Advance Notice of Proposed Rulemaking on Provision of Banking Services to Money Services Businesses

1 31 U.S.C. 5312(a)(2)(J), (K), (R), and (V). 2 31 CFR 103.11(uu). 3 67 FR 21114 (Apr. 29, 2002); 31 CFR 103.125. 4 31 CFR 103.22. 5 65 FR 13683 (Mar. 14, 2000); 31 CFR 103.20. 6 31 CFR 103.29. 7 31 CFR 103.37. 8 31 CFR 103.33(f)–(g). 9 64 FR 45438 (Aug. 20, 1999); 31 CFR 103.41. 10 31 CFR 103.56(b)(8). DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA85 Financial Crimes Enforcement Network; Provision of Banking Services to Money Services Businesses AGENCY: Financial Crimes Enforcement Network, Department of the Treasury. ACTION: Advance notice of proposed rulemaking. SUMMARY: We are issuing this advance notice of proposed rulemaking (‘‘Advance Notice’’) as a part of our ongoing effort to address, in the context of the Bank Secrecy Act, the issue of access to banking services by money services businesses. Both the banking industry and the money services business industry have expressed concerns with regard to the impact of Bank Secrecy Act regulations on the ability of money services businesses to open and maintain accounts and obtain other banking services at banks and other depository institutions. Due to the concerns about the effect of regulatory requirements on the provision of banking services to money services businesses, we, through the Non-bank Financial Institutions and the Examinations subcommittees of the Bank Secrecy Act Advisory Group, held a fact-finding meeting on March 8, 2005, to hear directly from banks, other depository institutions, and money services businesses concerning the challenges that they face on this issue. Subsequent to the fact-finding meeting, we took a number of steps to address the concerns raised by these industries, including working together with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision (collectively, the ‘‘Federal Banking Agencies’’) to issue guidance, which was incorporated into the June 2005 Federal Financial Institutions Examination Council Bank Secrecy Act/ Anti-Money Laundering Examination Manual. We understand that many banks and other depository institutions (collectively, ‘‘banking institutions’’) remain wary of dealing with money services businesses, and that money services businesses continue to experience difficulties in obtaining and maintaining bank accounts and other banking services. This Advance Notice solicits updated facts and recommendations regarding the extent to which ongoing concerns are based in the Bank Secrecy Act, and regarding what additional guidance or regulatory action under the Bank Secrecy Act, if any, would be appropriate to address these concerns. DATES: Written comments may be submitted on or before May 9, 2006. ADDRESSES: You may submit comments, identified by RIN 1506-AA85, by any of the following methods:

• Federal E-rulemaking Portal:
  http://www.regulations.gov. Follow the instructions for submitting comments.
• E-mail:
  regcomments@fincen.treas.gov. Include RIN 1506-AA85 in the subject line of the message.
• Mail: Financial Crimes Enforcement
  Network, P.O. Box 39, Vienna, VA

22183. Include RIN 1506-AA85 in the
       body of the text.
       Instructions: It is preferable for comments to be submitted by electronic mail because paper mail in the Washington, DC area may be delayed. Please submit comments by one method only. All submissions received must include the agency name and the Regulatory Information Number (RIN) for this rulemaking. All comments received will be posted without change to http://www.fincen.gov, including any personal information provided. Comments may be inspected at the Financial Crimes Enforcement Network between 10 a.m. and 4 p.m. in the reading room in Washington, DC. Persons wishing to inspect the comments submitted must request an appointment by telephone at (202) 354– 6400 (not a toll-free number). FOR FURTHER INFORMATION CONTACT:
       Regulatory Policy and Programs Division, Financial Crimes Enforcement Network at (800) 949–2732 (toll-free number). SUPPLEMENTARY INFORMATION:
       I. Background
       The Bank Secrecy Act authorizes the Secretary of the Treasury to issue regulations requiring all financial institutions (as defined therein) to maintain records or file reports that are determined to have a high degree of usefulness in criminal, tax, or regulatory investigations, or in the conduct of intelligence or counter-intelligence activities, including analysis, to protect against international terrorism, or to implement counter-money laundering programs and compliance procedures. The Secretary’s authority to administer the Bank Secrecy Act has been delegated to the Director of the Financial Crimes Enforcement Network. The Bank Secrecy Act defines currency exchangers; issuers, redeemers, or cashiers of travelers’ checks, checks, money orders, or similar instruments; the United States Postal Service; and persons involved in the transmission of funds (collectively, ‘‘money services businesses’’) as financial institutions for purposes of the Act.1 Regulations issued by the Financial Crimes Enforcement Network further define the universe of money services businesses.2 Like other financial institutions under the Bank Secrecy Act, money services businesses are required to: establish written anti-money laundering programs pursuant to section 352 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, Pub. L. No. 107–56 (the PATRIOT Act); 3 file Currency Transaction Reports 4 and Suspicious Activity Reports (for certain money services businesses); 5 maintain certain records with regard to customers who purchase monetary instruments with cash; 6 maintain certain records with regard to currency dealing or exchange; 7 and record and retain certain information about funds transfers and include certain information in the transmittals of orders for such funds transfers.8 Money services businesses also are required to register with the Department of the Treasury 9 and are examined for Bank Secrecy Act compliance by the Internal Revenue Service.10 In response to concerns expressed by both money services businesses and banking institutions, on March 8, 2005, we, through the Non-bank Financial Institutions and the Examinations subcommittees of the Bank Secrecy Act Advisory Group, held a fact-finding meeting on the following issues: (1) Specific challenges and issues encountered by money services businesses in obtaining banking services; (2) specific challenges and issues encountered by banking institutions seeking to provide banking services to money services businesses; (3) the understanding at that time by banking institutions of the various activities undertaken by money services businesses and how they may present different levels of risk; and (4) the dsatterwhite on PROD1PC61 with PROPOSALS