account • a savings association;
transmitting the following notice to its
Section 1010.660(a)(2) of the • a corporation acting under section foreign correspondent account holders
proposed rule would define the term 25A of the Federal Reserve Act (12 that it knows or has reason to know
‘‘correspondent account’’ by reference to U.S.C. 611); provide services to Liberty Reserve:
the definition contained in 31 CFR • a trust bank or trust company;
Notice: Pursuant to U.S. regulations issued
1010.605(c)(1)(ii). Section • a broker or dealer in securities; under section 311 of the USA PATRIOT Act,
1010.605(c)(1)(ii) defines a • a futures commission merchant or see 31 CFR 1010.660, we are prohibited from
correspondent account to mean an an introducing broker-commodities; and establishing, maintaining, administering, or
account established to receive deposits • a mutual fund. managing a correspondent account for or on
from, or make payments or other behalf of a foreign bank if such
disbursements on behalf of, a foreign 4. Subsidiary correspondent account processes any
transaction involving Liberty Reserve or any
bank, or to handle other financial Section 1010.660(a)(4) of the of its subsidiaries. The regulations also
transactions related to the foreign bank. proposed rule would define require us to notify you that you may not
Under this definition, ‘‘payable through ‘‘subsidiary’’ as a company of which provide Liberty Reserve or any of its
accounts’’ are a type of correspondent more than 50 percent of the voting stock subsidiaries with access to the correspondent
account. or analogous equity interest is owned by account you hold at our financial institution.
In the case of a U.S. depository Liberty Reserve. If we become aware that the correspondent
institution, this broad definition account you hold at our financial institution
includes most types of banking B. 1010.660(b)—Prohibition on has processed any transactions involving
relationships between a U.S. depository Accounts and Due Diligence Liberty Reserve or any of its subsidiaries, we
institution and a foreign bank that are Requirements for Covered Financial will be required to take appropriate steps to
Institutions prevent such access, including terminating
established to provide regular services,
your account.
dealings, and other financial 1. Prohibition on Use of Correspondent
transactions, including a demand A covered financial institution may,
Accounts
deposit, savings deposit, or other for example, have knowledge through
transaction or asset account, and a Section 1010.660(b)(1) of the transaction screening software that the
credit account or other extension of proposed rule imposing the fifth special correspondents process transactions for
credit. FinCEN is using the same measure would prohibit covered Liberty Reserve. The purpose of the
definition of ‘‘account’’ for purposes of financial institutions from establishing, notice requirement is to aid cooperation
this rule as was established for maintaining, administering, or with correspondent account holders in
depository institutions in the final rule managing in the United States any preventing transactions involving
implementing the provisions of section correspondent account for or on behalf Liberty Reserve from accessing the U.S.
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312 of the USA PATRIOT Act requiring of a foreign bank if such correspondent financial system. However, FinCEN
enhanced due diligence for account is being used to process would not require or expect a covered
correspondent accounts maintained for transactions involving Liberty Reserve, financial institution to obtain a
certain foreign banks.1 including any of its branches, offices or certification from any of its
In the case of securities broker- subsidiaries. correspondent account holders that
dealers, futures commission merchants, access will not be provided to comply
2 See 31 CFR 1010.605(c)(2)(ii)–(iv). with this notice requirement. Methods
1 See 31 CFR 1010.605(c)(2)(i). 3 See 31 CFR 1010.605(e)(1). of compliance with the notice
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Federal Register / Vol. 78, No. 109 / Thursday, June 6, 2013 / Proposed Rules 34011
requirement could include, for example, solicits comments on the requirement significant economic impact on a
transmitting a one-time notice by mail, under the proposed rule that covered substantial number of small entities.
fax, or email. FinCEN specifically financial institutions take reasonable
A. Proposal To Prohibit Covered
solicits comments on the form and steps to prevent any processing of
Financial Institutions From Opening or
scope of the notice that would be transactions involving Liberty Reserve.
Maintaining Correspondent Accounts
required under the rule.
