[Federal Register Volume 59, Number 199 (Monday, October 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25490]
[[Page Unknown]]
[Federal Register: October 17, 1994]
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DEPARTMENT OF THE TREASURY
31 CFR Part 103
Amendments to the Bank Secrecy Act Regulations Relating to
Identification Required To Purchase Bank Checks and Drafts, Cashier's
Checks, Money Orders, and Traveler's Checks
AGENCY: Departmental Offices, Treasury.
ACTION: Final Rule.
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SUMMARY: The Bank Secrecy Act prohibits financial institutions from
issuing or selling bank checks or drafts, cashier's checks, money
orders or traveler's checks for $3,000 or more in currency unless the
financial institution verifies and records the identity of the
purchaser. On May 15, 1990, Treasury published in the Federal Register,
a Final Rule requiring financial institutions to verify and record such
identifying information, to record certain information regarding the
instruments purchased, such as the amount of the instruments, and to
maintain a centralized chronological log of the sales. Today's Final
Rule rescinds the requirement to maintain a chronological log and
reduces substantially the amount of information required to be
recorded.
EFFECTIVE DATE: This Final Rule is effective on October 17, 1994.
ADDRESSES: Peter G. Djinis, Director, Office of Financial Enforcement,
Financial Crimes Enforcement Network (FinCEN), Department of the
Treasury, Room 3210 Annex, 1500 Pennsylvania Avenue, NW., Washington DC
20220.
FOR FURTHER INFORMATION CONTACT: A. Carlos Correa, Chief, Regulations
and Rulings, Office of Financial Enforcement, (202) 622-0400.
SUPPLEMENTARY INFORMATION: The Bank Secrecy Act (codified at 12 U.S.C.
1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5328) requires the
Secretary of the Treasury to prescribe regulations requiring financial
institutions to verify and record the identity of purchasers of bank
checks, cashier's checks, traveler's checks and money orders for
currency in amounts of $3,000 or more. 31 U.S.C. 5325. The purpose of
Section 5325 is to deter and detect persons seeking to evade Bank
Secrecy Act reporting requirements through purchases in currency of
multiple monetary instruments in amounts under $10,000. On May 15,
1990, Treasury published in the Federal Register, 55 FR 20139-20144, a
Final Rule implementing these new recordkeeping requirements by
amending the Bank Secrecy Act regulations at 31 CFR 103.29 (Section
103.29).
Section 103.29, which was effective August 13, 1990, established
recordkeeping requirements for purchases of bank checks and drafts,
cashier's checks, money orders and traveler's checks with currency in
amounts of $3,000 to $10,000, inclusive. This section required that the
recorded data be kept on a centralized chronological log(s) and
maintained for five years. The specific data to be recorded depended
upon whether the purchaser had a deposit account at the institution
issuing or selling the monetary instrument(s).
For a deposit accountholder, a financial institution was required
to obtain and record: the purchaser's name and account number; the date
of purchase; the branch where the purchase occurred; the types(s) and
serial number(s) of each of the instrument(s) purchased; and the dollar
amount(s) of each of the instrument(s) purchased in currency. Further,
the financial institution was required to verify that the individual
purchaser was a deposit accountholder, or to verify the individual's
identity. If the individual's identity had not been verified previously
and recorded, the financial institution was required to do so by
examination of a document containing the name and address of the
purchaser. Such information was required to be recorded on a
centralized chronological log kept at the financial institution.
If a purchaser did not have a deposit account, Section 103.29
required financial institutions to obtain and log the purchaser's name,
date of birth, address, and social security or alien identification
number. If the individual was purchasing the instrument(s) on behalf of
another person, the name and account number of that person or, if there
were no account number, the name, address and social security number,
as well as the taxpayer identification number, or alien identification
number, of such person also had to be recorded. Further, the financial
institution was required to log: the date of purchase; the branch where
the purchase occurred; the type(s), serial number(s), and dollar
amount(s) of each of the instrument(s) purchased; the payee(s) on each
purchased cashier's check(s), bank check(s) and draft(s); and the
amount of the purchase in currency. Finally, the financial institution
had to verify the purchaser's name and address by examination of a
document containing that information. The specific identifying
information was required to be recorded on the log (e.g., state of
issuance and number of driver's license).
Financial institutions were required by Section 103.29 to treat
contemporaneous purchases of the same or different types of instruments
totaling $3,000 or more as one purchase. Multiple purchases during one
business day totaling $3,000 or more had to be treated as one purchase
if the financial institution had knowledge that these purchases had
occurred. Multiple sales had to be noted as such on the log(s).
Finally, the financial institution was required to maintain
chronological log(s) in a centralized location, retain them for at
least five years, and make them available to the Secretary upon
request.
Reviewing Section 103.29 Requirements
Treasury established a Money Laundering Task Force (Task Force) to
consider ways to reduce the regulatory burden of complying with the BSA
while enhancing the utility of information received from financial
institutions. The Task Force considered the costs to financial
institutions of obtaining and recording specific financial data
concerning cash purchases of monetary instruments and the value of this
information to law enforcement.
