FinCEN and FRB Finalize Rule Amending Definitions in the Bank Secrecy Act

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FinCEN and the FRB issuedfinal rule largely adopting their 2012 proposal (see December 11, 2012 Alert) to amend the definitions of “funds transfer” and “transmittal of funds” under regulations implementing the Bank Secrecy Act. In light of the amendments to the Electronic Fund Transfer Act and its implementing regulation, Regulation E, FinCEN proposed to amend the definitions of “funds transfer” and “transmittal of funds.” Without such amendments, such transactions would no longer be subject to the Recordkeeping and Travel Rules’ requirements. The final rule responds to comments to: (1) clearly state that the amended rule does not change the current scope of the obligations of financial institutions under the Recordkeeping or Travel Rules, and (2) delay finalizing the amended rule until the CFPB’s remittance transfer rule was finalized and became effective. Of note, the final rule does not include commenters’ request to incorporate the statutory language of Section 903(7) of the EFTA instead of the proposed use of a cross-reference to the section. The final rule becomes effective on January 3, 2014.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Topics:  Bank Secrecy Act, Banks, Federal Reserve, FinCEN, Recordkeeping Requirements

Published In: 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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