The special due diligence would also 3. Recordkeeping and Reporting With Certain Foreign Banks Under the
include implementing risk-based Fifth Special Measure
Section 1010.660(b)(3) of the
procedures designed to identify any use proposed rule would clarify that 1. Estimate of the Number of Small
of correspondent accounts to process subsection (b) of the rule does not Entities To Whom the Proposed Fifth
transactions involving Liberty Reserve. impose any reporting requirement upon Special Measure Will Apply:
A covered financial institution would be any covered financial institution that is For purposes of the RFA, both banks
expected to apply an appropriate not otherwise required by applicable and credit unions are considered small
screening mechanism to identify a funds law or regulation. A covered financial entities if they have less than
transfer order that on its face listed institution must, however, document its $175,000,000 in assets.4 Of the
Liberty Reserve as the financial compliance with the requirement that it
institution of the originator or estimated 8,000 banks, 80 percent have
notify those correspondent account less than $175,000,000 in assets and are
beneficiary, or otherwise referenced holders that the covered financial
Liberty Reserve in a manner detectable considered small entities.5 Of the
institution knows or has reason to know estimated 7,000 credit unions, 90
under the financial institution’s normal provide services to Liberty Reserve that
screening mechanisms. Transactions percent have less than $175,000,000 in
such correspondents may not process assets.6
involving Liberty Reserve typically any transaction involving Liberty Broker-dealers are defined in 31 CFR
indicate such involvement by the Reserve through the correspondent 1010.100(h) as those broker-dealers
presence of the ‘‘LR’’ abbreviation and account maintained at the covered
Liberty Reserve account number. An required to register with the Securities
financial institution. and Exchange Commission (SEC).
appropriate screening mechanism could
be the mechanism used by a covered IV. Request for Comments Because FinCEN and the SEC regulate
financial institution to comply with substantially the same population, for
FinCEN invites comments on all the purposes of the RFA, FinCEN relies
various legal requirements, such as the aspects of the proposal to impose the
commercially available software on the SEC’s definition of small
fifth special measure against Liberty business as previously submitted to the
programs used to comply with the Reserve and specifically invites
economic sanctions programs Small Business Administration (SBA).
comments on the following matters: The SEC has defined the term ‘‘small
administered by OFAC. 1. The impact of the proposed special
A covered financial institution would entity’’ to mean a broker or dealer that:
measure upon legitimate transactions ‘‘(1) had total capital (net worth plus
also be required to implement risk-
utilizing Liberty Reserve involving, in subordinated liabilities of less than
based procedures to identify disguised
particular, U.S. persons and entities; $500,000 on the date in the prior fiscal
use of its correspondent accounts,
foreign persons, entities, and year as of which its audited financial
including through methods used to hide
governments; and multilateral statements, were prepared pursuant to
the beneficial owner of a transaction.
organizations doing legitimate business. Rule 17a–5(d) or, if not required to file
Specifically, FinCEN is concerned that
Liberty Reserve may attempt to disguise 2. The form and scope of the notice such statements, a broker or dealer that
its transactions by relying on types of to certain correspondent account had total capital (net worth plus
payments and accounts that would not holders that would be required under subordinated debt) of less than $500,000
explicitly identify Liberty Reserve as an the rule; on the last business day of the preceding
involved party. A financial institution 3. The appropriate scope of the fiscal year (or in the time that it has
may develop a suspicion of such misuse proposed requirement for a covered been in business if shorter); and (2) is
based on other information in its financial institution to take reasonable not affiliated with any person (other
possession, patterns of transactions, or steps to identify any use of its than a natural person) that is not a small
any other method available to it based correspondent accounts to process business or small organization as
on its existing systems. Under the transactions involving Liberty Reserve; defined in this release.’’ 7 Currently,
proposed rule, a covered financial and based on SEC estimates, 18 percent of
institution that suspects or has reason to 4. The appropriate steps a covered broker-dealers are classified as ‘‘small’’
suspect use of a correspondent account financial institution should take once it entities for purposes of the RFA.8
to process transactions involving Liberty identifies use of one of its
Reserve must take all appropriate steps correspondent accounts to process 4 Table of Small Business Size Standards
to attempt to verify and prevent such transactions involving Liberty Reserve. Matched to North American Industry Classification
System Codes, Small Business Administration Size
use, including a notification to its V. Regulatory Flexibility Act Standards at 27 (SBA Oct. 1, 2012) [hereinafter SBA
correspondent account holder per Size Standards].
section 1010.660(b)(2)(i)(A) requesting When an agency issues a rulemaking 5 Federal Deposit Insurance Corporation, Find an
further information regarding a proposal, the Regulatory Flexibility Act Institution, http://www2.fdic.gov/idasp/main.asp;
(RFA) requires the agency to ‘‘prepare select Size or Performance: Total Assets, type Equal
transaction, requesting corrective action
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or less than $: ‘‘175000’’, select Find.
