[Federal Register Volume 59, Number 199 (Monday, October 17, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-25490] [[Page Unknown]] [Federal Register: October 17, 1994] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY 31 CFR Part 103 Amendments to the Bank Secrecy Act Regulations Relating to Identification Required To Purchase Bank Checks and Drafts, Cashier's Checks, Money Orders, and Traveler's Checks AGENCY: Departmental Offices, Treasury. ACTION: Final Rule. ----------------------------------------------------------------------- SUMMARY: The Bank Secrecy Act prohibits financial institutions from issuing or selling bank checks or drafts, cashier's checks, money orders or traveler's checks for $3,000 or more in currency unless the financial institution verifies and records the identity of the purchaser. On May 15, 1990, Treasury published in the Federal Register, a Final Rule requiring financial institutions to verify and record such identifying information, to record certain information regarding the instruments purchased, such as the amount of the instruments, and to maintain a centralized chronological log of the sales. Today's Final Rule rescinds the requirement to maintain a chronological log and reduces substantially the amount of information required to be recorded. EFFECTIVE DATE: This Final Rule is effective on October 17, 1994. ADDRESSES: Peter G. Djinis, Director, Office of Financial Enforcement, Financial Crimes Enforcement Network (FinCEN), Department of the Treasury, Room 3210 Annex, 1500 Pennsylvania Avenue, NW., Washington DC 20220. FOR FURTHER INFORMATION CONTACT: A. Carlos Correa, Chief, Regulations and Rulings, Office of Financial Enforcement, (202) 622-0400. SUPPLEMENTARY INFORMATION: The Bank Secrecy Act (codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5328) requires the Secretary of the Treasury to prescribe regulations requiring financial institutions to verify and record the identity of purchasers of bank checks, cashier's checks, traveler's checks and money orders for currency in amounts of $3,000 or more. 31 U.S.C. 5325. The purpose of Section 5325 is to deter and detect persons seeking to evade Bank Secrecy Act reporting requirements through purchases in currency of multiple monetary instruments in amounts under $10,000. On May 15, 1990, Treasury published in the Federal Register, 55 FR 20139-20144, a Final Rule implementing these new recordkeeping requirements by amending the Bank Secrecy Act regulations at 31 CFR 103.29 (Section 103.29). Section 103.29, which was effective August 13, 1990, established recordkeeping requirements for purchases of bank checks and drafts, cashier's checks, money orders and traveler's checks with currency in amounts of $3,000 to $10,000, inclusive. This section required that the recorded data be kept on a centralized chronological log(s) and maintained for five years. The specific data to be recorded depended upon whether the purchaser had a deposit account at the institution issuing or selling the monetary instrument(s). For a deposit accountholder, a financial institution was required to obtain and record: the purchaser's name and account number; the date of purchase; the branch where the purchase occurred; the types(s) and serial number(s) of each of the instrument(s) purchased; and the dollar amount(s) of each of the instrument(s) purchased in currency. Further, the financial institution was required to verify that the individual purchaser was a deposit accountholder, or to verify the individual's identity. If the individual's identity had not been verified previously and recorded, the financial institution was required to do so by examination of a document containing the name and address of the purchaser. Such information was required to be recorded on a centralized chronological log kept at the financial institution. If a purchaser did not have a deposit account, Section 103.29 required financial institutions to obtain and log the purchaser's name, date of birth, address, and social security or alien identification number. If the individual was purchasing the instrument(s) on behalf of another person, the name and account number of that person or, if there were no account number, the name, address and social security number, as well as the taxpayer identification number, or alien identification number, of such person also had to be recorded. Further, the financial institution was required to log: the date of purchase; the branch where the purchase occurred; the type(s), serial number(s), and dollar amount(s) of each of the instrument(s) purchased; the payee(s) on each purchased cashier's check(s), bank check(s) and draft(s); and the amount of the purchase in currency. Finally, the financial institution had to verify the purchaser's name and address by examination of a document containing that information. The specific identifying information was required to be recorded on the log (e.g., state of issuance and number of driver's license). Financial institutions were required by Section 103.29 to treat contemporaneous purchases of the same or different types of instruments totaling $3,000 or more as one purchase. Multiple purchases during one business day totaling $3,000 or more had to be treated as one purchase if the financial institution had knowledge that these purchases had occurred. Multiple sales had to be noted as such on the log(s). Finally, the financial institution was required to maintain chronological log(s) in a centralized location, retain them for at least five years, and make them available to the Secretary upon request. Reviewing Section 103.29 Requirements Treasury established a Money Laundering Task Force (Task Force) to consider ways to reduce the regulatory burden of complying with the BSA while enhancing the utility of information received from financial institutions. The Task Force considered the costs to financial institutions of obtaining and recording specific financial data concerning cash purchases of monetary instruments and