Joint NPRM (Fed + FinCEN): $250 cross-border threshold for Recordkeeping/Travel Rules; CVC is 'money' (85 FR 68005) (Part 1 of 2)
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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.
68005
Proposed Rules Federal Register
Vol. 85, No. 208
Tuesday, October 27, 2020
This section of the FEDERAL REGISTER (863) 324–3375, Fax: (863) 291–8614, or Abigail Campos, Dolores Lowenstine,
contains notices to the public of the proposed Email: [email protected] or and Christian D. Nissen of the Southeast
issuance of rules and regulations. The [email protected]. Marketing Field Office, Specialty Crops
purpose of these notices is to give interested Program, AMS, USDA, are hereby
persons an opportunity to participate in the SUPPLEMENTARY INFORMATION: Pursuant
designated as the referendum agents of
rule making prior to the adoption of the final to Marketing Agreement and Order No.
the Secretary of Agriculture to conduct
rules. 915, as amended (7 CFR part 915),
this referendum. The procedure
hereinafter referred to as the ‘‘Order,’’
applicable to the referendum shall be
and the applicable provisions of the
DEPARTMENT OF AGRICULTURE the ‘‘Procedure for the Conduct of
Agricultural Marketing Agreement Act
Referenda in Connection with
of 1937, as amended (7 U.S.C. 601–674),
Agricultural Marketing Service Marketing Orders for Fruits, Vegetables,
hereinafter referred to as the ‘‘Act,’’ it is
and Nuts Pursuant to the Agricultural
hereby directed that a referendum be
7 CFR Part 915 Marketing Agreement Act of 1937, as
conducted to ascertain whether
Amended’’ (7 CFR 900.400 et seq.).
[Doc. No. AMS–SC–20–0064; SC20–915–1 continuance of the Order is favored by Ballots will be mailed to all growers
CR] growers. The referendum shall be of record and may also be obtained from
conducted from November 30 through the referendum agents or their
Avocados Grown in South Florida; December 21, 2020, among Florida
Continuance Referendum appointees.
avocado growers in the production area.
AGENCY: Agricultural Marketing Service, Only current Florida avocado growers List of Subjects in 7 CFR Part 915
USDA. who were engaged in the production of Avocados, Marketing agreements,
ACTION: Proposed rule; referendum Florida avocados grown in the Reporting and recordkeeping
order. production area, during the period of requirements.
period April 1, 2019, through March 31,
Authority: 7 U.S.C. 601–674.
SUMMARY: This document directs that a 2020, may participate in the
referendum be conducted among continuance referendum. Bruce Summers,
eligible growers of avocados grown in USDA has determined that Administrator, Agricultural Marketing
South Florida to determine whether continuance referenda are an effective Service.
they favor continuance of the marketing means for determining whether growers [FR Doc. 2020–23348 Filed 10–26–20; 8:45 am]
order regulating the handling of favor the continuation of marketing BILLING CODE 3410–02–P
avocados produced in the production order programs. The Order will
area. continue in effect if two-thirds of the
DATES: The referendum will be growers that cast votes, or growers DEPARTMENT OF THE TREASURY
conducted from November 30 through representing two-thirds of the volume of
December 21, 2020. Only current Florida avocados voted in the Financial Crimes Enforcement Network
growers of Florida avocados within the referendum, cast ballots in favor of
production area that produced avocados continuance. In evaluating the merits of 31 CFR Parts 1010 and 1020
during the period April 1, 2019, through continuance versus termination, USDA [Docket No. FINCEN–2020–0002 ; RIN 1506–
March 31, 2020, are eligible to vote in will not exclusively consider the results AB41]
this referendum. of the continuance referendum. USDA
ADDRESSES: Copies of the marketing will also consider all other relevant Threshold for the Requirement To
order may be obtained from the information regarding the operation of Collect, Retain, and Transmit
Southeast Marketing Field Office, the Order and relative benefits and Information on Funds Transfers and
Marketing Order and Agreement disadvantages to growers, handlers, and Transmittals of Funds That Begin or
Division, Specialty Crops Program, consumers in determining whether End Outside the United States, and
AMS, USDA, 1124 First Street South, continued operation of the Order would Clarification of the Requirement To
Winter Haven, FL 33880; Telephone: tend to effectuate the declared policy of Collect, Retain, and Transmit
(863) 324–3375; or from the Marketing the Act. Information on Transactions Involving
Order and Agreement Division, In accordance with the Paperwork Convertible Virtual Currencies and
Specialty Crops Program, AMS, USDA, Reduction Act of 1995 (44 U.S.C. Digital Assets With Legal Tender
1400 Independence Avenue SW, STOP Chapter 35), the ballots used in the Status
0237, Washington, DC 20250–0237; referendum have been approved by the AGENCY: Board of Governors of the
Telephone: (202) 720–2491; or on the Office of Management and Budget Federal Reserve System (‘‘Board’’);
internet: https://www.regulations.gov. (OMB) and have been assigned OMB Financial Crimes Enforcement Network
FOR FURTHER INFORMATION CONTACT: No. 0581–0189, Fruit Crops. It has been (‘‘FinCEN’’), Treasury.
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Abigail Campos, Marketing Specialist, estimated it will take an average of 20 ACTION: Joint notice of proposed
or Christian D. Nissen, Regional minutes for each of the approximately rulemaking.
Director, Southeast Marketing Field 325 growers of Florida avocados to cast
Office, Marketing Order and Agreement a ballot. Participation is voluntary. SUMMARY: The Board and FinCEN
Division, Specialty Crops Program, Ballots postmarked after December 21, (collectively, the ‘‘Agencies’’) are
AMS, USDA, 1124 First Street South, 2020, will not be included in the vote issuing this proposed rule to modify the
Winter Haven, FL 33880; Telephone: tabulation. threshold in the rule implementing the
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68006 Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules
Bank Secrecy Act (‘‘BSA’’) requiring electronically or in paper in Room 146, authorizes the Secretary and the Board
financial institutions to collect and 1709 New York Avenue NW, to jointly issue regulations requiring
retain information on certain funds Washington, DC 20006, between 9:00 insured depository institutions to
transfers and transmittals of funds. The a.m. and 5:00 p.m. on weekdays. For maintain records of domestic funds
proposed modification would reduce security reasons, the Board requires that transfers.3 The Secretary, but not the
this threshold from $3,000 to $250 for visitors make an appointment to inspect Board, is authorized to promulgate
funds transfers and transmittals of funds comments. You may do so by calling recordkeeping requirements for
that begin or end outside the United (202) 452–3684. domestic wire transfers by nonbank
States. FinCEN is likewise proposing to FinCEN: financial institutions.4 In addition,
reduce from $3,000 to $250 the • Federal E-rulemaking Portal: http:// Annunzio-Wylie authorizes the
threshold in the rule requiring financial www.regulations.gov. Follow the Secretary and the Board, after
institutions to transmit to other instructions for submitting comments. consultation with state banking
financial institutions in the payment Refer to Docket Number FINCEN–2020– supervisors, to jointly issue regulations
chain information on funds transfers 0002 and the specific RIN number requiring insured depository
and transmittals of funds that begin or 1506–AB41 the comment applies to. institutions and certain nonbank
end outside the United States. The • Mail: Policy Division, Financial financial institutions to maintain
Agencies are also proposing to clarify Crimes Enforcement Network, P.O. Box records of international funds transfers
the meaning of ‘‘money’’ as used in 39, Vienna, VA 22183. Refer to Docket and transmittals of funds.5 Annunzio-
these same rules to ensure that the rules Number FINCEN–2020–0002 and the Wylie requires the Secretary and the
apply to domestic and cross-border specific RIN number. Board, in issuing regulations for
transactions involving convertible FOR FURTHER INFORMATION CONTACT: international funds transfers and
virtual currency (‘‘CVC’’), which is a Board: Jason Gonzalez, Assistant transmittals of funds, to consider the
medium of exchange (such as General Counsel (202) 452–3275 or Evan usefulness of the records in criminal,
cryptocurrency) that either has an Winerman, Senior Counsel (202) 872– tax, or regulatory investigations or
equivalent value as currency, or acts as 7578, Legal Division, Board of proceedings, and the effect of the
a substitute for currency, but lacks legal Governors of the Federal Reserve regulations on the cost and efficiency of
tender status. The Agencies further System, 20th Street and Constitution the payments system.6 FinCEN can
propose to clarify that these rules apply Avenue NW, Washington, DC 20551. continually monitor the benefits of such
to domestic and cross-border Users of Telecommunication Device for regulations through its extensive liaison
transactions involving digital assets that Deaf (TDD) only, call (202) 263–4869. activity with federal and state law
have legal tender status. FinCEN: The FinCEN Regulatory enforcement and financial regulatory
Support Section at 1–800–767–2825 or entities, and the Board can assess costs
DATES: Written comments on this
electronically at [email protected]. through its regulatory oversight of
proposed rule may be submitted on or
SUPPLEMENTARY INFORMATION:
financial institutions under its
before November 27, 2020.
jurisdiction.
ADDRESSES: Comments may be I. Background On January 3, 1995, the Agencies
submitted by any of the following jointly issued a recordkeeping rule (the
methods: A. Statutory and Regulatory Background
‘‘Recordkeeping Rule’’) that requires
Board: You may submit comments, The Currency and Foreign banks and nonbank financial
identified by Docket No. R–1726; RIN Transactions Reporting Act of 1970, as institutions to collect and retain
7100–AF97, by any of the following amended by the Uniting and information related to funds transfers
methods: Strengthening America by Providing and transmittals of funds in amounts of
• Agency website: http:// Appropriate Tools Required to Intercept $3,000 or more.7 The Recordkeeping
www.federalreserve.gov. Follow the and Obstruct Terrorism Act of 2001 Rule is intended to help law
instructions for submitting comments at (‘‘USA PATRIOT Act’’) (Pub. L. 107–56) enforcement and regulatory authorities
http://www.federalreserve.gov/ and other legislation, is the legislative
generalinfo/foia/ProposedRegs.cfm. framework commonly referred to as the 3 12 U.S.C. 1829b(b)(2).
