[Title 31 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2009 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          31


          Parts 0 to 199

                         Revised as of July 1, 2009


          Money and Finance: Treasury
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2009
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 31:
          SUBTITLE A--Office of the Secretary of the Treasury        3
    SUBTITLE B--Regulations Relating to Money and Finance
          Chapter I--Monetary Offices, Department of the 
          Treasury                                                 383
  Finding Aids:
      Table of CFR Titles and Chapters........................     551
      Alphabetical List of Agencies Appearing in the CFR......     571
      List of CFR Sections Affected...........................     581

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 31 CFR 0.101 refers 
                       to title 31, part 0, 
                       section 101.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2009), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
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states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
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1963, 1964-1972, 1973-1985, or 1986-2000, published in eleven separate 
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Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
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This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
an approved incorporation by reference, please contact the agency that 
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This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.




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REPUBLICATION OF MATERIAL

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    July 1, 2009.







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                               THIS TITLE

    Title 31--Money and Finance: Treasury is composed of three volumes. 
The parts in these volumes are arranged in the following order: parts 0-
199, parts 200-499, and part 500 to end. The contents of these volumes 
represent all current regulations codified under this title of the CFR 
as of July 1, 2009.

    For this volume, Michele Bugenhagen Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Michael L. White, assisted by Ann Worley.


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                  TITLE 31--MONEY AND FINANCE: TREASURY




                   (This book contains parts 0 to 199)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE A--Office of the Secretary of the Treasury.........           0

          SUBTITLE B--Regulations Relating to Money and Finance

chapter i--Monetary Offices, Department of the Treasury.....          56


Abbreviation Used in This Chapter:
    C. P. D.= Commissioner of the Public Debt.

[[Page 3]]

           Subtitle A--Office of the Secretary of the Treasury

  --------------------------------------------------------------------

Part                                                                Page
0               Department of the Treasury Employee Rules of 
                    Conduct.................................           5
1               Disclosure of records.......................          10
2               National security information...............          84
3               Claims regulations and indemnification of 
                    Department of Treasury employees........          88
4               Employees' personal property claims.........          91
5               Treasury debt collection....................          91
6               Applications for awards under the Equal 
                    Access to Justice Act...................         109
7               Employee inventions.........................         113
8               Practice before the Bureau of Alcohol, 
                    Tobacco and Firearms....................         114
9               Effects of imported articles on the national 
                    security................................         128
10              Practice before the Internal Revenue Service         131
11              Operation of vending facilities by the blind 
                    on Federal property under the control of 
                    the Department of the Treasury..........         171
12              Restriction of sale and distribution of 
                    tobacco products........................         173
13              Procedures for providing assistance to State 
                    and local governments in protecting 
                    foreign diplomatic missions.............         174
14              Right to Financial Privacy Act..............         178
15              Post employment conflict of interest........         180
16              Regulations implementing the Program Fraud 
                    Civil Remedies Act of 1986..............         186
17              Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Department 
                    of the Treasury.........................         202

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18              Officials designated to perform the 
                    functions and duties of certain offices 
                    in case of absence, disability, or 
                    vacancy.................................         208
19              Governmentwide debarment and suspension 
                    (nonprocurement)........................         209
20              Governmentwide requirements for drug-free 
                    workplace (financial assistance)........         231
21              New restrictions on lobbying................         237
25              Prepayment of foreign military sales loans 
                    made by the Defense Security Assistance 
                    Agency and foreign military sales loans 
                    made by the Federal Financing Bank and 
                    guaranteed by the Defense Security 
                    Assistance Agency.......................         248
26              Environmental Review of Actions by 
                    Multilateral Development Bands (MDBs)...         258
27              Civil penalty assessment for misuse of 
                    Department of the Treasury names, 
                    symbols, etc............................         261
28              Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving federal financial assistance..         265
29              Federal benefit payments under certain 
                    District of Columbia Programs...........         287
30              Tarp standards for compensation and 
                    corporate governance....................         318
31              Troubled Asset Relief Program...............         350
50              Terrorism Risk Insurance Program............         357

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PART 0_DEPARTMENT OF THE TREASURY EMPLOYEE RULES OF CONDUCT--Table of Contents




                      Subpart A_General Provisions

Sec.
0.101 Purpose.
0.102 Policy.
0.103 Definitions.

                            Responsibilities

0.104 Designated Agency Ethics Official and Alternate Designated Agency 
          Ethics Official.
0.105 Deputy Ethics Official.
0.106 Bureau Heads.
0.107 Employees.

                       Subpart B_Rules of Conduct

0.201 Political activity.
0.202 Strikes.
0.203 Gifts or gratuities from foreign governments.
0.204 Use of controlled substances and intoxicants.
0.205 Care of documents and data.
0.206 Disclosure of information.
0.207 Cooperation with official inquiries.
0.208 Falsification of official records.
0.209 Use of Government vehicles.
0.210 Conduct while on official duty or on Government property.
0.211 Soliciting, selling and canvassing.
0.212 Influencing legislation or petitioning Congress.
0.213 General conduct prejudicial to the Government.
0.214 Nondiscrimination.
0.215 Possession of weapons and explosives.
0.216 Privacy Act.
0.217 Personal financial interests.

                 Subpart C_Special Government Employees

0.301 Applicability of subpart B.
0.302 Service with other Federal agencies.

                  Subpart D_Advisers to the Department

0.401 Advisers to the Department.

    Authority: 5 U.S.C. 301.

    Source: 60 FR 28535, June 1, 1995, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 0.101  Purpose.

    (a) The Department of the Treasury Employee Rules of Conduct (Rules) 
are separate from and additional to the Standards of Ethical Conduct for 
Employees of the Executive Branch (Executive Branch-wide Standards) (5 
CFR part 2635) and the Supplemental Standards of Ethical Conduct for 
Employees of the Department of the Treasury (Treasury Supplemental 
Standards) (to be codified at 5 CFR part 3101). The Rules prescribe 
employee rules of conduct and procedure and provide for disciplinary 
action for the violation of the Rules, the Treasury Supplemental 
Standards, the Executive Branch-wide Standards, and any other rule, 
regulation or law governing Department employees.
    (b) The Rules are not all-inclusive and may be modified by 
interpretive guidelines and procedures issued by the Department's 
bureaus. The absence of a specific published rule of conduct covering an 
action does not constitute a condonation of that action or indicate that 
the action would not result in corrective or disciplinary action.



Sec. 0.102  Policy.

    (a) All employees and officials of the Department are required to 
follow the rules of conduct and procedure contained in the Rules, the 
Treasury Supplemental Standards, the Executive Branch-wide Standards of 
Ethical Conduct, the Employee Responsibilities and Conduct (5 CFR part 
735), and any bureau issued rules.
    (b) Employees found in violation of the Rules, the Treasury 
Supplemental Standards, the Executive Branch-wide Standards or any 
applicable bureau rule may be instructed to take remedial or corrective 
action to eliminate the conflict. Remedial action may include, but is 
not limited to:
    (1) Reassignment of work duties;
    (2) Disqualification from a particular assignment;
    (3) Divestment of a conflicting interest; or
    (4) Other appropriate action.
    (c) Employees found in violation of the Rules, the Treasury 
Supplemental Standards, the Executive Branch-wide Standards or any 
applicable bureau rule may be disciplined in proportion to the gravity 
of the offense committed, including removal. Disciplinary action will be 
taken in accordance with applicable laws and regulations

[[Page 6]]

and after consideration of the employee's explanation and any mitigating 
factors. Further, disciplinary action may include any additional penalty 
prescribed by law.



Sec. 0.103  Definitions.

    The following definitions are used throughout this part:
    (a) Adviser means a person who provides advice to the Department as 
a representative of an outside group and is not an employee or special 
Government employee as those terms are defined in Sec. 0.103.
    (b) Bureau means:
    (1) Bureau of Alcohol, Tobacco and Firearms;
    (2) Bureau of Engraving and Printing;
    (3) Bureau of the Public Debt;
    (4) Departmental Offices;
    (5) Federal Law Enforcement Training Center;
    (6) Financial Management Service;
    (7) Internal Revenue Service;
    (8) Legal Division;
    (9) Office of the Comptroller of the Currency;
    (10) Office of the Inspector General;
    (11) Office of Thrift Supervision;
    (12) United States Customs Service;
    (13) United States Mint;
    (14) United States Secret Service; and
    (15) Any organization designated as a bureau by the Secretary 
pursuant to appropriate authority.
    (c) Person means an individual, corporation and subsidiaries it 
controls, company, association, firm, partnership, society, joint stock 
company, or any other organization or institution as specified in 5 CFR 
2635.102(k).
    (d) Regular employee or employee means an officer or employee of the 
Department of the Treasury but does not include a special Government 
employee.
    (e) Special Government employee means an officer or employee who is 
retained, designated, appointed, or employed to perform temporary duties 
either on a full-time or intermittent basis, with or without 
compensation, for a period not to exceed 130 days during any consecutive 
365-day period. See 18 U.S.C. 202(a).

                            Responsibilities



Sec. 0.104  Designated Agency Ethics Official and Alternate Designated Agency 

Ethics Official.

    The Deputy General Counsel is the Department's Designated Agency 
Ethics Official (DAEO). The DAEO is responsible for managing the 
Department's ethics program, including coordinating ethics counseling 
and interpreting questions of conflicts of interest and other matters 
that arise under the Executive Branch-wide Standards and Treasury 
Supplemental Standards and Rules. See 5 CFR 2638.203. The Senior Counsel 
for Ethics is the Alternate Designated Agency Ethics Official.



Sec. 0.105  Deputy Ethics Official.

    The Chief Counsel or Legal Counsel for a bureau, or a designee, is 
the Deputy Ethics Official for that bureau. The Legal Counsel for the 
Financial Crimes Enforcement Network is the Deputy Ethics Official for 
that organization. It is the responsibility of the Deputy Ethics 
Official to give authoritative advice and guidance on conflicts of 
interest and other matters arising under the Executive Branch-wide 
Standards, Treasury Supplemental Standards, and the Rules.



Sec. 0.106  Bureau Heads.

    Bureau heads or designees are required to:
    (a) Provide all employees with a copy of Executive Order 12674, as 
amended by Executive Order 12731, the Executive Branch-wide Standards, 
the Treasury Supplemental Standards and the Rules; provide all new 
employees with an explanation of the contents and application of the 
Executive Branch-wide Standards, Treasury Supplemental Standards and the 
Rules; and provide all departing employees with an explanation of the 
applicable post-employment restrictions contained in 18 U.S.C. 207 and 5 
CFR part 2641 and any other applicable law or regulation.
    (b) Provide guidance and assistance to supervisors and employees in 
implementing and adhering to the rules and procedures included in the 
Executive Branch-wide Standards and Treasury

[[Page 7]]

Supplemental Standards and Rules; obtain any necessary legal advice or 
interpretation from the Designated Agency Ethics Official or a Deputy 
Ethics Official; and inform employees as to how and from whom they may 
obtain additional clarification or interpretation of the Executive 
Branch-wide Standards, Treasury Supplemental Standards, Rules, and any 
other relevant law, rule or regulation.
    (c) Take appropriate corrective or disciplinary action against an 
employee who violates the Executive Branch-wide Standards, Treasury 
Supplemental Standards or Rules, or any other applicable law, rule or 
regulation, and against a supervisor who fails to carry out his 
responsibilities in taking or recommending corrective or disciplinary 
action when appropriate against an employee who has committed an 
offense.



Sec. 0.107  Employees.

    (a) Employees are required to:
    (1) Read and follow the rules and procedures contained in the 
Executive Branch-wide Standards, Treasury Supplemental Standards, and 
Rules;
    (2) Request clarification or interpretation from a supervisor or 
ethics official if the application of a rule contained in the Executive 
Branch-wide Standards, Treasury Supplemental Standards, or Rules is not 
clear;
    (3) Report to the Inspector General or to the appropriate internal 
affairs office of the Bureau of Alcohol, Tobacco and Firearms, Customs 
Service, Internal Revenue Service, or Secret Service, any information 
indicating that an employee, former employee, contractor, subcontractor, 
or potential contractor engaged in criminal conduct or that an employee 
or former employee violated the Executive Branch-wide Standards or the 
Treasury Supplemental Standards or Rules. Legal Division attorneys 
acquiring this type of information during the representation of a bureau 
shall report it to the appropriate Chief or Legal Counsel or the Deputy 
General Counsel, who shall report such information to the Inspector 
General or appropriate internal affairs office; and
    (4) Report to the Inspector General information defined in paragraph 
(a)(3) of this section relating to foreign intelligence or national 
security, as covered in Executive Order 12356. Legal Division attorneys 
acquiring this type of information during the representation of a bureau 
shall report it to the Deputy General Counsel, who shall report such 
information to the Inspector General.
    (b) The confidentiality of the source of the information reported to 
the Inspector General or the internal affairs office under this section 
will be maintained to the extent appropriate under the circumstances.



                       Subpart B_Rules of Conduct



Sec. 0.201  Political activity.

    (a) Employees may:
    (1) Take an active part in political management or in political 
campaigns to the extent permitted by law (5 U.S.C. 7321-7326); and
    (2) Vote as they choose and express their opinions on political 
subjects and candidates.
    (b) Employees may not use their official authority or influence to 
interfere with or affect election results.
    (c) Employees may be disqualified from employment for knowingly 
supporting or advocating the violent overthrow of our constitutional 
form of government.
    Note: The Hatch Act Reform Amendments of 1993 significantly reduced 
the statutory restrictions on the political activity of most Department 
employees. However, career members of the Senior Executive Service and 
employees of the Secret Service, the Internal Revenue Service, Office of 
Criminal Investigation, the Customs Service, Office of Investigative 
Programs, and the Bureau of Alcohol, Tobacco and Firearms, Office of Law 
Enforcement, remain subject to significant restrictions on their 
political activities.



Sec. 0.202  Strikes.

    Employees shall not strike against the Government.



Sec. 0.203  Gifts or gratuities from foreign governments.

    (a) The United States Constitution prohibits employees from 
accepting gifts, emoluments, offices, or titles from a foreign 
government without the consent of the Congress. Congress has consented 
to an employee accepting

[[Page 8]]

and retaining a gift from a foreign government that is of minimal value 
and offered as a souvenir or mark of courtesy, unless otherwise 
prohibited by bureau regulation (5 U.S.C. 7342). Minimal value is 
prescribed in 41 CFR part 101-49 and was set at $225.00 on the date that 
the Rules became effective.
    (b) All gifts exceeding minimal value, the refusal of which would 
likely cause offense or embarrassment or otherwise adversely affect the 
foreign relations of the United States, shall be accepted and deposited 
with the Department within sixty days of acceptance. If the gift is 
travel or expenses for travel taking place entirely outside the United 
States, it shall be reported within thirty days (see 5 U.S.C. 
7342(c)(1)(B)(ii)).
    (c) As used in paragraph (b) of this section, Deposit with the 
Department means delivery to the Department Gift Unit or other 
depository as authorized by the Treasury Directive on Foreign Gifts 
(Treasury Directive 61-04).
    (d) All foreign gifts must be reported as prescribed in the Treasury 
Directive on Foreign Gifts (Treasury Directive 61-04).



Sec. 0.204  Use of controlled substances and intoxicants.

    Employees shall not sell, use or possess controlled substances or 
intoxicants in violation of the law while on Department property or 
official duty, or use a controlled substance or intoxicant in a manner 
that adversely affects their work performance.



Sec. 0.205  Care of documents and data.

    (a) Employees shall not conceal, remove, alter, destroy, mutilate or 
access documents or data in the custody of the Federal Government 
without proper authority.
    (b) Employees are required to care for documents according to 
Federal law and regulation, and Department procedure (18 U.S.C. 2071, 5 
U.S.C. 552, 552a).
    (c) The term documents includes, but is not limited to, any writing, 
recording, computer tape or disk, blueprint, photograph, or other 
physical object on which information is recorded.



Sec. 0.206  Disclosure of information.

    Employees shall not disclose official information without proper 
authority, pursuant to Department or bureau regulation. Employees 
authorized to make disclosures should respond promptly and courteously 
to requests from the public for information when permitted to do so by 
law (31 CFR 1.9, 1.10, and 1.28(b)).



Sec. 0.207  Cooperation with official inquiries.

    Employees shall respond to questions truthfully and under oath when 
required, whether orally or in writing, and must provide documents and 
other materials concerning matters of official interest when directed to 
do so by competent Treasury authority.



Sec. 0.208  Falsification of official records.

    Employees shall not intentionally make false, misleading or 
ambiguous statements, orally or in writing, in connection with any 
matter of official interest. Matters of official interest include among 
other things: Transactions with the public, government agencies or 
fellow employees; application forms and other forms that serve as a 
basis for appointment, reassignment, promotion or other personnel 
action; vouchers; leave records and time and attendance records; work 
reports of any nature or accounts of any kind; affidavits; entry or 
record of any matter relating to or connected with an employee's duties; 
and reports of any moneys or securities received, held or paid to, for 
or on behalf of the United States.



Sec. 0.209  Use of Government vehicles.

    Employees shall not use Government vehicles for unofficial purposes, 
including to transport unauthorized passengers. The use of Government 
vehicles for transporting employees between their domiciles and places 
of employment must be authorized by statute (See, e.g., 31 U.S.C. 1344).



Sec. 0.210  Conduct while on official duty or on Government property.

    Employees must adhere to the regulations controlling conduct when 
they are on official duty or in or on Government property, including the 
Treasury Building, Treasury Annex Building and grounds; the Bureau of 
Engraving and Printing buildings and grounds; the

[[Page 9]]

United States Mint buildings and grounds; the grounds of the Federal Law 
Enforcement Training Center; and Treasury-occupied General Services 
Administration buildings and grounds (see 31 CFR parts 91, 407, 605, 
700).



Sec. 0.211  Soliciting, selling and canvassing.

    Employees shall not solicit, make collections, canvass for the sale 
of any article, or distribute literature or advertising in any space 
occupied by the Department without appropriate authority.



Sec. 0.212  Influencing legislation or petitioning Congress.

    (a) Employees shall not use Government time, money, or property to 
petition a Member of Congress to favor or oppose any legislation. This 
prohibition does not apply to the official handling, through the proper 
channels, of matters relating to legislation in which the Department of 
the Treasury has an interest.
    (b) Employees, individually or collectively, may petition Congress 
or Members of Congress or furnish information to either House of 
Congress when not using Government time, money or property (5 U.S.C. 
7211).



Sec. 0.213  General conduct prejudicial to the Government.

    Employees shall not engage in criminal, infamous, dishonest, or 
notoriously disgraceful conduct, or any other conduct prejudicial to the 
Government.



Sec. 0.214  Nondiscrimination.

    (a) Employees shall not discriminate against or harass any other 
employee, applicant for employment or person dealing with the Department 
on official business on the basis of race, color, religion, national 
origin, sex, sexual orientation, age, or disability. Sexual harassment 
is a form of sex discrimination and is prohibited by this section.
    (b) An employee who engages in discriminatory conduct may be 
disciplined under these rules. However, this section does not create any 
enforceable legal rights in any person.



Sec. 0.215  Possession of weapons and explosives.

    (a) Employees shall not possess firearms, explosives, or other 
dangerous or deadly weapons, either openly or concealed, while on 
Government property or official duty.
    (b) The prohibition in paragraph (a) of this section does not apply 
to employees who are required to possess weapons or explosives in the 
performance of their official duties.



Sec. 0.216  Privacy Act.

    Employees involved in the design, development, operation, or 
maintenance of any system of records or in maintaining records subject 
to the Privacy Act of 1974, as amended (5 U.S.C. 552a), shall comply 
with the conduct regulations delineated in 31 CFR 1.28(b).



Sec. 0.217  Personal financial interests.

    (a) Employees may hold the following financial interests without 
violating 18 U.S.C. 208(a):
    (1) The stocks or bonds of a publicly traded corporation with a 
value of $1000 or less; and
    (2) The stocks or bonds in the investment portfolio of a diversified 
mutual fund in which an employee has invested.
    (b) The Department has found that the financial interests listed in 
paragraph (a) of this section are too remote and inconsequential to 
affect the integrity of an employee's service.



                 Subpart C_Special Government Employees



Sec. 0.301  Applicability of subpart B.

    The rules of conduct contained in subpart B of this part apply to 
special Government employees employed with the Treasury Department. The 
regulations contained in Sec. 0.201 of subpart B, concerning political 
activity, apply to special Government employees only on the days that 
they serve the Department. Treasury bureaus are responsible for 
informing special Government employees employed with them of the 
applicability of bureau specific statutes or regulations.

[[Page 10]]



Sec. 0.302  Service with other Federal agencies.

    A special Government employee serving concurrently in the Department 
and in a Federal agency other than the Department is required to inform 
the Department and the agency in which he serves of the arrangement so 
that appropriate administrative measures may be taken.



                  Subpart D_Advisers to the Department



Sec. 0.401  Advisers to the Department.

    (a) An adviser or advisory committee member includes an individual 
who provides advice to the Department as a representative of an outside 
group and is not an employee or special Government employee of the 
Department. Questions concerning whether an individual serves the 
Department in the capacity of an adviser, employee, or special 
Government employee shall be addressed to the Designated Agency Ethics 
Official or a Deputy Ethics Official.
    (b) Advisers or advisory committee members are not required to 
follow the Rules and are not generally required by the Department to 
file financial disclosure statements; nevertheless, they should be 
guided by the regulations in this part covering such issues as public 
disclosure of official information (Sec. 0.206), conduct (Sec. 0.211 
and Sec. 0.213), and gifts or gratuities from Foreign governments 
(Sec. 0.203).



