Financial Crimes Enforcement Network; Inflation Adjustment of Civil Monetary Penalties

DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Part 1010

Financial Crimes Enforcement Network; Inflation Adjustment of Civil Monetary Penalties

AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.

ACTION: Final rule.

SUMMARY: FinCEN is publishing this final rule to reflect inflation adjustments to its civil monetary penalties as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. This rule adjusts certain maximum civil monetary penalties within the jurisdiction of FinCEN to the amounts required by that Act.

DATES: Effective January 25, 2024.

FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section at 1-800-767-2825 or electronically at frc@fincen.gov.

SUPPLEMENTARY INFORMATION:

I. Background

To improve the effectiveness of civil monetary penalties (CMPs) and to maintain their deterrent effect, the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Act) [1] requires Federal agencies to adjust for inflation each CMP provided by law within the jurisdiction of the agency. Under the Act, agencies are required to adjust CMPs annually and publish these adjustments in the Federal Register.[2] Agencies are to make the adjustments without engaging in notice-and-comment rulemaking, and these adjustments may be immediately effective upon publication.[3] The Act provides that any increase in a CMP shall apply to CMPs that are assessed after the date the increase takes effect, regardless of whether the underlying violation predated such increase.[4] FinCEN publishes CMP inflation adjustments in its regulations at 31 CFR 1010.821.

[1] Public Law 101-410, as amended in 2015 by section 701 of Public Law 114-74 and codified as a note to 28 U.S.C. 2461.

[2] Act, sec. 4(a).

[3] Act, sec. 4(b)(2) (adjustments are to be made “notwithstanding” the rulemaking requirements of 5 U.S.C. 553 of the Administrative Procedure Act).

[4] The increased CMPs, however, apply only with respect to underlying violations occurring after November 2, 2015, the date of enactment of the most recent amendment to the Act. Act, sec. 6.

II. Method of Calculation

The method of calculating CMP adjustments applied in this final rule is determined by the Act. Under the Act and Office of Management and Budget (OMB) guidance, annual inflation adjustments are to be based on the percent change between the Consumer Price Index for all Urban Consumers (CPI-U) for the October preceding the date of the adjustment and the prior year's October CPI-U.[5] As set forth in OMB Memorandum M-24-07 of December 19, 2023, the adjustment multiplier for 2024 is 1.03241. To complete the 2024 annual adjustment, each current FinCEN CMP is multiplied by the 2024 adjustment multiplier. Under the Act, any increase in CMP must be rounded to the nearest multiple of $1.[6]

[5] Act, sec. 5; OMB Mem. M-24-07 (Dec. 19, 2023).

[6] Act, sec. 5(a). FinCEN previously applied a catch-up adjustment for each penalty subject to the Act in 2016 based on the year and corresponding amount(s) for which the maximum penalty or range of minimum and maximum penalties was established or last adjusted, whichever is later. See Civil Monetary Penalty Adjustment and Table, 81 FR 42503, 42504 (June 30, 2016). Because the year of establishment or last adjustment is different for different penalties, penalties that were of the same size when each was promulgated can have different values today if promulgated at different times.

This final rule lists adjusted CMPs associated with violations of the Corporate Transparency Act (CTA) [7] for the first time: specifically, the CMPs for beneficial ownership information (BOI) reporting violations (31 U.S.C. 5336(h)(3)(A)(i)) and for the unauthorized disclosure or use of BOI (31 U.S.C. 5336(h)(3)(B)(i)). These CMPs were established when the CTA became law in 2021, but were not published with prior adjustments because FinCEN's regulations implementing the CTA were then not yet effective.[8] Because these CTA-associated CMPs will be effective in 2024, they are listed in this adjustment. As these CMPs were established in 2021, they were also subject to the CMP adjustments imposed in 2022 and 2023, even though they were not published with those adjustments; accordingly, this rule applies the 2022, 2023, and 2024 adjustment multipliers to the CMPs established by the CTA.[9]

[7] The CTA is Title LXIV of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Public Law 116-283 (Jan. 1, 2021). The CTA is codified at 31 U.S.C. 5336.

[8] The CTA's BOI reporting requirements are implemented by regulations effective January 1, 2024, and the CTA's requirements regarding BOI access and safeguards are implemented by regulations effective February 20, 2024. See FinCEN, Beneficial Ownership Information Reporting Requirements, 87 FR 59498 (Sept. 30, 2022); FinCEN, Beneficial Ownership Information Access and Safeguards, 88 FR 88732 (Dec. 22, 2023).

[9] Under section 5(b)(2)(B) of the Act, the adjustment is to “be applied to the amount of the civil monetary penalty as it was most recently established or adjusted under a provision of law other than [the Act].” This amount is the penalty “established (i.e., as originally enacted by Congress), or last adjusted (i.e., by Congress in statute, or by the agency through regulation), whichever is later, other than pursuant to [Act].” OMB Mem. M-16-06 (Feb. 24, 2016). Because the CTA-associated CMPs were established by Congress in 2021 and have not since been adjusted by statute or regulation, they were subject to the 2022 and 2023 adjustments required by the Act, as well as the 2024 adjustment. FinCEN applied an adjustment multiplier of 1.06222 in 2022 and of 1.07745 in 2023 to CMPs. FinCEN, Inflation Adjustment of Civil Monetary Penalties, 87 FR 3433, 3434 (Jan. 24, 2022); FinCEN, Inflation Adjustment of Civil Monetary Penalties, 88 FR 3311, 3312 (Jan. 19, 2023).