• Email: regs.comments@ BSA. The Secretary of the Treasury 4 12 U.S.C. 1953.
federalreserve.gov. Include docket and (‘‘Secretary’’) has delegated to the 5 12 U.S.C. 1829b(b)(3). The terms ‘‘funds
RIN numbers in the subject line of the transfer,’’ ‘‘originator,’’ ‘‘beneficiary,’’ and
Director of FinCEN (‘‘Director’’) the ‘‘payment order’’ apply only in the context of
message. authority to implement, administer, and banks. The term ‘‘transmittal of funds’’ includes a
• Fax: (202) 452–3819 or (202) 452– enforce compliance with the BSA and funds transfer and its counterpart in the context of
3102. associated regulations.1 Pursuant to this nonbank financial institutions. See 31 CFR
• Mail: Ann E. Misback, Secretary, authority, FinCEN may require financial 1010.100(ddd). Transmittors, recipients, and
transmittal orders in the context of nonbank
Board of Governors of the Federal institutions to keep records and file financial institutions play the same role as
Reserve System, 20th Street and reports that the Director determines originators, beneficiaries, and payment orders in the
Constitution Avenue NW, Washington, have a high degree of usefulness in context of banks.
6 12 U.S.C. 1829b(b)(3).
DC 20551. criminal, tax, or regulatory 7 60 FR 220 (Jan. 3, 1995). Through a separate
All public comments will be made investigations or proceedings, or in rulemaking, the Board added on January 3, 1995 a
available on the Board’s website at intelligence or counterintelligence new subpart B to 12 CFR part 219 (Regulation S),
http://www.federalreserve.gov/ matters to protect against international which cross-references the substantive
generalinfo/foia/ProposedRegs.cfm as terrorism.2 requirements in the Recordkeeping Rule. See 60 FR
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231–01 (Jan. 3, 1995). As noted above, the Board
submitted, unless modified for technical The Annunzio-Wylie Anti-Money (unlike FinCEN) is not authorized to promulgate
reasons or to remove personally Laundering Act of 1992 (Pub. L. 102– recordkeeping requirements for domestic wire
identifiable information at the 550) (‘‘Annunzio-Wylie’’) amended the transfers by nonbank financial institutions.
commenter’s request. Accordingly, BSA framework. Annunzio-Wylie Accordingly, for purposes of Regulation S, the
provisions of the Recordkeeping Rule with respect
comments will not be edited to remove to nonbank financial institutions apply only to
any identifying or contact information. 1 Treasury Order 180–01 (Jan. 14, 2020).
international transmittals of funds. 12 CFR
Public comments may also be viewed 2 31 U.S.C. 5311. 219.23(b).
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Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules 68007
detect, investigate, and prosecute money unnecessary to propose conforming bank or nonbank financial institution in
laundering, and other financial crimes amendments to Regulation S. the payment chain. An intermediary
by preserving an information trail about bank or financial institution is also
B. Information Required To Be
persons sending and receiving funds required to transmit this information to
Collected, Retained, and Transmitted
through the funds transfer system. other banks or nonbank financial
Under the Recordkeeping and Travel
At the same time, FinCEN issued a institutions in the payment chain, to the
Rules
separate rule—the ‘‘Travel Rule’’—that extent the information is received by the
The Recordkeeping Rule and Travel intermediary bank or financial
requires banks and nonbank financial Rule collectively require banks and institution.
institutions to transmit information on nonbank financial institutions to collect,
certain funds transfers and transmittals retain, and transmit information on II. Lowering of Threshold From $3,000
of funds to other banks or nonbank funds transfers and transmittals of funds to $250 for Funds Transfers and
financial institutions participating in in amounts of $3,000 or more. Transmittals of Funds by Financial
the transfer or transmittal.8 The Travel Under the Recordkeeping Rule, the Institutions That Begin or End Outside
Rule and the Recordkeeping Rule originator’s bank or transmittor’s the United States
complement each other: Generally, as financial institution must collect and The existing requirements in 31 CFR
noted below, the Recordkeeping Rule retain the following information: (a) 1020.410(a) and 31 CFR 1010.410(e) and
requires financial institutions to collect Name and address of the originator or (f) to collect, retain, and transmit
and retain the information that, under transmittor; (b) the amount of the information on funds transfers and
the Travel Rule, must be included with payment or transmittal order; (c) the transmittals of funds currently apply
transmittal orders, although the execution date of the payment or only to funds transfers and transmittals
Recordkeeping Rule also has other transmittal order; (d) any payment of funds in amounts of $3,000 or more.
applications apart from ensuring that instructions received from the originator The Agencies are proposing to lower the
information is available to include with or transmittor with the payment or threshold under the Recordkeeping
funds transfers. FinCEN issued the transmittal order; and (e) the identity of Rule, and FinCEN is proposing to lower
Travel Rule pursuant to statutory the beneficiary’s bank or recipient’s the threshold under the Travel Rule, to
authority that permits the Treasury to financial institution. In addition, the $250 for funds transfers and transmittals
require domestic financial institutions originator’s bank or transmittor’s of funds that begin or end outside the
or nonfinancial trades or businesses to financial institution must retain the United States.13 In proposing these
maintain appropriate procedures to following information if it receives that modifications, the Agencies considered
ensure compliance with the BSA or to information from the originator or the usefulness of transaction
guard against money laundering, and to transmittor: (a) Name and address of the information associated with smaller-
establish anti-money laundering beneficiary or recipient; (b) account value cross-border transfers and
programs.9 number of the beneficiary or recipient; transmittals of funds in criminal, tax, or
and (c) any other specific identifier of regulatory investigations or proceedings,
This proposed rule would amend both
the beneficiary or recipient. The and in intelligence or
the Recordkeeping Rule and the Travel
originator’s bank or transmittor’s counterintelligence activities to protect
Rule. The Recordkeeping Rule is
financial institution is required to verify against international terrorism, as well
codified at 31 CFR 1020.410(a) and
the identity of the person placing a as the effect on the payments system of
1010.410(e) 10 and the Travel Rule is
payment or transmittal order if the order requiring information collection and
codified at 31 CFR 1010.410(f).11
is made in person and the person retention for these transactions. The
Consistent with its rulemaking authority following two sections lay out,
placing the order is not an established
in the BSA, as amended by Annunzio- respectively, (A) the potential benefits
customer.12 Similarly, should the
Wylie, the Board is proposing the to national security and law
beneficiary’s bank or recipient’s
amendments to § 1010.100(ll) and enforcement from reducing the
financial institution deliver the
§ 1020.410(a) only to the extent the Recordkeeping Rule and Travel Rule
proceeds to the beneficiary or recipient
amendments apply to funds transfers by thresholds for funds transfers and
in person, the bank or nonbank financial
insured depository institutions, and is transmittals of funds that begin or end
institution must verify the identity of
proposing the amendments to outside the United States, and (B) the
the beneficiary or recipient—and collect
§ 1010.100(eee) and § 1010.410(e) only potential effect these new requirements
and retain various items of information
to the extent the amendments would would have on the cost and efficiency
identifying the beneficiary or
apply to international transmittals of of the payments system.
recipient—if the beneficiary or recipient
funds by financial institutions other
is not an established customer. Finally, A. Benefit to National Security and Law
than insured depository institutions.
an intermediary bank or financial Enforcement
Because the Board’s Regulation S
institution—and the beneficiary’s bank
generally cross-references those portions Information available to the Agencies
or recipient’s financial institution—
of the Recordkeeping Rule promulgated indicates that malign actors are using
must retain originals or copies of
jointly by the Board and FinCEN, it is smaller-value cross-border wire
payment or transmittal orders.
Under the Travel Rule, the transfers to facilitate or commit terrorist
8 60 FR 234 (Jan. 3, 1995).
originator’s bank or transmittor’s financing, narcotics trafficking, and
9 Id.; see also 31 U.S.C. 5218(a)(2) and (h).
financial institution is required to other illicit activity, and that increased
10 As explained in n. 6, supra, the Board
include information, including all recordkeeping and reporting concerning
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separately promulgated subpart B to Regulation S,
which cross-references the requirements of 31 CFR information required under the these transactions would be valuable to
1020.410(a) and 1010.410(e). Recordkeeping Rule, in a payment or
11 Recordkeeping requirements for banks are set 13 The ‘‘United States’’ includes the States of the
transmittal order sent by the bank or
forth in 31 CFR 1020.410(a). Recordkeeping United States, the District of Columbia, the Indian
requirements for nonbank financial institutions are nonbank financial institution to another lands (as that term is defined in the Indian Gaming
set forth in 31 CFR 1010.410(e). The Travel Rule— Regulatory Act), and the Territories and Insular
codified at 31 CFR 1010.410(f)—applies by its terms 12 The term ‘‘established customer’’ is defined at Possessions of the United States. 31 CFR
to both bank and nonbank financial institutions. 31 CFR 1010.100(p). 1010.100(hhh).