PART 1_DISCLOSURE OF RECORDS--Table of Contents




                  Subpart A_Freedom of Information Act

Sec.
1.1 General.
1.2 Information made available.
1.3 Publication in the Federal Register.
1.4 Public inspection and copying.
1.5 Specific requests for other records.
1.6 Business information.
1.7 Fees for services.

Appendix A to Subpart A--Departmental Offices
Appendix B to Subpart A--Internal Revenue Service
Appendix C to Subpart A--United States Customs Service
Appendix D to Subpart A--United States Secret Service
Appendix E to Subpart A--Bureau of Alcohol, Tobacco and Firearms
Appendix F to Subpart A--Bureau of Engraving and Printing
Appendix G to Subpart A--Financial Management Service
Appendix H to Subpart A--United States Mint
Appendix I to Subpart A--Bureau of the Public Debt
Appendix J to Subpart A--Office of the Comptroller of the Currency
Appendix K to Subpart A--Federal Law Enforcement Training Center
Appendix L to Subpart A--Office of Thrift Supervision
Appendix M to Subpart A--Financial Crimes Enforcement Network

                  Subpart B_Other Disclosure Provisions

1.8 Scope.
1.9 Records not to be otherwise withdrawn or disclosed.
1.10 Oral information.
1.11 Testimony or the production of records in a court or other 
          proceeding.
1.12 Regulations not applicable to official request.

                          Subpart C_Privacy Act

1.20 Purpose and scope of regulations.
1.21 Definitions.
1.22 Requirements relating to systems of records.
1.23 Publication in the Federal Register--Notices of systems of records, 
          general exemptions, specific exemptions, review of all 
          systems.
1.24 Disclosure of records to person other than the individual to whom 
          they pertain.
1.25 Accounting of disclosures.
1.26 Procedures for notification and access to records pertaining to 
          individuals--format and fees for request for access.
1.27 Procedures for amendment of records pertaining to individuals--
          format, agency review and appeal from initial adverse agency 
          determination.
1.28 Training, rules of conduct, penalties for non-compliance.
1.29 Records transferred to Federal Records Center or National Archives 
          of the United States.
1.30 Application to system of records maintained by Government 
          contractors.
1.31 Sale or rental of mailing lists.
1.32 Use and disclosure of social security numbers.
1.34 Guardianship.
1.35 Information forms.
1.36 Systems exempt in whole or in part from provisions of 5 U.S.C. 552a 
          and this part.

[[Page 11]]


Appendix A to Subpart C--Departmental Offices
Appendix B to Subpart C--Internal Revenue Service
Appendix C to Subpart C--United States Customs Service
Appendix D to Subpart C--United States Secret Service
Appendix E to Subpart C--Bureau of Alcohol, Tobacco and Firearms
Appendix F to Subpart C--Bureau of Engraving and Printing
Appendix G to Subpart C--Financial Management Service
Appendix H to Subpart C--United States Mint
Appendix I to Subpart C--Bureau of the Public Debt
Appendix J to Subpart C--Office of the Comptroller of the Currency
Appendix K to Subpart C--Federal Law Enforcement Training Center
Appendix L to Subpart C--Office of Thrift Supervision
Appendix M to Subpart C [Reserved]
Appendix N to Subpart C--Financial Crimes Network

    Authority: 5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued 
under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C. 
552a.

    Source: 52 FR 26305, July 14, 1987, unless otherwise noted.



                  Subpart A_Freedom of Information Act

    Source: 65 FR 40504, June 30, 2000, unless otherwise noted.



Sec. 1.1  General.

    (a) Purpose and scope. (1) This subpart contains the regulations of 
the Department of the Treasury implementing the Freedom of Information 
Act (FOIA), 5 U.S.C. 552, as amended by the Electronic Freedom of 
Information Act Amendments of 1996. The regulations set forth procedures 
for requesting access to records maintained by the Department of the 
Treasury. These regulations apply to all bureaus of the Department of 
the Treasury. Any reference in this subpart to the Department or its 
officials, employees, or records shall be deemed to refer also to the 
bureaus or their officials, employees, or records. Persons interested in 
the records of a particular bureau should also consult the appendix to 
this subpart that pertains to that bureau. The head of each bureau is 
hereby authorized to substitute the officials designated and change the 
addresses specified in the appendix to this subpart applicable to the 
bureau. The bureaus of the Department of the Treasury for the purposes 
of this subpart are:
    (i) The Departmental Offices, which include the offices of:
    (A) The Secretary of the Treasury, including immediate staff;
    (B) The Deputy Secretary of the Treasury, including immediate staff;
    (C) The Chief of Staff, including immediate staff;
    (D) The Executive Secretary and all offices reporting to such 
official, including immediate staff;
    (E) The Under Secretary of the Treasury for International Affairs 
and all offices reporting to such official, including immediate staff;
    (F) The Under Secretary of the Treasury for Domestic Finance and all 
offices reporting to such official, including immediate staff;
    (G) The Under Secretary for Enforcement and all offices reporting to 
such official, including immediate staff;
    (H) The Assistant Secretary of the Treasury for Financial 
Institutions and all offices reporting to such official, including 
immediate staff;
    (I) The Assistant Secretary of the Treasury for Economic Policy and 
all offices reporting to such official, including immediate staff;
    (J) The Fiscal Assistant Secretary and all offices reporting to such 
official, including immediate staff;
    (K) The General Counsel and all offices reporting to such official, 
including immediate staff; except legal counsel to the components listed 
in paragraphs (a)(1)(i)(L), and (a)(1)(i)(S), and (a)(1)(ii) through 
(xiii) of this section;
    (L) The Inspector General and all offices reporting to such 
official, including immediate staff;
    (M) The Assistant Secretary of the Treasury for International 
Affairs and all offices reporting to such official, including immediate 
staff;
    (N) The Assistant Secretary of the Treasury for Legislative Affairs 
and Public Liaison and all offices reporting to such official, including 
immediate staff;

[[Page 12]]

    (O) The Assistant Secretary of the Treasury for Management and Chief 
Financial Officer and all offices reporting to such official, including 
immediate staff;
    (P) The Assistant Secretary of the Treasury for Public Affairs and 
all offices reporting to such official, including immediate staff;
    (Q) The Assistant Secretary of the Treasury for Tax Policy and all 
offices reporting to such official, including immediate staff;
    (R) The Treasurer of the United States, including immediate staff;
    (S) The Treasury Inspector General for Tax Administration and all 
offices reporting to such official, including immediate staff.
    (ii) The Bureau of Alcohol, Tobacco and Firearms.
    (iii) The Office of the Comptroller of the Currency.
    (iv) The United States Customs Service.
    (v) The Bureau of Engraving and Printing.
    (vi) The Federal Law Enforcement Training Center.
    (vii) The Financial Management Service.
    (viii) The Internal Revenue Service.
    (ix) The United States Mint.
    (x) The Bureau of the Public Debt.
    (xi) The United States Secret Service.
    (xii) The Office of Thrift Supervision.
    (xiii) The Financial Crimes Enforcement Network.
    (2) For purposes of this subpart, the office of the legal counsel 
for the components listed in paragraphs (a)(1)(ii) through (xiii) of 
this section are to be considered a part of their respective bureaus. 
Any office which is now in existence or may hereafter be established, 
which is not specifically listed or known to be a component of any of 
those listed in paragraphs (a)(1)(i) through (xiii) of this section, 
shall be deemed a part of the Departmental Offices for the purpose of 
making requests for records under this subpart.
    (b) Definitions. As used in this subpart, the following terms shall 
have the following meanings:
    (1) Agency has the meaning given in 5 U.S.C. 551(1) and 5 U.S.C. 
552(f).
    (2) Appeal means a request for a review of an agency's determination 
with regard to a fee waiver, category of requester, expedited 
processing, or denial in whole or in part of a request for access to a 
record or records.
    (3) Bureau means an entity of the Department of the Treasury that is 
authorized to act independently in disclosure matters.
    (4) Business information means trade secrets or other commercial or 
financial information.
    (5) Business submitter means any entity which provides business 
information to the Department of the Treasury or its bureaus and which 
has a proprietary interest in the information.
    (6) Computer software means tools by which records are created, 
stored, and retrieved. Normally, computer software, including source 
code, object code, and listings of source and object codes, regardless 
of medium, are not agency records. However, when data are embedded 
within the software and cannot be extracted without the software, the 
software may have to be treated as an agency record. Proprietary (or 
copyrighted) software is not an agency record.
    (7) Confidential commercial information means records provided to 
the government by a submitter that arguably contain material exempt from 
release under Exemption 4 of the Freedom of Information Act, 5 U.S.C. 
552(b)(4), because disclosure could reasonably be expected to cause 
substantial competitive harm.
    (8) Duplication refers to the process of making a copy of a record 
in order to respond to a FOIA request. Such copies can take the form of 
paper copy, microform, audio-visual materials, or machine readable 
documentation (e.g., magnetic tape or disk), among others.
    (9) Electronic records means those records and information which are 
created, stored, and retrievable by electronic means. This ordinarily 
does not include computer software, which is a tool by which to create, 
store, or retrieve electronic records.
    (10) Request means any request for records made pursuant to 5 U.S.C. 
552(a)(3).
    (11) Requester means any person who makes a request for access to 
records.

[[Page 13]]

    (12) Responsible official means a disclosure officer or the head of 
the organizational unit having immediate custody of the records 
requested, or an official designated by the head of the organizational 
unit.
    (13) Review, for fee purposes, refers to the process of examining 
records located in response to a commercial use request to determine 
whether any portion of any record located is permitted to be withheld. 
It also includes processing any records for disclosure; e.g., doing all 
that is necessary to excise them and otherwise prepare them for release.
    (14) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
or by automated means.

[65 FR 40504, June 30, 2000, as amended at 68 FR 55311, Sept. 25, 2003]



Sec. 1.2  Information made available.

    (a) General. The FOIA (5 U.S.C. 552) provides for access to 
information and records developed or maintained by Federal agencies. The 
provisions of section 552 are intended to assure the right of the public 
to information. Generally, this section divides agency information into 
three major categories and provides methods by which each category of 
information is to be made available to the public. The three major 
categories of information are as follows:
    (1) Information required to be published in the Federal Register 
(see Sec. 1.3);
    (2) Information required to be made available for public inspection 
and copying or, in the alternative, to be published and offered for sale 
(see Sec. 1.4); and
    (3) Information required to be made available to any member of the 
public upon specific request (see Sec. 1.5).
    (b) Subject only to the exemptions and exclusions set forth in 5 
U.S.C. 552(b) and (c), any person shall be afforded access to 
information or records in the possession of any bureau of the Department 
of the Treasury, subject to the regulations in this subpart and any 
regulations of a bureau implementing or supplementing them.
    (c) Exemptions. (1) The disclosure requirements of 5 U.S.C. 552(a) 
do not apply to certain matters which are exempt under 5 U.S.C. 552(b); 
nor do the disclosure requirements apply to certain matters which are 
excluded under 5 U.S.C. 552(c).
    (2) Even though an exemption described in 5 U.S.C. 552(b) may be 
applicable to the information or records requested, a Treasury bureau 
may, if not precluded by law, elect under the circumstances of that 
request not to apply the exemption. The fact that the exemption is not 
applied by a bureau in response to a particular request shall have no 
precedential significance in processing other requests, but is merely an 
indication that, in the processing of the particular request, the bureau 
finds no necessity for applying the exemption.



Sec. 1.3  Publication in the Federal Register.

    (a) Requirement. Subject to the application of the exemptions and 
exclusions in 5 U.S.C. 552(b) and (c) and subject to the limitations 
provided in 5 U.S.C. 552(a)(1), each Treasury bureau shall, in 
conformance with 5 U.S.C. 552(a)(1), separately state, publish and 
maintain current in the Federal Register for the guidance of the public 
the following information with respect to that bureau:
    (1) Descriptions of its central and field organization and the 
established places at which, the persons from whom, and the methods 
whereby, the public may obtain information, make submittals or requests, 
or obtain decisions;
    (2) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (3) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports, or examinations;
    (4) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the bureau; and

[[Page 14]]

    (5) Each amendment, revision, or repeal of matters referred to in 
paragraphs (a)(1) through (4) of this section.
    (b) The United States Government Manual. The functions of each 
bureau are summarized in the description of the Department and its 
bureaus in the United States Government Manual, which is issued annually 
by the Office of the Federal Register.



Sec. 1.4  Public inspection and copying.

    (a) In general. Subject to the application of the exemptions and 
exclusions described in 5 U.S.C. 552(b) and (c), each Treasury bureau 
shall, in conformance with 5 U.S.C. 552(a)(2), make available for public 
inspection and copying, or, in the alternative, promptly publish and 
offer for sale the following information with respect to the bureau:
    (1) Final opinions, including concurring and dissenting opinions, 
and orders, made in the adjudication of cases;
    (2) Those statements of policy and interpretations which have been 
adopted by the bureau but are not published in the Federal Register;
    (3) Its administrative staff manuals and instructions to staff that 
affect a member of the public;
    (4) Copies of all records, regardless of form or format, which have 
been released to any person under 5 U.S.C. 552(a)(3), and which the 
bureau determines have become or are likely to become the subject of 
subsequent requests for substantially the same records because they are 
clearly of interest to the public at large. The determination that 
records have become or may become the subject of subsequent requests 
shall be made by the Responsible Official (as defined at Sec. 
1.1(b)(12)).
    (5) A general index of the records referred to in paragraph (a)(4) 
of this section.
    (b) Information made available by computer telecommunications. For 
records required to be made available for public inspection and copying 
pursuant to 5 U.S.C. 552(a)(2) (paragraphs (a)(1) through (4) of this 
section) which are created on or after November 1, 1996, as soon as 
practicable but no later than one year after such records are created, 
each bureau shall make such records available on the Internet.
    (c) Deletion of identifying details. To prevent a clearly 
unwarranted invasion of personal privacy, or pursuant to an exemption in 
5 U.S.C. 552(b), a Treasury bureau may delete information contained in 
any matter described in paragraphs (a)(1) through (4) of this section 
before making such matters available for inspection or publishing it. 
The justification for the deletion shall be explained fully in writing, 
and the extent of such deletion shall be indicated on the portion of the 
record which is made available or published, unless including that 
indication would harm an interest protected by the exemption in 5 U.S.C. 
552(b) under which the deletion is made. If technically feasible, the 
extent of the deletion shall be indicated at the place in the record 
where the deletion was made.
    (d) Public reading rooms. Each bureau of the Department of the 
Treasury shall make available for public inspection and copying, in a 
reading room or otherwise, the material described in paragraphs (a)(1) 
through (5) of this section. Fees for duplication shall be charged in 
accordance with Sec. 1.7. See the appendices to this subpart for the 
location of established bureau reading rooms.
    (e) Indexes. (1) Each bureau of the Department of the Treasury shall 
maintain and make available for public inspection and copying current 
indexes identifying any material described in paragraphs (a)(1) through 
(3) of this section. In addition, each bureau shall promptly publish, 
quarterly or more frequently, and distribute (by sale or otherwise) 
copies of each index or supplement unless the head of each bureau (or a 
delegate) determines by order published in the Federal Register that the 
publication would be unnecessary and impractical, in which case the 
bureau shall nonetheless provide copies of the index on request at a 
cost not to exceed the direct cost of duplication.
    (2) Each bureau shall make the index referred to in paragraph (a)(5) 
of this section available on the Internet by December 31, 1999.



Sec. 1.5  Specific requests for other records.

    (a) In general. (1) Except for records made available under 5 U.S.C. 
552(a)(1)

[[Page 15]]

and (a)(2), but subject to the application of the exemptions and 
exclusions described in 5 U.S.C. 552(b) and (c), each bureau of the 
Department of the Treasury shall promptly make the requested records 
available to any person in conformance with 5 U.S.C. 552(a)(3). The 
request must conform in every respect with the rules and procedures of 
this subpart and the applicable bureau's appendix to this subpart. Any 
request or appeal from the initial denial of a request that does not 
comply with the requirements in this subpart will not be considered 
subject to the time constraints of paragraphs (h), (i), and (j) of this 
section, unless and until the request is amended to comply. Bureaus 
shall promptly advise the requester in what respect the request or 
appeal is deficient so that it may be amended and resubmitted for 
consideration in accordance with this subpart. If a requester does not 
respond within 30 days to a communication from a bureau to amend the 
request in order for it to be in conformance with this subpart, the 
request file will be considered closed. When the request conforms with 
the requirements of this subpart, bureaus shall make every reasonable 
effort to comply with the request within the time constraints. If the 
description of the record requested is of a type that is not maintained 
by the bureau, the requester shall be so advised and the request shall 
be returned to the requester.
    (2) This subpart applies only to records in the possession or 
control of the bureau at the time of the request. Records considered to 
be responsive to the request are those in existence on or before the 
date of receipt of the request by the appropriate bureau official. 
Requests for the continuing production of records created after the date 
of the appropriate bureau official's receipt of the request shall not be 
honored. Bureaus shall provide the responsive record or records in the 
form or format requested if the record or records are readily 
reproducible by the bureau in that form or format. Bureaus shall make 
reasonable efforts to maintain their records in forms or formats that 
are reproducible for the purpose of disclosure. For purposes of this 
section, readily reproducible means, with respect to electronic format, 
a record or records that can be downloaded or transferred intact to a 
floppy disk, compact disk (CD), tape, or other electronic medium using 
equipment currently in use by the office or offices processing the 
request. Even though some records may initially be readily reproducible, 
the need to segregate exempt from nonexempt records may cause the 
releasable material to not be readily reproducible.
    (3) Requests for information classified pursuant to Executive Order 
12958, ``Classified National Security Information,'' require the 
responsible bureau to review the information to determine whether it 
continues to warrant classification. Information which no longer 
warrants classification under the Executive Order's criteria shall be 
declassified and made available to the requester, unless the information 
is otherwise exempt from disclosure.
    (4) When a bureau receives five or more requests for substantially 
the same records, it shall place those requests in front of an existing 
request backlog that the responsible official may have. Upon completion 
of processing, the released records shall be made available in the 
bureau's public reading room, and if created on or after November 1, 
1996, shall be made available in the electronic reading room of the 
bureau's web site.
    (b) Form of request. In order to be subject to the provisions of 
this section, the following must be satisfied.
    (1) The request for records shall be made in writing, signed by the 
person making the request, and state that it is made pursuant to the 
Freedom of Information Act, 5 U.S.C. 552, or this subpart.
    (2) The request shall indicate whether the requester is a commercial 
user, an educational institution, non-commercial scientific institution, 
representative of the news media, or ``other'' requester, subject to the 
fee provisions described in Sec. 1.7. In order for the Department to 
determine the proper category for fee purposes as defined in this 
section, a request for records shall also state how the records released 
will be used. This information shall not be used to determine the 
releasibility of any record or records. A

[[Page 16]]

determination of the proper category of requester shall be based upon a 
review of the requester's submission and the bureau's own records. Where 
a bureau has reasonable cause to doubt the use to which a requester will 
put the records sought, or where that use is not clear from the request 
itself, bureaus should seek additional clarification before assigning 
the request to a specific category. The categories of requesters are 
defined as follows:
    (i) Commercial. A commercial use request refers to a request from or 
on behalf of one who seeks information for a use or purpose that 
furthers the commercial, trade, or profit interests of the requester or 
the person on whose behalf the request is made, which can include 
furthering those interests through litigation. The bureaus may determine 
from the use specified in the request that the requester is a commercial 
user.
    (ii) Educational institution. This refers to a preschool, a public 
or private elementary or secondary school, an institution of graduate 
higher education, an institution of undergraduate higher education, an 
institution of professional education, and an institution of vocational 
education, which operates a program or programs of scholarly research. 
This category does not include requesters wanting records for use in 
meeting individual academic research or study requirements.
    (iii) Non-commercial scientific institution. This refers to an 
institution that is not operated on a ``commercial'' basis as that term 
is defined in paragraph (b)(2)(i) of this section, and which is operated 
solely for the purpose of conducting scientific research, the results of 
which are not intended to promote any particular product or industry.
    (iv) Representative of the news media. This refers to any person 
actively gathering news for an entity that is organized and operated to 
publish or broadcast news to the public. The term news means information 
that is about current events or that would be of current interest to the 
public. Examples of news media entities include television or radio 
stations broadcasting to the public at large, and publishers of 
periodicals (but only in those instances when they can qualify as 
disseminators of ``news'') who make their products available for 
purchase or subscription by the general public. These examples are not 
intended to be all-inclusive. In the case of ``freelance'' journalists, 
they may be regarded as working for a news organization if they can 
demonstrate a solid basis for expecting publication through that 
organization, even though not actually employed by it. A publication 
contract would be the clearest proof, but bureaus may also look to the 
past publication record of a requester in making this determination.
    (v) ``Other'' Requester. This refers to a requester who does not 
fall within any of the previously described categories.
    (3) The request must be properly addressed to the bureau that 
maintains the record. The functions of each bureau are summarized in The 
United States Government Manual which is issued annually and is 
available from the Superintendent of Documents. Both the envelope and 
the request itself should be clearly marked ``Freedom of Information Act 
Request.'' See the appendices to this subpart for the office or officer 
to which requests shall be addressed for each bureau. A requester in 
need of guidance in defining a request or determining the proper bureau 
to which a request should be sent may contact Disclosure Services at 
202/622-0930, or may write to Disclosure Services, Department of the 
Treasury, 1500 Pennsylvania Avenue, NW, Washington, DC 20220. Requesters 
may access the ``FOIA Home Page'' at the Department of the Treasury 
World Wide Web site at: http://www.treas.gov.
    (4) The request must reasonably describe the records in accordance 
with paragraph (d) of this section.
    (5) The request must set forth the address where the person making 
the request wants to be notified about whether or not the request will 
be granted.
    (6) The request must state whether the requester wishes to inspect 
the records or desires to have a copy made and furnished without first 
inspecting them.
    (7) The request must state the firm agreement of the requester to 
pay the fees for search, duplication, and review

