FinCEN, Federal Reserve Seek Comments on Bank Secrecy Act Definitions

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On November 29, the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury, and the Federal Reserve Board (Board) issued a notice of proposed rulemaking seeking comments on a proposal to amend the definitions of “funds transfer” and “transmittal of funds” under the regulations implementing the Bank Secrecy Act (BSA). The proposed amendments “are necessary to maintain the current scope of funds transfers and transmittals subject to the BSA in light of amendments to the Electronic Funds Transfer Act (EFTA) made by the Dodd-Frank Wall Street Reform and Consumer Protection Act.”

Recent amendments to the EFTA and the recently finalized revisions to Regulation E, which implements the EFTA, are effective February 7, 2013, and will result in an expanded scope of the transactions subject to the EFTA’s remittance provisions. Some of these transactions have, to date, been covered by the regulations implementing the BSA. When the changes to Regulation E become effective, these transactions—which include international funds transfers sent by consumers through banks, and cash-based or account-based transmittals of funds sent by consumers through money transmitters—will fall outside the BSA rules’ definitions of “funds transfer” and “transmittal of funds”. To avoid this result, the Board and FinCEN are proposing to amend the definitions of funds transfer and transmittal of funds under the regulations implementing the BSA to limit the exclusion of EFTA-covered transactions from the recordkeeping and travel rules. The recordkeeping and travel rules provide uniform recordkeeping and transmittal requirements for financial institutions and are intended to help law enforcement and regulatory authorities detect, investigate and prosecute money laundering and other financial crimes by preserving an information trail about persons sending and receiving funds through the funds transfer system.

Comments on the proposed rule are due January 25, 2013.

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Topics:  Bank Secrecy Act, EFTA, Federal Reserve, FinCEN, White Collar Crimes

Published In: Criminal Law Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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