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68008 Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules
law enforcement and national security FinCEN also reviewed a separate support for terrorist activity to a
authorities. In proposing to lower the subset of 363 SARs filed by a money designated Foreign Terrorist
current threshold under the transmitter for the period between 2012 Organization (‘‘FTO’’). In one such case,
Recordkeeping and Travel Rules, the and 2018 that FinCEN determined to be during 2013, the defendant allegedly
Agencies have specifically considered potentially related to fentanyl sent $1,500 to a co-defendant’s financial
Suspicious Activity Reports (‘‘SARs’’) trafficking.17 These SARs referenced account within the United States; the
filed by money transmitters, which approximately 78,000 transmittals of co-defendant was collecting money from
indicate that a substantial volume of funds, over 82% of which began or his co-conspirators in support of an FTO
potentially illicit funds transfers and ended outside the United States. The fighter in Syria, ultimately transmitting
transmittals of funds occur below the mean and median dollar-value of those funds through money remitting
$3,000 threshold; evidence used in transmittals of funds mentioned in these businesses and intermediaries
recent criminal prosecutions; and the SARs were approximately $588 and overseas.19 In another case, a man was
views of law enforcement partners and $283, respectively. Approximately 67 prosecuted for meeting with an FTO
the Financial Action Task Force percent of those 78,000 transmittals recruiter in 2015, wiring funds in the
(‘‘FATF’’) 14 on the utility of mandating (more than 52,000) were at or below amount of $250 to an FTO, and
information collection for smaller-value $500, totaling more than $10 million. attempting to leave the United States
wire transfers. Approximately 52 percent of those with the intent of joining the FTO in
First, FinCEN analyzed data derived transmittals (more than 40,000) were at Libya.20 Another example of small
from approximately 2,000 SARs filed by or below $300, totaling more than $5.7 dollar funds transfers made in support
money transmitters between 2016 and million. of terrorism involved an individual in
2019 related to potential terrorist In the 1995 rulemaking implementing the United States who received several
financing-related transmittals of the Travel Rule, the Treasury noted that cash transfers in 2015 from FTO
funds.15 These SARs referenced it would monitor the effectiveness of affiliates, totaling about $8,700 and sent
approximately 1.29 million underlying financial institutions’ suspicious primarily in sums of less than $3,000.21
transmittals of funds, approximately 99 transaction reporting protocols to One such transfer in 2016 was from a
percent of which began or ended determine whether potentially illicit person located in Egypt, in the amount
outside the United States (only transactions below the $3,000 threshold of $1,000, and sent through a U.S.
approximately 17,000 of the were being reported (and thus whether money transmitter.22 The subject later
approximately 1.29 million transactions it might be unnecessary, from a law admitted to law enforcement that the
included within its terrorist-financing enforcement perspective, to lower the money was to be used to finance a
analysis dataset involved domestic-only threshold).18 FinCEN has been able to terrorist attack in the United States, and
transactions). The mean and median analyze some records of transmittals of the subject was subsequently convicted
dollar-value of transmittals of funds funds below $3,000, as noted above, of providing material support to an
mentioned in those SARs were because money transmitters have FTO.23
retained records for those transmittals of Third, the Money Laundering and
approximately $509 and $255,
funds after recognizing the underlying Asset Recovery Section (‘‘MLARS’’) of
respectively. Approximately 71 percent
activity as suspicious. However, the the Criminal Division of the Department
of those 1.29 million transmittals (more
Agencies believe that lowering the of Justice (‘‘DOJ’’) has advised the
than 916,000) were at or below $500,
threshold to capture smaller-value Agencies that it supports lowering the
totaling more than $179 million. dollar threshold for the Recordkeeping
Approximately 57 percent of those cross-border funds transfers and
transmittals of funds would be valuable and Travel Rules. In 2006, MLARS
transmittals (more than 728,000) were at (previously known as the Asset
or below $300, totaling more than $103 for law enforcement and national
security authorities, despite financial Forfeiture and Money Laundering
million. As noted in the 2015 National Section) submitted a public comment to
Terrorism Finance Risk Assessment, institutions’ suspicious activity
reporting programs, because some the Agencies in response to an Advance
terrorist financiers and facilitators are Notice of Proposed Rulemaking (‘‘2006
creative and will seek to exploit financial institutions may not recognize
or retain records for all suspicious ANPRM’’) in which the Agencies sought
vulnerabilities in the financial system to comments on lowering the thresholds of
further their unlawful aims, including, activity below the $3,000 threshold or
the suspicious pattern may not become the Recordkeeping and Travel Rules.24
as the above analysis indicates, through MLARS’s public comment included a
the use of low-dollar transactions.16 clear until the records are aggregated.
This could inhibit law enforcement 19 See United States v. Harcevic, 2015 WL
14 The FATF is an international, inter- from promptly investigating and 1821509, at *1 (E.D. Mo. Apr. 21, 2015); United
governmental task force whose purpose is the mapping illicit networks. States v. Hodzic, 2016 WL 11578530, at *1 (E.D.
development and promotion of international Second, recent prosecutions show Mo. Aug. 22, 2016), report and recommendation
standards and the effective implementation of legal, that individuals are sending and adopted, 355 F. Supp. 3d 825 (E.D. Mo. 2019); see
regulatory, and operational measures to combat also Press Release, Department of Justice, ‘‘Missouri
money laundering, terrorist financing, the financing receiving funds to finance terrorist Man Pleads Guilty to Providing Material Support to
of proliferation, and other related threats to the activity in amounts below (and in some Terrorists,’’ 2019 WL 1472565 (Apr. 3, 2019).
integrity of the international financial system. cases, well below) the current $3,000 20 See Press Release, Department of Justice,
15 FinCEN determined that these SARs were
recordkeeping threshold. Those cases ‘‘Columbus Man Sentenced to 80 Months in Prison
potentially related to terrorist financing based on for Attempting to Provide Material Support to ISIS’’
the application of certain search terms and analytic
involved persons providing material (July 6, 2019), https://www.justice.gov/usao-sdoh/
methods developed by FinCEN. FinCEN shared its pr/columbus-man-sentenced-80-months-prison-
attempting-provide-material-support-isis; see also
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analysis with law enforcement. FinCEN is aware, Terrorist%20Financing%20Risk%20
based on feedback from domestic and foreign law Assessment%20-%2006-12-2015.pdf. United States v Daniels, 2:2016–cr–222 (ECF No. 7
enforcement partners, that those partners have used 17 FinCEN determined that these SARs were at 2) (filed Nov. 10, 2016).
21 See United States v. Elshinawy, No. CR ELH–
information contained in terrorism-related SARs in potentially related to fentanyl trafficking based on
their investigations. the application of certain search terms and analytic 16–009, 2018 WL 1521876, at *17–18 (D. Md. Mar.
16 See Dep’t of the Treasury, 2015 National methods developed by FinCEN, including through 28, 2018), aff’d, 781 F. App’x 168 (4th Cir. 2019).
22 Id. at *17.
Terrorism Finance Risk Assessment, at 2 (June FinCEN’s work with law enforcement. FinCEN
2015), https://www.treasury.gov/resource-center/ shared its analysis with law enforcement. 23 Id. at *8.
terrorist-illicit-finance/Documents/National%20 18 60 FR 234, 236 (Jan. 3, 1995). 24 71 FR 119 (June 21, 2006).
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Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules 68009
synthesis of comments from agents and throughout the payment chain of the transactions to FinCEN. FinCEN is also
prosecutors at several federal law originator’s name, account number, and aware that some financial institutions
enforcement agencies who use this address, and the name of the beneficiary already collect information on the
information, including the Federal and their account number.27 The FATF originator and beneficiary for
Bureau of Investigation (‘‘FBI’’), the further states that countries may adopt transmittals below the $3,000 threshold
United States Drug Enforcement a de minimis threshold of no higher for reasons separate from reporting
Administration (‘‘DEA’’), the Internal than USD/EUR 1,000 for cross-border suspicious transactions to FinCEN, for
Revenue Service (‘‘IRS’’), the United wire transfers, below which the name instance because it is cost-effective to
States Secret Service (‘‘USSS’’), and U.S. and account numbers of the originator maintain a single set of processes for all
Immigration and Customs Enforcement. and beneficiary should be collected and transactions..
While not the official comment of each transmitted but need not be verified for The Agencies note that in completing
such agency, the agents and prosecutors accuracy unless there is a suspicion of the 1995 rulemakings implementing the
specializing in money laundering cases money laundering or terrorist Recordkeeping and Travel Rules, and in
and who routinely use wire transfer financing.28 The FATF recommends obtaining comments from the industry
information supported lowering or that countries minimize this and other in connection with the 2006 ANPRM,
eliminating altogether the reporting thresholds to the extent practicable, some financial institutions advised that
threshold to disrupt illegal activity and after taking into account the risk of they were already collecting information
increase its cost to the perpetrators. At ‘‘driving transactions underground’’ and for smaller-value transmittals and that
the same time, MLARS identified two the ‘‘importance of financial mandating recordkeeping requirements
potential concerns—first, that some inclusion.’’ 29 The 1,000 USD/EUR de for such transactions would not have a
criminals would structure transactions minimis cross-border threshold material impact on the payment system.
to evade the lower threshold, and specified in the FATF At the same time, other financial
second, if such structuring occurred, Recommendations has been adopted by institutions expressed concern that
those smaller dollar transactions would the European Union and by the vast imposing information collection
be difficult to distinguish from majority of jurisdictions around the requirements (especially for smaller-
legitimate wire transfers. Ultimately, in world. value transmittals) could increase
spite of these concerns, MLARS Accordingly, the Agencies believe regulatory compliance costs by
supported a lower, uniform that mandating the collection, retention, mandating the use of new technologies
recordkeeping threshold. and transmission of information for and processes to collect the information,
More recently, MLARS has advised funds transfers and transmittals of funds and that these costs could be passed on
the Agencies that it continues to support of at least $250 that originate or to consumers.
lowering the threshold, particularly if terminate outside the United States In deciding on a threshold of $3,000
doing so would bring the Recordkeeping would likely lead to the preservation of in 1995, the Agencies balanced the
Rule and Travel Rule in line with information that would benefit law value of data on funds transfers and
international standards (which are enforcement and national security transmittals of funds with the burden
further described immediately below). investigations. Given the usefulness of that the Recordkeeping Rule and Travel
MLARS indicated that its views apply this information and the potential that Rule imposed on both bank and
equally to funds transfers by banks and financial institutions may not correctly nonbank financial institutions. The
transmittals of funds by nonbank identify a transaction as suspicious, as Agencies are proposing to lower the
financial institutions. The DEA, the IRS, noted previously, the Agencies believe threshold because the current threshold
and the USSS have similarly expressed that it is appropriate to propose may no longer represent the appropriate
support for lowering the reporting lowering the threshold of the balance for transmittals originating or
threshold for purposes of the Recordkeeping Rule, and FinCEN terminating outside the United States.