[[Page 17]]

as may ultimately be determined in accordance with Sec. 1.7. The 
agreement may state the upper limit (but not less than $25) that the 
requester is willing to pay for processing the request. A request that 
fees be waived or reduced may accompany the agreement to pay fees and 
shall be considered to the extent that such request is made in 
accordance with Sec. 1.7(d) and provides supporting information to be 
measured against the fee waiver standard set forth in Sec. 1.7(d)(1). 
The requester shall be notified in writing of the decision to grant or 
deny the fee waiver. A requester shall be asked to provide an agreement 
to pay fees when the request for a fee waiver or reduction is denied and 
the initial request for records does not include such agreement. If a 
requester has an outstanding balance of search, review, or duplication 
fees due for FOIA request processing, the requirements of this paragraph 
are not met until the requester has remitted the outstanding balance 
due.
    (c) Requests for records not in control of bureau; referrals; 
consultations. (1) When a requested record is in the possession or under 
the control of a bureau of the Department other than the office to which 
the request is addressed, the request for the record shall be 
transferred to the appropriate bureau and the requester notified. This 
referral shall not be considered a denial of access within the meaning 
of these regulations. The bureau of the Department to which this 
referral is made shall treat this request as a new request addressed to 
it and the time limits for response set forth by paragraph (h)(1) of 
this section shall begin when the referral is received by the designated 
office or officer of the bureau.
    (2) When a requested record has been created by an agency or 
Treasury bureau other than the Treasury bureau possessing the record, 
the bureau having custody of the record shall refer the record to the 
originating agency or Treasury bureau for a direct response to the 
requester. The requester shall be informed of the referral unless 
otherwise instructed by the originating agency. This is not a denial of 
a FOIA request; thus no appeal rights accrue to the requester.
    (3) When a FOIA request is received for a record created by a 
Treasury bureau that includes information originated by another bureau 
of the Department of the Treasury or another agency, the record shall be 
referred to the originating agency or bureau for review and 
recommendation on disclosure. The agency or bureau shall respond to the 
referring office. The Treasury bureau shall not release any such records 
without prior consultation with the originating bureau or agency.
    (4) In certain instances and at the discretion of the Departmental 
Offices, requests having impact on two or more bureaus of the Department 
may be coordinated by the Departmental Offices.
    (d) Reasonable description of records. The request for records must 
describe the records in reasonably sufficient detail to enable employees 
who are familiar with the subject area of the request to locate the 
records without placing an unreasonable burden upon the Department. 
Whenever possible, a request should include specific information about 
each record sought, such as the date, title or name, author, recipients, 
and subject matter of the record. If the Department determines that the 
request does not reasonably describe the records sought, the requester 
shall be given an opportunity to provide additional information. Such 
opportunity may, when necessary, involve a discussion with knowledgeable 
Department of the Treasury personnel. The reasonable description 
requirement shall not be used by officers or employees of the Department 
of the Treasury to improperly withhold records from the public.
    (e) Requests for expedited processing. (1) When a request for 
records includes a request for expedited processing, both the envelope 
and the request itself must be clearly marked, ``Expedited Processing 
Requested.''
    (2) Records will be processed as soon as practicable when a 
requester asks for expedited processing in writing and is granted such 
expedited treatment by the Department. The requester must demonstrate a 
compelling need for expedited processing of the requested records. A 
compelling need is defined as follows:

[[Page 18]]

    (i) Failure to obtain the requested records on an expedited basis 
could reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual. The requester shall fully explain the 
circumstances warranting such an expected threat so that the Department 
may make a reasoned determination that a delay in obtaining the 
requested records could pose such a threat; or
    (ii) With respect to a request made by a person primarily engaged in 
disseminating information, urgency to inform the public concerning 
actual or alleged Federal Government activity. A person ``primarily 
engaged in disseminating information'' does not include individuals who 
are engaged only incidentally in the dissemination of information. The 
standard of ``urgency to inform'' requires that the records requested 
pertain to a matter of current exigency to the American public and that 
delaying a response to a request for records would compromise a 
significant recognized interest to and throughout the American general 
public. The requester must adequately explain the matter or activity and 
why the records sought are necessary to be provided on an expedited 
basis.
    (3) A demonstration of a compelling need by a person making a 
request for expedited processing shall be made by a statement certified 
by the requester to be true and correct to the best of his or her 
knowledge and belief. The statement must be in the form prescribed by 28 
U.S.C. 1746, ``I declare under penalty of perjury that the foregoing is 
true and correct to the best of my knowledge and belief. Executed on 
[date].''
    (4) Upon receipt by the appropriate bureau official, a request for 
expedited processing shall be considered and a determination as to 
whether to grant or deny the request for expedited processing shall be 
made, and the requester notified, within 10 calendar days of the date of 
the request. However, in no event shall the bureau have fewer than five 
days (excluding Saturdays, Sundays, and legal public holidays) from the 
date of receipt of the request for such processing. The determination to 
grant or deny a request for expedited processing may be made solely on 
the information contained in the initial letter requesting expedited 
treatment.
    (5) Appeals of initial determinations to deny expedited processing 
must be made within 10 calendar days of the date of the initial letter 
of determination denying expedited processing. Both the envelope and the 
appeal itself shall be clearly marked, ``Appeal for Expedited 
Processing.''
    (6) An appeal determination regarding expedited processing shall be 
made, and the requester notified, within 10 days (excluding Saturdays, 
Sundays, and legal public holidays) from the date of receipt of the 
appeal.
    (f) Date of receipt of request. A request for records shall be 
considered to have been received on the date on which a complete request 
containing the information required by paragraph (b) of this section has 
been received. A determination that a request is deficient in any 
respect is not a denial of access, and such determinations are not 
subject to administrative appeal. Requests shall be stamped with the 
date of receipt by the office prescribed in the appropriate appendix. As 
soon as the date of receipt has been established, the requester shall be 
so informed and shall also be advised when to expect a response. The 
acknowledgment of receipt requirement shall not apply if a disclosure 
determination will be issued prior to the end of the 20-day time limit.
    (g) Search for record requested. Department of the Treasury 
employees shall search to identify and locate requested records, 
including records stored at Federal Records Centers. Searches for 
records maintained in electronic form or format may require the 
application of codes, queries, or other minor forms of programming to 
retrieve the requested records. Wherever reasonable, searches shall be 
done by electronic means. However, searches of electronic records are 
not required when such searches would significantly interfere with the 
operation of a Treasury automated information system or would require 
unreasonable effort to conduct. The Department of the Treasury is not 
required under 5 U.S.C. 552 to tabulate or compile information for the 
purpose of creating a record or records that do not exist.

[[Page 19]]

    (h) Initial determination--(1) In general. The officers designated 
in the appendices to this part shall make initial determinations either 
to grant or to deny in whole or in part requests for records. Such 
officers shall respond in the approximate order of receipt of the 
requests, to the extent consistent with sound administrative practice. 
These determinations shall be made and the requester notified within 20 
days (excepting Saturdays, Sundays, and legal public holidays) after the 
date of receipt of the request, as determined in accordance with 
paragraph (f) of this section, unless the designated officer invokes an 
extension pursuant to paragraph (j)(1) of this section or the requester 
otherwise agrees to an extension of the 20-day time limitation.
    (2) Granting of request. If the request is granted in full or in 
part, and if the requester wants a copy of the records, a copy of the 
records shall be mailed to the requester, together with a statement of 
the applicable fees, either at the time of the determination or shortly 
thereafter.
    (3) Inspection of records. In the case of a request for inspection, 
the requester shall be notified in writing of the determination, when 
and where the requested records may be inspected, and of the fees 
incurred in complying with the request. The records shall then promptly 
be made available for inspection at the time and place stated, in a 
manner that will not interfere with Department of the Treasury 
operations and will not exclude other persons from making inspections. 
The requester shall not be permitted to remove the records from the room 
where inspection is made. If, after making inspection, the requester 
desires copies of all or a portion of the requested records, copies 
shall be furnished upon payment of the established fees prescribed by 
Sec. 1.7. Fees may be charged for search and review time as stated in 
Sec. 1.7.
    (4) Denial of request. If it is determined that the request for 
records should be denied in whole or in part, the requester shall be 
notified by mail. The letter of notification shall:
    (i) State the exemptions relied on in not granting the request;
    (ii) If technically feasible, indicate the amount of information 
deleted at the place in the record where such deletion is made (unless 
providing such indication would harm an interest protected by the 
exemption relied upon to deny such material);
    (iii) Set forth the name and title or position of the responsible 
official;
    (iv) Advise the requester of the right to administrative appeal in 
accordance with paragraph (i) of this section; and
    (v) Specify the official or office to which such appeal shall be 
submitted.
    (5) No records found. If it is determined, after a thorough search 
for records by the responsible official or his delegate, that no records 
have been found to exist, the responsible official will so notify the 
requester in writing. The letter of notification will advise the 
requester of the right to administratively appeal the Department's 
determination that no records exist (i.e., to challenge the adequacy of 
the Department's search for responsive records) in accordance with 
paragraph (i) of this section. The response shall specify the official 
or office to which the appeal shall be submitted for review.
    (i) Administrative appeal. (1)(i) A requester may appeal a 
Department of the Treasury initial determination when:
    (A) Access to records has been denied in whole or in part;
    (B) There has been an adverse determination of the requester's 
category as provided in Sec. 1.7(d)(4);
    (C) A request for fee waiver or reduction has been denied;
    (D) It has been determined that no responsive records exist; or
    (E) A request for expedited processing has been denied.
    (ii) An appeal, other than an appeal for expedited processing, must 
be submitted within 35 days of the date of the initial determination or 
the date of the letter transmitting the last records released, whichever 
is later, except in the case of a denial for expedited processing. An 
appeal of a denial for expedited processing must be made within 10 days 
of the date of the initial determination to deny expedited processing 
(see Sec. 1.5(e)(5)). All appeals must be submitted to the official 
specified in the appropriate appendix to this subpart whose title and 
address should also

[[Page 20]]

have been included in the initial determination. An appeal that is 
improperly addressed shall be considered not to have been received by 
the Department until the office specified in the appropriate appendix 
receives the appeal.
    (2) The appeal shall--
    (i) Be made in writing and signed by the requester or his or her 
representative;
    (ii) Be addressed to and mailed or hand delivered within 35 days (or 
within 10 days when expedited processing has been denied) of the date of 
the initial determination, or the date of the letter transmitting the 
last records released, whichever is later, to the office or officer 
specified in the appropriate appendix to this subpart and also in the 
initial determination. (See the appendices to this subpart for the 
address to which appeals made by mail should be addressed);
    (iii) Set forth the address where the requester desires to be 
notified of the determination on appeal;
    (iv) Specify the date of the initial request and date of the letter 
of initial determination, and, where possible, enclose a copy of the 
initial request and the initial determination being appealed.
    (3)(i) Appeals shall be stamped with the date of their receipt by 
the office to which addressed, and shall be processed in the approximate 
order of their receipt. The receipt of the appeal shall be acknowledged 
by the office or officer specified in the appropriate appendix to this 
subpart and the requester advised of the date the appeal was received 
and the expected date of response. The decision to affirm the initial 
determination (in whole or in part) or to grant the request for records 
shall be made and notification of the determination mailed within 20 
days (exclusive of Saturdays, Sundays, and legal public holidays) after 
the date of receipt of the appeal, unless extended pursuant to paragraph 
(j)(1) of this section. If it is decided that the initial determination 
is to be upheld (in whole or in part) the requester shall be--
    (A) Notified in writing of the denial;
    (B) Notified of the reasons for the denial, including the FOIA 
exemptions relied upon;
    (C) Notified of the name and title or position of the official 
responsible for the determination on appeal; and
    (D) Provided with a statement that judicial review of the denial is 
available in the United States District Court for the judicial district 
in which the requester resides or has a principal place of business, the 
judicial district in which the requested records are located, or the 
District of Columbia in accordance with 5 U.S.C. 552(a)(4)(B).
    (ii) If the initial determination is reversed on appeal, the 
requester shall be so notified and the request shall be processed 
promptly in accordance with the decision on appeal.
    (4) If a determination cannot be made within the 20-day period (or 
within a period of extension pursuant to paragraph (j)(1) of this 
section), the requester may be invited to agree to a voluntary extension 
of the 20-day appeal period. This voluntary extension shall not 
constitute a waiver of the right of the requester ultimately to commence 
an action in a United States district court.
    (j) Time extensions; unusual circumstances. (1) In unusual 
circumstances, the time limitations specified in paragraphs (h) and (i) 
of this section may be extended by written notice from the official 
charged with the duty of making the determination to the person making 
the request or appeal setting forth the reasons for this extension and 
the date on which the determination is expected to be sent. As used in 
this paragraph, unusual circumstances means, but only to the extent 
reasonably necessary to the proper processing of the particular 
requests:
    (i) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
office processing the request;
    (ii) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request; or
    (iii) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request, or among two or

[[Page 21]]

more bureaus or components of bureaus of the Department of the Treasury 
having substantial subject matter interest therein.
    (2) Any extension or extensions of time shall not cumulatively total 
more than 10 days (exclusive of Saturdays, Sundays, and legal public 
holidays). However, if additional time is needed to process the request, 
the bureau shall notify the requester and provide the requester an 
opportunity to limit the scope of the request or arrange for an 
alternative time frame for processing the request or a modified request. 
The requester shall retain the right to define the desired scope of the 
request, as long as it meets the requirements contained in this subpart.
    (3) Bureaus may establish multitrack processing of requests based on 
the amount of work or time, or both, involved in processing requests.
    (4) If more than one request is received from the same requester, or 
from a group of requesters acting in concert, and the Department 
believes that such requests constitute a single request which would 
otherwise satisfy the unusual circumstances specified in paragraph 
(j)(1) of this section, and the requests involve clearly related 
matters, the Department may aggregate these requests for processing 
purposes.
    (k) Failure to comply. If a bureau of the Department of the Treasury 
fails to comply with the time limits specified in paragraphs (h) or (i) 
of this section , or the time extensions of paragraph (j) of this 
section, any person making a request for records in accordance with 
Sec. 1.5 shall be considered to have exhausted administrative remedies 
with respect to the request. Accordingly, the person making the request 
may initiate suit as set forth in paragraph (l) of this section.
    (l) Judicial review. If an adverse determination is made upon appeal 
pursuant to paragraph (i) of this section, or if no determination is 
made within the time limits specified in paragraphs (h) and (i) of this 
section, together with any extension pursuant to paragraph (j)(1) of 
this section or within the time otherwise agreed to by the requester, 
the requester may commence an action in a United States district court 
in the district in which he resides, in which his principal place of 
business is located, in which the records are situated, or in the 
District of Columbia, pursuant to 5 U.S.C. 552(a)(4).
    (m) Preservation of records. Under no circumstances shall records be 
destroyed while they are the subject of a pending request, appeal, or 
lawsuit under the FOIA.
    (n) Processing requests that are not properly addressed. A request 
that is not properly addressed as specified in the appropriate appendix 
to this subpart shall be forwarded to the appropriate bureau or bureaus 
for processing. If the recipient of the request does not know the 
appropriate bureau to forward it to, the request shall be forwarded to 
the Departmental Disclosure Officer (Disclosure Services, DO), who will 
determine the appropriate bureau. A request not addressed to the 
appropriate bureau will be considered to have been received for purposes 
of paragraph (f) of this section when the request has been received by 
the appropriate bureau office as designated in the appropriate appendix 
to this subpart. An improperly addressed request, when received by the 
appropriate bureau office, shall be acknowledged by that bureau.



Sec. 1.6  Business information.

    (a) In general. Business information provided to the Department of 
the Treasury by a business submitter shall not be disclosed pursuant to 
a Freedom of Information Act request except in accordance with this 
section.
    (b) Notice to business submitters. A bureau shall provide a business 
submitter with prompt written notice of receipt of a request or appeal 
encompassing its business information whenever required in accordance 
with paragraph (c) of this section, and except as is provided in 
paragraph (g) of this section. Such written notice shall either describe 
the exact nature of the business information requested or provide copies 
of the records or portions of records containing the business 
information.
    (c) When notice is required. The bureau shall provide a business 
submitter with notice of receipt of a request or appeal whenever:
    (1) The business submitter has in good faith designated the 
information

[[Page 22]]

as commercially or financially sensitive information, or
    (2) The bureau has reason to believe that disclosure of the 
information could reasonably be expected to cause substantial 
competitive harm.
    (3) Notice of a request for business information falling within 
paragraph (c)(1) or (2) of this section shall be required for a period 
of not more than ten years after the date of submission unless the 
business submitter requests, and provides acceptable justification for, 
a specific notice period of greater duration.
    (4) The submitter's claim of confidentiality should be supported by 
a statement by an authorized representative of the company providing 
specific justification that the information in question is in fact 
confidential commercial or financial information and has not been 
disclosed to the public.
    (d) Opportunity to object to disclosure. (1) Through the notice 
described in paragraph (b) of this section, a bureau shall afford a 
business submitter ten days from the date of the notice (exclusive of 
Saturdays, Sundays, and legal public holidays) to provide the bureau 
with a detailed statement of any objection to disclosure. Such statement 
shall specify all grounds for withholding any of the information under 
any exemption of the Freedom of Information Act and, in the case of 
Exemption 4, shall demonstrate why the information is considered to be a 
trade secret or commercial or financial information that is privileged 
or confidential. Information provided by a business submitter pursuant 
to this paragraph may itself be subject to disclosure under the FOIA.
    (2) When notice is given to a submitter under this section, the 
requester shall be advised that such notice has been given to the 
submitter. The requester shall be further advised that a delay in 
responding to the request may be considered a denial of access to 
records and that the requester may proceed with an administrative appeal 
or seek judicial review, if appropriate. However, the requester will be 
invited to agree to a voluntary extension of time so that the bureau may 
review the business submitter's objection to disclose.
    (e) Notice of intent to disclose. A bureau shall consider carefully 
a business submitter's objections and specific grounds for nondisclosure 
prior to determining whether to disclose business information. Whenever 
a bureau decides to disclose business information over the objection of 
a business submitter, the bureau shall forward to the business submitter 
a written notice which shall include:
    (1) A statement of the reasons for which the business submitter's 
disclosure objections were not sustained;
    (2) A description of the business information to be disclosed; and
    (3) A specified disclosure date which is not less than ten days 
(exclusive of Saturdays, Sundays, and legal public holidays) after the 
notice of the final decision to release the requested information has 
been mailed to the submitter. Except as otherwise prohibited by law, a 
copy of the disclosure notice shall be forwarded to the requester at the 
same time.
    (f) Notice of FOIA lawsuit. Whenever a requester brings suit seeking 
to compel disclosure of business information covered by paragraph (c) of 
this section, the bureau shall promptly notify the business submitter.
    (g) Exception to notice requirement. The notice requirements of this 
section shall not apply if:
    (1) The bureau determines that the information shall not be 
disclosed;
    (2) The information lawfully has been published or otherwise made 
available to the public; or
    (3) Disclosure of the information is required by law (other than 5 
U.S.C. 552).



Sec. 1.7  Fees for services.