the value of this information to law enforcement. Based upon the Task Force's review, Treasury determined that, while Section 103.29 remains a useful deterrent, its required records, informally referred to as $3,000 logs, had been requested and used infrequently by law enforcement. Because Section 103.29 does not specify the format in which the $3,000 logs should be maintained, law enforcement use of the logs is labor intensive. Log information must be retrieved manually and computerized. This is a cumbersome process which, when weighed against other immediate leads in the hands of law enforcement, such as suspicious transaction reports, criminal referrals and informants, may have discouraged requests for the $3,000 logs. Treasury has evaluated the cost of compliance with the $3,000 log requirement to financial institutions against its benefits to the law enforcement community. Treasury believes that Section 103.29 imposes an expensive and time-consuming burden on financial institutions and that its recordkeeping requirements can be reduced substantially without compromising its deterrent effect or utility to law enforcement. In reaching this determination, Treasury consulted with the Bank Secrecy Act Advisory Group (Advisory Group), a committee comprising 30 representatives from the financial services industry, trades and businesses, and state and federal government. The Advisory Group stated that the financial institution's resources could be more effectively devoted to the detection and reporting of suspicious transactions and implementation of ``know your customer'' programs and procedures. Treasury expects to issue a Notice of Proposed Rulemaking outlining the elements of anti-money laundering programs, including ``know your customer'' policies and procedures incorporating, among other things, verification of identity when establishing a customer relationship, and suspicious transaction reporting. In light of these initiatives, Treasury has determined that Section 103.29 should be modified to lessen the amount of information that must be obtained and recorded and to permit retention of this information in records kept in the ordinary course of business, in a manner consistent with the record systems that may already exist in financial institutions. Recordkeeping Required Today's rule requires deposit accountholders' financial institutions when issuing or selling a bank check or draft, cashier's check, money order or traveler's check for $3,000 or more in currency to obtain and maintain records of: the name of the purchaser; the date of purchase; and, the type(s), serial number, and the amount in dollars of each of the instrument(s) purchased. The financial institution must verify that the purchaser is a deposit accountholder and has been identified previously, or verify his or her identity and record the method of verification. The new rule requires a financial institution issuing or selling the same monetary instruments to a person that does not have a deposit account to obtain and maintain records of: the name, address, social security or alien identification number and date of birth of the purchaser; the date of purchase; and, the type(s), serial number and the amount in dollars of each of the instrument(s) purchased. The financial institution must verify the purchaser's identity and record the method of verification and specific identifying information (e.g. state of issuance and number of driver's license). Financial institutions must continue to treat contemporaneous purchases by an individual as one purchase. Multiple purchases by an individual must also still be treated as one purchase if they are known to the financial institution. Information to be maintained may be recorded on copies of, or other records relating to, the instruments purchased. All records must still be maintained for five years and made available to the Secretary upon request at any time. As with all records required to be maintained under the BSA, the records must be filed or stored in a way as to be accessible within a reasonable period of time. Section 103.38. Much of the information, required formerly to be kept in centralized chronological logs, is available generally in account or other records, or on the originals or copies of the monetary instruments. These copies, along with other records kept in the ordinary course of business, may satisfy the requirements of this Final Rule and may be kept in any format. These records must be accessible within a reasonable period of time, taking into consideration the nature of the record, and the amount of time expired since the record was made. Recordkeeping Requirements Eliminated To relieve the burden imposed on financial institutions by Section 103.29, today's Final Rule reduces substantially the amount of information required to be maintained and eliminates the requirement for a centralized chronological log. Because Treasury is reducing requirements already imposed by Section 103.29 of the BSA regulations, and not adding any new requirements, this rule is published as a Final Rule, effective upon publication in the Federal Register. For the sake of clarity and for ease of understanding, amended Section 103.29 is published in its entirety. Information Eliminated Treasury rescinds the requirement for centralized chronological log(s) for sales of monetary instruments. Instead, financial institutions will be required to obtain and maintain records of certain information and may keep them in any format. In the case of deposit accountholders, Treasury eliminates the requirement to log the purchaser's account number, the branch where the purchase occurred, and the requirement to note on the log whether the transaction is part of a multiple sale. In the case of persons who do not hold deposit accounts with the financial institution, Treasury eliminates the requirement to obtain and record information regarding the person(s) ``on whose behalf'' the instrument is being purchased, the branch where the purchase