Recordkeeping Rule and Travel Rule. concludes that it is appropriate to As noted in the 2006 ANPRM,
Finally, the FATF has indicated that propose lowering the threshold of the subsequent to 1995, the responsibilities
records of smaller-value transactions are Travel Rule, even though financial of financial institutions under the BSA
valuable to law enforcement, institutions are subject to SAR reporting have expanded. For example, an MSB
particularly with respect to terrorist requirements through which they may must now report suspicious
financing investigations.25 The FATF report certain of these smaller-value transactions 30 and implement anti-
recommends that ‘‘basic information’’ transactions that fall below the current money laundering programs for
concerning the originator and threshold. ensuring compliance with the BSA.31
beneficiary of wire transfers be B. Effect on Financial Institutions and MSBs may collect and retain
immediately available to appropriate the Payments System information on transmittals of funds as
government authorities, including law a means of ensuring compliance with
enforcement and financial intelligence The Agencies believe that the effect of the requirement to report suspicious
units, as well as to financial institutions lowering the $3,000 threshold on transactions. The requirement for MSBs
participating in the transaction.26 For financial institutions and on the cost to report suspicious transactions likely
cross-border wire transfers, the FATF and efficiency of the payments system is means that reducing or eliminating the
recommends that countries provide for likely to be low. As demonstrated by the threshold for transmittals would impose
the collection and transmission SARs described in the preceding less of an incremental cost. Further, the
section, some financial institutions are
already collecting information on at
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25 See Recommendation 16 and Interpretive Note 30 See 31 CFR 1022.320(a)–(f). The requirement
to FATF Recommendation 16, International least a portion of transactions taking applies to transactions occurring after December 31,
Standards on Combating Money Laundering and the place under the current threshold for 2001. The threshold for the requirement to report
Financing of Terrorism & Proliferation—The FATF suspicious transactions is $2,000.
Recommendations, at 15–16, 73–77 (June 2019),
purposes of reporting suspicious 31 See 31 CFR 1022.210(a)–(e). An MSB must
available at www.fatf-gafi.org/ implement the program on or before the later of July
27 See id.
recommendations.html). 24, 2002 and the end of the 90-day period beginning
26 See id. at 73 (Interpretive Note to FATF 28 See id.
on the day following the date the business is
Recommendation 16). 29 See id. established.
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68010 Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules
Agencies note that technology has Accordingly, funds transfers and Public use of CVCs has grown
advanced significantly since the transmittals of funds involve an significantly in recent years. Estimated
issuance of the 2006 ANPRM. Among instruction to pay a ‘‘fixed or transactions in Bitcoin alone were
other things, data storage costs have determinable amount of money.’’ The approximately $366 billion dollars in
gone down, and accordingly it is likely Recordkeeping Rule does not explicitly 2019 and $312 billion through in 2020
that financial institutions generally use define the word ‘‘money.’’ However, in through August.39 Furthermore, the
less expensive or more efficient means the preamble to the Federal Register market capitalization of Bitcoin alone
of electronic storage and retrieval. The document adopting the Recordkeeping was approximately $216 billion as of
Agencies believe there has been an Rule, the Agencies explained that August 2020.40
increase in the ability of small ‘‘terms . . . that are not defined The Treasury, including FinCEN, has
institutions to rely on third-party specifically in the regulation, but are closely monitored illicit finance risks
vendors to reduce their costs of defined in relevant provisions of the posed by CVCs. The Agencies note that
handling compliance with a revised UCC, will have the meaning given them malign actors have used CVCs to
threshold. in the UCC, unless otherwise facilitate international terrorist
indicated.’’ 36 Under the UCC, the term financing, weapons proliferation,
III. Application of the Recordkeeping sanctions evasion, and transnational
and Travel Rules to CVC and Digital ‘‘money’’ is defined as ‘‘a medium of
exchange currently authorized or money laundering, as well as to buy and
Assets That Have Legal Tender Status sell controlled substances, stolen and
adopted by a domestic or foreign
A. The Meaning of ‘‘Money’’ as government.’’ 37 fraudulent identification documents and
Applicable to the Recordkeeping and access devices, counterfeit goods,
Travel Rules In guidance issued in November 2010, malware and other computer hacking
FinCEN similarly explained that the tools, firearms, and toxic chemicals.41
The Recordkeeping Rule applies to Travel Rule ‘‘uses terms that are
funds transfers (i.e., transactions For example, North Korean cyber actors,
intended to parallel those used in UCC such as the Lazarus Group, have
involving banks) and transmittals of Article 4A, but that are applicable to all
funds (i.e., transactions involving continuously engaged in efforts to steal
financial institutions, as defined within and extort CVC as a means of generating
nonbank financial institutions). The the Bank Secrecy Act’s implementing
term ‘‘funds transfer’’ is defined, as in and laundering large amounts of
regulations.’’ Similar to the revenue for the regime.42
Article 4A of the Uniform Commercial Recordkeeping Rule, FinCEN’s To mitigate illicit finance risks posed
Code (‘‘UCC’’), to include ‘‘[t]he series implementing regulations explain that a by CVC, the FATF has advised that
of transactions, beginning with the transmittal order ‘‘includes a payment countries should consider so-called
originator’s payment order, made for the order and is an instruction of a sender virtual assets as ‘‘property,’’ ‘‘proceeds,’’
purpose of making payment to the to a receiving financial institution,
beneficiary of the order.’’ 32 The transmitted orally, electronically, or in 39 Estimates based on data from blockchain.com,
Recordkeeping Rule in turn defines writing, to pay, or cause another https://www.blockchain.com/charts/estimated-
‘‘payment order’’ similarly to the UCC financial institution or foreign financial transaction-volume-usd.
Article 4A definition, stating that a agency to pay, a fixed or determinable
40 See Coingecko, Top 100 Coins by Market
payment order is ‘‘[a]n instruction of a Capitalization, https://www.coingecko.com/en.
amount of money to a recipient[.]’’ 38 41 See, e.g., United States. v. Cazes, No. 1:17CR–
sender to a receiving bank . . . to pay,
00144, Indictment ¶ 2 (E.D. Ca. filed June 1, 2017)
or to cause another bank or foreign bank B. FinCEN’s Prior Guidance on CVC, (alleging that ‘‘AlphaBay [was] a dark-web
to pay, a fixed or determinable amount and This Proposed Rule’s Further marketplace designed to enable users to buy and
of money to a beneficiary.’’ 33 (Emphasis Clarification of the Definition of sell illegal goods, including controlled substances,
added.) ‘‘Money’’ as Applicable to the stolen and fraudulent identification documents and
The Recordkeeping Rule’s definition access devices, counterfeit goods, malware and
Recordkeeping and Travel Rules other computer hacking tools, firearms, and toxic
of ‘‘transmittal of funds’’ parallels the chemicals . . . AlphaBay required its users to
UCC Article 4A definition of ‘‘funds Since the Agencies issued the transact in digital currencies, including Bitcoin,
transfer,’’ with minor adjustments that Recordkeeping Rule, and FinCEN issued Monero, and Ethereum.’’); Dep’t of the Treasury
allow the definition to apply to nonbank the Travel Rule, a number of CVCs, such Press Release—Remarks of Sigal Mandelker, Under
Secretary for Terrorism and Financial Intelligence
financial institutions. Specifically, the as Bitcoin and Ethereum, have been (May 13, 2019), https://home.treasury.gov/news/
Recordkeeping Rule defines transmittal created. CVC is a medium of exchange press-releases/sm687; Press Release, Dep’t of
of funds as ‘‘[a] series of transactions (such as cryptocurrency) that either has Justice, ‘‘Two Chinese Nationals Charged with
beginning with the transmittor’s an equivalent value as currency, or acts Laundering Over $100 Million in Cryptocurrency
from Exchange Hack’’ at 1 (Mar. 2, 2020) (‘‘North
transmittal order, made for the purpose as a substitute for currency, but lacks Korea continues to attack the growing worldwide
of making payment to the recipient. . legal tender status. Generally, CVCs can ecosystem of virtual currency as a means to bypass
. .’’ 34 The Recordkeeping Rule’s be exchanged instantaneously anywhere the sanctions imposed on it by the United States
definition of ‘‘transmittal order’’ in turn in the world through peer-to-peer and the United Nations Security Council.’’), https://
www.justice.gov/opa/pr/two-chinese-nationals-
parallels the UCC Article 4A definition payment systems (a distributed ledger) charged-laundering-over-100-million-
of payment order, stating that ‘‘[t]he that allow any two parties to transact cryptocurrency-exchange-hack. For vulnerabilities
term transmittal order includes a directly with each other without the of digital assets to securities fraud, see SEC—
payment order and is an instruction of need for an intermediary financial Investor Alert: Ponzi Schemes Using Virtual
Currencies, SEC Pub. No. 153 (7/13), http://
a sender to a receiving financial institution. However, in practice, many www.sec.gov/investor/alerts/ia_
institution . . . to pay, a fixed or persons hold and transmit CVC using a virtualcurrencies.pdf (accessed June 23, 2020);
third-party financial institution such as
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determinable amount of money to a CFTC—Investor Alert: Watch Out for Fraudulent
recipient . . . .’’ 35 (Emphasis added.) a ‘‘hosted wallet’’ or an exchange. Digital Asset and ‘‘Crypto’’ Trading websites,
https://www.cftc.gov/LearnAndProtect/
AdvisoriesAndArticles/watch_out_for_digital_
32 31 CFR 1010.100(w); see also U.C.C. 4A–104(a). 36 60 FR 220, 222 (Jan. 3, 1995).
fraud.html (accessed Aug. 28, 2020).