Procedural Matters

1. Administrative Procedure Act

Section 4(b) of the Act requires agencies, beginning in 2017, to make annual adjustments for inflation to CMPs notwithstanding the rulemaking requirements of 5 U.S.C. 553. Additionally, the methodology used for adjusting CMPs for inflation is provided by statute, with no discretion provided to agencies regarding the substance of the adjustments for inflation to CMPs. Accordingly, prior public notice and an opportunity for public comment and a delayed effective date are not required for this rule. 2. Regulatory Flexibility Act

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply. 3. Executive Order 12866

This rule is not a significant regulatory action as defined in section

3(f) of Executive Order 12866, as amended. 4. Paperwork Reduction Act

The provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this rule because there are no new or revised recordkeeping or reporting requirements.

List of Subjects in 31 CFR Part 1010

Administrative practice and procedure, Aliens, Authority delegations (Government agencies), Banks and banking, Brokers, Business and industry, Commodity futures, Currency, Citizenship and naturalization, Electronic filing, Federal savings associations, Federal-States relations, Federally recognized tribes, Foreign persons, Holding companies, Indian law, Indians, Insurance companies, Investment advisers, Investment companies, Investigations, Law enforcement, Penalties, Reporting and recordkeeping requirements, Small businesses, Securities, Terrorism, Tribal government, Time.

Authority and Issuance

For the reasons set forth in the preamble, part 1010 of chapter X of title 31 of the Code of Federal Regulations is amended as follows:

PART 1010—GENERAL PROVISIONS

0 1. The authority citation for part 1010 continues to read as follows:

Authority: 12 U.S.C. 1829b and 1951-1960; 31 U.S.C. 5311-5314 and 5316-5336; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307; sec. 2006, Pub. L. 114-41, 129 Stat. 458-459; sec. 701, Pub. L. 114-74, 129 Stat. 599.

0 2. Amend Sec. 1010.821 by revising table 1 of Sec. 1010.821 to read as follows:

Sec. 1010.821 Penalty adjustment and table.

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                              Table 1 to Sec.   1010.821--Penalty Adjustment Table
----------------------------------------------------------------------------------------------------------------
                                                                                         Maximum penalty amounts
                                                                                         or range of minimum and
                                      Civil monetary penalty       Penalties as last     maximum penalty amounts
        U.S. Code citation                  description            amended by statute     for penalties assessed
                                                                                         on or after January 25,
                                                                                                   2024
----------------------------------------------------------------------------------------------------------------
12 U.S.C. 1829b(j)................  Relating to Recordkeeping                   $10,000                  $25,597
                                     Violations for Funds
                                     Transfers.
12 U.S.C. 1955....................  Willful or Grossly                           10,000                   25,597
                                     Negligent Recordkeeping
                                     Violations.
31 U.S.C. 5318(k)(3)(C)...........  Failure To Terminate                         10,000                   17,315
                                     Correspondent
                                     Relationship with Foreign
                                     Bank.
31 U.S.C. 5321(a)(1)..............  General Civil Penalty                25,000-100,000           69,733-278,937
                                     Provision for Willful
                                     Violations of Bank
                                     Secrecy Act Requirements.
31 U.S.C. 5321(a)(5)(B)(i)........  Foreign Financial Agency                     10,000                   16,117
                                     Transaction--Non-Willful
                                     Violation of Transaction.
31 U.S.C. 5321(a)(5)(C)(i)(I).....  Foreign Financial Agency                    100,000                  161,166
                                     Transaction--Willful
                                     Violation of Transaction.
31 U.S.C. 5321(a)(6)(A)...........  Negligent Violation by                          500                    1,394
                                     Financial Institution or
                                     Non-Financial Trade or
                                     Business.
31 U.S.C. 5321(a)(6)(B)...........  Pattern of Negligent                         50,000                  108,489
                                     Activity by Financial
                                     Institution or Non-
                                     Financial Trade or
                                     Business.
31 U.S.C. 5321(a)(7)..............  Violation of Certain Due                  1,000,000                1,731,383
                                     Diligence Requirements,
                                     Prohibition on
                                     Correspondent Accounts
                                     for Shell Banks, and
                                     Special Measures.
31 U.S.C. 5330(e).................  Civil Penalty for Failure                     5,000                   10,289
                                     To Register as Money
                                     Transmitting Business.
31 U.S.C. 5336(h)(3)(A)(i)........  Civil Penalty for                               500                      591
                                     Beneficial Ownership
                                     Information Reporting
                                     Violation.
31 U.S.C. 5336(h)(3)(B)(i)........  Civil Penalty for                               500                      591
                                     Unauthorized Disclosure
                                     or Use of Beneficial
                                     Ownership Information.
----------------------------------------------------------------------------------------------------------------

Andrea M. Gacki, Director, Financial Crimes Enforcement Network.

[FR Doc. 2024-01420 Filed 1-24-24; 8:45 am]

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