FinCEN Proposes Rule that will Significantly Increase Reporting Requirements on Certain Financial Institutions


The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is proposing a rule that will significantly increase reporting requirements on certain financial institutions and require them to report to FinCEN certain cross-border electronic transmittals of funds in order to better detect terrorist financing. FinCEN has found that electronic funds transfers feature prominently in the layering stage of money laundering activity. Currently, the U.S. government has no ability on a national scale to target financial crimes that are being conducted through wire transfers. Specifically, the current Bank Secrecy Act reporting regime requires financial institutions to file Currency Transaction Reports (CTR) when a person conducts certain types of large currency transactions such as deposits, withdrawals, exchanges, or other transfers of more than $10,000 by, through, or to the financial institution. Wire transfers, however, are not included in CTR reporting requirements. Additionally, individuals and corporations must file Currency and Monetary Instrument Reports (CMIR) when travelers enter the United States with more than $10,000 in currency. Like the CTR, wire transfers are not included in CMIR reporting requirements.

The Proposed Rule: The proposed rule would require (1) certain banks and money transmitters to file periodic reports with respect to certain cross-border electronic transmittal of funds (CBETF) and (2)

all banks to file an annual report for certain CBETFs with the account number that was credited or debited to originate or receive a CBETF and the accountholder’s U.S. tax identification number. The definition of CBETF would not cover any debit card type of transmittals, point-of-sale (POS) systems, transactions conducted through an Automated Clearing House (ACH) process, or Automated Teller Machine (ATM).

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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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