33 31 CFR 1010.100(ll); see also U.C.C. 4A– 37 U.C.C. 1–201(b)(24) (2001); see also U.C.C. 4A– 42 Dep’t of the Treasury Press Release—Remarks
103(a)(1). 105(d) (2012) (stating that Article 1 general of Sigal Mandelker, Under Secretary for Terrorism
34 31 CFR 1010.100(ddd). definitions are applicable throughout Article 4A). and Financial Intelligence (May 13, 2019), https://
35 31 CFR 1010.100(eee). 38 31 CFR 1010.100(eee). home.treasury.gov/news/press-releases/sm687.
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Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules 68011
‘‘funds,’’ ‘‘funds or other assets,’’ or proposed rule would therefore requirements to retain address
other ‘‘corresponding value’’ and, supersede the UCC’s definition of information, other than those resulting
consequently, should apply relevant ‘‘money’’ for purposes of the from a change to the applicable
FATF anti-money laundering/counter- Recordkeeping and Travel Rules. The thresholds.
terrorist-financing measures to virtual Agencies believe this action is
B. Definition of ‘‘Money’’
assets.43 Consistent with the FATF appropriate to provide clarity
guidance, in May 2019, FinCEN issued concerning the application of the This proposed rule also would revise
guidance advising that CVC-based Recordkeeping and Travel Rules. the definitions of payment order and
transfers effectuated by a nonbank FinCEN is aware that the CVC transmittal order set forth in the BSA
financial institution may fall within the industry is working on developing regulations so that the Recordkeeping
Recordkeeping and Travel Rules, on the systems and processes to achieve full Rule and Travel Rule would explicitly
grounds that such transfers involve the compliance with the Travel Rule as apply to domestic and cross-border
making of a ‘‘transmittal order’’ by the applied to virtual currency transactions transactions in CVC and digital assets
sender—i.e., an instruction to pay ‘‘a as a result of the distinctive having legal tender status.
determinable amount of money to a characteristics of CVCs. The Agencies Both the Recordkeeping Rule and
recipient’’—a criterion for application of welcome comment on these efforts and Travel Rule refer to a ‘‘payment order’’
the rules.44 However, FinCEN any costs related thereto. (in the case of banks) and a ‘‘transmittal
understands that at least one industry order’’ (in the case of financial
IV. Section-by-Section Analysis
group has asserted that the institutions other than banks). These
Recordkeeping and Travel Rules do not A. Recordkeeping Rule and Travel Rule terms, in turn, use the term ‘‘money.’’
apply to transactions involving CVC, in Thresholds This proposed rule would clarify the
part because the group asserts that CVC This proposed rule would lower the meaning of money in 31 CFR
is not ‘‘money’’ as defined by the rules. Recordkeeping Rule and Travel Rule 1010.100(ll) (payment order) and
In addition to CVCs, foreign thresholds set forth in 31 CFR 1020.410 1010.100(eee) (transmittal order),
governments—including Iran, and 31 CFR 1010.410(e) and (f) for explaining that money includes (1) a
Venezuela, and Russia—have created or financial institutions. The thresholds medium of exchange currently
expressed interest in creating digital would be lowered from $3,000 to $250, authorized or adopted by a domestic or
currencies that could be used to engage but only with respect to funds transfers foreign government, including any
in sanctions evasion. For example, the and transmittals of funds that begin or digital asset that has legal tender status
Venezuelan government developed a end outside the United States. As set in any jurisdiction 47 and (2) CVC. The
state-backed digital currency called the forth in the proposed revised sections proposed rule would define CVC as a
‘‘petro,’’ which the government publicly below, a funds transfer or transmittal of medium of exchange (such as
indicated was designed for the purpose funds would be considered to begin or cryptocurrency) that either has an
of evading U.S sanctions.45 The end outside the United States if the equivalent value as currency, or acts as
President subsequently issued Executive financial institution knows or has a substitute for currency, but lacks legal
Order 13827, prohibiting any U.S. reason to know that the transmittor, tender status.48
persons from involvement in the petro transmittor’s financial institution,
digital currency. V. Request for Comment
recipient, or recipient’s financial
This proposed rule would define institution is located in, is ordinarily The Agencies welcome comment on
‘‘money’’ in 31 CFR 1010.100(ll) and resident in, or is organized under the all aspects of this proposed rule. The
(eee) to make explicitly clear that both laws of a jurisdiction other than the Agencies encourage all interested
payment orders and transmittal orders United States or a jurisdiction within parties to provide their views.
include any instruction by the sender to the United States. With respect to the effect of lowering
transmit CVC or any digital asset having For this purpose, a financial the threshold for the requirement in 31
legal tender status to a recipient.46 The institution would have ‘‘reason to CFR 1020.410 and 31 CFR 1010.410(e)
know’’ that a transaction begins or ends and (f) to collect, retain, and transmit
43 Interpretive Note to FATF Recommendation 15
outside the United States only to the information on funds transfers and
at 70. transmittals of funds that begin or end
44 FinCEN Guidance—Application of FinCEN’s extent such information could be
Regulations to Certain Business Models Involving determined based on the information outside the United States, the Agencies
Convertible Virtual Currencies at 11–12 (May 9, the financial institution receives in the in particular request comment on the
2019); see also 31 CFR 1010.100(eee) (defining transmittal order, collects from the following questions from financial
transmittal order) and 31 CFR 1010.410(e) and (f). institutions and members of the public:
45 E.O. 13827, Taking Additional Steps to Address transmittor to effectuate the transmittal
of funds, or otherwise collects from the (1) To what extent would the
the Situation in Venezuela, (March 19, 2018); see
also FinCEN Advisory—Updated Advisory on transmittor or recipient to comply with proposed rule impose a burden on
Widespread Public Corruption in Venezuela at 11 regulations implementing the BSA. financial institutions, including with
(May 3, 2019), https://www.fincen.gov/sites/default/
Financial institutions are already respect to information technology
files/advisory/2019-05-03/ implementation costs? To what extent
Venezuela%20Advisory%20FINAL%20508.pdf. required to retain the address of the
46 The regulatory definitions of ‘‘money’’ and transmittor and recipient under the would the burden be different for
‘‘convertible virtual currency’’ that this rulemaking Recordkeeping Rule for transactions thresholds such as $0, $500, or $1,000
proposes to add to the definitions of ‘‘payment subject to the current threshold, and for funds transfers and transmittals of
order’’ and ‘‘transmittal order’’ at 31 CFR funds that begin or end outside the
1010.100(ll) and (eee) are specific to those may, as a matter of their own business
practices, retain the addresses of other United States? What would be the
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provisions and not intended to have any impact on,
inter alia, the definition of ‘‘currency’’ in 31 CFR participants in a funds transfer or
47 ‘‘Money’’ would also include a monetary unit
1010.100(m). Furthermore, nothing in this transmittal of funds. This proposed rule
document shall constitute a determination that any of account established by an intragovernmental
asset that is within the regulatory definitions of would not impose any new organization or by agreement between two or more
‘‘money’’ or ‘‘convertible virtual currency’’ that this countries.
rulemaking proposes to add to the definitions of laws, 15 U.S.C. 78c(47), or the federal derivatives 48 CVC is therefore a type of ‘‘value that
‘‘payment order’’ and ‘‘transmittal order’’ is laws, 7 U.S.C. 1–26, and the regulations substitutes for currency.’’ See 31 CFR
currency for the purposes of the federal securities promulgated thereunder. 1010.100(ff)(5)(i)(A).