to address the perceived risk and, where and make available for public comment 6 National Credit Union Administration, Credit
necessary, terminating the an initial regulatory flexibility analysis’’ Union Data, http://webapps.ncua.gov/
correspondent account. A covered that will ‘‘describe the impact of the customquery/; select Search Fields: Total Assets,
financial institution may re-establish an proposed rule on small entities.’’ (5 select Operator: Less than or equal to, type Field
Values: ‘‘175000000’’, select Go.
account closed under the rule if it U.S.C. 603(a)). Section 605 of the RFA 7 17 CFR 240.0–10(c).
determines that the account will not be allows an agency to certify a rule, in lieu 8 76 FR 37572, 37602 (June 27, 2011) (The SEC
used to process transactions involving of preparing an analysis, if the proposed estimates 871 small broker-dealers of the 5,063 total
Liberty Reserve. FinCEN specifically rulemaking is not expected to have a registered broker-dealers).
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34012 Federal Register / Vol. 78, No. 109 / Thursday, June 6, 2013 / Proposed Rules
Futures commission merchants of broker-dealers, 95 percent of rule would not have a significant
(FCMs) are defined in 31 CFR introducing brokers-commodities, zero economic impact on a substantial
1010.100(x) as those FCMs that are FCMs, and 7 percent of mutual funds number of small entities.
registered or required to be registered as are small entities. The limited number FinCEN invites comments from
a FCM with the Commodity Futures of foreign banking institutions with members of the public who believe
Trading Commission (CFTC) under the which Liberty Reserve maintains or will there would be a significant economic
Commodity Exchange Act (CEA), except maintain accounts will likely limit the impact on small entities from the
persons who register pursuant to section number of affected covered financial imposition of the fifth special measure
4f(a)(2) of the CEA, 7 U.S.C. 6f(a)(2). institutions to the largest U.S. banks, regarding Liberty Reserve.
Because FinCEN and the CFTC regulate which actively engage in international VI. Paperwork Reduction Act
substantially the same population, for transactions. Thus, the prohibition on
the purposes of the RFA, FinCEN relies maintaining correspondent accounts for The collection of information
on the CFTC’s definition of small foreign banking institutions that engage contained in this proposed rule is being
business as previously submitted to the in transactions involving Liberty submitted to the Office of Management
SBA. In the CFTC’s ‘‘Policy Statement Reserve under the fifth special measure and Budget for review in accordance
and Establishment of Definitions of would not impact a substantial number with the Paperwork Reduction Act of
‘Small Entities’ for Purposes of the of small entities. 1995 (44 U.S.C. 3507(d)). Comments on
Regulatory Flexibility Act,’’ the CFTC the collection of information should be
2. Description of the Projected Reporting sent to the Desk Officer for the
concluded that registered FCMs should and Recordkeeping Requirements of the
not be considered to be small entities for Department of Treasury, Office of
Fifth Special Measure: Information and Regulatory Affairs,
purposes of the RFA.9 The CFTC’s
determination in this regard was based, The proposed fifth special measure Office of Management and Budget,
in part, upon the obligation of registered would require covered financial Paperwork Reduction Project (1506),
FCMs to meet the capital requirements institutions to provide a notification Washington, DC 20503 (or by email to
established by the CFTC. intended to aid cooperation from foreign [email protected]) with a
For purposes of the RFA, an correspondent account holders in copy to FinCEN by mail or email at the
introducing broker-commodities is preventing transactions involving addresses previously specified.
considered small if it has less than Liberty Reserve from accessing the U.S. Comments should be submitted by one
$7,000,000 in gross receipts annually.10 financial system. FinCEN estimates that method only. Comments on the
the burden on institutions providing collection of information should be
Based on information provided by the
this notice is one hour. Covered received by August 5, 2013. In
National Futures Association (NFA),
financial institutions would also be accordance with the requirements of the
there were 1249 introducing brokers-
required to take reasonable measures to Paperwork Reduction Act of 1995, 44
commodities that were members of NFA
detect use of their correspondent U.S.C. 3506(c)(2)(A), and its
as of April 30, 2013, 95 percent of
accounts to directly or indirectly implementing regulations, 5 CFR 1320,
which have less than $7 million in
process transactions involving Liberty the following information concerning
Adjusted Net Capital and are considered
Reserve. All U.S. persons, including the collection of information as required
to be small entities.