    (a) In general. This fee schedule is applicable uniformly throughout 
the Department of the Treasury and pertains to requests processed under 
the Freedom of Information Act. Specific levels of fees are prescribed 
for each of the following categories of requesters. Requesters are asked 
to identify the applicable fee category they belong to in their initial 
request in accordance with Sec. 1.5(b).
    (1) Commercial use requesters. These requesters are assessed charges 
which

[[Page 23]]

recover the full direct costs of searching for, reviewing, and 
duplicating the records sought. Commercial use requesters are not 
entitled to two hours of free search time or 100 free pages of 
duplication of documents. Moreover, when a request is received for 
disclosure that is primarily in the commercial interest of the 
requester, the Department is not required to consider a request for a 
waiver or reduction of fees based upon the assertion that disclosure 
would be in the public interest. The Department may recover the cost of 
searching for and reviewing records even if there is ultimately no 
disclosure of records, or no records are located.
    (2) Educational and Non-Commercial Scientific Institution 
Requesters. Records shall be provided to requesters in these categories 
for the cost of duplication alone, excluding charges for the first 100 
pages. To be eligible, requesters must show that the request is made 
under the auspices of a qualifying institution and that the records are 
not sought for a commercial use, but are sought in furtherance of 
scholarly (if the request is from an educational institution) or 
scientific (if the request is from a non-commercial scientific 
institution) research. These categories do not include requesters who 
want records for use in meeting individual academic research or study 
requirements.
    (3) Requesters who are Representatives of the News Media. Records 
shall be provided to requesters in this category for the cost of 
duplication alone, excluding charges for the first 100 pages.
    (4) All Other Requesters. Requesters who do not fit any of the 
categories described above shall be charged fees that will recover the 
full direct cost of searching for and duplicating records that are 
responsive to the request, except that the first 100 pages of 
duplication and the first two hours of search time shall be furnished 
without charge. The Department may recover the cost of searching for 
records even if there is ultimately no disclosure of records, or no 
records are located. Requests from persons for records about themselves 
filed in the Department's systems of records shall continue to be 
treated under the fee provisions of the Privacy Act of 1974 which permit 
fees only for duplication, after the first 100 pages are furnished free 
of charge.
    (b) Fee waiver determination. Where the initial request includes a 
request for reduction or waiver of fees, the responsible official shall 
determine whether to grant the request for reduction or waiver before 
processing the request and notify the requester of this decision. If the 
decision does not waive all fees, the responsible official shall advise 
the requester of the fact that fees shall be assessed and, if 
applicable, payment must be made in advance pursuant to Sec. 1.7(e)(2).
    (c) When fees are not charged. (1) No fee shall be charged for 
monitoring a requester's inspection of records.
    (2) Fees shall be charged in accordance with the schedule contained 
in paragraph (g) of this section for services rendered in responding to 
requests for records, unless any one of the following applies:
    (i) Services were performed without charge;
    (ii) The cost of collecting a fee would be equal to or greater than 
the fee itself; or,
    (iii) The fees were waived or reduced in accordance with paragraph 
(d) of this section.
    (d) Waiver or reduction of fees. (1) Fees may be waived or reduced 
on a case-by-case basis in accordance with this paragraph by the 
official who determines the availability of the records, provided such 
waiver or reduction has been requested in writing. Fees shall be waived 
or reduced by this official when it is determined, based upon the 
submission of the requester, that a waiver or reduction of the fees is 
in the public interest because furnishing the information is likely to 
contribute significantly to public understanding of the operations or 
activities of the government and is not primarily in the commercial 
interest of the requester. Fee waiver/reduction requests shall be 
evaluated against the fee waiver policy guidance issued by the 
Department of Justice on April 2, 1987.
    (2) Normally no charge shall be made for providing records to state 
or foreign governments, international governmental organizations, or 
local government agencies or offices.

[[Page 24]]

    (3) Appeals from denials of requests for waiver or reduction of fees 
shall be decided in accordance with the criteria set forth in paragraph 
(d)(1) of this section by the official authorized to decide appeals from 
denials of access to records. Appeals shall be addressed in writing to 
the office or officer specified in the appropriate appendix to this 
subpart within 35 days of the denial of the initial request for waiver 
or reduction and shall be decided within 20 days (excluding Saturdays, 
Sundays, and legal public holidays).
    (4) Appeals from an adverse determination of the requester's 
category as described in Sec. 1.5(b)(2) and provided in Sec. 1.5(i)(1) 
shall be decided by the official authorized to decide appeals from 
denials of access to records and shall be based upon a review of the 
requester's submission and the bureau's own records. Appeals shall be 
addressed in writing to the office or officer specified in the 
appropriate appendix to this subpart within 35 days of the date of the 
bureau's determination of the requester's category and shall be decided 
within 20 days (excluding Saturdays, Sundays, and legal public 
holidays).
    (e) Advance notice of fees. (1) When the fees for processing the 
request are estimated to exceed the limit set by the requester, and that 
amount is less than $250, the requester shall be notified of the 
estimated costs. The requester must provide an agreement to pay the 
estimated costs; however, the requester shall also be given an 
opportunity to reformulate the request in an attempt to reduce fees.
    (2) If the requester has failed to state a limit and the costs are 
estimated to exceed $250.00, the requester shall be notified of the 
estimated costs and must pre-pay such amount prior to the processing of 
the request, or provide satisfactory assurance of full payment if the 
requester has a history of prompt payment of FOIA fees. The requester 
shall also be given an opportunity to reformulate the request in such a 
way as to constitute a request for responsive records at a reduced fee.
    (3) When the Department or a bureau of the Department acts under 
paragraphs (e)(1) or (2) of this section, the administrative time limits 
of 20 days (excluding Saturdays, Sundays, and legal public holidays) 
from receipt of initial requests or appeals, plus extensions of these 
time limits, shall begin only after fees have been paid, a written 
agreement to pay fees has been provided, or a request has been 
reformulated.
    (f) Form of payment. (1) Payment may be made by check or money order 
payable to the Treasury of the United States or the relevant bureau of 
the Department of the Treasury.
    (2) The Department of the Treasury reserves the right to request 
prepayment after a request is processed and before documents are 
released.
    (3) When costs are estimated or determined to exceed $250, the 
Department shall either obtain satisfactory assurance of full payment of 
the estimated cost where the requester has a history of prompt payment 
of FOIA fees or require a requester to make an advance payment of the 
entire estimated or determined fee before continuing to process the 
request.
    (4) If a requester has previously failed to pay a fee within 30 days 
of the date of the billing, the requester shall be required to pay the 
full amount owed plus any applicable interest, and to make an advance 
payment of the full amount of the estimated fee before the Department 
begins to process a new request or the pending request. Whenever 
interest is charged, the Department shall begin assessing interest on 
the 31st day following the day on which billing was sent. Interest shall 
be at the rate prescribed in 31 U.S.C. 3717. In addition, the Department 
shall take all steps authorized by the Debt Collection Act of 1982, as 
amended by the Debt Collection Improvement Act of 1996, including 
administrative offset pursuant to 31 CFR Part 5, disclosure to consumer 
reporting agencies and use of collection agencies, to effect payment.
    (g) Amounts to be charged for specific services. The fees for 
services performed by a bureau of the Department of the Treasury shall 
be imposed and collected as set forth in this paragraph.
    (1) Duplicating records. All requesters, except commercial 
requesters, shall receive the first 100 pages duplicated without charge. 
Absent a determination to waive fees, a bureau shall charge requesters 
as follows:

[[Page 25]]

    (i) $.20 per page, up to 8\1/2\x14, made by photocopy or 
similar process.
    (ii) Photographs, films, and other materials--actual cost of 
duplication.
    (iii) Other types of duplication services not mentioned above--
actual cost.
    (iv) Material provided to a private contractor for copying shall be 
charged to the requester at the actual cost charged by the private 
contractor.
    (2) Search services. Bureaus shall charge for search services 
consistent with the following:
    (i) Searches for other than electronic records. The Department shall 
charge for search time at the salary rate(s) (basic pay plus 16 percent) 
of the employee(s) making the search. However, where a single class of 
personnel is used exclusively (e.g., all administrative/clerical, or all 
professional/executive), an average rate for the range of grades 
typically involved may be established. This charge shall include 
transportation of personnel and records necessary to the search at 
actual cost. Fees may be charged for search time as prescribed in Sec. 
1.7, even if the search does not yield any responsive records, or if 
records are denied.
    (ii) Searches for electronic records. The Department shall charge 
for actual direct cost of the search, including computer search time, 
runs, and the operator's salary. The fee for computer output shall be 
actual direct costs. For requesters in the ``all other'' category, when 
the cost of the search (including the operator time and the cost of 
operating the computer to process a request) equals the equivalent 
dollar amount of two hours of the salary of the person performing the 
search (i.e., the operator), the charge for the computer search will 
begin.
    (3) Review of records. The Department shall charge commercial use 
requesters for review of records at the salary rate(s) (i.e., basic pay 
plus 16 percent) of the employee(s) making the review. However, when a 
single class of personnel is used exclusively (e.g., all administrative/
clerical, or all professional/executive), an average rate for the range 
of grades typically involved may be established. Fees may be charged for 
review time as prescribed in Sec. 1.7, even if records ultimately are 
not disclosed.
    (4) Inspection of records. Fees for all services provided shall be 
charged whether or not copies are made available to the requester for 
inspection.
    (5) Other services. Other services and materials requested which are 
not covered by this part nor required by the FOIA are chargeable at the 
actual cost to the Department. This includes, but is not limited to:
    (i) Certifying that records are true copies;
    (ii) Sending records by special methods such as express mail, etc.
    (h) Aggregating requests. When the Department or a bureau of the 
Department reasonably believes that a requester or group of requesters 
is attempting to break a request down into a series of requests for the 
purpose of evading the assessment of fees, the agency shall aggregate 
any such requests and charge accordingly.



      Sec. Appendix A to Subpart A of Part 1--Departmental Offices

    1. In general. This appendix applies to the Departmental Offices as 
defined in 31 CFR 1.1(a)(1).
    2. Public reading room. The public reading room for the Departmental 
Offices is the Treasury Library. The Library is located in the Main 
Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. 
For building security purposes, visitors are required to make an 
appointment by calling 202-622-0990.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the Departmental Offices 
will be made by the head of the organizational unit having immediate 
custody of the records requested or the delegate of such official. 
Requests for records should be addressed to: Freedom of Information 
Request, DO, Assistant Director, Disclosure Services, Department of the 
Treasury, 1500 Pennsylvania Avenue, NW, Washington, DC 20220.
    4. Administrative appeal of initial determination to deny records.
    (i) Appellate determinations under 31 CFR 1.5(i) with respect to 
records of the Departmental Offices will be made by the Secretary, 
Deputy Secretary, Under Secretary, General Counsel, Inspector General, 
Treasury Inspector General for Tax Administration, Treasurer of the 
United States, or Assistant Secretary having jurisdiction over the 
organizational unit which has immediate custody of the records 
requested, or the delegate of such officer.

[[Page 26]]

    (ii) Appellate determinations with respect to requests for expedited 
processing shall be made by the Deputy Assistant Secretary 
(Administration).
    (iii) Appeals should be addressed to:

Freedom of Information Appeal, DO, Assistant Director, Disclosure 
Services, Department of the Treasury, 1500 Pennsylvania Avenue, NW., 
Washington, DC 20220.

    5. Delivery of process. Service of process will be received by the 
General Counsel of the Department of the Treasury or the delegate of 
such officer and shall be delivered to the following location: General 
Counsel, Department of the Treasury, Room 3000, Main Treasury Building, 
1500 Pennsylvania Avenue, NW., Washington, DC 20220.



    Sec. Appendix B to Subpart A of Part 1--Internal Revenue Service

    1. In general. This appendix applies to the Internal Revenue 
Service. See also 26 CFR 601.702.
    2. Public reading room. The public reading rooms for the Internal 
Revenue Service are maintained at the following location:

                             National Office

                             Mailing Address

Freedom of Information Reading Room, PO Box 795, Ben Franklin Station, 
Washington, DC 20044

                             Walk-In Address

Room 1621, 1111 Constitution Avenue, NW., Washington, DC

                            Northeast Region

                             Mailing Address

Freedom of Information Reading Room, PO Box 5138, E:QMS:D, New York, NY 
10163

                             Walk-In Address

11th Floor, 110 W. 44th Street, New York, NY

                            Midstates Region

                             Mailing Address

Freedom of Information Reading Room, Mail Code 7000 DAL, 1100 Commerce 
Street, Dallas, TX 75242

                             Walk-In Address

10th Floor, Rm. 10B37, 1100 Commerce Street, Dallas, TX

                            Southeast Region

                             Mailing Address

401 W. Peachtree Street, NW., Stop 601D, Room 868, Atlanta, GA 30365

                             Walk-In Address

Same as mailing address

                             Western Region

                             Mailing Address

1301 Clay Street, Stop 800-S, Oakland, CA 94612

                             Walk-In Address

8th Floor, 1301 Clay Street, Oakland, CA

    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the Internal Revenue 
Service, grant expedited processing, grant a fee waiver, or determine 
requester category will be made by those officials specified in 26 CFR 
601.702.
    4. Administrative appeal of initial determination to deny records. 
Appellate eterminations under 31 CFR 1.5(i) with respect to records of 
the Internal Revenue Service will be made by the Commissioner of 
Internal Revenue or the delegate of such officer. Appeals made by mail 
should be addressed to:

Freedom of Information Appeal, Commissioner of Internal Revenue Service, 
c/o Ben Franklin Station, PO Box 929, Washington, DC 20044.

    Appeals may be delivered personally to the Assistant Chief Counsel 
(Disclosure Litigation) CC:EL:D, Office of the Chief Counsel, Internal 
Revenue Building, 1111 Constitution Avenue NW., Washington, D.C.
    5. Delivery of process. Service of process shall be effected 
consistent with Rule 4 of the Federal Rule of Civil Procedure, and 
directed to the Commissioner of Internal Revenue at the following 
address:

Commissioner, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC 20224. Attention: CC:EL:D.



  Sec. Appendix C to Subpart A of Part 1--United States Customs Service

    1. In general. This appendix applies to the United States Customs 
Service.
    2. Public reading room. The public reading room for the United 
States Customs Service is maintained at the following location:

United States Customs Service, 1300 Pennsylvania Avenue NW., Washington, 
DC 20229.

    3. Requests for records.
    (a) Headquarters--Initial determinations under 31 CFR 1.5(h) as to 
whether to grant requests for records will be made by the appropriate 
Division Director at Customs Service Headquarters having custody of or 
functional jurisdiction over the subject matter of the requested 
records. If the request relates to records maintained in an office which 
is

[[Page 27]]

not within a division, the initial determination shall be made by the 
individual designated for that purpose by the Assistant Commissioner 
having responsibility for that office. Requests may be mailed or 
delivered in person to:

Freedom of Information Act, Chief, Disclosure Law Branch, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229.

    (b) Field Offices--Initial determinations under 31 CFR 1.5(h) as to 
whether to grant requests for records maintained by the Office of 
Investigations will be made by the Special Agent in Charge in whose 
office the records are maintained. Initial determinations of records 
maintained in Customs Ports of Entry as to whether or not to grant 
requests for records will be made by the Port Director of the Customs 
Service Port having jurisdiction over the Port of Entry in which the 
records are maintained. Requests may be mailed or faxed to or delivered 
personally to the respective Special Agents in Charge or Port Directors 
of the Customs Service Ports at the following locations:

               Offices of Special Agents in Charge (SACS)

                              Atlanta--SAC

1691 Phoenix Blvd., Suite 250, Atlanta, Georgia 30349, Phone (770) 994-
2230, FAX (770) 994-2262

                              Detroit--SAC

McNamara Federal Building, 477 Michigan Avenue, Room 350, Detroit, 
Michigan 8226-2568, Phone (313) 226-3166, FAX (313) 226-6282

                             Baltimore--SAC

40 South Gay Street, 3rd Floor Baltimore, Maryland 21202, Phone (410) 
962-2620, FAX (410) 962-3469

                              El Paso--SAC

9400 Viscount Blvd., Suite 200, El Paso, Texas 79925, Phone (915) 540-
5700, FAX (915) 540-5754

                               Boston--SAC

10 Causeway Street, Room 722, Boston, MA 02222-1054, Phone (617) 565-
7400, FAX (617) 565-7422

                              Houston--SAC

4141 N. Sam Houston Pkwy, E., Houston, Texas 77032, Phone (281) 985-
0500, FAX (281) 985-0505

                              Buffalo--SAC

111 West Huron Street, Room 416, Buffalo, New York 14202, Phone (716) 
551-4375, FAX (716) 551-4379

                            Los Angeles--SAC

300 South Ferry St., Room 2037, Terminal Island, CA 90731, Phone (310) 
514-6231, FAX (310) 514-6280

                              Chicago--SAC

610 South Canal Street, Room 1001, Chicago, Illinois 60607, Phone (312) 
353-8450, FAX (312) 353-8455

                               Miami--SAC

8075 NW 53rd Street, Scranton Building, Miami, Florida 33166, Phone 
(305) 597-6030, FAX (305) 597-6227

                               Denver--SAC

115 Inverness Drive, East, Suite 300, Englewood, CO 80112-5131, Phone 
(303) 84-6480, FAX (303) 784-6490

                            New Orleans--SAC

423 Canal Street, Room 207, New Orleans, LA 70130, Phone (504) 670-2416, 
FAX (504) 589-2059

                              New York--SAC

6 World Trade Center, New York, New York 10048-0945, Phone (212) 466-
2900, FAX (212) 466-2903

                              San Juan--SAC

1, La Puntilla Street, Room 110, San Juan, PR 00901, Phone 
(787) 729-6975 FAX (787) 729-6646

                            San Antonio--SAC

10127 Morocco, Suite 180, San Antonio, Texas 78216, Phone (210) 229-
4561, FAX (210) 229-4582

                              Seattle--SAC

1000--2nd Avenue, Suite 2300, Seattle, Washington, 98104, Phone (206) 
553-7531, FAX (206) 553-0826

                             San Diego--SAC

185 West ``F'' Street, Suite 600, San Diego, CA 92101, Phone (619) 57-
6850, FAX (619) 557-5109

                               Tampa--SAC

2203 North Lois Avenue, Suite 600, Tampa, Florida 33607, Phone (813) 
348-1881, FAX (813) 348-1871

                           San Francisco--SAC

1700 Montgomery Street, Suite 445, San Francisco, CA 94111, Phone (415) 
705-4070, FAX (415) 705-4065

                               Tucson--SAC

555 East River Road, Tucson, Arizona 85704, Phone (520) 670-6026, FAX 
(520) 70-6233

[[Page 28]]

                          Customs Service Ports

Anchorage: 605 West Fourth Avenue Anchorage, AK 99501. Phone: (907) 271-
2675; FAX: (907) 271-2684.
Minneapolis: 110 South Street Minneapolis, MN 55401. Phone: (612) 348-
1690; FAX: (612) 348-1630.
Baltimore: 200 St. Paul Place Baltimore, MD 21202. Phone: (410) 962-
2666; FAX: (410) 962-9335.
Mobile: 150 North Royal Street Mobile, AL 36602. Phone: (205) 441-5106; 
FAX: (205) 441-6061.
Blaine: 9901 Pacific Highway Blaine, WA 98230. Phone: (360) 332-5771; 
FAX: (360) 332-4701.
New Orleans: 423 Canal Street New Orleans, LA 70130. Phone: (504) 589-
6353; FAX: (504) 589-7305.
Boston: 10 Causeway Street Boston, MA 02222-1059. Phone: (617) 565-6147; 
FAX: (617) 565-6137.
New York: 6 World Trade Center New York, NY 10048. Phone: (212) 466-
4444; FAX: (212) 455-2097.
Buffalo: 111 West Huron Street Buffalo, NY 14202-22378. Phone: (716) 
551-4373; FAX: (716) 551-5011.
New York-JFK Area: Building 77 Jamaica, NY 11430. Phone: (718) 
553-1542; FAX: (718) 553-0077.
Champlain: 35 West Service Road Rts. 1 & 9 South Champlain, NY 12919. 
Phone: (518) 298-8347; FAX: (518) 298-8314.
New York-NY/Newark Area: Hemisphere Center, Newark, NJ 07114. Phone: 
(201) 645-3760; FAX: (201) 645-6634.
Charleston: 200 East Bay Street Charleston, SC 29401. Phone: (803) 727-
4296; FAX: (803) 727-4043.
Nogales: 9 North Grand Avenue Nogales, AZ 85621. Phone: (520) 287-1410; 
FAX: (520) 287-1421.
Charlotte: 1801-K Cross Beam Drive Charlotte, NC 28217. Phone: (704) 
329-6101; FAX: (704) 329-6103.
Norfolk: 200 Granby Street Norfolk, VA 23510. Phone: (804) 441-3400; 
FAX: (804) 441-6630.
Charlotte/Amalie: Main Post OFC-Sugar Estate St. Thomas, VI 00801. 
Phone: (809) 774-2511; FAX: (809) 776-3489.
Pembina: PO Box 610 Pembina, ND 58271. Phone: (701) 825-6201; FAX: (701) 
825-6473.
Chicago: 610 South Canal Street Chicago, IL 60607. Phone: (312) 353-
6100; FAX: (312) 353-2337.
Philadelphia: 2nd & Chestnut Streets Philadelphia, PA 19106. Phone: 
(215) 597-4605; FAX: (215) 597-2103.
Cleveland: 56 Erieview Plaza Cleveland, OH 44114. Phone: (216) 891-3804; 
FAX: (216) 891-3836.
Portland, Oregon: 511 NW Broadway Portland, OR 97209. Phone: (503) 326-
2865; FAX: (503) 326-3511.
Dallas/Fort Worth: PO Box 61905 Dallas/Fort Worth Airport, TX 75261. 
Phone: (972) 574-2170; FAX: (972) 574-4818.
Providence: 49 Pavilion Avenue Providence, RI 02905. Phone: (401) 941-
6326; FAX: (401) 941-6628.
Denver: 4735 Oakland Street Denver, CO 80239. Phone: (303) 361-0715; 
FAX: (303) 361-0722.
San Diego: 610 West Ash Street San Diego, CA 92188. Phone: (619) 557-
6758; FAX: (619) 557-5314.
Detroit: 477 Michigan Avenue Detroit, MI 48226. Phone: (313) 226-3178; 
FAX: (313) 226-3179.
San Francisco: 555 Battery Avenue San Francisco, CA 94111. Phone: (415) 
744-7700; FAX: (415) 744-7710.
Duluth: 515 West 1st Street Duluth, MN 55802-1390. Phone: (218) 720-
5201; FAX: (218) 720-5216.
San Juan: 1 La Puntilla San Juan, PR 00901. Phone: (809) 729-
6965; FAX: (809) 729-6978.
El Paso: 9400 Viscount Boulevard El Paso, TX 79925. Phone: (915) 540-
5800; FAX: (915) 540-3011.
Savannah: 1 East Bay Street Savannah, GA 31401. Phone: (912) 652-4256; 
FAX: (912) 652-4435.
Great Falls: 300 2nd Avenue South Great Falls, MT 59403. Phone: (406) 
453-7631; FAX: (406) 453-7069.
Seattle: 1000 2nd Avenue Seattle, WA 98104-1049. Phone: (206) 553-0770; 
FAX: (206) 553-2970.
Honolulu: 335 Merchant Street Honolulu, HI 96813. Phone: (808) 522-8060; 
FAX: (808) 522-8060.
St. Albans: P.O. Box 1490 St. Albans, VT 05478. Phone: (802) 524-7352; 
FAX: (802) 527-1338.
Houston/Galveston: 1717 East Loop Houston, TX 77029. Phone: (713) 985-
6712; FAX: (713) 985-6705.
St. Louis: 4477 Woodson Road St. Louis, MO 63134-3716. Phone: (314) 428-
2662; FAX: (314) 428-2889.
Laredo/Colombia: P.O. Box 3130 Laredo, TX 78044. Phone: (210) 726-2267; 
FAX: (210) 726-2948.
Tacoma: 2202 Port of Tacoma Road, Tacoma, WA 98421. Phone: (206) 593-
6336; FAX: (206) 593-6351.
Los Angeles: 300 South Ferry Street Terminal Island, CA 90731. Phone: 
(310) 514-6001; FAX: (310) 514-6769.
Tampa: 4430 East Adamo Drive Tampa, FL 33605. Phone: (813) 228-2381; 
FAX: (813) 225-7309.
Miami Airport: 6601 West 25th Street Miami, FL 33102-5280. Phone: (305) 
869-2800; FAX: (305) 869-2822.
Washington, DC: P.O. Box 17423 Washington, DC. 20041. Phone: (703) 318-
5900; FAX: (703) 318-6706.

