Amendment to Bank Secrecy Act Regulations -- Requirement that Nonfinancial Trades or Businesses Report Certain Currency Transactions

1Language expanding the scope of the Bank Secrecy Act to intelligence or counter-intelligence activities to protect against international terrorism was added by Section 358 of the USA Patriot Act of 2001. DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA25 Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations— Requirement That Nonfinancial Trades or Businesses Report Certain Currency Transactions AGENCY: Financial Crimes Enforcement Network (‘‘FinCEN’’), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document proposes to amend the Bank Secrecy Act regulations to require that persons who, in the course of conducting a nonfinancial trade or business, receive more than $10,000 in coins or currency in one transaction (or two or more related transactions), file a report of such transaction with the Treasury Department. DATES: Written comments on all aspects of the proposed rule are welcome and must be received on or before March 1, 2002. ADDRESSES: Written comments should be submitted to: Cash Reporting-Section 5331 Comments, P.O. Box 1618, Vienna, VA 22183–1618. Comments may also be submitted by electronic mail to the following Internet address:
regcomments@fincen.treas.gov with the caption in the body of the text, ‘‘Attention:
Proposed Rule—Cash Reporting-Section 5331.’’ For additional instructions on the submission of comments, see SUPPLEMENTARY INFORMATION under the heading ‘‘Submission of Comments.’’ Inspection of comments: Comments may be inspected at FinCEN between 10 a.m. and 4 p.m., in the FinCEN Reading Room in Washington, DC. Persons wishing to inspect the comments submitted must request an appointment by telephoning (202) 354–6400. FOR FURTHER INFORMATION CONTACT:
Cynthia L. Clark, Deputy Chief Counsel, or Laurence J. Levine, Attorney-Advisor, Office of Chief Counsel, FinCEN, (703) 905–3590. SUPPLEMENTARY INFORMATION:
I. Introduction
Published elsewhere in this issue of the Federal Register is an interim rule adding a new section 31 CFR 103.30. The text of the interim rule is the same as the text of this notice of proposed rulemaking. This document proposes a new
section 31 CFR 103.30 in order to
implement 31 U.S.C. 5331, as added to the Bank Secrecy Act by section 365 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, Public Law 107–56 (October 26, 2001).
II. Statutory Provisions
The Bank Secrecy Act, Titles I and II of Public Law 91–508, as amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311, et seq., authorizes the Secretary of the Treasury, inter alia, to issue regulations requiring financial institutions to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, and regulatory matters, or in the conduct of intelligence or counter-intelligence activities, to protect against international terrorism, and to implement counter-money laundering programs and compliance procedures.1 Regulations implementing Title II of the Bank Secrecy Act (codified at 31 U.S.C. 5311, et seq.), appear at 31 CFR part
103. The authority of the Secretary to
administer Title II of the Bank Secrecy Act has been delegated to the Director of FinCEN. Under 31 U.S.C. 5331, any person who is engaged in a trade or business and who, in the course of such trade or business, receives more than $10,000 in coins or currency in one transaction (or two or more related transactions) is required to file a report with respect to such transaction (or related transactions) with the Treasury Department. Reporting under section 5331 does not apply to amounts received in a transaction reported under 31 U.S.C. 5313 and the accompanying regulations. For purposes of section 5331, currency includes foreign currency, and to the extent provided in regulations, any monetary instrument, whether or not in bearer form, with a face amount of not more than $10,000. Such monetary instruments shall not include any check drawn on the account of the writer in a financial institution referred to in subparagraph (A), (B), (C), (D), (E), (F), (G), (J), (K), (R), or (S) of 31 U.S.C. 5312 (a)(2). Reports required under section 5331 must be in such form as the Secretary may prescribe. The reports must contain: (1) The name, address, and such other identification information as the Secretary may require, of the person from whom the coins or currency was received; (2) the amount of coins or currency received; (3) the date and nature of the transaction; and (4) such other information, including the identification of the person filing the report, as the Secretary may prescribe.
III. Proposed Rule
With a minor exception, section 5331 requires reporting of the same transaction that must be reported to the Internal Revenue Service (‘‘IRS’’) under
section 6050I of title 26, United States
Code, and 26 CFR 1.6050I–1. Section 5331 does not require reporting of currency received by clerks of court. Cf. 26 U.S.C. 6050I(g). Further, section 5331 does not require the person making a report under section 5331 to furnish to the person whose name is required to be set forth on the report a statement concerning the report. Cf. 26 U.S.C. 6050I(e). Because section 5331 is substantially similar to 26 U.S.C. 6050I, the proposed rule provides that persons required to report a transaction under section 5331 must make that report by filing a joint FinCEN/IRS form with the IRS. Under this dual-reporting regime, only one form is required to be filed for a transaction subject to both section 5331 and section 6050I of title 26. Thus, the proposed rule imposes no new reporting or record-keeping burden on persons required to report certain transactions under section 5331. Because of the similarity between the provisions, FinCEN believes it is appropriate that the proposed rule adopt the same rules for multiple payments, monetary instruments, and designated reporting transactions as appear in the regulations under section 6050I. Thus, for example, the proposed rule would require that recipients aggregate an initial payment and subsequent payments such that a report is required if the aggregation exceeds $10,000 within one year of the initial payment. In addition, the proposed rule, like 26 CFR 1.6050I–1, includes within the definition of currency monetary instruments such as cashiers’ checks, bank drafts, traveler’s checks or money orders, not having a face amount of more than $10,000, when such monetary instruments are received in a ‘‘designated reporting transaction,’’ i.e., certain retail sales as defined in the regulation.
IV. Submission of Comments
An original and four copies of any comment (other than one sent electronically) must be submitted. All comments will be available for public inspection and copying, and no material in any such comments, including the name of any person submitting comments, will be recognized as