U.S. financial institutions, currently by 31 CFR 1010.659 is presented to
Mutual funds are defined in 31 CFR
must exercise some degree of due assist those persons wishing to
1010.100(gg) as those investment diligence to comply with OFAC
companies that are open-end investment comment on the information collection.
sanctions and suspicious activity
companies that are registered or are reporting requirements. The tools used A. Proposed Information Collection
required to register with the SEC. for such purposes, including Under the Fifth Special Measure
Because FinCEN and the SEC regulate commercially available software used to The notification requirement in
substantially the same population, for comply with the economic sanctions section 1010.660(b)(2)(i) is intended to
the purposes of the RFA, FinCEN relies programs administered by OFAC, can aid cooperation from correspondent
on the SEC’s definition of small easily be modified to identify account holders in denying Liberty
business as previously submitted to the correspondent accounts with foreign Reserve access to the U.S. financial
SBA. The SEC has defined the term banks that involve Liberty Reserve. system. The information required to be
‘‘small entity’’ under the Investment Thus, the special due diligence that maintained by section 1010.660(b)(3)(i)
Company Act to mean ‘‘an investment would be required by the imposition of would be used by federal agencies and
company that, together with other the fifth special measure—i.e., the one- certain self-regulatory organizations to
investment companies in the same time transmittal of notice to certain verify compliance by covered financial
group of related investment companies, correspondent account holders, the institutions with the provisions of 31
has net assets of $50 million or less as screening of transactions to identify any CFR 1010.660. The collection of
of the end of its most recent fiscal use of correspondent accounts, and the information would be mandatory.
year.11 Currently, based on SEC implementation of risk-based measures Description of Affected Financial
estimates, 7 percent of mutual funds are to detect use of correspondent Institutions: Banks, broker-dealers in
classified as ‘‘small entities’’ for accounts—would not impose a securities, futures commission
purposes of the RFA under their significant additional economic burden merchants and introducing brokers-
definition.12 upon small U.S. financial institutions. commodities, and mutual funds.
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As noted above, 80 percent of banks, Estimated Number of Affected
90 percent of credit unions, 18 percent B. Certification Financial Institutions: 5,000.
When viewed as a whole, FinCEN Estimated Average Annual Burden in
9 47 FR 18618, 18619 (Apr. 30, 1982).
10 SBA Size Standards at 28.
does not anticipate that the proposals Hours Per Affected Financial
11 17 CFR 270.0–10.
contained in this rulemaking would Institution: The estimated average
12 78 FR 23637, 23658 (April 19, 2013) (The SEC have a significant impact on a burden associated with the collection of
estimates 119 small mutual funds of the 1692 total substantial number of small businesses. information in this proposed rule is one
active registered mutual funds). Accordingly, FinCEN certifies that this hour per affected financial institution.
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Federal Register / Vol. 78, No. 109 / Thursday, June 6, 2013 / Proposed Rules 34013
Estimated Total Annual Burden: secs. 311, 312, 313, 314, 319, 326, 352, Pub. process transactions involving Liberty
5,000 hours. L. 107–56, 115 Stat. 307. Reserve.
FinCEN specifically invites comments ■ 2. Amend Part 1010 by adding (iii) A covered financial institution
on: (a) Whether the proposed collection § 1010.660 of Subpart F to read as that obtains knowledge that a foreign
of information is necessary for the follows: correspondent account may be being
proper performance of the mission of used to process transactions involving
FinCEN, including whether the § 1010.660 Special measures against
Liberty Reserve shall take all
Liberty Reserve
information would have practical appropriate steps to further investigate
utility; (b) the accuracy of FinCEN’s (a) Definitions. For purposes of this and prevent such access, including the
estimate of the burden of the proposed section: notification of its correspondent account
collection of information; (c) ways to (1) Liberty Reserve means all holder under paragraph (b)(2)(i)(A) and,
enhance the quality, utility, and clarity branches, offices, and subsidiaries of where necessary, termination of the
of the information required to be Liberty Reserve operating in any correspondent account.
maintained; (d) ways to minimize the jurisdiction. (3) Recordkeeping and reporting.
burden of the required collection of (2) Correspondent account has the (i) A covered financial institution is
information, including through the use same meaning as provided in required to document its compliance
of automated collection techniques or § 1010.605(c)(1)(ii). with the notice requirement set forth in
other forms of information technology; (3) Covered financial institution has
paragraph (b)(2)(i)(A) of this section.
and (e) estimates of capital or start-up the same meaning as provided in
(ii) Nothing in paragraph (b) shall
costs and costs of operation, § 1010.605(e)(1).
require a covered financial institution to
(4) Subsidiary means a company of
maintenance, and purchase of services report any information not otherwise
which more than 50 percent of the
to report the information. required to be reported by law or
An agency may not conduct or voting stock or analogous equity interest
regulation.
sponsor, and a person is not required to is owned by another company.
