Amendment to the Bank Secrecy Act Regulations – Defining Mutual Funds as Financial Institutions

1Language expanding the scope of the BSA was added by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (‘‘USA PATRIOT Act’’), Public Law 107–56. 2 31 U.S.C. 5312(a)(2)(I). 3See 15 U.S.C. 80a–3. 4 15 U.S.C. 80a–4; 15 U.S.C. 80a–5(a)(1); 15 U.S.C. 80a–2(a)(32). Face-amount certificate companies and unit investment trusts are excluded from the definition of ‘‘management company.’’ 15 U.S.C. 80a–4(3). 5Anti-Money Laundering Programs for Mutual Funds, 67 FR 21117 (April 29, 2002); Customer Identification Programs for Mutual Funds, 68 FR 25131 (May 9, 2003); Amendment to the Bank Secrecy Act Regulations—Requirement That Mutual Funds Report Suspicious Activity, 71 FR 26213 (May 4, 2006); Anti-Money Laundering Programs; Special Due Diligence Programs for Certain Foreign Accounts, 71 FR 496 (Jan. 4, 2006); Anti-Money Continued Epidemiology & Statistics Unit, Research and Scientific Affairs, January 2009.
10. Mannino, D. M. et al., ‘‘Surveillance for
Asthma—United States, 1980–1999,’’ Morbidity and Mortality Weekly Report, 51(SS01):1–13, March 29, 2002.
11. Analysis completed by FDA based on
information provided by IMS Health, IMS National Sales Perspective (TM), 2009, extracted September 2009. These data can be purchased from IMS Health. Please send all inquiries to: IMS Health, Attn: Brian Palumbo, Account Manager, 660 West Germantown Pike, Plymouth Meeting, PA 19462.
12. Rozek, R. P., and E. R. Bishko,
‘‘Economic Issues Raised in the FDA’s Proposed Rule on Removing the Essential￾Use Designation for Albuterol MDIs,’’ National Economic Research Associates, August 13, 2004 (FDA Docket No. 2003P– 0029/C25).
13. Hendeles, L. G, L. Colice, and R. J.
Meyer, ‘‘Withdrawal of Albuterol Inhalers Containing Chlorofluorocarbon Propellants,’’ New England Journal of Medicine, 356:1344– 1351, March 29, 2007.
14. Goldman, D. P. et al., ‘‘Pharmacy
Benefits and the Use of Drugs by the Chronically Ill,’’ The Journal of the American Medical Association, 291:2344–2350, May 19, 2004.
15. DeNavas-Walt, C., B. D. Proctor, and J.
C. Smith, U.S. Census Bureau, Current
Population Reports, P60–236(RV), Income, Poverty, and Health Insurance Coverage in the United States: 2008, Table 7, p. 21, 2009. List of Subjects in 21 CFR Part 2 Administrative practice and procedure, Cosmetics, Drugs, Foods.

• Therefore, under the Federal Food,
  Drug, and Cosmetic Act and the Clean Air Act and under authority delegated to the Commissioner of Food and Drugs, after consultation with the Administrator of the Environmental Protection Agency, 21 CFR part 2 is amended as follows:
  PART 2—GENERAL ADMINISTRATIVE
  RULINGS AND DECISIONS
• 1. The authority citation for 21 CFR
     part 2 continues to read as follows:
     Authority: 15 U.S.C. 402, 409; 21 U.S.C. 321, 331, 335, 342, 343, 346a, 348, 351, 352, 355, 360b, 361, 362, 371, 372, 374; 42 U.S.C. 7671 et seq. § 2.125 [Amended]
• 2. Effective June 14, 2010, in § 2.125,
     remove and reserve paragraphs (e)(2)(iii) and (e)(4)(vii). § 2.125 [Amended]
• 3. Effective December 31, 2010, in
     § 2.125, remove and reserve paragraphs (e)(1)(v) and (e)(4)(iv). § 2.125 [Amended]
• 4. Effective June 30, 2011, in § 2.125,
     remove and reserve paragraph (e)(1)(iii). § 2.125 [Amended]
• 5. Effective December 31, 2013, in
     § 2.125, remove and reserve paragraphs (e)(2)(iv) and (e)(4)(viii). Dated: April 8, 2010. Leslie Kux, Acting Assistant Commissioner for Policy. [FR Doc. 2010–8467 Filed 4–13–10; 8:45 am] BILLING CODE 4160–01–S DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA93 Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations; Defining Mutual Funds as Financial Institutions. AGENCY: Financial Crimes Enforcement Network (‘‘FinCEN’’), Treasury. ACTION: Final rule. SUMMARY: FinCEN is issuing this final rule to include mutual funds within the general definition of ‘‘financial institution’’ in regulations implementing the Bank Secrecy Act (‘‘BSA’’). The final rule subjects mutual funds to rules under the BSA on the filing of Currency Transaction Reports (‘‘CTRs’’) and on the creation, retention, and transmittal of records or information for transmittals of funds. Additionally, the final rule amends the definition of mutual fund in the rule requiring mutual funds to establish anti-money laundering (‘‘AML’’) programs. The amendment harmonizes the definition of mutual fund in the AML program rule with the definitions found in the other BSA rules to which mutual funds are subject. Finally, the final rule amends the rule that delegates authority to examine institutions for compliance with the BSA. The amendment makes it clear that FinCEN has not delegated to the Internal Revenue Service the authority to examine mutual funds for compliance with the BSA, but rather to the U.S. Securities and Exchange Commission (‘‘SEC’’) as the federal functional regulator of mutual funds. DATES: Effective Date: This rule is effective May 14, 2010. Compliance Date: Mutual funds must comply with 31 CFR 103.33 by January 10, 2011. The compliance date for all other aspects of this rulemaking is the same as the effective date. FOR FURTHER INFORMATION CONTACT: The FinCEN regulatory helpline at (800) 949–2732 and select Option 6. SUPPLEMENTARY INFORMATION:
     I. Background
     A. Statutory Provisions.
     The Bank Secrecy Act, Public Law 91–508, codified as amended at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311–5314; 5316–5332, authorizes the Secretary of the Treasury (‘‘Secretary’’) 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 investigations or proceedings, or in the conduct of intelligence or counter-intelligence activities, including analysis, to protect against international terrorism, and to implement anti-money laundering programs and compliance procedures.1 Regulations implementing the BSA appear at 31 CFR part 103. The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN. The definition of ‘‘financial institution’’ in the BSA includes investment companies.2 The Investment Company Act of 1940, codified at 15 U.S.C. 80a–1 et seq. (the ‘‘Investment Company Act’’), defines ‘‘investment company’’ 3 and subjects investment companies to regulation by the SEC. B. Overview of Current Regulatory Provisions. Regulations implementing the BSA currently apply only to investment companies that are ‘‘open-end companies,’’ as the term is defined in the Investment Company Act. More commonly known as mutual funds, open-end companies are the predominant type of investment company. Open-end companies are management companies that offer or have outstanding securities that are redeemable at net asset value.4 Although FinCEN has issued individual rules that apply to mutual funds,5 FinCEN has not included