occurred, payee(s) on each cashier's check and bank checks and drafts purchased, and the amount of the purchase in currency. The requirement to note whether the transaction is part of a multiple sale is also eliminated. Although Treasury rescinds the requirement to record whether a given transaction is part of a multiple sale, Treasury retains the requirement that a financial institution treat as a single purchase, multiple sales to an individual of which the institution has knowledge. Conclusion Treasury is rescinding those provisions of Section 103.29 as described above and clarifying revised recordkeeping requirements. Executive Order 12866 This Final Rule is not a ``significant'' rule for purposes of Executive Order 12866. Consistent with that Order, it reduces regulatory burden. It rescinds a requirement that financial institutions maintain centralized chronological log(s) of the issuance or sale for cash of certain monetary instruments, and substantially reduces data required to be recorded regarding such issuances or sales. Therefore, it is not anticipated to have an annual effect on the economy of $100 million or more. Rather, it will reduce the costs of doing business for financial institutions. It will not affect adversely in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. It is not inconsistent with, nor does it interfere with actions taken or planned by other agencies. Finally, it raises no novel legal or policy issues. A cost and benefit analysis, therefore, is not required. 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. Paperwork Reduction Act The collection of information requirements contained in this Final Rule has been reviewed and approved previously by the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1980 (under control number 1505-0063). Drafting Information The principal author of this document is the Office of Financial Enforcement. List of Subjects in 31 CFR Part 103 Authority delegations (Government agencies), Banks and banking, Currency, Foreign banking, Investigations, Law enforcement, Reporting and recordkeeping requirements, Taxes. Amendment For the reasons set forth in the preamble, 31 CFR Part 103 is amended as set forth below: PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN TRANSACTIONS 1. The authority citation for Part 103 is revised to read as follows: Authority: Pub. L. 91-508, Title I, 84 Stat. 1114 (12 U.S.C. 1829b and 1951-1959); 31 U.S.C. 5311-5328. 2. Section 103.29 is revised to read as follows: Sec. 103.29 Purchases of bank checks and drafts, cashier's checks, money orders and traveler's checks. (a) No financial institution may issue or sell a bank check or draft, cashier's check, money order or traveler's check for $3,000 or more in currency unless it maintains records of the following information, which must be obtained for each issuance or sale of one or more of these instruments to any individual purchaser which involves currency in amounts of $3,000-$10,000 inclusive: (1) If the purchaser has a deposit account with the financial institution: (i)(A) The name of the purchaser; (B) The date of purchase; (C) The type(s) of instrument(s) purchased; (D) The serial number(s) of each of the instrument(s) purchased; and (E) The amount in dollars of each of the instrument(s) purchased. (ii) In addition, the financial institution must verify that the individual is a deposit accountholder or must verify the individual's identity. Verification may be either through a signature card or other file or record at the financial institution provided the deposit accountholder's name and address were verified previously and that information was recorded on the signature card or other file or record; or by examination of a document which is normally acceptable within the banking community as a means of identification when cashing checks for nondepositors and which contains the name and address of the purchaser. If the deposit accountholder's identity has not been verified previously, the financial institution shall verify the deposit accountholder's identity by examination of a document which is normally acceptable within the banking community as a means of identification when cashing checks for nondepositors and which contains the name and address of the purchaser, and shall record the specific identifying information (e.g., State of issuance and number of driver's license). (2) If the purchaser does not have a deposit account with the financial institution: (i)(A) The name and address of the purchaser; (B) The social security number of the purchaser, or if the purchaser is an alien and does not have a social security number, the alien identification number; (C) The date of birth of the purchaser; (D) The date of purchase; (E) The type(s) of instrument(s) purchased; (F) The serial number(s) of the instrument(s) purchased; and (G) The amount in dollars of each of the instrument(s) purchased. (ii) In addition, the financial institution shall verify the purchaser's name and address by examination of a document which is normally acceptable within the banking community as a means of identification when cashing checks for nondepositors and which contains the name and address of the purchaser, and shall record the specific identifying information (e.g., State of issuance and number of driver's license). (b) Contemporaneous purchases of the same or different types of instruments totaling $3,000 or more shall be treated as one purchase. Multiple purchases during one business day totaling $3,000 or more shall be treated as one purchase if an individual employee, director, officer, or partner of the financial institution has knowledge that these purchases have occurred. (c) Records required to be kept shall be retained by the financial institution for a period of five years and shall be made available to the Secretary upon request at any time. Dated: September 20, 1994. Stanley E. Morris, Director, Financial Crimes Enforcement Network. [FR Doc. 94-25490 Filed 10-14-94; 8:45 am] BILLING CODE 4810-25-P