[[Page 29]]

Milwaukee: P.O. Box 37260 Milwaukee, WI 53237-0260. Phone: (414) 571-
2860; FAX: (414) 762-0253.

    (c) All such requests should be conspicuously labeled on the face of 
the envelope, ``Freedom of Information Act Request'' or ``FOIA 
Request''.
    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) will be made by the 
Assistant Commissioner of Customs (Office of Regulations and Rulings), 
or his designee, and all such appeals should be mailed, faxed (202/927-
1873) or personally delivered to the United States Customs Service, 1300 
Pennsylvania Avenue, NW., Washington, DC 20229. If possible, a copy of 
the initial letter of determination should be attached to the appeal.
    5. Delivery of process. Service of process will be received by the 
Chief Counsel, United States Customs Service, 1300 Pennsylvania Avenue, 
NW., Washington, DC 20229.



  Sec. Appendix D to Subpart A of Part 1--United States Secret Service

    1. In general. This appendix applies to the United States Secret 
Service.
    2. Public reading room. The United States Secret Service will 
provide a room on an ad hoc basis when necessary. Contact the Disclosure 
Officer, Room 720, 1800 G Street, NW., Washington, DC 20223 to make 
appointments.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the United States Secret 
Service will be made by the Freedom of Information and Privacy Acts 
Officer, United States Secret Service. Requests may be mailed or 
delivered in person to:

Freedom of Information Act Request, FOIA and Privacy Acts Officer, U.S. 
Secret Service, oom 720, 1800 G Street, NW., Washington, DC 20223.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the United States Secret Service will be made by the Deputy Director, 
United States Secret Service. Appeals should be addressed to:

Freedom of Information Appeal, Deputy Director, U.S. Secret Service, 
Room 800, 1800 G Street, NW., Washington, DC 20223.

    5. Delivery of Process. Service of process will be received by the 
United States Secret Service Chief Counsel at the following address:

Chief Counsel, U.S. Secret Service, Room 842, 1800 G Street, NW., 
Washington, DC 20223.



 Sec. Appendix E to Subpart A of Part 1--Bureau of Alcohol, Tobacco and 
                                Firearms

    1. In general. This appendix applies to the Bureau of Alcohol, 
Tobacco and Firearms.
    2. Public reading room. The Bureau of Alcohol, Tobacco and Firearms 
will make materials available for review on an ad hoc basis when 
necessary. Contact the Chief, Disclosure Division, Bureau of Alcohol, 
Tobacco, and Firearms, 650 Massachusetts Avenue, NW., Washington, DC 
20226.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the Bureau of Alcohol, 
Tobacco, and Firearms will be made by the Chief, Disclosure Division, 
Office of Assistant Director (Liaison and Public Information) or the 
delegate of such officer. Requests may be mailed or delivered in person 
to:

Freedom of Information Act Request, Chief, Disclosure Division, Bureau 
of Alcohol, Tobacco, and Firearms, 650 Massachusetts Avenue, NW., 
Washington, DC 20226.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the Bureau of Alcohol, Tobacco and Firearms will be made by the 
Assistant Director, Liaison and Public Information, Bureau of Alcohol, 
Tobacco, and Firearms or the delegate of such officer.
    Appeals may be mailed or delivered in person to:

Freedom of Information Appeal, Assistant Director, Liaison and Public 
Information, Bureau of Alcohol, Tobacco, and Firearms, 650 Massachusetts 
Avenue, NW., Washington, DC 20226.

    5. Delivery of process. Service of process will be received by the 
Director of the Bureau of Alcohol, Tobacco, and Firearms at the 
following location:

Bureau of Alcohol, Tobacco, and Firearms, 650 Massachusetts Avenue, NW., 
Washington, DC 20226, Attention: Chief Counsel.



Sec. Appendix F to Subpart A of Part 1--Bureau of Engraving and Printing

    1. In general. This appendix applies to the Bureau of Engraving and 
Printing.
    2. Public reading room. Contact the Disclosure Officer, 14th and C 
Streets, SW., Washington, DC 20228, to make an appointment.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the Bureau of Engraving 
and Printing will be made by the Assistant to the Director. Requests may 
be mailed or delivered in person to:

Freedom of Information Act Request, Disclosure Officer, (Assistant to 
the Director),

[[Page 30]]

Room 112-M, Bureau of Engraving and Printing, Washington, DC 20228.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the Bureau of Engraving and Printing will be made by the Director of the 
Bureau of Engraving and Printing or the delegate of the Director. 
Appeals may be mailed or delivered in person to:

Freedom of Information Appeal, Director, Bureau of Engraving and 
Printing, 14th and C Streets, SW., Room 119-M, Washington, DC 20228.

    5. Delivery of process. Service of process will be received by the 
Chief Counsel or the delegate of such officer at the following location:

Chief Counsel, Bureau of Engraving and Printing, 14th and C Streets, 
SW., Room 04-24 M, Washington, DC 20228.



  Sec. Appendix G to Subpart A of Part 1--Financial Management Service

    1. In general. This appendix applies to the Financial Management 
Service.
    2. Public reading room. The public reading room for the Financial 
Management Service is maintained at the following location:

Library, Main Treasury Building, 1500 Pennsylvania Avenue NW., 
Washington, DC 20220.

    For building security purposes, visitors are required to make an 
appointment by calling 202/622-0990.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
whether to grant requests for records will be made by the Disclosure 
Officer, Financial Management Service. Requests may be mailed or 
delivered in person to:

Freedom of Information Request, Disclosure Officer, Financial Management 
Service, 401 14th Street, SW., Washington, DC 20227.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) will be made by the 
Commissioner, Financial Management Service. Appeals may be mailed to:

Freedom of Information Appeal (FOIA), Commissioner, Financial Management 
Service, 401 14th Street, SW., Washington, DC 20227.

    Appeals may be delivered personally to the Office of the 
Commissioner, Financial Management Service, 401 14th Street, SW., 
Washington, DC.
    5. Delivery of process. Service of process will be received by the 
Commissioner, Financial Management Service, and shall be delivered to:

Commissioner, Financial Management Service, Department of the Treasury, 
401 14th Street, SW., Washington, DC 20227.



       Sec. Appendix H to Subpart A of Part 1--United States Mint

    1. In general. This appendix applies to the United States Mint.
    2. Public reading room. The U.S. Mint will provide a room on an ad 
hoc basis when necessary. Contact the Freedom of Information/Privacy Act 
Officer, United States Mint, Judiciary Square Building, 7th floor, 633 
3rd Street, NW., Washington, DC 20220.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the United States Mint 
will be made by the Freedom of Information/Privacy Act Officer, United 
States Mint. Requests may be mailed or delivered in person to:

Freedom of Information Act Request, Freedom of Information/Privacy Act 
Officer, United States Mint, Judiciary Square Building, 7th Floor, 633 
3rd Street, NW., Washington, DC 20220.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the United States Mint will be made by the Director of the Mint. Appeals 
made by mail should be addressed to:

Freedom of Information Appeal, Director, United States Mint, Judiciary 
Square Building, 7th Floor, 633 3rd Street, NW., Washington, DC 20220.

    5. Delivery of process. Service of process will be received by the 
Director of the Mint and shall be delivered to:

Chief Counsel, United States Mint, Judiciary Square Building, 7th Floor, 
633 3rd Street, NW., Washington, D.C. 20220.



    Sec. Appendix I to Subpart A of Part 1--Bureau of the Public Debt

    1. In general. This appendix applies to the Bureau of the Public 
Debt.
    2. Public reading room. The public reading room for the Bureau of 
the Public Debt is maintained at the following location:

Library, Main Treasury Building, 1500 Pennsylvania Avenue, NW, 
Washington, DC 20220.

    For building security purposes, visitors are required to make an 
appointment by calling 202/622-0990.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
whether to grant requests for records will be made by the Disclosure 
Officer of the Bureau of the Public Debt. Requests may be sent to:

    Freedom of Information Act Request, Disclosure Officer, 
Administrative Resource Center, Bureau of the Public Debt, Department of 
the Treasury, 200 Third Street, Room 211, Parkersburg, WV 26101-5312.


[[Page 31]]


    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the Bureau of the Public Debt will be made by the Executive Director, 
Administrative Resource Center, Bureau of the Public Debt. Appeals may 
be sent to:

Freedom of Information Act Appeal, Executive Director, Administrative 
Resource Center, Bureau of the Public Debt, Department of the Treasury, 
200 Third Street, Room 211, Parkersburg, WV 26101-5312.

    5. Delivery of process. Service of process will be received by the 
Chief Counsel, Bureau of the Public Debt, or the delegate of such 
officer, and shall be delivered to the following location:

Chief Counsel's Office, Bureau of the Public Debt, 200 Third Street, 
Room G-15, Parkersburg, WV 26106-1328.

[65 FR 40504, June 30, 2000, as amended at 67 FR 34402, May 14, 2002]



Sec. Appendix J to Subpart A of Part 1--Office of the Comptroller of the 
                                Currency

    1. In general. This appendix applies to the Office of the 
Comptroller of the Currency.
    2. Public reading room. The Office of the Comptroller of the 
Currency will make materials available through its Public Information 
Room at 250 E Street, SW., Washington, DC 20219.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the Office of the 
Comptroller of the Currency will be made by the Disclosure Officer or 
the official so designated. Requests may be mailed or delivered in 
person to:

Freedom of Information Act Request, Disclosure Officer, Communications 
Division, 3rd Floor, Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the Office of the Comptroller of the Currency will be made by the Chief 
Counsel or delegates of such person. Appeals made by mail should be 
addressed to:

Communications Division, Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.

    Appeals may be delivered personally to the Communications Division, 
Comptroller of the Currency, 250 E Street, SW., Washington, DC.
    5. Delivery of process. Service of process will be received by the 
Director, Litigation Division, Comptroller of the Currency, and shall be 
delivered to such officer at the following location:

Litigation Division, Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.



Sec. Appendix K to Subpart A of Part 1--Federal Law Enforcement Training 
                                 Center

    1. In general. This apppendix applies to the Federal Law Enforcement 
Training Center.
    2. Public reading room. The public reading room for the Federal Law 
Enforcement Training Center is maintained at the following location:

Library, Building 262, Federal Law Enforcement Training Center, Glynco, 
GA 31524.

    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records will be made by the Chief, 
Management Analysis Division, Federal Law Enforcement Training Center. 
Requests made by mail should be addressed to:

Freedom of Information Act Request, Freedom of Information Act Officer, 
Federal Law Enforcement Training Center, Department of the Treasury, 
Building 94, Glynco, GA 31524.

    Requests may be delivered personally to the Management Analysis 
Division, Federal Law Enforcement Training Center, Building 94, Glynco, 
GA.
    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the consolidated Federal Law Enforcement Training Center will be made by 
the Director, Federal Law Enforcement Training Center. Appeals may be 
mailed to:

Freedom of Information Appeal, Federal Law Enforcement Training Center, 
Department of the Treasury, Building 94, Glynco, GA 31524.

    5. Delivery of process. Service of process will be received by the 
Legal Counsel of the Federal Law Enforcement Training Center, or his 
delegate, and shall be delivered to such officer at the following 
location:

Legal Counsel, Federal Law Enforcement Training Center, Department of 
the Treasury, Building 94, Glynco, GA 31524.



  Sec. Appendix L to Subpart A of Part 1--Office of Thrift Supervision

    1. In general. This appendix applies to the Office of Thrift 
Supervision (OTS). OTS regulatory handbooks and other publications are 
available for sale. Information may be obtained by calling the OTS Order 
Department at 301/645-6264. OTS regulatory handbooks and other 
publications may be purchased by forwarding a request, along with a 
check to: OTS Order Department, PO Box

[[Page 32]]

753, Waldorf, MD 20604 or by calling 301/645-6264 to pay by VISA or 
MASTERCARD.
    2. Public reading room. The public reading room for the Office of 
Thrift Supervision is maintained at the following location:

1700 G Street, NW., Washington, DC 20552.

    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of the Office of Thrift 
Supervision will be made by the Director, OTS Dissemination Branch. 
Requests for records should be addressed to: Freedom of Information 
Request, Manager, Dissemination Branch, Records Management & Information 
Policy Division, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552.
    Requests for records may be delivered in person to:

Public Reference Room, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC.

    4. Administrative appeal of initial determination to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to records of 
the Office of Thrift Supervision will be made by the Director, Records 
Management & Information Policy, Office of Thrift Supervision, or their 
designee. Appeals made by mail should be addressed to: Freedom of 
Information Appeal, Director, Records Management & Information Policy 
Division, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552.
    Appeals may be delivered in person to:

Public Reference Room, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC.

    5. Delivery of process. Service of process will be received by the 
Corporate Secretary of the Office of Thrift Supervision or their 
designee and shall be delivered to the following location:

Corporate Secretary, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552.



   Sec. Appendix M to Subpart A--Financial Crimes Enforcement Network

    1. In general. This appendix applies to the Financial Crimes 
Enforcement Network (FinCEN).
    2. Public Reading Room. FinCEN will provide a room on an ad hoc 
basis when necessary. Contact Office of Regulatory Programs, FinCEN, 
(202) 354-6400.
    3. Requests for records. Initial determinations under 31 CFR 1.5(h) 
as to whether to grant requests for records of FinCEN will be made by 
the Freedom of Information Act/Privacy Act Officer, FinCEN. Requests for 
records may be mailed to: Freedom of Information Act/Privacy Act 
Request, Financial Crimes Enforcement Network, Post Office Box 39, 
Vienna, VA 22183.
    4. Administrative appeal of initial determinations to deny records. 
Appellate determinations under 31 CFR 1.5(i) with respect to the records 
of FinCEN will be made by the Director of FinCEN or the delegate of the 
Director. Appeals should be mailed to: Freedom of Information Appeal, 
Post Office Box 39, Vienna, VA 22183.
    5. Delivery of process. Service of process will be received by the 
Chief Counsel of FinCEN and shall be delivered to: Chief Counsel, 
Financial Crimes Enforcement Network, Post Office Box 39, Vienna, VA 
22183.

[68 FR 55310, Sept. 25, 2003]



                  Subpart B_Other Disclosure Provisions



Sec. 1.8  Scope.

    The regulations in this subpart concern access to information and 
records other than under 5 U.S.C. 552. This subpart is applicable to the 
Departmental Offices and to the bureaus of the Department as defined in 
Sec. 1.1(a) of this part, except to the extent that bureaus of the 
Department have adopted separate guidance governing the subject matter 
of a provision of this subpart.

[69 FR 54003, Sept. 7, 2004]



Sec. 1.9  Records not to be otherwise withdrawn or disclosed.

    Except in accordance with this part, or as otherwise authorized, 
Treasury Department officers and employees are prohibited from making 
records or duplicates available to any person who is not an officer or 
employee of the Department, and are prohibited from withdrawing any such 
records or duplicates from the files, possession or control of the 
Department.

[69 FR 54003, Sept. 7, 2004]



Sec. 1.10  Oral information.

    (a) Officers and employees of the Department may, in response to 
requests, orally provide information contained in records of the 
Department that are determined to be available to the public. If the 
obtaining of such information requires a search of records, a written 
request and the payment of the fee for a record search set forth in 
Sec. 1.6 will be required.

[[Page 33]]

    (b) Information with respect to activities of the Department not a 
matter of record shall not be disclosed if the information involves 
matters exempt from disclosure under 5 U.S.C. 552 or the regulations in 
this part, or if the disclosure of such information would give the 
person requesting the information advantages not accorded to other 
citizens.

[69 FR 54003, Sept. 7, 2004]



Sec. 1.11  Testimony or the production of records in a court or other 

proceeding.

    (a) Applicability. (1) This section sets forth the policies and 
procedures of the Department regarding the testimony of employees and 
former employees as witnesses in legal proceedings and the production or 
disclosure of information contained in Department documents for use in 
legal proceedings pursuant to a request, order, or subpoena 
(collectively referred to in this subpart as a demand).
    (2) This section does not apply to any legal proceeding in which an 
employee is to testify while on leave status regarding facts or events 
that are unrelated to the official business of the Department.
    (3)(i) Nothing in this section affects the rights and procedures 
governing public access to records pursuant to the Freedom of 
Information Act (5 U.S.C. 552) or the Privacy Act (5 U.S.C. 552a).
    (ii) Demands in legal proceedings for the production of records, or 
for the testimony of Department employees regarding information 
protected by the Privacy Act (5 U.S.C. 552a), the Trade Secrets Act (18 
U.S.C. 1905) or other confidentiality statutes, must satisfy the 
requirements for disclosure set forth in those statutes and the 
applicable regulations of this part before the records may be provided 
or testimony given.
    (4) This section is intended only to provide guidance for the 
internal operations of the Department and to inform the public about 
Department procedures concerning the service of process and responses to 
demands or requests, and the procedures specified in this section, or 
the failure of any Treasury employee to follow the procedures specified 
in this section, are not intended to, do not, and may not be relied upon 
to create a right or benefit, substantive or procedural, enforceable at 
law by a party against the United States.
    (b) Definitions. For purposes of this section:
    (1) Agency counsel means:
    (i) With respect to the Departmental Offices, the General Counsel or 
his or her designee; or
    (ii) With respect to a bureau or office of the Department, the Chief 
Counsel or Legal Counsel (or his or her designee) of such bureau or 
office.
    (2) Demand means a request, order, or subpoena for testimony or 
documents related to or for possible use in a legal proceeding.
    (3) Department means the United States Department of the Treasury.
    (4) Document means any record or other property, no matter what 
media and including copies thereof, held by the Department, including 
without limitation, official letters, telegrams, memoranda, reports, 
studies, calendar and diary entries, maps, graphs, pamphlets, notes, 
charts, tabulations, analyses, statistical or informational 
accumulations, any kind of summaries of meetings and conversations, film 
impressions, magnetic tapes and sound or mechanical reproductions.
    (5) Employee means all employees or officers of the Department, 
including contractors and any other individuals who have been appointed 
by, or are subject to the supervision, jurisdiction or control of the 
Secretary, as well as the Secretary of the Treasury. The procedures 
established within this subpart also apply to former employees of the 
Department where specifically noted.
    (6) General Counsel means the General Counsel of the Department or 
other Department employee to whom the General Counsel has delegated 
authority to act under this subpart.
    (7) Legal proceeding means all pretrial, trial and post trial stages 
of all existing or reasonably anticipated judicial or administrative 
actions, hearings, investigations, or similar proceedings before courts, 
commissions, boards, grand juries, or other tribunals, foreign or 
domestic. This phrase includes all phases of discovery as well as

[[Page 34]]

responses to formal or informal requests by attorneys or others involved 
in legal proceedings.
    (8) Official business means the authorized business of the 
Department.
    (9) Secretary means the Secretary of the Treasury.
    (10) Testimony means a statement in any form, including personal 
appearances before a court or other legal tribunal, interviews, 
depositions, telephonic, televised, or videotaped statements or any 
responses given during discovery or similar proceedings, which response 
would involve more than the production of documents.
    (c) Department policy. No current or former employee shall, in 
response to a demand, produce any Department documents, provide 
testimony regarding any information relating to or based upon Department 
documents, or disclose any information or produce materials acquired as 
part of the performance of that employee's official duties or official 
status, without the prior authorization of the General Counsel or the 
appropriate agency counsel.
    (d) Procedures for demand for testimony or production of documents. 
(1) A demand directed to the Department for the testimony of a 
Department employee or for the production of documents shall be served 
in accordance with the Federal Rules of Civil Procedure, Federal Rules 
of Criminal Procedure, or applicable state procedures and shall be 
directed to the General Counsel, Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220, or to the Chief or Legal 
Counsel of the concerned Department component. Acceptance of a demand 
shall not constitute an admission or waiver with respect to 
jurisdiction, propriety of service, improper venue, or any other defense 
in law or equity available under the applicable laws or rules.
    (2) A subpoena or other demand for testimony directed to an employee 
or former employee shall be served in accordance with the Federal Rules 
of Civil or Criminal Procedure or applicable State procedure and a copy 
of the subpoena shall be sent to agency counsel.
    (3)(i) In court cases in which the United States or the Department 
is not a party, where the giving of testimony or the production of 
documents by the Department, or a current or former employee is desired, 
an affidavit (or if that is not feasible, a statement) by the litigant 
or the litigant's attorney, setting forth the information with respect 
to which the testimony or production is desired, must be submitted in 
order to obtain a decision concerning whether such testimony or 
production will be authorized. Such information shall include: the title 
of the legal proceeding, the forum, the requesting party's interest in 
the legal proceeding, the reason for the demand, a showing that other 
evidence reasonably suited to the requester's needs is not available 
from any other source and, if testimony is requested, the intended use 
of the testimony, a general summary of the desired testimony, and a 
showing that no document could be provided and used in lieu of 
testimony. The purpose of this requirement is to assist agency counsel 
in making an informed decision regarding whether testimony or the 
production of document should be authorized. Permission to testify or 
produce documents will, in all cases, be limited to the information set 
forth in the affidavit or statement, or to such portions thereof as may 
be deemed proper.
    (ii) Agency counsel may consult or negotiate with an attorney for a 
party, or the party if not represented by an attorney, to refine or 
limit a demand so that compliance is less burdensome or obtain 
information necessary to make the determination required by paragraph 
(e) of this section. Failure of the attorney or party to cooperate in 
good faith to enable agency counsel to make an informed determination 
under this subpart may serve, where appropriate, as a basis for a 
determination not to comply with the demand.
    (iii) A determination under this subpart to comply or not to comply 
with a demand is without prejudice as to any formal assertion or waiver 
of privilege, lack of relevance, technical deficiency or any other 
ground for noncompliance.
    (4)(i) Employees shall immediately refer all inquiries and demands 
made on the Department to agency counsel.

