E9-27449. Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations-Administrative Ruling System

AGENCY:

Financial Crimes Enforcement Network (“FinCEN”), Treasury.

ACTION:

Final rule.

SUMMARY:

FinCEN is issuing this final rule to amend the procedures for publicly issuing an administrative ruling^[1] relating to the Bank Secrecy Act (“BSA”). Reliance on these administrative rulings is limited to persons who are similarly situated to the original recipient of an applicable administrative ruling. To disseminate its interpretations in a more timely and efficient manner, FinCEN will use its website to make these administrative rulings available to the public.^[2]

DATES:

Effective Date: December 17, 2009.

FOR FURTHER INFORMATION CONTACT:

Regulatory Policy and Programs Division, FinCEN [phone] and select option 6.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory and Regulatory Background

The BSA, Titles I and II of Public Law 91-508, as amended, codified at 12 U.S.C. 1829b, 1951-1959, and 31 U.S.C. 5311-5314 and 5316-5332, authorizes the Secretary of the Treasury (the “Secretary”), among other things, to issue regulations requiring financial institutions to keep records and file reports that the Secretary determines “have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence matters, including analysis, to protect against international terrorism.” ^[3] The Secretary's authority to administer the BSA and its implementing regulations has been delegated to the Director of FinCEN.^[4] FinCEN has interpreted the BSA through implementing regulations that appear at 31 CFR Part 103.

In 1987, the Department of the Treasury's Office of Financial Enforcement ^[5] established an administrative ruling system to ensure uniform guidance and effective and efficient dissemination of official Treasury interpretations of the BSA.^[6] The administrative ruling system was designed to: provide financial institutions with binding ruling interpretations of Part 103; and to provide interpretations of hypothetical situations.^[7] 31 CFR 103.85 requires that the interpretations intended to have precedential value be published periodically in the Federal Register and yearly in the Appendix to Part 103.

B. Section-by-Section Analysis

FinCEN is amending section 103.85 by removing the requirement that rulings be published in the Federal Register before similarly situated persons other than the recipients of the rulings can rely upon them. In addition, FinCEN is no longer publishing these administrative rulings in an Appendix to Part 103. Instead, these rulings will be available on the FinCEN Web site or by mail per written request.^[8]

Using alternatives to the Federal Register to provide notice to the public of administrative rulings is not uncommon. Many agencies publish bulletins containing their administrative rulings including the Office of the Comptroller of Currency, Internal Revenue Service (“IRS”), and U.S. Customs Service and Border Protection. Specifically, in July of 1955, the IRS implemented the Internal Revenue Bulletin (“IRB”) under Revenue Procedure 55-1 to “* * * promote uniform application of the tax laws by Service employees and to assist taxpayers in attaining maximum voluntary compliance.” ^[9] At the time, the IRS determined that the IRB was the most appropriate forum to provide notice to the public of its administrative rulings.

In 1987, when implementing the BSA administrative ruling system, the Department of the Treasury did not have a bulletin for publishing its determinations concerning the BSA. Therefore, the Department of the Treasury determined that publishing the administrative rulings in the Federal Register ensured proper distribution to the public. However, since implementation of the BSA administrative ruling system, various electronic and other means of disseminating information to the public have become available. In particular, FinCEN, like many other administrative agencies, has developed a Web site to provide notice of agency actions to the public. The current address for the Web site is: www.fincen.gov/​statutes_​regs/​rulings/​. Similar to the IRS's determination in creating the IRB in 1955, FinCEN, in promoting uniform application and compliance with the BSA, has determined that publishing administrative rulings on the FinCEN website distributes information to the public more broadly and more expediently than publication in the Federal Register. There are a variety of persons who are affected by the BSA. The majority of such affected persons are probably more familiar with the Internet than with the Federal Register. Communications with these affected persons through FinCEN's regulatory Helpline has shown that the majority of callers referred to the FinCEN website as a source for information. Also, when responding to questions from affected persons, FinCEN staff members regularly refer individuals to the FinCEN website for information. Because FinCEN's website is specifically tailored to the BSA, affected persons are not required to sift through the volumes of information available in the Federal Register before finding a relevant interpretive rule addressing the affected person's issue. Considering the time and resources FinCEN allocates to updating the website and increasing the website's usability, FinCEN believes that it would be inefficient and unnecessary to also publish administrative rulings in the Federal Register.

II. Proposed Location in Chapter X

As discussed in a previous Federal Register Notice, 73 FR 66414, Nov. 7, 2008, FinCEN is separately proposing to remove Part 103 of Chapter I of Title 31, Code of Federal Regulations, and add Chapter 1000 to 1099 (“Chapter X”). If the notice of proposed rulemaking for Chapter X is finalized, the changes in the present final rule would be reorganized according to the proposed Chapter X. The planned reorganization will have no substantive effect on the regulatory changes herein, except that the words “part 103” in the first sentence of 31 CFR 103.85 would be replaced by “this chapter.” The regulatory changes of this specific rulemaking would be renumbered according to the proposed Chapter X as follows:

(a) 103.85 would be moved to 1010.715.