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68012 Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules
impact on the burden if the proposed $3,000 that begin or end outside the $79.58 million annually (3,315,844
threshold change were extended to all United States? hours multiplied by $24 per hour).
transactions, including domestic With respect to the effect of clarifying However, the PRA burden does not
transactions? the meaning of ‘‘money’’ in the include certain costs, such as
(2) To what extent would the burden definitions of ‘‘payment order’’ and information technology implementation
of the proposed rule on financial ‘‘transmittal order’’ in 31 CFR 1010.100, costs solely resulting from the need to
institutions and the public be mitigated the Agencies in particular request comply with this proposed rule. FinCEN
were the Agencies to select a threshold comment on the following questions specifically requests comment regarding
of $250 but not require nonbank from law enforcement, financial the costs associated with implementing
financial institutions to collect a social institutions, and members of the public: these requirements.
security number or employer (1) Describe the additional costs, if The benefits from the proposed rule
identification number (‘‘EIN’’) for non- any, from complying with the include enhanced law enforcement
established customers engaging in Recordkeeping Rule and Travel Rule in ability to investigate, prosecute and
transmittals of funds between $250 and light of the clarification included in the disrupt the financing of international
$3,000 that begin or end outside the proposed rule, including with respect to terrorism and other priority
United States? information technology costs. transnational security threats, as well as
(2) What mechanisms have persons other types of transnational financial
(3) To what extent would the burden
that engage in CVC transactions crime. The cost of terrorist attacks can
of the proposed rule be reduced if the
developed to comply with the be immense. For instance, one public
Agencies issued specific guidance about
Recordkeeping Rule and Travel Rule report estimated the cost of terrorism
appropriate forms of identification to be
and what is the impact of adopting these globally at $33 billion in 2018, though
used in conjunction with identity
solutions on the CVC industry, this cost was primarily borne outside
verification, including in regards to
including on other BSA compliance the United States.50 The cost of a major
whether there are circumstances in
efforts? terrorist attack, such as the September
which verification may be done
remotely and what documents are VI. Regulatory Analysis 11 attacks, can reach tens of billions of
acceptable as proof? dollars.51 Of course, it is difficult to
A. Executive Orders 13563, 12866, and quantify the contribution of a particular
(4) To what extent would the burden 13771
of the proposed rule on financial rule to a reduction in the risk of a
Executive Orders 13563 and 12866 terrorist attack. However, even if the
institutions and the public be mitigated
direct agencies to assess costs and proposed rule produced very small
if the Agencies were to include in the
benefits of available regulatory reductions in the probability of a major
regulation the standard described in
alternatives and, if regulation is terrorist attack, the benefits would
Section IV.A for determining when an
necessary, to select regulatory exceed the costs. For instance, if the
institution would be subject to the $250
approaches that maximize net benefits proposed rule reduced by 0.26 percent
threshold for cross-border transfers, i.e.,
(including potential economic, the annual probability of a major
that ‘‘reason to know’’ that a transaction
environmental, and public health and terrorist attack with an economic impact
begins or ends outside the United States
safety effects; distributive impacts; and of $30 billion, the benefits would be
exists when such information could be
equity). Executive Order 13563 greater than the PRA burden costs
determined based on the information described above.
the financial institution receives in the emphasizes the importance of
quantifying both costs and benefits, of Of course, the proposed rule would
transmittal order, collects from the not simply reduce the probability of
transmittor to effectuate the transmittal reducing costs, of harmonizing rules,
and of promoting flexibility. This terrorism but also would contribute to
of funds, or otherwise collects from the the ability of law enforcement to
transmittor or recipient to comply with proposed rule has been designated a
‘‘significant regulatory action’’ under investigate a wide array of other priority
regulations implementing the BSA? transnational threats and financial
section 3(f) of Executive Order 12866.
The Agencies request comment from crimes, including proliferation
Accordingly, the proposed rule has been
law enforcement with respect to the financing, sanctions evasion, and money
reviewed by the Office of Management
following related questions: laundering.
and Budget (‘‘OMB’’).
(1) To what extent would the FinCEN believes the primary cost of FinCEN considered several
proposed rule benefit law enforcement? complying with the proposed rule is alternatives to the proposed rule. First,
To what extent would these benefits be captured in its Paperwork Reduction FinCEN considered the possibility of
different for thresholds such as $0, Act (44 U.S.C. 3507(d)) (‘‘PRA’’) burden modifying the proposed rule by
$500, or $1,000 for funds transfers and estimates described in detail below, applying the FATF’s suggested de
transmittals of funds that begin or end which amount to 3,315,844 hours. minimis threshold of $1,000 to
outside the United States? What would FinCEN estimated in its recent OMB transactions that begin or end outside
be the impact on the benefits to law control number renewal for SAR the United States. However, this
enforcement if the proposed threshold requirements that the average labor cost threshold would exclude over 88
change were extended to all of storing SARs and supporting percent of the transactions in FinCEN’s
transactions, including domestic documentation, weighed against the
transactions? relevant labor required, was $24 per 50 See Institute for Econoimcs and Peace, Global
(2) To what extent would the benefit hour.49 FinCEN assesses that this is a Terrorsim Index, 2019 (Nov. 2019), http://
of the proposed rule to law enforcement visionofhumanity.org/app/uploads/2019/11/GTI-
reasonable estimate for the labor cost of
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2019web.pdf.
be compromised were the Agencies to the requirements imposed by this rule. 51 For example, the New York Comptroller
select a threshold of $250 but not Therefore a reasonable minimum estimated in 2002 that the direct physical and
require that nonbank financial estimate for the burden of administering human cost of the September 11 attacks on New
institutions collect a social security York was over $30.5 billion. See City of New York
the proposed rule is approximately Comptroller, One Year Later: The Fiscal Impact of
number or EIN for non-established 9/11 on New York City (Sept. 4, 2002), https://
nonbank customers engaging in 49 85 FR 31598, at 31604 and 31607 (May 26, comptroller.nyc.gov/wp-content/uploads/
transmittals of funds between $250 and 2020). documents/impact-9-11-year-later.pdf.
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Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules 68013
dataset of transactions potentially FinCEN requests comment on the and transmitted by financial
linked to terrorism. Given the intended benefits, and any estimates of costs, institutions.
goal of the proposed rule to increase the associated with the requirements of the The clarifications regarding the
availability of information to address proposed rule and the proposed meaning of ‘‘money’’ in the definitions
priority transnational threats, including alternatives. of ‘‘payment order’’ and ‘‘transmittal
terrorism, FinCEN believes a lower Executive Order 13771 requires an order’’ in 31 CFR 1010.100 address
threshold would be appropriate. agency to identify at least two existing urgent concerns regarding illicit finance,
Second, FinCEN considered the regulations to be repealed whenever it including the financing of international
possibility of implementing the publicly proposes for notice and terrorism, sanctions evasion, and
proposed rule with a threshold of $0 for comment or otherwise promulgates a weapons proliferation through CVC. In
transactions beginning or ending new regulation. As described above, the the absence of clarification, some
outside of the United States. FinCEN’s proposed amendments to the entities may not be aware of or may
terrorism-related transaction analysis Recordkeeping Rule and Travel Rule choose not to comply with the
suggests that transactions potentially involve a national security function. Recordkeeping Rule and the Travel Rule
related to terrorism occur at values Therefore, Executive Order 13771 does when engaging in transactions involving
below the $250 level. Although FinCEN not apply. CVC. The Agencies are also clarifying
believes that a $0 threshold would lead that ‘‘money’’ includes digital assets
to enhanced benefits in terms of B. Regulatory Flexibility Act with legal tender status.
capturing a larger universe of The Regulatory Flexibility Act ii. Small Entities Affected by the
transactions, requiring collection and (‘‘RFA’’) (5 U.S.C. 601 et seq.) requires Proposed Regulation
verification of transaction information an agency either to provide an initial
for low-value transactions could impose The proposed changes to the
regulatory flexibility analysis with a Recordkeeping Rule and Travel Rule
a substantial burden on small financial
proposed rule or certify that the would apply to all financial institutions
institutions, such as small money
proposed rule will not have a significant regulated under the BSA.52 However, as
services businesses. Nonetheless,
impact on a substantial number of small a practical matter, because the
FinCEN will carefully consider
entities. This proposed regulation on its requirements of this proposed rule are
comments to determine whether a $0
face would apply to all financial only triggered by funds transfers and
threshold would be appropriate in a
institutions. However, because of the transmittals of funds, the proposal
final rule. FinCEN will also consider in
nature of the requirements contained would impact mostly banks and money
a final rule the extent to which the
therein, only banks (including credit transmitters. As described in the PRA
burden could be minimized by
unions), money transmitters, and other section that follows, based upon current
providing guidance on appropriate
verification procedures for lower-value MSBs would be impacted. Although the data there are 5,306 banks, 5,236 credit
transactions. Agencies believe that the proposed unions, and 12,692 money transmitters
Third, FinCEN considered applying regulatory changes would affect a that would be impacted by the proposed
the requirements of the proposed rule to substantial number of small entities, the rule changes. Based upon current data,
all transactions, including those that Agencies also believe these changes for the purposes of the RFA, there are
begin and end within the United States. would be unlikely to have a significant at least 3,817 small Federally-regulated
However, FinCEN’s analysis identified economic impact on such entities. The banks and 4,681 small credit unions.53
that only approximately 17,000 of the Agencies, however, recognize the The Agencies believe that most money
approximately 1.29 million transactions limitations in readily available data transmitters are small entities.54
included within its terrorism analysis about potential costs and benefits and Because the proposed rule would apply
dataset involved domestic-only have prepared an initial regulatory to all of these small financial
transactions. Applying the requirements flexibility analysis pursuant to the RFA.
to all domestic transactions would The Agencies welcome comments on all 52 31 CFR 1010.400 notes that ‘‘[e]ach financial
therefore capture a relatively small aspects of the initial regulatory institution (as defined in 31 U.S.C. 5312(a)(2) or
flexibility analysis. A final regulatory (c)(1)) should refer to its chapter X part for any
number of additional transactions while additional recordkeeping requirements. Unless
resulting in significant additional flexibility analysis will be conducted otherwise indicated, the recordkeeping
recordkeeping burden for financial after consideration of comments requirements contained in this subpart D apply to
institutions. FinCEN believes that, at received during the comment period. all financial institutions.’’ See 31 CFR 1020.410
(banks), 31 CFR 1022.410 (dealers in foreign
this time, it would therefore be i. Statement of the Need for, and exchange), 31 CFR 1022.400 (MSBs), 31 CFR
appropriate to limit the proposed rule to Objectives of, the Proposed Regulation 1023.410 (broker dealers in securities), 31 CFR
transactions that begin or end outside 1024.410 (mutual funds), 31 CFR 1025.410
The proposed changes to the (insurance), 31 CFR 1026.410 (futures commission
the United States. Again, based on merchants and introducing brokers in
comments received, FinCEN will Recordkeeping Rule and Travel Rule commodities), 31 CFR 1027.410 (dealers in precious
consider in a final rule the extent to would reduce from $3,000 to $250 the metals, precious stones, or jewels), 31 CFR 1028.410
which the benefits of extending the threshold for the requirement to collect, (operators of credit card systems), 31 CFR 1029.400
retain, and transmit information on (loan or finance companies), and 31 CFR 1030.400
scope of the changes to the thresholds (housing government sponsored entities).