Based upon the Task Force's review, Treasury determined that, while
Section 103.29 remains a useful deterrent, its required records,
informally referred to as $3,000 logs, had been requested and used
infrequently by law enforcement. Because Section 103.29 does not
specify the format in which the $3,000 logs should be maintained, law
enforcement use of the logs is labor intensive. Log information must be
retrieved manually and computerized. This is a cumbersome process
which, when weighed against other immediate leads in the hands of law
enforcement, such as suspicious transaction reports, criminal referrals
and informants, may have discouraged requests for the $3,000 logs.
Treasury has evaluated the cost of compliance with the $3,000 log
requirement to financial institutions against its benefits to the law
enforcement community. Treasury believes that Section 103.29 imposes an
expensive and time-consuming burden on financial institutions and that
its recordkeeping requirements can be reduced substantially without
compromising its deterrent effect or utility to law enforcement.
In reaching this determination, Treasury consulted with the Bank
Secrecy Act Advisory Group (Advisory Group), a committee comprising 30
representatives from the financial services industry, trades and
businesses, and state and federal government. The Advisory Group stated
that the financial institution's resources could be more effectively
devoted to the detection and reporting of suspicious transactions and
implementation of ``know your customer'' programs and procedures.
Treasury expects to issue a Notice of Proposed Rulemaking outlining the
elements of anti-money laundering programs, including ``know your
customer'' policies and procedures incorporating, among other things,
verification of identity when establishing a customer relationship, and
suspicious transaction reporting. In light of these initiatives,
Treasury has determined that Section 103.29 should be modified to
lessen the amount of information that must be obtained and recorded and
to permit retention of this information in records kept in the ordinary
course of business, in a manner consistent with the record systems that
may already exist in financial institutions.
Recordkeeping Required
Today's rule requires deposit accountholders' financial
institutions when issuing or selling a bank check or draft, cashier's
check, money order or traveler's check for $3,000 or more in currency
to obtain and maintain records of: the name of the purchaser; the date
of purchase; and, the type(s), serial number, and the amount in dollars
of each of the instrument(s) purchased. The financial institution must
verify that the purchaser is a deposit accountholder and has been
identified previously, or verify his or her identity and record the
method of verification.
The new rule requires a financial institution issuing or selling
the same monetary instruments to a person that does not have a deposit
account to obtain and maintain records of: the name, address, social
security or alien identification number and date of birth of the
purchaser; the date of purchase; and, the type(s), serial number and
the amount in dollars of each of the instrument(s) purchased. The
financial institution must verify the purchaser's identity and record
the method of verification and specific identifying information (e.g.
state of issuance and number of driver's license).
Financial institutions must continue to treat contemporaneous
purchases by an individual as one purchase. Multiple purchases by an
individual must also still be treated as one purchase if they are known
to the financial institution. Information to be maintained may be
recorded on copies of, or other records relating to, the instruments
purchased. All records must still be maintained for five years and made
available to the Secretary upon request at any time. As with all
records required to be maintained under the BSA, the records must be
filed or stored in a way as to be accessible within a reasonable period
of time. Section 103.38.
Much of the information, required formerly to be kept in
centralized chronological logs, is available generally in account or
other records, or on the originals or copies of the monetary
instruments. These copies, along with other records kept in the
ordinary course of business, may satisfy the requirements of this Final
Rule and may be kept in any format. These records must be accessible
within a reasonable period of time, taking into consideration the
nature of the record, and the amount of time expired since the record
was made.
Recordkeeping Requirements Eliminated
To relieve the burden imposed on financial institutions by Section
103.29, today's Final Rule reduces substantially the amount of
information required to be maintained and eliminates the requirement
for a centralized chronological log. Because Treasury is reducing
requirements already imposed by Section 103.29 of the BSA regulations,
and not adding any new requirements, this rule is published as a Final
Rule, effective upon publication in the Federal Register. For the sake
of clarity and for ease of understanding, amended Section 103.29 is
published in its entirety.
Information Eliminated
Treasury rescinds the requirement for centralized chronological
log(s) for sales of monetary instruments. Instead, financial
institutions will be required to obtain and maintain records of certain
information and may keep them in any format.
In the case of deposit accountholders, Treasury eliminates the
requirement to log the purchaser's account number, the branch where the
purchase occurred, and the requirement to note on the log whether the
transaction is part of a multiple sale.
In the case of persons who do not hold deposit accounts with the
financial institution, Treasury eliminates the requirement to obtain
and record information regarding the person(s) ``on whose behalf'' the
instrument is being purchased, the branch where the purchase occurred,
payee(s) on each cashier's check and bank checks and drafts purchased,
and the amount of the purchase in currency. The requirement to note
whether the transaction is part of a multiple sale is also eliminated.