[[Page 35]]

    (ii) An employee who receives a subpoena shall immediately forward 
the subpoena to agency counsel. Agency counsel will determine the manner 
in which to respond to the subpoena.
    (e) Factors to be considered by agency counsel. (1) In deciding 
whether to authorize the release of official information or the 
testimony of personnel concerning official information (hereafter 
referred to as ``the disclosure'') agency counsel shall consider the 
following factors:
    (i) Whether the request or demand is unduly burdensome;
    (ii) Whether the request would involve the Department in 
controversial issues unrelated to the Department's mission;
    (iii) Whether the time and money of the United States would be used 
for private purposes;
    (iv) The extent to which the time of employees for conducting 
official business would be compromised;
    (v) Whether the public might misconstrue variances between personal 
opinions of employees and Department policy;
    (vi) Whether the request demonstrates that the information requested 
is relevant and material to the action pending, genuinely necessary to 
the proceeding, unavailable from other sources, and reasonable in its 
scope;
    (vii) Whether the number of similar requests would have a cumulative 
effect on the expenditure of agency resources;
    (viii) Whether disclosure otherwise would be inappropriate under the 
circumstances; and
    (ix) Any other factor that is appropriate.
    (2) Among those demands and requests in response to which compliance 
will not ordinarily be authorized are those with respect to which any of 
the following factors exists:
    (i) The disclosure would violate a statute, Executive order, or 
regulation;
    (ii) The integrity of the administrative and deliberative processes 
of the Department would be compromised;
    (iii) The disclosure would not be appropriate under the rules of 
procedure governing the case or matter in which the demand arose;
    (iv) The disclosure, including release in camera, is not appropriate 
or necessary under the relevant substantive law concerning privilege;
    (v) The disclosure, except when in camera and necessary to assert a 
claim of privilege, would reveal information properly classified or 
other matters exempt from unrestricted disclosure; or
    (vi) The disclosure would interfere with ongoing enforcement 
proceedings, compromise constitutional rights, reveal the identity of an 
intelligence source or confidential informant, or disclose trade secrets 
or similarly confidential commercial or financial information.
    (f) Requests for opinion or expert testimony. (1) Subject to 5 CFR 
2635.805, an employee or former employee shall not provide, with or 
without compensation, opinion or expert testimony concerning official 
information, subjects, or activities, except on behalf of the United 
States or a party represented by the Department of Justice, without 
written approval of agency counsel.
    (2) Upon a showing by the requestor of exceptional need or unique 
circumstances and that the anticipated testimony will not be adverse to 
the interests of the Department or the United States, agency counsel 
may, in writing, grant authorization for an employee, or former 
employee, to appear and testify at no expense to the United States.
    (3) Any expert or opinion testimony by a former employee of the 
Department shall be excepted from Sec. 1.11(f)(1) where the testimony 
involves only general expertise gained while employed at the Department.
    (g) Procedures when agency counsel directs an employee not to 
testify or provide documents. (1) If agency counsel determines that an 
employee or former employee should not comply with a subpoena or other 
request for testimony or the production of documents, agency counsel 
will so inform the employee and the party who submitted the subpoena or 
made the request.
    (2) If, despite the determination of the agency counsel that 
testimony should not be given and/or documents not be produced, a court 
of competent jurisdiction or other appropriate authority orders the 
employee or former

[[Page 36]]

employee to testify and/or produce documents, the employee shall notify 
agency counsel of such order.
    (i) If agency counsel determines that no further legal review of, or 
challenge to, the order will be sought, the employee or former employee 
shall comply with the order.
    (ii) If agency counsel determines to challenge the order, or that 
further legal review is necessary, the employee or former employee 
should not comply with the order. Where necessary, the employee should 
appear at the time and place set forth in the subpoena. If legal counsel 
cannot appear on behalf of the employee, the employee should produce a 
copy of this subpart and respectfully inform the legal tribunal that he/
she has been advised by counsel not to provide the requested testimony 
and/or produce documents. If the legal tribunal rules that the subpoena 
must be complied with, the employee shall respectfully decline to 
comply, citing this section and United States ex rel. Touhy v. Ragen, 
340 U.S. 462 (1951).

[69 FR 54003, Sept. 7, 2004]



Sec. 1.12  Regulations not applicable to official request.

    The regulations in this part shall not be applicable to official 
requests of other governmental agencies or officers thereof acting in 
their official capacities, unless it appears that granting a particular 
request would be in violation of law or inimical to the public interest. 
Cases of doubt should be referred for decision to agency counsel (as 
defined in Sec. 1.11(b)(1)).

[69 FR 54003, Sept. 7, 2004]



                          Subpart C_Privacy Act



Sec. 1.20  Purpose and scope of regulations.

    The regulations in this subpart are issued to implement the 
provisions of the Privacy Act of 1974 (5 U.S.C. 552a). The regulations 
apply to all records which are contained in systems of records 
maintained by the Department of the Treasury and which are retrieved by 
an individual's name or personal identifier. They do not relate to those 
personnel records of Government employees, which are under the 
jurisdiction of the Office of Personnel Management to the extent such 
records are subject to regulations issued by such OPM. The regulations 
apply to all components of the Department of the Treasury. Any reference 
in this subpart to the Department or its officials, employees, or 
records shall be deemed to refer also to the components or their 
officials, employees, or records. The regulations set forth the 
requirements applicable to Department of the Treasury employees 
maintaining, collecting, using or disseminating records pertaining to 
individuals. They also set forth the procedures by which individuals may 
request notification of whether the Department of the Treasury maintains 
or has disclosed a record pertaining to them or may seek access to such 
records maintained in any nonexempt system of records, request 
correction of such records, appeal any initial adverse determination of 
any request for amendment, or may seek an accounting of disclosures of 
such records. For the convenience of interested persons, the components 
of the Department of the Treasury may reprint these regulations in their 
entirety (less any appendices not applicable to the component in 
question) in those titles of the Code of Federal Regulations which 
normally contain regulations applicable to such components. In 
connection with such republication, and at other appropriate times, 
components may issue supplementary regulations applicable only to the 
component in question, which are consistent with these regulations. In 
the event of any actual or apparent inconsistency, these Departmental 
regulations shall govern. Persons interested in the records of a 
particular component should, therefore, also consult the Code of Federal 
Regulations for any rules or regulations promulgated specifically with 
respect to that component (see Appendices to this subpart for cross 
references). The head of each component is hereby also authorized to 
substitute other appropriate officials for those designated and correct 
addresses specified in the appendix to this subpart applicable to the 
component. The components of the Department of the Treasury for the 
purposes of this subpart are:

[[Page 37]]

    (a) The Departmental Offices, which include the offices of:
    (1) The Secretary of the Treasury, including immediate staff;
    (2) The Deputy Secretary of the Treasury, including immediate staff;
    (3) The Chief of Staff, including immediate staff;
    (4) The Executive Secretary and all offices reporting to such 
official, including immediate staff;
    (5) The Under Secretary of the Treasury for International Affairs 
and all offices reporting to such official, including immediate staff;
    (6) The Under Secretary of the Treasury for Domestic Finance and all 
offices reporting to such official, including immediate staff;
    (7) The Under Secretary for Enforcement and all offices reporting to 
such official, including immediate staff;
    (8) The Assistant Secretary of the Treasury for Financial 
Institutions and all offices reporting to such official, including 
immediate staff;
    (9) The Assistant Secretary of the Treasury for Economic Policy and 
all offices reporting to such official, including immediate staff;
    (10) The Fiscal Assistant Secretary and all offices reporting to 
such official, including immediate staff;
    (11) The General Counsel and all offices reporting to such official, 
including immediate staff; except legal counsel to the components listed 
in paragraphs (a)(17) and (b) through (m) of this section;
    (12) The Inspector General and all offices reporting to such 
official, including immediate staff;
    (13) The Assistant Secretary of the Treasury for International 
Affairs and all offices reporting to such official, including immediate 
staff;
    (14) The Assistant Secretary of the Treasury for Legislative Affairs 
and Public Liaison and all offices reporting to such official, including 
immediate staff;
    (15) The Assistant Secretary of the Treasury for Management and 
Chief Financial Officer and all offices reporting to such official, 
including immediate staff;
    (16) The Assistant Secretary of the Treasury for Public Affairs and 
all offices reporting to such official, including immediate staff;
    (17) The Assistant Secretary of the Treasury for Tax Policy and all 
offices reporting to such official, including immediate staff;
    (18) The Treasurer of the United States, including immediate staff;
    (19) The Treasury Inspector General for Tax Administration and all 
offices reporting to such official, including immediate staff.
    (b) Alcohol and Tobacco Tax and Trade Bureau.
    (c) The Office of the Comptroller of the Currency.
    (d) The United States Customs Service.
    (e) The Bureau of Engraving and Printing.
    (f) The Federal Law Enforcement Training Center.
    (g) The Financial Management Service.
    (h) The Internal Revenue Service.
    (i) The United States Mint.
    (j) The Bureau of the Public Debt.
    (k) The United States Secret Service.
    (l) The Office of Thrift Supervision.
    (m) The Financial Crimes Enforcement Network.

For purposes of this subpart, the office of the legal counsel for the 
components listed in paragraphs (b), (c), (d), (e), (f), (g), (h), (i), 
(j), (k), (l), and (m) of this section are to be considered a part of 
such components. Any office, which is now in existence or may hereafter 
be established, which is not specifically listed or known to be a 
component of any of those listed above, shall be deemed a part of the 
Departmental Offices for the purpose of these regulations.

[52 FR 26305, July 14, 1987, as amended at 60 FR 31633, June 16, 1995; 
65 FR 2333, Jan. 14, 2000; 68 FR 55311, Sept. 25, 2003; 73 FR 51221, 
Sept. 2, 2008]



Sec. 1.21  Definitions.

    (a) The term agency means agency as defined in 5 U.S.C. 552(e);
    (b) The term individual means a citizen of the United States or an 
alien lawfully admitted for permanent residence;
    (c) The term maintain includes maintain, collect, use, or 
disseminate;

[[Page 38]]

    (d) The term record means any item, collection, or grouping of 
information about an individual that is maintained by the Department of 
the Treasury or component of the Department. This includes, but is not 
limited to, the individual's education, financial transactions, medical 
history, and criminal or employment history and that contains the name, 
or an identifying number, symbol, or other identifying particular 
assigned to the individual, such as a finger or voice print or a 
photograph;
    (e) The term system of records means a group of any records under 
the control of the Department of the Treasury or any component from 
which information is retrieved by the name of the individual or by some 
identifying number, symbol, or other identifying particular assigned to 
the individual;
    (f) The term statistical record means a record in a system of 
records maintained for statistical research or reporting purposes only 
and not used in whole or part in making any determination about an 
identifiable individual, except as provided by 13 U.S.C. 8.
    (g) The term routine use means the disclosure of a record that is 
compatible with the purpose for which the record was collected;
    (h) The term component means a bureau or office of the Department of 
the Treasury as set forth in Sec. 1.20 and in the appendices to these 
regulations. (See 5 U.S.C. 552a(a).)
    (i) The term request for access means a request made pursuant to 5 
U.S.C. 552a(d)(1).
    (j) The term request for amendment means a request made pursuant to 
5 U.S.C. 552a(d)(2).
    (k) The term request for accounting means a request made pursuant to 
5 U.S.C. 552a(c)(3).



Sec. 1.22  Requirements relating to systems of records.

    (a) In general. Subject to 5 U.S.C. 552a (j) and (k) and Sec. 
1.23(c), each component shall, in conformance with 5 U.S.C. 552a:
    (1) Maintain in its records only such information about an 
individual as is relevant and necessary to accomplish a purpose of the 
agency required to be accomplished by the statute or by Executive order 
of the President (See 5 U.S.C. 552a(e)(1)).
    (2) Collect information to the greatest extent practicable directly 
from the subject individual when the information may result in adverse 
determinations about an individual's rights, benefits, and privileges 
under Federal programs. (See 5 U.S.C. 552a(e)(2)).
    (b) Requests for information from individuals. Subject to 5 U.S.C. 
552a(j) and Sec. 1.23(c)(1), each component of the Treasury shall 
inform each individual whom it asks to supply information, on the form 
which it uses to collect the information or on a separate form that can 
be retained by the individual:
    (1) The authority (whether granted by statute, or by Executive order 
of the President) which authorizes the solicitation of the information 
and whether disclosure of such information is mandatory or voluntary;
    (2) The principal purpose or purposes for which the information is 
intended to be used;
    (3) The routine uses which may be made of the information, as 
published pursuant to 5 U.S.C. 552a(e)(4)(D); and
    (4) The effects on such individual, if any, of not providing all or 
any part of the requested information. (See 5 U.S.C. 552a(e)(3)).
    (c) Report on new systems. Each component of the Treasury shall 
provide adequate advance notice to Congress and the Office of Management 
and Budget through the Disclosure Branch and Administration Section of 
the Office of the General Counsel of any proposal to establish or alter 
any system of records in order to permit an evaluation of the probable 
or potential effect of such proposal on the privacy and other personal 
or property rights of individuals or the disclosure of information 
relating to such individuals, and its effect on the preservation of the 
constitutional principles of federalism and separation of powers. (See 5 
U.S.C. 552a(o)).
    (d) Accurate and secure maintenance of records. Each component 
shall:
    (1) Subject to 5 U.S.C. 552a(j) and Sec. 1.23(c)(1), maintain all 
records which are used in making any determination

[[Page 39]]

about any individual with such accuracy, relevance, timeliness, and 
completeness as is reasonably necessary to assure fairness to the 
individual in the determination (see 5 U.S.C. 552a(e)(5);
    (2) Prior to disseminating any record about an individual to any 
person other than an agency, unless the dissemination is made pursuant 
to 5 U.S.C. 552 (see 31 CFR part 1, subpart A), make reasonable efforts 
to assure that such records are accurate, complete, timely, and relevant 
for Department of the Treasury purposes (see 5 U.S.C. 552a(e)(6)) and
    (3) Establish appropriate administrative, technical, and physical 
safeguards to insure the security and confidentiality of records and to 
protect against any anticipated threats or hazards to their security or 
integrity which could result in substantial harm, embarrassment, 
inconvenience, or unfairness to any individual on whom information is 
maintained. (See 5 U.S.C. 552a(e)(10)).
    (i) System managers, with the approval of the head of their offices 
within a component, shall establish administrative and physical 
controls, consistent with Department regulations, to insure the 
protection of records systems from unauthorized access or disclosure and 
from physical damage or destruction. The controls instituted shall be 
proportional to the degree of sensitivity of the records but at a 
minimum must insure that records other than those available to the 
general public under the Freedom of Information Act (5 U.S.C. 552), are 
protected from public view, that the area in which the records are 
stored is supervised during all business hours and physically secure 
during nonbusiness hours to prevent unauthorized personnel from 
obtaining access to the records. Automated systems shall comply with the 
security standards promulgated by the National Bureau of Standards.
    (ii) System managers, with the approval of the head of their offices 
within a component, shall adopt access restrictions to insure that only 
those individuals within the agency who have a need to have access to 
the records for the performance of their duties have access to them. 
Procedures shall also be adopted to prevent accidental access to, or 
dissemination of, records.
    (e) Prohibition against maintenance of records concerning First 
Amendment rights. No component shall maintain a record describing how 
any individual exercises rights guaranteed by the First Amendment (e.g. 
speech), unless the maintenance of such record is:
    (1) Expressly authorized by statute, or
    (2) Expressly authorized by the individual about whom the record is 
maintained, or
    (3) Pertinent to and within the scope of an authorized law 
enforcement activity. (See 5 U.S.C. 552a (e)(7))
    (f) Notification of disclosure under compulsory legal process. 
Subject to 5 U.S.C. 552a(j) and Sec. 1.23(c)(1), when records 
concerning an individual are subpoenaed by a Grand Jury, Court, or 
quasi-judicial agency, or disclosed in accordance with an ex parte court 
order pursuant to 26 U.S.C. 6103(i), the official served with the 
subpoena or court order shall make reasonable efforts to assure that 
notice of any disclosure is provided to the individual. Notice shall be 
provided within five working days of making the records available under 
compulsory legal process or, in the case of a Grand Jury subpoena or an 
ex parte order, within five days of its becoming a matter of public 
record. Notice shall be mailed to the last known address of the 
individual and shall contain the following information: the date and 
authority to which the subpoena is, or was returnable, or the date of 
and court issuing the ex parte order, the name and number of the case or 
proceeding, and the nature of the information sought and provided. 
Notice of the issuance of a subpoena or an ex parte order is not 
required if the system of records has been exempted from the notice 
requirement of 5 U.S.C. 552a (e)(8) and this section, pursuant to 5 
U.S.C. 552a (j) and Sec. 1.23 (c)(1), by a Notice of Exemption 
published in the Federal Register. (See 5 U.S.C. 552a (e)(8)).
    (g) Emergency disclosure. If information concerning an individual 
has been disclosed to any person under compelling circumstances 
affecting health or safety, the individual shall be notified at the last 
known address within 5 days

[[Page 40]]

of the disclosure (excluding Saturdays, Sundays, and legal public 
holidays). Notification shall include the following information: The 
nature of the information disclosed, the person or agency to whom it was 
disclosed, the date of disclosure, and the compelling circumstances 
justifying the disclosure. Notification shall be given by the officer 
who made or authorized the disclosure. (See 5 U.S.C. 552a (b)(8)).



Sec. 1.23  Publication in the Federal Register--Notices of systems of records, 

general exemptions, specific exemptions, review of all systems.

