Amendment to Bank Secrecy Act Regulations Requiring Nonfinancial Trades or Businesses to Report Certain Currency Transactions

Monday,
December 31, 2001
Part VI
Department of the
Treasury
Internal Revenue Service 26 CFR Part 1 31 CFR Part 103 Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations—Requirement that Nonfinancial Trades or Businesses Report Certain Currency Transactions; Interim Rule, Final and Proposed Rules

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: Interim rule. SUMMARY: This document contains an interim rule amending 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: This interim rule is effective as of January 1, 2002. 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
This document adds, as an interim rule, a new section 31 CFR 103.30. The Interim Rule is adopted to implement the terms of 31 U.S.C. 5331, which was 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. Interim 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 Interim 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 Interim 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 for the Interim Rule to 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 Interim Rule requires 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 Interim 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. Regulatory Flexibility Act
The provisions of the Regulatory Flexibility Act relating to initial and final regulatory flexibility analysis (5 U.S.C. 604) are not applicable to this Interim Rule because FinCEN was not required to publish a notice of proposed rulemaking under 5 U.S.C. 553 or any other law.
V. Paperwork Reduction Act
This regulation is being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collection of information contained in this regulation has been reviewed under the requirements of the Paperwork Reduction Act (44 U.S.C. 3507(j)) and approved by the Office of Management and Budget (OMB) under control number 1506–0018. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. To submit comments concerning the collection of information described in this Interim Rule, please refer to the companion Notice of Proposed Rulemaking published elsewhere in this issue of the Federal Register.