of the Recordkeeping Rule and Travel funds transfers and transmittal of funds 53 The Small Business Administration (‘‘SBA’’)
Rule to include domestic transactions for transactions that begin or end defines a depository institution (including a credit
would exceed the burdens. outside the United States. These union) as a small business if it has assets of $600
With respect to the clarification of the changes are necessary because funds million or less. The information on small banks is
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published by the Federal Deposit Insurance
definition of ‘‘money,’’ FinCEN transfers and transmittals of funds Corporation (‘‘FDIC’’) and was current as of March
considered the alternative of leaving the related to terrorist financing, narcotics 31, 2020.
regulation as it was, but believed doing trafficking, and other crimes are 54 The SBA defines an entity engaged in
so would perpetuate uncertainty about occurring well below the current $3,000 ‘‘Financial Transactions Processing, Reserve, and
Clearinghouse Activities’’ to be small if it has assets
the applicability of the Recordkeeping threshold. It therefore would benefit law of $41.5 million or less. FinCEN assesses that
and Travel Rules to transactions enforcement for this additional money transmitters most closely align with this
involving CVC. information to be collected, retained, SBA category of entities.
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68014 Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules
institutions, the Agencies conclude that interpretation that the Recordkeeping payment or transmittal order sent by the
this proposed rule would apply to a and Travel Rules apply to transactions bank or nonbank financial institution to
substantial number of small entities. involving a digital asset with legal another bank or nonbank financial
Although the proposed changes tender status. The Agencies do not institution in the payment chain. An
would apply to a substantial number of believe that any financial institutions intermediary bank or financial
small entities, the Agencies believe that currently facilitate transactions institution would also be required to
the changes would not have a involving sovereign digital currencies. transmit information to other banks or
significant economic impact on such nonbank financial institutions in the
entities for the reasons noted below. In iii. Compliance Requirements
payment chain, to the extent the
the first year, the Agencies expect Compliance costs for entities that information is received by the
additional expense of time and would be affected by these regulations intermediary bank or financial
resources to read and understand the are generally, reporting, recordkeeping, institution.
regulations and train staff and and information technology
implement technological changes. implementation and maintenance costs. iv. Duplicative, Overlapping, or
In 2006, the Agencies solicited public Data are not readily available to Conflicting Federal Rules
comment on the potential benefits and determine the costs specific to small The Agencies are unaware of any
burdens of reducing the threshold for entities and the Agencies invite Federal rules that duplicate, overlap
the Recordkeeping Rule and Travel Rule comments about compliance costs, with, or conflict with the proposed
requirements.55 Based on the comments especially those affecting small entities. changes to the Recordkeeping and
received at that time, it appears that These proposed changes (a) reduce Travel Rules, except that some financial
almost all banks, regardless of size, the threshold for the Recordkeeping and institutions may already collect some of
maintain records of all funds transfers Travel Rule requirements to collect, the information required by the
and transmittals of funds regardless of retain, and transmit information on proposed modifications as part of their
the dollar amount, including those funds transfers and transmittals of funds existing implementation of their risk-
transfers/transmittals below the $3,000 for transactions that begin or end based AML programs under the BSA
regulatory threshold. Similarly, in 2006, outside the United States; and (b) clarify and its implementing regulations.
many money transmitters indicated that the application of the Recordkeeping
and Travel Rule requirements to v. Significant Alternatives to the
they maintained records of transfers/
transactions involving CVC or digital Proposed Regulations
transmittals at approximately the $1,000
level. Since 2006 there have been assets with legal tender status. Banks The Agencies considered several
significant advances in technology, and other financial institutions therefore alternatives to the proposed regulatory
likely allowing small entities to comply would need to collect and retain the changes. First, the Agencies considered
with regulatory recordkeeping following information on funds transfers the possibility of modifying the
requirements at a lower cost. and transmittals of funds in amounts at proposed rule by applying the FATF’s
As noted previously, in May 2019, or above the applicable threshold, suggested de minimis threshold of
FinCEN issued guidance advising that including with respect to transactions $1,000 to transactions that begin or end
CVC-based transfers effectuated by a involving CVC or digital assets with outside the United States. However, this
nonbank financial institution may fall legal tender status: The name and threshold would exclude an
within the Recordkeeping and Travel address of the originator or transmittor; unacceptably large percentage of
Rules, on the grounds that such the amount and date of the transaction; transactions. It is unclear what impact
transfers involve the making of a any payment instructions received; and this alternative would have on small
‘‘transmittal order’’ by the sender—i.e., the identity of the beneficiary’s bank or entities and it might not reduce the
an instruction to pay ‘‘a determinable recipient’s financial institution. In impact on affected small entities in a
amount of money to a recipient’’—a addition, for transactions at or above the meaningful way.
criterion for application of the rules.56 applicable threshold, including with Second, the Agencies considered the
Therefore, the proposed rule would respect to transactions involving CVC or possibility of implementing the
codify FinCEN’s existing expectation. In digital assets with legal tender status, an proposed rule with a threshold of $0 for
addition, FATF’s international originator’s bank or transmittor’s transactions that begin or end outside of
standards now call for jurisdictions to financial institution would be required the United States. Although this would
apply their rules equivalent to the to verify the identity of the person expand the data available to law
Recordkeeping and Travel Rule to placing a payment or transmittal order enforcement, and the Agencies will
virtual assets.57 Therefore, U.S. if the order is made in person and the carefully consider comments to
financial institutions engaged in CVC person placing the order is not an determine whether a $0 threshold
transactions with an international nexus established customer. An intermediary would be appropriate in a final rule, the
would likely need to adopt such bank or intermediary financial Agencies believed that a $0 threshold
compliance measures regardless of the institution, and the beneficiary’s bank or might impose a significant burden on
applicable U.S. rules, as other countries recipient’s financial institution, also small financial institutions and
have aligned or are aligning their would be required to retain originals or therefore are not proposing a $0
regulatory regimes with the FATF copies of payment or transmittal orders. threshold at this time.
recommendations. For funds transfers and transmittals of Third, the Agencies considered
As described above, the proposed rule funds at or above the applicable exempting small banks from the lower
would also clarify the Agencies’ existing threshold, including with respect to threshold requirement entirely.
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transactions involving CVC or digital However, the Agencies believe that the
55 71 FR 35564 (June 21, 2006). assets with legal tender status, the number of transactions beginning or
56 FinCEN Guidance—Application of FinCEN’s
originator’s bank or transmittor’s ending outside the United States is
Regulations to Certain Business Models Involving financial institution also would be relatively low for most small banks,
Convertible Virtual Currencies at 11–12 (May 9,
2019); see also 31 CFR 1010.100(eee) (defining required to include information, which should substantially reduce the
transmittal order) and 31 CFR 1010.410(e) and (f). including all information required burden on them from the proposed
57 Interpretive Note to FATF Recommendation 15. under the Recordkeeping Rule, in a change in the threshold.
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Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules 68015
Finally, the Agencies considered the Currently, financial institutions must Although the proposed rule on its face
possibility of waiving the requirement collect, retain, and transmit certain would apply to all nonbank financial
that financial institutions obtain a social information as part of funds transfers or institutions, because of the nature of the
security number or EIN for funds transmittals of funds involving $3,000 requirements contained therein, mostly
transfers or transmittals of funds below or more (31 CFR 1020.410(a) and 31 money transmitters and other MSBs that
a certain threshold by non-established CFR 1010.410(e) and (f)). This proposed conduct transmittals of funds that begin
customers. Adopting this alternative rule would modify the thresholds in the or end outside the United States would
would primarily impact MSBs, many of rules implementing the BSA requiring be impacted.
which are small and more likely to deal financial institutions to collect and Estimated Number of Recordkeepers:
with non-established customers. The retain information on certain funds 12,692 money transmitters. As of June
Agencies have not adopted this transfers and transmittals of funds. The 2020, there were 12,692 MSBs registered
alternative at this time because it would modifications would reduce the with FinCEN that indicated they were
increase the likelihood of criminals threshold from the current $3,000 to conducting money transmission.
using false identities to transmit funds. $250 for funds transfers and transmittals Estimated Average Annual Burden
Although the Agencies have not of funds that begin or end outside the Hours per Recordkeeper: The estimated
adopted this alternative at this time, this United States. The proposed rule average burden hours would vary
proposed rule requests comment on the likewise would modify the threshold in depending on the number of
benefits and drawbacks of waiving the the rule requiring financial institutions transmittals of funds conducted by a
requirement to obtain a social security to transmit to other financial nonbank financial institution between
number or EIN below some threshold. institutions in the payment chain $250 and $3,000 that begin or end
information on funds transfers and outside the United States. Under OMB
The Agencies welcome comment on
transmittals of funds from $3,000 to control number 1506–0058, FinCEN
the overall regulatory flexibility
$250 for funds transfers and transmittals estimates that the recordkeeping burden
analysis, especially information about
of funds that begin or end outside the per recordkeeper to maintain records of
compliance costs and alternatives.