    (a) Notices of systems of records to be published in the Federal 
Register. (1) The Department shall publish a notice of the existence and 
character of all systems of records every 3 years in the Federal 
Register. An annual notice of systems of records is required to be 
published by the Office of the Federal Register in the publication 
entitled ``Privacy Act Issuances'', as specified in 5 U.S.C. 552a(f).
    (2) Minor changes to systems of records shall be published annually. 
(See paragraph (d)(8) of this section)
    (3) In addition, the Department shall publish in the Federal 
Register upon establishment or revision a notice of the existence and 
character of any new or revised systems of records. Unless otherwise 
instructed, each notice shall include:
    (i) The name and location of the system;
    (ii) The categories of individuals on whom records are maintained in 
the system;
    (iii) The categories of records maintained in the system;
    (iv) Each routine use of the records contained in the system, 
including the categories of users and the purpose of such use;
    (v) The policies and practices of the component regarding storage, 
retrievability, access controls, retention, and disposal of the records;
    (vi) The title and business address of the Treasury official who is 
responsible for the system of records;
    (vii) The procedures of the component whereby an individual can be 
notified if the system of records contain a record pertaining to the 
individual, including reasonable times, places, and identification 
requirements.
    (viii) The procedures of the component whereby an individual can be 
notified on how to gain access to any record pertaining to such 
individual that may be contained in the system of records, and how to 
contest its content; and
    (ix) The categories of sources of records in the system. (See 5 
U.S.C. 552a(e)(4))
    (b) Notice of new or modified routine uses to be published in the 
Federal Register. At least 30 days prior to a new use or modification of 
a routine use, as published under paragraph (a)(3)(iv) of this section, 
each component shall publish in the Federal Register notice of such new 
or modified use of the information in the system and provide an 
opportunity for interested persons to submit written data, views, or 
arguments to the components. (See 5 U.S.C. 552a(e)(11))
    (c) Promulgation of rules exempting systems from certain 
requirements--(1) General exemptions. In accordance with existing 
procedures applicable to a Treasury component's issuance of regulations, 
the head of each such component may adopt rules, in accordance with the 
requirements (including general notice) of 5 U.S.C. 553 (b) (1), (2), 
and (3), (c) and (e), to exempt any system of records within the 
component from any part of 5 U.S.C. 552a and these regulations except 
subsections (b) (sec. 1.24, conditions of disclosure), (c)(1) (sec. 
1.25, keep accurate accounting of disclosures), (c)(2) (sec. 1.25, 
retain accounting for five years or life of record), (e)(4) (A) through 
(F) (paragraph (a) of this section, publication of annual notice of 
systems of records), (e)(6) (sec. 1.22(d), accuracy of records prior to 
dissemination), (e)(7) (sec. 1.22(e), maintenance of records on First 
Amendment rights), (e)(9) (sec. 1.28, establish rules of conduct), 
(e)(10) (sec. 1.22(d)(3), establish safeguards for records), (e)(11) 
(paragraph (c) of this section, publish new intended use), and (i) (sec. 
1.28(c), criminal penalties) if the systems of records maintained by the 
component which performs as its principal function any activity 
pertaining to the enforcement of criminal

[[Page 41]]

laws, including police efforts to prevent, control, or reduce crime or 
to apprehend criminals, and the activities of prosecutors, courts, 
correctional, probation, pardon, or parole authorities, and which 
consists of:
    (i) Information compiled for the purpose of identifying individual 
criminal offenders and alleged offenders and consisting only of 
identifying data and notations of arrests, the nature and disposition of 
criminal charges, sentencing, confinement, release, and parole, and 
probation status;
    (ii) Information compiled for the purpose of a criminal 
investigation, including reports of informants and investigators, and 
associated with an identifiable individual; or
    (iii) Reports identifiable to an individual compiled at any stage of 
the process of enforcement of the criminal laws from arrest or 
indictment through release from supervision. (See 5 U.S.C. 552a(j))
    (2) Specific exemptions. In accordance with existing procedures 
applicable to a Treasury component's issuance of regulations, the head 
of each such component may adopt rules, in accordance with the 
requirements (including general notice) of 5 U.S.C. 553 (b) (1), (2), 
and (3), (c), and (e), to exempt any system of records within the 
component from 5 U.S.C. 552a(c)(3) (sec. 1.25(c)(2), accounting of 
certain disclosures available to the individual), (d) (sec. 1.26(a), 
access to records), (e)(1) (sec. 1.22(a)(1), maintenance of information 
to accomplish purposes authorized by statute or executive order only), 
(e)(4)(G) (paragraph (a)(7) of this section, publication of procedures 
for notification), (e)(4)(H) (paragraph (a)(8) of this section, 
publication of procedures for access and contest), (e)(4)(I) (paragraph 
(a)(9) of this section, publication of sources of records), and (f) 
(sec. 1.26, promulgate rules for notification, access and contest), if 
the system of records is:
    (i) Subject to the provisions of 5 U.S.C. 552(b)(1);
    (ii) Investigatory material compiled for law enforcement purposes, 
other than material within the scope of subsection (j)(2) of 5 U.S.C. 
552a and paragraph (a)(1) of this section. If any individual is denied 
any right, privilege, or benefit that such individual would otherwise be 
entitled to by Federal law, or for which such individual would otherwise 
be eligible, as a result of the maintenance of this material, such 
material shall be provided to the individual, except to the extent that 
the disclosure of the material would reveal the identity of a source who 
furnished information to the Government under an express promise that 
the identity of the source would be held in confidence, or prior to 
September 27, 1975, under an implied promise that the identity of the 
source would be held in confidence;
    (iii) Maintained in connection with providing protective services to 
the President of the United States or other individuals pursuant to 18 
U.S.C. 3056;
    (iv) Required by statute to be maintained and used solely as 
statistical records;
    (v) Investigatory material compiled solely for the purpose of 
determining suitability, eligibility, or qualifications for Federal 
civilian employment, military service, Federal contracts, or access to 
classified information, but only to the extent that the disclosure of 
such material would reveal the identity of a source who furnished 
information to the Government under an express promise that the identity 
of the source would be held in confidence, or, prior to September 27, 
1975, under an implied promise that the identity of the source would be 
held in confidence;
    (vi) Testing or examination material used solely to determine 
individual qualifications for appointment or promotion in the Federal 
service the disclosure of which would compromise the objectivity or 
fairness of the testing or examination process; or
    (vii) Evaluation material used to determine potential for promotion 
in the armed services, but only to the extent that the disclosure of 
such material would reveal the identity of a source who furnished 
information to the Government under an express promise that the identity 
of the source would be held in confidence, or, prior to September 27, 
1975, under an implied promise that the identity of the source would be 
held in confidence.
    (3) At the time that rules under this subsection are adopted, the 
head of the component shall include in the statement required under 5 
U.S.C. 553(c) the

[[Page 42]]

reasons why the system of records is to be exempted from a provision of 
5 U.S.C. 552a and this part. (See 5 U.S.C. 552a (j) and (k))
    (d) Review and report to OMB. The Department shall ensure that the 
following reviews are conducted as often as specified below by each of 
the components who shall be prepared to report to the Departmental 
Disclosure Branch upon request the results of such reviews and any 
corrective action taken to resolve problems uncovered. Each component 
shall:
    (1) Review every two years a random sample of the component's 
contracts that provide for the maintenance of a system of records on 
behalf of the component to accomplish a function of the component, in 
order to ensure that the working of each contract makes the provisions 
of the Act apply. (5 U.S.C. 552a(m)(1))
    (2) Review annually component's recordkeeping and disposal policies 
and practices in order to assure compliance with the Act.
    (3) Review routine use disclosures every 3 years, that are 
associated with each system of records in order to ensure that the 
recipient's use of such records continues to be compatible with the 
purpose for which the disclosing agency originally collected the 
information.
    (4) Review every three years each system of records for which the 
component has issued exemption rules pursuant to section (j) or (k) of 
the Privacy Act in order to determine whether the exemption is needed.
    (5) Review annually each ongoing matching program in which the 
component has participated during the year, either as a source or as a 
matching agency in order to assure that the requirements of the Act, the 
OMB Matching Guidelines, and the OMB Model Control System and checklist 
have been met.
    (6) Review component's training practices annually to ensure that 
all component personnel are familiar with the requirements of the Act, 
these regulations and Departmental directives.
    (7) Review annually the actions of component personnel that have 
resulted either in the agency being found civilly liable under section 
(g) of the Act, or an employee being found criminally liable under the 
provisions of section (i) of the Act, in order to determine the extent 
of the problem and to prevent future recurrences.
    (8) Review annually each system of records notice to ensure that it 
accurately describes the system. Where minor changes are needed, publish 
an amended notice in the Federal Register. Minor changes shall be 
consolidated in one annual comprehensive publication. The term ``minor 
change to a system of records'' means a change that does not 
significantly change the system. More specifically, a minor change does 
not affect the character or purpose of the system and does not affect 
the ability of an individual to gain access to a record about the 
individual or to any information pertaining to such individual which is 
contained in the system; for example, changing the title of the system 
manager or the location of the system.



Sec. 1.24  Disclosure of records to person other than the individual to whom 

they pertain.

    (a) Conditions of disclosure. No component of Treasury shall 
disclose any record which is contained in a system of records maintained 
by it by any means of communication to any person, or to another agency, 
except pursuant to a written request by, or with the prior written 
consent of, the individual to whom the record pertains, or the parent, 
if a minor, or legal guardian, if incompetent, of such individual, 
unless disclosure of the record would be:
    (1) To those offices and employees of the Department of the Treasury 
who have a need for the record in the performance of their duties;
    (2) Retired under 5 U.S.C. 552 (subpart A of this part);
    (3) For a routine use as defined in 5 U.S.C. 552a(a)(7) and Sec. 
1.21(g) and as described under 5 U.S.C. 552a(e)(4)(D) and Sec. 
1.23(a)(4);
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13 of the U.S. Code;
    (5) To a recipient who has provided the component with advance 
adequate

[[Page 43]]

written assurance that the record will be used solely as a statistical 
research or reporting record, and the record is to be transferred in a 
form that is not individually identifiable;
    (6) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or the designee of such official to 
determine whether the record has such value;
    (7) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity.
    (i) If the activity is authorized by law; and
    (ii) If the head of the agency or instrumentality has made a written 
request to the Department of the Treasury specifying the particular 
portion desired and the law enforcement activities for which the record 
is sought;
    (8) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual, if upon such 
disclosure, notification is transmitted to the last known address of 
such individual;
    (9) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee.
    (10) To the Comptroller General, or the authorized representatives 
of such official, in the course of the performance of the duties of the 
General Accounting Office; or
    (11) Pursuant to the order of a court of competent jurisdiction. 
(See 5 U.S.C. 552a(b))



Sec. 1.25  Accounting of disclosures.

    (a) Accounting of certain disclosures. Each component, with respect 
to each system of records under its control, shall:
    (1) Keep an accurate accounting of: (i) The date, nature, and 
purpose of each disclosure of a record to any person or to an agency 
made under 5 U.S.C. 552a (b) and Sec. 1.24; and (ii) the name and 
address of the person or agency to whom the disclosure is made;
    (2) Retain the accounting made under paragraph (a)(1) of this 
section for at least five years or the life of the record, whichever is 
longer, after the disclosure for which the accounting is made; and
    (3) Inform any person or other agency about any correction or 
notation of dispute made by the constitutent unit in accordance with 5 
U.S.C. 552a (d) and Sec. 1.28 of any record that has been disclosed to 
the person or agency if an accounting of the disclosure was made. (See 5 
U.S.C. 552(c).)
    (b) Accounting systems. To permit the accounting required by 
paragraph (a) of this section, system managers, with the approval of the 
head of their offices within a component, shall establish or implement, 
a system of accounting for all disclosures of records, either orally or 
in writing, made outside the Department of the Treasury. Accounting 
records shall:
    (1) Be established in the least expensive and most convenient form 
that will permit the system manager to advise individuals, promptly upon 
request, what records concerning them have been disclosed and to whom:
    (2) Provide, as a minimum, the identification of the particular 
record disclosed, the name and address of the person or agency to whom 
or to whom or to which disclosed, and the date, nature and purpose of 
the disclosure; and
    (3) Be maintained for 5 years or until the record is destroyed or 
transferred to the National Archives and Records Service for storage in 
records centers, in which event, the accounting pertaining to those 
records, unless maintained separately, shall be transferred with the 
records themselves.
    (c) Exemptions from accounting requirements. No accounting is 
required for disclosure of records:
    (1) To those officers and employees of the Department of the 
Treasury who have a need for the record in the performance of their 
duties; or
    (2) If disclosure would be required under 5 U.S.C. 552 and Subpart A 
of this part.
    (d) Access to accounting by individual. (1) Subject to paragraphs 
(c) and (d)(2) of this section, each component shall

[[Page 44]]

establish and set forth in the appendix to this subpart applicable to 
the component, procedures for making the accounting required under 
paragraph (a) of this section available to the individual to whom the 
record pertains and shall thereafter make such accounting available in 
accordance therewith at the request of the individual. The procedures 
may require the requester to provide reasonable identification.
    (2) Access accountings of disclosure may be withheld from the 
individual named in the record only if the disclosures were (i) made 
under 5 U.S.C. 552a (b)(7) and Sec. 1.24 (a)(7), or (ii) under a system 
of records exempted from the requirements of 5 U.S.C. 552a(c)(3) in 
accordance with 5 U.S.C. 552 (j) or (k) and Sec. 1.23(c). (See 5 U.S.C. 
552a(c))



Sec. 1.26  Procedures for notification and access to records pertaining to 

individuals--format and fees for request for access.

    (a) Procedures for notification and access. Each component shall 
establish, in accordance with the requirements of 5 U.S.C. 553, and set 
forth in the appendix to this subpart applicable to such component 
procedures whereby an individual can be notified, in response to a 
request, if any system of records named by the individual contains a 
record pertaining to that individual. In addition, such procedures shall 
set forth the requirements for access to such records. As a minimum such 
procedures shall specify the times during, and the places at which 
access will be accorded, together with such identification as may be 
required of the individual before access. (See 5 U.S.C. 552a(f) (1), (2) 
and (3))
    (b) Access. Each component in accordance with the procedures 
prescribed under paragraph (a) of this section, shall allow an 
individual to gain access to records or to any information pertaining to 
such individual which is contained in the system of records upon 
request. The individual shall be permitted to review the record and have 
a copy made of all or any portion of the record in a form that is 
comprehensible. The individual will also be permitted to be accompanied 
by any person of the individual's choosing to review the record, except 
that the agency may require the individual to furnish a written 
statement authorizing discussion of that individual's record in the 
accompanying person's presence. (See 5 U.S.C. 552a(d)(1))
    (c) Exceptions. Neither the procedures prescribed under paragraph 
(a) of this section nor the requirements for access under paragraph (b) 
of this section shall be applicable to--(1) systems of records exempted 
pursuant to 5 U.S.C. 552a (j) and (k) and Sec. 1.23(c); (2) information 
compiled in reasonable anticipation of a civil action or proceeding (See 
5 U.S.C. 552(d)(5)); or (3) information pertaining to an individual 
which is contained in, and inseparable from, another individual's 
record.
    (d) Format of request. (1) A record for notification of whether a 
record exists shall:
    (i) Be made in writing and signed by the person making the request, 
who must be the individual about whom the record is maintained, or such 
individual's duly authorized representative (See Sec. 1.34);
    (ii) State that it is made pursuant to the Privacy Act, 5 U.S.C. 
552a or these regulations, have marked ``Privacy Act Request'' on the 
request and on the envelope;
    (iii) Give the name of the system or subsystem or categories of 
records to which access is sought, as specified in ``Privacy Act 
Issuances'' published by the Office of the Federal Register and 
referenced in the appendices to this subpart;
    (iv) Describe the nature of the record(s) sought in sufficient 
detail to enable Department personnel to locate the system of records 
containing the record with a reasonable amount of effort. Whenever 
possible, a request for access should describe the nature of the record 
sought, the date of the record or the period in which the record was 
compiled.
    (v) Provide such identification of the requester as may be specified 
in the appropriate appendix to this subpart; and
    (vi) Be addressed or delivered in person to the office or officer of 
the component indicated for the particular system or subsystem or 
categories of records the individual wishes access to, as specified in 
``Privacy Act Issuances'' published by the Office of the Federal

[[Page 45]]

Register and referenced in the appendices to this subpart. Assistance in 
ascertaining the appropriate component or in preparing a request for 
notification may be obtained by a written request to this effect 
addressed as specified in Appendix A of this part, as the address for 
the Departmental Offices for ``Request for notification and access to 
records and accountings of disclosures''.
    (2) A request for access to records shall, in addition to complying 
with paragraph (a)(1)(i) through (vi) of this section:
    (i) State whether the requester wishes to inspect the records or 
desires to have a copy made and furnished without first inspecting them;
    (ii) If the requester desires to have a copy made, state the firm 
agreement of the requester to pay the fees for duplication ultimately 
determined in accordance with (31 CFR 1.6) Subpart A of this title, 
unless such fees are waived pursuant to that section by the system 
manager or other appropriate official as indicated in the appropriate 
appendix to these regulations; and
    (iii) Comply with any other requirement set forth in the applicable 
appendix to this subpart or the ``Notice of Records Systems'' applicable 
to the system in question. Requesters are hereby advised that any 
request for access which does not comply with the foregoing requirements 
and those set forth elsewhere in this Subpart C, will not be deemed 
subject to the time constraints of this section, unless and until 
amended so as to comply. However, components shall advise the requester 
in what respect the request is deficient so that it may be processed. 
This section applies only to records which are contained in a system of 
records and which are in the possession or control of the component. 
(See 5 U.S.C. 552a (d) and (f))
    (e) Requests for records not in control of component. (1) Treasury 
employees shall make reasonable efforts to assist an oral requester to 
ascertain to which office or officer a written request should be sent. 
When the request is for a record which is not in the possession or 
control of any component of the Department of the Treasury, the 
requester shall be so advised.
    (2) Where the record requested was created by a Department or agency 
other than the Department of the Treasury or a component of the 
Department and has been classified (e.g. National Defense or 
Intelligence Information) or otherwise restrictively endorsed (e.g. 
Office of Personnel Management records of FBI reports) by such other 
Department or agency, and a copy is in the possession of a component of 
the Department of the Treasury, that portion of the request shall be 
referred to the originating agency for determination as to all issues in 
accordance with the Privacy Act. In the case of a referral to another 
agency under this paragraph, the requester shall be notified that such 
portion of the request has been so referred and that the requester may 
expect to hear from that agency.
    (3) When information sought from a system manager or other 
appropriate official in the Department of the Treasury includes 
information furnished by other Federal agencies not classified or 
otherwise restrictively endorsed, the system manager or other 
appropriate official receiving the request shall consult with the 
appropriate agency prior to making a decision to disclose or not to 
disclose the record. The decision as to whether the record shall be 
disclosed shall be made, in the first instance by the system manager or 
other appropriate official maintaining the record. (See 5 U.S.C. 552a 
(d) and (f))
    (f) Date of receipt of request. A request for notification or access 
to records shall be considered to have been received for purposes of 
this subpart on the date on which the requirements of paragraph (d) of 
this section have been satisfied. Requests for notification or access to 
records and any separate agreement to pay shall be stamped or endorsed 
with the date of receipt by the receiving office. The latest of such 
stamped dates will be deemed to be the date of receipt of the request 
for the purposes of this subpart. (See 5 U.S.C. 552a (d) and (f))
    (g) Notification of determination--(1) In general. Notification of 
determinations as to notification of whether a record exists or as to 
whether to grant access to records requested will be made by

[[Page 46]]

the officers designated in the appendices to this subpart. The 
notification of the determination shall be mailed within 30 days 
(excluding Saturdays, Sundays and legal public holidays) after the date 
of receipt of the request, as determined in accordance with paragraph 
(f) of this section. If it is not possible to respond within 30 days, 
the designated officer shall inform the requester, stating the reason 
for the delay (e.g. volume of records requested, scattered location of 
the records, need to consult other agencies, or the difficulty of the 
legal issues involved) and when a response will be dispatched. (See 5 
U.S.C. 552a (d) and (f))
    (2) Granting of access. When it has been determined that the request 
for access will be granted--(i) and a copy requested; such copy in a 
form comprehensible to the requester shall be furnished promptly, 
together with a statement of the applicable fees for duplication; and 
(ii) and the right to inspect has been requested, the requester shall be 
promptly notified in writing of the determination, and when and where 
the requested records may be inspected. An individual seeking to inspect 
such records may be accompanied by another person of such individual's 
choosing. The individual seeking access shall be required to sign the 
required form indicating that the Department of the Treasury is 
authorized to discuss the contents of the subject record in the 
accompanying person's presence. If, after making the inspection, the 
individual making the request desires a copy of all or a portion of the 
requested records, such copy in a form comprehensible to the individual 
shall be furnished upon payment of the applicable fees for duplication. 
Fees to be charged are as prescribed by 31 CFR part 1, Subpart A, Sec. 
1.6 Fees shall not be charged where they would amount, in the aggregate, 
to less than $3.00. (See 5 U.S.C. 552a (d) and (f))
    (3) Requirements for access to medical records. When access is 
requested to medical records, including psychological records, the 
responsible official may determine that such release could have an 
adverse effect on the individual and that release will be made only to a 
physician authorized in writing to have access to such records by the 
individual making the request. Upon receipt of the authorization the 
physician will be permitted to review the records or to receive copies 
of the records by mail, upon proper verification of identity. (See 5 
U.S.C. 552a (f) (3))
    (4) Denial of request. When it is determined that the request for 
notification of whether a record exists or access to records will be 
denied (whether in whole or part or subject to conditions or 
exceptions), the person making the request shall be so notified by mail 
in accordance with paragraph (g)(1) of this section. The letter of 
notification shall specify the city or other location where the 
requested records are situated (if known), contain a statement of the 
reasons for not granting the request as made, set forth the name and 
title or position of the responsible official and advise the individual 
making the request of the right to file suit in accordance with 5 U.S.C. 
552a (g)(1)(B).
    (5) Prohibition against the use of 5 U.S.C. 552 (b) exemptions. 
Exemptions from disclosure under 5 U.S.C. 552 (b) (31 CFR part 1, 
Subpart A, Sec. 1.2 (c)), may not be invoked for the purpose of 
withholding from an individual any record which is otherwise accessible 
to such individual under the Privacy Act, 5 U.S.C. 552a and this 
subpart. (See 5 U.S.C. 552a (q))
    (6) Records exempt in whole or in part. (i) When an individual 
requests notification as to whether a record exists or access to records 
concerning the individual which have been exempted from individual 
access pursuant to 5 U.S.C. 552a (j) or which have been compiled in 
reasonable anticipation of a civil action or proceeding in either a 
court or before an administrative tribunal and the assertion of the 
exemption is deemed necessary, the Department of the Treasury will 
neither confirm nor deny the existence of the record but shall advise 
the individual only that no record available to the individual pursuant 
to the Privacy Act of 1974 has been identified.
    (ii) Requests from individuals for access to records which have been 
exempted from access pursuant to 5 U.S.C. 552a (k) shall be processed as 
follows:

[[Page 47]]

    (A) Requests for information classified pursuant to Executive Order 
11652 require the responsible component of the Department to review the 
information to determine whether it continues to warrant classification 
under the criteria of sections 1 and 5 (B), (C), (D) and (E) of the 
Executive order. Information which no longer warrants classification 
under these criteria shall be declassified and made available to the 
individual. If the information continues to warrant classification, the 
individual shall be advised that the information sought is classified, 
that it has been reviewed and continues to warrant classification, and 
that it has been exempted from access pursuant to 5 U.S.C. 552 (b)(1) 
and 5 U.S.C. 552a (k)(1). Information which has been exempted pursuant 
to 5 U.S.C. 552a (j) and which is also classified shall be reviewed as 
required by this paragraph but the response to the individual shall be 
in the form prescribed by paragraph (g)(6)(i) of this section.
    (B) Requests for information which has been exempted from disclosure 
pursuant to 5 U.S.C. 552a (k)(2) shall be responded to in the manner 
provided in paragraph (g)(6)(i) of this section unless the requester 
shows that the information has been used or is being used to deny the 
individual any right, privilege or benefit for which he is eligible or 
to which he would otherwise be entitled under federal law. In that 
event, the individual shall be advised of the existence of the 
information but such information as would identify a confidential source 
shall be extracted or summarized in a manner which protects the source 
to the maximum degree possible and the summary extract shall be provided 
to the requesting individual.
    (C) Information compiled as part of an employee background 
investigation which has been exempted pursuant to 5 U.S.C. 552a (k)(5) 
shall be made available to an individual upon request except to the 
extent that it identifies the confidential source. Material identifying 
the confidential sources shall be extracted or summarized in a manner 
which protects the source to the maximum degree possible and the summary 
or extract shall be provided to the requesting individual.
    (D) Testing or examination material which has been exempted pursuant 
to 5 U.S.C. 552a (k)(6) shall not be made available to an individual if 
disclosure would compromise the objectivity or fairness of the testing 
or examination process; but may be made available if no such compromise 
possibility exists. (See 5 U.S.C. 552a (d)(5), (j) and (k)).