(b) 103.81 would be moved to 1010.711

(c) Appendix A to Part 103—Administrative Rulings would be removed in its entirety and Appendix E to Chapter X—Administrative Rulings would not appear.

III. Notice and Comment Under the Administrative Procedure Act

The administrative ruling procedural changes at 31 CFR 103.85 will take effect 30 days after publication in the Federal Register.

The Administrative Procedure Act (“APA”) allows an agency to dispense with notice and comment for “rules of agency organization, procedure, or practice.” ^[10] This amendment promulgates general statements of policy, procedures and practices governing the scope and operation of an administrative ruling system. Hence, pursuant to 5 U.S.C. 553(b)(A), notice and public procedure are unnecessary.

IV. Regulatory Flexibility Act

Since no notice of proposed rulemaking is required by the APA (5 U.S.C. 551 et seq.), or by any other statute, this document is not subject to the provisions of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.).

V. Paperwork Reduction Act

The collection of information requirements have been reviewed and approved by the Office of Management and Budget under section 3507 of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d). (OMB Control No. 1506-0009). Under the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

VI. Executive Order 12866

As this rulemaking primarily deals with agency management, it has been determined not to be a significant regulatory action for purposes of Executive Order 12866. Accordingly, a regulatory impact analysis is not required.

VII. Unfunded Mandates Act of 1995

Since no notice of proposed rulemaking is required by the APA (5 U.S.C. 551 et seq.), or by any other statute, FinCEN has determined that it is not required to prepare a written statement under section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4 (March 22, 1995).

List of Subjects in 31 CFR Part 103

• Administrative practice and procedure
• Banks, banking
• Brokers
• Currency
• Foreign banking
• Foreign currencies
• Gambling
• Investigations
• Penalties
• Reporting and recordkeeping requirements
• Securities
• Terrorism

Authority and Issuance

For the reasons set forth in the preamble, part 103 of title 31 of the Code of Federal Regulations is amended as follows:

PART 103—FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FINANCIAL TRANSACTIONS

1. The authority citation for part 103 continues to read as follows:

Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314, 5316-5332; title III, secs. 311, 312, 313, 314, 319, 326, 352, Public Law 107-56, 115 Stat. 307.

2. Section 103.85 is revised to read as follows:

§ 103.85

Issuing rulings.

The Director, FinCEN, or his designee may issue a written ruling interpreting the relationship between part 103 and each situation for which the ruling has been requested in conformity with § 103.81. A ruling issued under this section shall bind FinCEN only in the event that the request describes a specifically identified actual situation. A ruling issued under this section shall have precedential value, and hence may be relied upon by others similarly situated, only if FinCEN makes it available to the public through publication on the FinCEN website under the heading “Administrative rulings” or other appropriate forum. All rulings with precedential value will be available by mail to any person upon written request specifically identifying the ruling sought. FinCEN will make every effort to respond to each requestor within 90 days of receiving a request.

Appendix A—Administrative Rulings [Removed]

3. Appendix A to part 103 is removed.

Dated: November 9, 2009.

James H. Freis, Jr.,

Director, Financial Crimes Enforcement Network.

Footnotes

1.  “Administrative ruling” is the title FinCEN uses to represent documents commonly referred to as interpretative rules.

2.  FinCEN's criteria for determining whether a particular ruling will be published is located under the heading “Rulings” on the FinCEN Web site at http://www.fincen.gov.

3.  31 U.S.C. 5311.

4.  See Treasury Order 180-01 (Sept. 26, 2002).

5.  The Office of Financial Enforcement originally had authority to issue regulations implementing the BSA. In 1994, the Treasury Department merged the Office of Financial Enforcement with FinCEN and granted FinCEN the authority to implement the BSA.

6.  See 52 FR 35545 (Sep. 22, 1987) (final rule instituting an administrative ruling system).

7.  If the subject situation is hypothetical, it must include “a statement justifying why the particular situation described warrants the issuance of a ruling.” 31 CFR 103.81(6).

8.  Administrative Rulings 88-5, 89-5, 92-1 and 92-2 will be posted on FinCEN's public Web site. Administrative Rulings 88-1, 88-3, 88-4, 89-1, and 89-2 have been superseded by changes to 31 CFR 103.22 and 31 U.S.C. 5318 and are hereby formally rescinded under 31 CFR 103.86(a)(1) and (3). These administrative rulings will not be available on the website.

9.  See Rev. Proc. 68-44 (July 1968) (Discussion of the objectives of the IRB).

10.  5 U.S.C. § 553(b).