(b) Prohibition on accounts and due Dated: May 28, 2013.
respond to, a collection of information
diligence requirements for covered Jennifer Shasky Calvery,
unless it displays a valid OMB control
financial institutions Director, Financial Crimes Enforcement
number.
(1) Prohibition on use of Network.
VII. Executive Order 12866 correspondent accounts. A covered [FR Doc. 2013–12945 Filed 6–5–13; 8:45 am]
Executive Orders 12866 and 13563 financial institution shall terminate any BILLING CODE 4810–02–P
direct agencies to assess costs and correspondent account that is
benefits of available regulatory established, maintained, administered,
alternatives and, if regulation is or managed in the United States for, or ENVIRONMENTAL PROTECTION
necessary, to select regulatory on behalf of, a foreign bank if such AGENCY
approaches that maximize net benefits correspondent account is being used to
(including potential economic, process transactions that involve Liberty 40 CFR Part 52
environmental, public health and safety Reserve.
[EPA–R03–OAR–2012–0955; FRL–9819–5]
effects, distributive impacts, and (2) Special due diligence of
equity). Executive Order 13563 correspondent accounts to prohibit use. Approval and Promulgation of Air
emphasizes the importance of (i) A covered financial institution Quality Implementation Plans;
quantifying both costs and benefits, of shall apply special due diligence to its Delaware, District of Columbia,
reducing costs, of harmonizing rules, foreign correspondent accounts that is Maryland, Pennsylvania, Virginia, and
and of promoting flexibility. It has been reasonably designed to guard against West Virginia; Removal of Obsolete
determined that the proposed rule is not their use to process transactions Regulations and Updates to Citations
a ‘‘significant regulatory action’’ for involving Liberty Reserve. At a to State Regulations Due to
purposes of Executive Order 12866. minimum, that special due diligence Recodification
must include:
List of Subjects in 31 CFR Chapter X (A) Notifying those foreign AGENCY: Environmental Protection
Administrative practice and correspondent account holders that the Agency (EPA).
procedure, banks and banking, brokers, covered financial institution knows or ACTION: Proposed rule.
counter-money laundering, counter- has reason to know provide services to
Liberty Reserve that such SUMMARY: EPA is proposing to remove
terrorism, foreign banking.
correspondents may not provide Liberty over fifty rules in the Code of Federal
Authority and Issuance Reserve with access to the Regulations (CFR) at 40 CFR part 52 for
For the reasons set forth in the correspondent account maintained at Delaware, the District of Columbia,
preamble, Chapter X of title 31 of the the covered financial institution; and Maryland, Pennsylvania, Virginia, and
Code of Federal Regulations is proposed (B) Taking reasonable steps to identify West Virginia because they are
to be amended as follows: any use of its foreign correspondent unnecessary or obsolete. EPA is also
accounts by Liberty Reserve, to the proposing to clarify regulations in 40
CHAPTER X—FINANCIAL CRIMES extent that such use can be determined CFR part 52 which reflect updated
ENFORCEMENT NETWORK, from transactional records maintained citations of certain Commonwealth of
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DEPARTMENT OF THE TREASURY in the covered financial institution’s Virginia rules due to the
normal course of business. Commonwealth’s recodification of its
PART 1010—GENERAL PROVISIONS (ii) A covered financial institution regulations at the state level. These
shall take a risk-based approach when proposed actions make no substantive
■ 1. The authority citation for Part 1010 deciding what, if any, other due changes to these State Implementation
continues to read as follows: diligence measures it reasonably must Plans (SIPs) and impose no new
Authority: 12 U.S.C. 1829b and 1951–1959; adopt to guard against the use of its requirements. In the Final Rules section
31 U.S.C. 5311–5314, 5316–5332 Title III, foreign correspondent accounts to of this Federal Register, EPA is
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