Although Treasury rescinds the requirement to record whether a given
transaction is part of a multiple sale, Treasury retains the
requirement that a financial institution treat as a single purchase,
multiple sales to an individual of which the institution has knowledge.
Conclusion
Treasury is rescinding those provisions of Section 103.29 as
described above and clarifying revised recordkeeping requirements.
Executive Order 12866
This Final Rule is not a ``significant'' rule for purposes of
Executive Order 12866. Consistent with that Order, it reduces
regulatory burden. It rescinds a requirement that financial
institutions maintain centralized chronological log(s) of the issuance
or sale for cash of certain monetary instruments, and substantially
reduces data required to be recorded regarding such issuances or sales.
Therefore, it is not anticipated to have an annual effect on the
economy of $100 million or more. Rather, it will reduce the costs of
doing business for financial institutions. It will not affect adversely
in a material way the economy, a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or state,
local, or tribal governments or communities. It is not inconsistent
with, nor does it interfere with actions taken or planned by other
agencies. Finally, it raises no novel legal or policy issues. A cost
and benefit analysis, therefore, is not required.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, the
provisions of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., do
not apply.
Paperwork Reduction Act
The collection of information requirements contained in this Final
Rule has been reviewed and approved previously by the Office of
Management and Budget for review in accordance with the Paperwork
Reduction Act of 1980 (under control number 1505-0063).
Drafting Information
The principal author of this document is the Office of Financial
Enforcement.
List of Subjects in 31 CFR Part 103
Authority delegations (Government agencies), Banks and banking,
Currency, Foreign banking, Investigations, Law enforcement, Reporting
and recordkeeping requirements, Taxes.
Amendment
For the reasons set forth in the preamble, 31 CFR Part 103 is
amended as set forth below:
PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND
FOREIGN TRANSACTIONS
1. The authority citation for Part 103 is revised to read as
follows:
Authority: Pub. L. 91-508, Title I, 84 Stat. 1114 (12 U.S.C.
1829b and 1951-1959); 31 U.S.C. 5311-5328.
2. Section 103.29 is revised to read as follows:
Sec. 103.29 Purchases of bank checks and drafts, cashier's checks,
money orders and traveler's checks.
(a) No financial institution may issue or sell a bank check or
draft, cashier's check, money order or traveler's check for $3,000 or
more in currency unless it maintains records of the following
information, which must be obtained for each issuance or sale of one or
more of these instruments to any individual purchaser which involves
currency in amounts of $3,000-$10,000 inclusive:
(1) If the purchaser has a deposit account with the financial
institution:
(i)(A) The name of the purchaser;
(B) The date of purchase;
(C) The type(s) of instrument(s) purchased;
(D) The serial number(s) of each of the instrument(s) purchased;
and
(E) The amount in dollars of each of the instrument(s) purchased.
(ii) In addition, the financial institution must verify that the
individual is a deposit accountholder or must verify the individual's
identity. Verification may be either through a signature card or other
file or record at the financial institution provided the deposit
accountholder's name and address were verified previously and that
information was recorded on the signature card or other file or record;
or by examination of a document which is normally acceptable within the
banking community as a means of identification when cashing checks for
nondepositors and which contains the name and address of the purchaser.
If the deposit accountholder's identity has not been verified
previously, the financial institution shall verify the deposit
accountholder's identity by examination of a document which is normally
acceptable within the banking community as a means of identification
when cashing checks for nondepositors and which contains the name and
address of the purchaser, and shall record the specific identifying
information (e.g., State of issuance and number of driver's license).
(2) If the purchaser does not have a deposit account with the
financial institution:
(i)(A) The name and address of the purchaser;
(B) The social security number of the purchaser, or if the
purchaser is an alien and does not have a social security number, the
alien identification number;
(C) The date of birth of the purchaser;
(D) The date of purchase;
(E) The type(s) of instrument(s) purchased;
(F) The serial number(s) of the instrument(s) purchased; and
(G) The amount in dollars of each of the instrument(s) purchased.
(ii) In addition, the financial institution shall verify the
purchaser's name and address by examination of a document which is
normally acceptable within the banking community as a means of
identification when cashing checks for nondepositors and which contains
the name and address of the purchaser, and shall record the specific
identifying information (e.g., State of issuance and number of driver's
license).
(b) Contemporaneous purchases of the same or different types of
instruments totaling $3,000 or more shall be treated as one purchase.
Multiple purchases during one business day totaling $3,000 or more
shall be treated as one purchase if an individual employee, director,
officer, or partner of the financial institution has knowledge that
these purchases have occurred.
(c) Records required to be kept shall be retained by the financial
institution for a period of five years and shall be made available to
the Secretary upon request at any time.
Dated: September 20, 1994.
Stanley E. Morris,
Director, Financial Crimes Enforcement Network.
[FR Doc. 94-25490 Filed 10-14-94; 8:45 am]
BILLING CODE 4810-25-P