United States. The proposed rule would all transmittals of funds of $3,000 or
C. Unfunded Mandates Act also clarify the meaning of ‘‘money,’’ more is 16 hours a year. FinCEN
making more clear the transactions in estimates that twice as many
Section 202 of the Unfunded transmittals of funds conducted by
Mandates Reform Act of 1995 relation to which financial institutions
must comply with the Recordkeeping nonbank financial institutions are
(‘‘Unfunded Mandates Act’’), Public between $250 and $3,000, and begin or
Law 104–4 (March 22, 1995), requires Rule and the Travel Rule.
Since FinCEN has authority to end outside the United States, in
that an agency prepare a budgetary comparison to all transmittals of funds
implement the Recordkeeping Rule and
impact statement before promulgating a over $3,000. For that reason, FinCEN
Travel Rule with respect to all
rule that may result in expenditure by estimates that the proposed rule would
respondents, FinCEN will be
the state, local, and tribal governments, add an additional 32 hours of burden
responsible for the entire paperwork
in the aggregate, or by the private sector, per recordkeeper a year.58
burden associated with this information
of $100 million or more in any one year. Estimated Total Additional Annual
collection.
If a budgetary impact statement is Burden Hours: 406,144 hours. (12,692
required, section 202 of the Unfunded i. Threshold Changes to the money transmitters multiplied by 32
Mandates Act also requires an agency to Recordkeeping and Travel Rules hours).
identify and consider a reasonable This proposed rule would reduce
number of regulatory alternatives before 2. 31 CFR 1010.410(f)
from $3,000 to $250 the threshold for
promulgating a rule. See section VI.A the requirement to collect, retain, and This proposed rule would reduce the
for a discussion of the economic impact transmit information on funds transfers threshold for the requirement to
of this proposed rule. and transmittals of funds that begin or transmit information on funds transfers
D. Paperwork Reduction Act end outside the United States. This and transmittals of funds conducted by
threshold change is necessary because financial institutions acting as the
The recordkeeping requirements funds transfers and transmittals of funds transmitting financial institution or the
contained in this proposed rule (31 CFR related to terrorist financing, drug intermediary financial institution in
1010.410 and 31 CFR 1020.410) have trafficking, and other crimes often occur funds transfers and transmittals of funds
been submitted by FinCEN to OMB for well below the current threshold. It that begin or end outside the United
review in accordance with the PRA. therefore would benefit law States.
Written comments and enforcement for this additional financial Description of Recordkeepers:
recommendations for the proposed information to be collected, retained, Financial institutions, including banks
information collection can be submitted and transmitted by financial and credit unions, that are the
by visiting www.reginfo.gov/public/do/ institutions. transmitting or intermediary financial
PRAMain. Find this particular institution in a transmittal of funds in
document by selecting ‘‘Currently under 1. 31 CFR 1010.410(e) an amount between $250 and $3,000
Review—Open for Public Comments’’ or This proposed rule would reduce the that begin or end outside the United
by using the search function. Comments threshold for the requirement to collect States. Although the proposed rule on
are welcome and must be received by and retain information on transmittals its face would apply to all financial
November 27, 2020. In accordance with of funds conducted by nonbank institutions, because of the nature of the
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requirements of the PRA and its financial institutions that begin or end requirements contained therein, only
implementing regulations, 5 CFR part outside the United States.
1320, the following information Description of Recordkeepers: 58 FinCEN estimates that the costs of the
concerning the collections of Financial institutions other than banks Recordkeeping Rule scale linearly with the number
of transactions, though there may well be
information are presented to assist those that conduct transmittals of funds in an economies of scale that reduce the burden. This
persons wishing to comment on the amount between $250 and $3,000 that observation applies to the other burden estimates in
information collections. begin or end outside the United States. this section as well.
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68016 Federal Register / Vol. 85, No. 208 / Tuesday, October 27, 2020 / Proposed Rules
banks, credit unions, money Estimated Number of Recordkeepers: thus increasing such risks. Although the
transmitters, and other MSBs that 10,542 banks and credit unions. FinCEN clarification is consistent with FinCEN’s
conduct transmittals of funds that begin estimates that there are approximately interpretation of existing rules, the
or end outside the United States would 5,306 federally regulated banks and estimates below analyze the costs of
be impacted. 5,236 federally regulated credit unions. compliance with this clarification
Estimated Number of Recordkeepers: Estimated Average Annual Burden against a baseline in which financial
23,234 financial institutions. FinCEN Hours per Recordkeeper: The estimated institutions are not complying with
estimates that there are approximately average burden hours will vary FinCEN’s interpretation of the
5,306 federally regulated banks and depending on the number of funds Recordkeeping Rule and Travel Rule for
5,236 federally regulated credit transfers conducted by banks and credit such transactions.
unions.59 As of June 2020, there were unions between $250 and $3,000 that
begin or end outside the United States. 1. 31 CFR 1010.410(e)
12,692 MSBs registered with FinCEN
that indicated they were conducting Under OMB control number 1506–0059, This proposed rule would explicitly
money transmission. FinCEN estimates that the include within the requirement to
Estimated Average Annual Burden recordkeeping burden per recordkeeper collect and retain information on
Hours per Recordkeeper: The estimated to maintain records of all funds transfers transmittals of funds conducted by
average burden hours will vary of $3,000 or more is 100 hours a year. nonbank financial institutions
depending on the number of FinCEN estimates that on average twice transactions involving (1) CVC, or (2)
transmittals of funds conducted by as many funds transfers conducted by any digital asset having legal tender
banks, credit unions, and money banks and credit unions are between status.
transmitters between $250 and $3,000 $250 and $3,000 and begin or end Description of Recordkeepers:
outside the United States, in Financial institutions other than banks
that begin or end outside the United
comparison to all transmittals of funds that conduct transmittals of funds
States. Under OMB control number
over $3,000. For that reason, FinCEN involving CVCs or digital assets with
1506–0058, FinCEN estimates that the
estimates that the proposed rule would legal tender status. Although the
recordkeeping burden per recordkeeper
add an additional 200 hours of burden proposed rule on its face applies to all
to transmit information relating to all
per recordkeeper a year. nonbank financial institutions, this
transmittals of funds of $3,000 or more
Estimated Total Additional Annual provision would only impact money
is 12 hours a year. FinCEN estimates
Burden Hours: 2,108,400 hours. (10,542 transmitters and other MSBs that
that twice as many transmittals of funds
banks and credit unions multiplied by conduct transmittals of funds involving
conducted by banks, credit unions, and
200 hours). CVC or digital assets with legal tender
money transmitters are between $250 status.
and $3,000, and begin or end outside 4. Total Burden Resulting From Estimated Number of Recordkeepers:
the United States, in comparison to all Threshold Changes to the 530 money transmitters and other MSBs
transmittals of funds over $3,000. For Recordkeeping and Travel Rules engaged in CVC transactions, which
that reason, FinCEN estimates that the Total Estimated Annual Burden FinCEN assesses is a reasonable
proposed rule would add an additional Increase Because of Threshold estimate of the number of MSBs
24 hours of burden per recordkeeper a Reduction in the Recordkeeping and engaging in transactions involving CVC.
year. Travel Rules: 31 CFR 1010.410(e) As of June 2020, there were 12,692
Estimated Total Additional Annual [406,144 hours] + 31 CFR 1010.410(f) MSBs registered with FinCEN that
Burden Hours: 557,616 hours. (23,234 [557,616 hours] + 31 CFR 1020.410 indicated they were conducting money
financial institutions multiplied by 24 [2,108,400 hours] = 3,072,160 hours. transmission. Of those 12,692 MSBs,
hours). FinCEN estimates that 530 engage in
ii. Clarification of the Meaning of CVC transactions. The FinCEN MSB
3. 31 CFR 1020.410 ‘‘Money’’ in the Recordkeeping Rule registration form does not require that
This proposed rule would reduce the and the Travel Rule companies disclose whether they engage
threshold for the requirement to collect This proposed rule also would clarify in CVC transactions. This estimate is
and retain information on funds the meaning of ‘‘money’’ as used in the therefore based on adding the number of
transfers conducted by a bank acting as Recordkeeping Rule and the Travel MSBs that indicated they engage in CVC
the transmitting, intermediary, or Rule. Specifically, the proposed rule transactions in an optional field on the
recipient bank when the funds transfer would explicitly clarify that these rules MSB registration form, and the number
begins or ends outside the United apply to transactions involving (1) CVC, that did not so indicate but which,
States. or (2) any digital asset having legal based on FinCEN’s research, FinCEN
Description of Recordkeepers: Banks tender status. The clarification related to believes engage in CVC transactions.
that are the originator’s bank, the such transactions is necessary because FinCEN does not believe that any
intermediary bank, or the beneficiary’s many of these transactions present nonbank financial institutions currently
bank with respect to funds transfers in heightened terrorist financing, weapons facilitate transactions involving
an amount between $250 and $3,000 proliferation, sanctions evasion, and sovereign digital currencies.
that begin or end outside the United money laundering risks due to their Estimated Average Annual Burden
States. global nature, distributed structure, Hours per Recordkeeper: The estimated
limited transparency, and speed. While average burden hours will vary
59 According to the FDIC there were 5,103 FDIC-
these transactions pose some of the depending on the number of
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insured banks as of March 31, 2020. According to
the Board, there were 203 other entities supervised
same risks as those made in traditional transmittals of funds conducted by a
by the Board or other Federal regulators, as of June financial systems, in addition, a nonbank financial institution engaged in
16, 2020, that fall within the definition of bank. (20 combination of features unique to CVC CVC transactions. Under OMB control
Edge Act