Sec. 1.27  Procedures for amendment of records pertaining to individuals--

format, agency review and appeal from initial adverse agency determination.

    (a) In general. Subject to the application of exemptions promulgated 
by the head of each component, in accordance with Sec. 1.23(c), and 
subject to Sec. 1.27(f), each component of the Department of the 
Treasury, shall in conformance with 5 U.S.C. 552a(d)(2), permit an 
individual to request amendment of a record pertaining to such 
individual. Any request for amendment of records or any appeal that does 
not fully comply with the requirements of this section and any 
additional specific requirements imposed by the component in the 
applicable appendix to this subpart will not be deemed subject to the 
time constraints of paragraph (e) of this section, unless and until 
amended so as to comply. However, components shall advise the requester 
in what respect the request or appeal is deficient so that it may be 
resubmitted or amended. (See 5 U.S.C. 552a (d) and (f))
    (b) Form of request to amend records. In order to be subject to the 
provisions of this section, a request to amend records shall:
    (1) Be made in writing and signed by the person making the request, 
who must be the individual about whom the record is maintained, or the 
duly authorized representative of such individual;
    (2) State that it is made pursuant to the Privacy Act, 5 U.S.C. 552a 
or these regulations, have marked ``Privacy Act Amendment Request'' on 
the request and on the envelope;
    (3) Be addressed to the office or officer of the component specified 
for such purposes in ``Privacy Act Issuances'' published by the Office 
of the Federal Register and referenced in the appendices to this subpart 
for that purpose; and

[[Page 48]]

    (4) Reasonably describe the records which the individual desires to 
have amended, including, to the best of the requester's knowledge, dates 
of letters requesting access to such records previously and dates of 
letters in which notification concerning access was made, if any, and 
the individual's documentation justifying the correction. (See U.S.C. 
552a (d) and (f))
    (c) Date of receipt of request. A request for amendment of records 
pertaining to an individual shall be deemed to have been received for 
purposes of this subpart when the requirements of paragraph (b) of this 
section have been satisfied. The receiving office or officer shall stamp 
or otherwise endorse the date of receipt of the request. (See 5 U.S.C. 
552a (d) and (f))
    (d) Review of requests to amend records. Officials responsible for 
review of requests to amend records pertaining to an individual, as 
specified in the appropriate appendix to this subpart, shall:
    (1) Not later than 10 days (excluding Saturdays, Sundays, and legal 
public holidays) after the date of receipt of such request, acknowledge 
in writing such receipt; and
    (2) Promptly, either--(i) Make any correction of any portion which 
the individual believes and the official agrees is not accurate, 
relevant, timely, or complete; or
    (ii) Inform the individual of the refusal to amend the record in 
accordance with the individual's request, the reason for the refusal, 
and the name and business address of the officer designated in the 
applicable appendix to this subpart, as the person who is to review such 
refusal. (See 5 U.S.C. 552a (d) and (f))
    (e) Administrative appeal--(1) In general. Each component shall 
permit individuals to request a review of initial decisions made under 
paragraph (d) of this section, when an individual disagrees with a 
refusal to amend this record. (See 5 U.S.C. 552a (d), (f), and (g)(1))
    (2) Form of request for administrative review of refusal to amend 
record. At any time within 35 days after the date of the notification of 
the initial decision described in paragraph (d)(2)(ii) of this section, 
the requester may submit an administrative appeal from such refusal to 
the official specified in the notification of the initial decision and 
the appropriate appendix to this subpart. The appeal shall:
    (i) Be made in writing stating any arguments in support thereof and 
be signed by the person to whom the record pertains, or the duly 
authorized representative of such official;
    (ii) Be addressed to and mailed or hand delivered within 35 days of 
the date of the initial decision, to the office or officer specified in 
the appropriate appendix to this subpart and in the notification. (See 
the appendices to this subpart for the address to which appeals made by 
mail should be addressed);
    (iii) Have clearly marked on the appeal and on the envelope, 
``Privacy Act Amendment Appeal'';
    (iv) Reasonably describe the records requested to be amended; and
    (v) Specify the date of the initial request, to amend records, and 
the date of the letter giving notification that the request was denied. 
(See 5 U.S.C. 552a (d) and (f))
    (3) Date of receipt. Appeals shall be promptly stamped with the date 
of their receipt by the office to which addressed and such stamped date 
will be deemed to be the date of receipt for all purposes of this 
subpart. The receipt of the appeal shall be acknowledged within 10 days 
(excluding Saturdays, Sundays, and legal public holidays) from the date 
of the receipt (unless the determination on appeal is dispatched in 10 
days, in which case, no acknowledgement is required) by the responsible 
official and the requester advised of the date of receipt established by 
the foregoing and when a response is due in accordance with this 
paragraph. (See 5 U.S.C. 552a (d) and (f))
    (4) Review of administrative appeals from denial of requests to 
amend records. Officials responsible for deciding administrative appeals 
from denials of requests to amend records pertaining to an individual, 
as specified in the appendices to this subpart shall: Complete the 
review, and notify the requester of the final agency decision within 30 
days (exclusive of Saturdays, Sundays and legal public holidays) after 
the date of receipt of such appeal, unless the time is extended by the 
head of the

[[Page 49]]

agency or the delegate of such official, for good cause shown. If such 
final agency decision is to refuse to amend the record, in whole or in 
part, the requester shall also be advised of the right--(i) to file a 
concise ``Statement of Disagreement'' setting forth the reasons for his 
disagreement with the decision which shall be filed within 35 days of 
the date of the notification of the final agency decision and (ii) to 
judicial review of the final agency decision under 5 U.S.C. 
552a(g)(1)(A). (See 5 U.S.C. 552a (d), (f) and (g)(1))
    (5) Notation on record and distribution of statements of 
disagreement. The system manager is responsible, in any disclosure 
containing information about which an individual has filed a ``Statement 
of Disagreement'', occurring after the filing of the statement under 
paragraph (e)(4) of this section, for clearly noting any portion of the 
record which is disputed and providing copies of the statement and, if 
deemed appropriate, a concise statement of the component's reasons for 
not making the amendments requested to persons or other agencies to whom 
the disputed record has been disclosed. (See 5 U.S.C. 552a(d)(4))
    (f) Records not subject to correction under the Privacy Act. The 
following records are not subject to correction or amendment by 
individuals:
    (1) Transcripts or written statements made under oath; and
    (2) Transcripts of Grand Jury proceedings, judicial or quasi-
judicial proceedings which form the official record of those 
proceedings; and
    (3) Pre-sentence reports comprising the property of the courts but 
maintained in agency files; and
    (4) Records pertaining to the determination, the collection and the 
payment of the Federal taxes; and
    (5) Records duly exempted from correction by notice published in the 
Federal Register; and
    (6) Records compiled in reasonable anticipation of a civil action or 
proceeding.



Sec. 1.28  Training, rules of conduct, penalties for non-compliance.

    (a) Training. Subject to policy guidance and regulations issued by 
the Deputy Secretary, who has Departmentwide responsibility therefor, 
each component shall institute a training program to instruct employees 
and employees of Government contractors covered by 5 U.S.C. 552a(m), who 
are involved in the design, development, operation or maintenance of any 
system of records, on a continuing basis with respect to the duties and 
responsibilities imposed on them and the rights conferred on individuals 
by the Privacy Act, the regulations in this subpart, including the 
appendices thereto, and any other related regulations. Such training 
shall provide suitable emphasis on the civil and criminal penalties 
imposed on the Department and the individual employees by the Privacy 
Act for non-compliance with specified requirements of the Act as 
implemented by the regulations in this subpart. (See 5 U.S.C. 
552a(e)(9))
    (b) Rules of conduct. In addition, to the Standards of Conduct 
published in part O of this title, particularly 31 CFR 0.735-44, the 
following are applicable to employees of the Department of the Treasury 
(including, to the extent required by the contract or 5 U.S.C. 552a(m), 
Government contractors and employees of such contractors), who are 
involved in the design, development, operation or maintenance of any 
system of records, or in maintaining any records, for or on behalf of 
the Department, including any component thereof.
    (1) The head of each office of a component of the Department shall 
be responsible for assuring that employees subject to such official's 
supervision are advised of the provisions of the Privacy Act, including 
the criminal penalties and civil liabilities provided therein, and the 
regulations in this subpart, and that such employees are made aware of 
their individual and collective responsibilities to protect the security 
of personal information, to assure its accuracy, relevance, timeliness 
and completeness, to avoid unauthorized disclosure either orally or in 
writing, and to insure that no information system concerning 
individuals, no matter how small or specialized is maintained without 
public notice.
    (2) Employees of the Department of the Treasury involved in the 
design,

[[Page 50]]

development, operation, or maintenance of any system of records, or in 
maintaining any record shall:
    (i) Collect no information of a personal nature from individuals 
unless authorized to collect it to achieve a function or carry out a 
responsibility of the Department;
    (ii) Collect from individuals only that information which is 
necessary to Department functions or responsibilities, unless related to 
a system exempted under 5 U.S.C. 552a (j) or (k):
    (iii) Collect information, wherever possible, directly from the 
individual to whom it relates, unless related to a system exempted under 
5 U.S.C. 552a(j);
    (iv) Inform individuals from whom information is collected about 
themselves of the authority for collection, the purposes thereof, the 
use that will be made of the information, and the effects, both legal 
and practical, of not furnishing the information. (While this provision 
does not explicitly require it, where feasible, third party sources 
should be informed of the purposes for which information they are asked 
to provide will be used.);
    (v) Neither collect, maintain, use nor disseminate information 
concerning an individual's religious or political beliefs or activities 
or membership in associations or organizations, unless (A) the 
individual has volunteered such information for the individual's own 
benefits; (B) the information is expressly authorized by statute to be 
collected, maintained, used or disseminated; or (C) the activities 
involved are pertinent to and within the scope of an authorized 
investigation, adjudication or correctional activity;
    (vi) Advise their supervisors of the existence or contemplated 
development of any record system which is capable of retrieving 
information about individuals by individual identifier;
    (vii) Disseminate no information concerning individuals outside the 
Department except when authorized by 5 U.S.C. 552a or pursuant to a 
routine use published in the Federal Register;
    (viii) Assure that an accounting is kept in the prescribed form, of 
all dissemination of personal information outside the Department, 
whether made orally or in writing, unless disclosed under 5 U.S.C. 552 
and subpart A of this part;
    (ix) Maintain and process information concerning individuals with 
care in order to insure that no inadvertent disclosure of the 
information is made either within or without the Department; and
    (x) Assure that the proper Department authorities are aware of any 
information in a system maintained by the Department which is not 
authorized to be maintained under the provisions of the Privacy Act of 
1974, including information on First Amendment Activities, information 
that is inaccurate, irrelevant or so incomplete as to risk unfairness to 
the individual concerned.
    (3) Heads of components within the Department or their delegates 
shall, at least annually, review the record systems subject to their 
supervision to insure compliance with the provisions of the Privacy Act 
of 1974 and the regulations in this subpart. (See 5 U.S.C. 552a (e)(9), 
(i) and (m))
    (c) Criminal penalties. (1) The Privacy Act imposes criminal 
penalties on the conduct of Government officers or employees as follows: 
Any officer or employee of an agency (which term includes the Department 
of the Treasury):
    (i) Who by virtue of the official's employment or official position, 
has possession of, or access to, agency records which contain 
individually identifiable information the disclosure of which is 
prohibited by this section (5 U.S.C. 552a) or regulations established 
thereunder, and who knowing that disclosure of the specific material is 
so prohibited, willfully discloses the material in any manner to any 
person or agency not entitled to receive it, or
    (ii) Who willfully maintains a system of records without meeting the 
notice requirements of paragraph (e)(4) of this section (5 U.S.C. 
552a)--shall be guilty of a misdemeanor and fined not more than $5,000.
    (2) The Act also imposes a collateral criminal penalty on the 
conduct of any person as follows:

    ``Any person who knowingly and willfully requests or obtains any 
record concerning an

[[Page 51]]

individual from an agency under false pretenses shall be guilty of a 
misdemeanor and fined not more than $5,000.''

    (3) For the purposes of 5 U.S.C. 552a (i), the provisions of 
paragraph (c)(1) of this section are applicable to Government 
contractors and employees of such contractors who by contract, operate 
by or on behalf of the Department of the Treasury a system of records to 
accomplish a Departmental function. Such contractor and employees are 
considered employees of the Department of the Treasury for the purposes 
of 5 U.S.C. 552a(i). (See 5 U.S.C. 552a (i) and (m).)



Sec. 1.29  Records transferred to Federal Records Center or National Archives 

of the United States.

    (a) Records transferred to the Administrator of General Services for 
storage in the Federal Records Center. Records pertaining to an 
identifiable individual which are transferred to the Federal Records 
Center in accordance with 44 U.S.C. 3103 shall, for the purposes of the 
Privacy Act, 5 U.S.C. 552a, be considered to be maintained by the 
component which deposited the record and shall be subject to the 
provisions of the Privacy Act and this subpart. The Administrator of 
General Services shall not disclose such records except to the 
Department of the Treasury or to others under rules consistent with the 
Privacy Act which may be established by the Department of the Treasury 
or a component. If such records are retrieved for the purpose of making 
a determination about an individual, they must be reviewed for accuracy, 
relevance, timeliness, and completeness.
    (b) Records transferred to the National Archives of the United 
States. (1) Records transferred to National Archives prior to September 
27, 1975. Records pertaining to an identifiable individual transferred 
to the National Archives prior to September 27, 1975, as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government shall be considered to be 
maintained by the National Archives, and
    (i) Shall not be subject to 5 U.S.C. 552a,
    (ii) Except, that a statement describing such records [modeled after 
5 U.S.C. 552a (e)(4) (A) through (G)] shall be published in the Federal 
Register.
    (2) Records transferred to National Archives on or after September 
27, 1975. Records pertaining to an identifiable individual transferred 
to the National Archives as a record which has sufficient historical or 
other value to warrant its continued preservation by the United States 
Government, on or after September 27, 1975, shall be considered to be 
maintained by the National Archives, and
    (i) Shall not be subject to 5 U.S.C. 552a,
    (ii) Except, that a statement describing such records in accordance 
with 5 U.S.C. 552a (e)(4) (A) through (G) shall be published in the 
Federal Register and rules of conduct and training in accordance with 5 
U.S.C. 552 (e) (9) are to be established by the National Archives. (See 
5 U.S.C. 552a (e))



Sec. 1.30  Application to system of records maintained by Government 

contractors.

    When a component contracts for the operation of a system of records, 
to accomplish a Departmental function, the provisions of the Privacy 
Act, 5 U.S.C. 552a, and this subpart shall be applicable to such system. 
The component shall have responsibility for insuring that the contractor 
complies with the contract requirements relating to privacy.



Sec. 1.31  Sale or rental of mailing lists.

    (a) In general. An individual's name and address shall not be sold 
or rented by a component unless such action is specifically authorized 
by law.
    (b) Withholding of names and addresses. This section shall not be 
construed to require the withholding of names and addresses otherwise 
permitted to be made public. (See 5 U.S.C. 552a (n)).



Sec. 1.32  Use and disclosure of social security numbers.

    (a) In general. An individual shall not be denied any right, 
benefit, or privilege provided by law by a component because of such 
individual's refusal to disclose his social security number.
    (b) Exceptions. The provisions of paragraph (a) of this section 
shall not apply with respect to:

[[Page 52]]

    (1) Any disclosure which is required by Federal statute, or
    (2) The disclosure of a social security number to any Federal, 
State, or local agency maintaining a system of records in existence and 
operating before January 1, 1975, if such disclosure was required under 
statute or regulation adopted prior to such date to verify the identity 
of an individual.
    (c) Requests for disclosure of social security number. Any component 
which requests an individual to disclose his or her social security 
account number shall inform that individual whether:
    (1) Disclosure is mandatory or voluntary.
    (2) By what statutory or other authority such number is solicited, 
and
    (3) What uses will be made of it. (See section 7 of the Privacy Act 
of 1974 set forth at 5 U.S.C. 552a, note.)



Sec. 1.34  Guardianship.

    The parent or guardian of a minor or a person judicially determined 
to be incompetent shall, in addition to establishing the identity of the 
minor or other person represented, establish parentage or guardianship 
by furnishing a copy of a birth certificate showing parentage or a court 
order establishing the guardianship and may thereafter, act on behalf of 
such individual. (See 5 U.S.C. 552a (h))



Sec. 1.35  Information forms.

    (a) Review of forms. Except for forms developed and used by 
constituent units, the Deputy Assistant Secretary for Administration 
shall be responsible for reviewing all forms developed and used by the 
Department of the Treasury to collect information from and about 
individuals. The heads of components shall each be responsible for the 
review of forms used by such component to collect information from and 
about individuals.
    (b) Scope of review. The responsible officers shall review each form 
for the purpose of eliminating any requirement for information that is 
not relevant and necessary to carry out an agency function and to 
accomplish the following objectives;
    (1) To insure that no information concerning religion, political 
beliefs or activities, association memberships (other than those 
required for a professional license), or the exercise of First Amendment 
rights is required to be disclosed unless such requirement of disclosure 
is expressly authorized by statute or is pertinent to, and within the 
scope of, any authorized law enforcement activity;
    (2) To insure that the form or a separate form that can be retained 
by the individual makes clear to the individual which information he is 
required by law to disclose and the authority for that requirement and 
which information is voluntary;
    (3) To insure that the form or a separate form that can be retained 
by the individual states clearly the principal purpose or purposes for 
which the information is being collected, and summarizes concisely the 
routine uses that will be made of the information;
    (4) To insure that the form or a separate form that can be retained 
by the individual clearly indicates to the individual the effect in 
terms of rights, benefits or privileges of not providing all or part of 
the requested information; and
    (5) To insure that any form requesting disclosure of a Social 
Security Number, or a separate form that can be retained by the 
individual, clearly advises the individual of the statute or regulation 
requiring disclosure of the number or clearly advises the individual 
that disclosure is voluntary and that no consequence will follow from 
the refusal to disclose it, and the uses that will be made of the number 
whether disclosed mandatorily and voluntarily.
    (c) Revision of forms. Any form which does not meet the objectives 
specified in the Privacy Act and in this section, shall be revised to 
conform thereto. A separate statement may be used in instances when a 
form does not conform. This statement will accompany a form and shall 
include all the information necessary to accomplish the objectives 
specified in the Privacy Act and this section.



Sec. 1.36  Systems exempt in whole or in part from provisions of 5 U.S.C. 552a 

and this part.

    (a) In General. In accordance with 5 U.S.C. 552a(j) and (k) and 
Sec. 1.23(c), the

[[Page 53]]

Department of the Treasury hereby exempts the systems of records 
identified below from the following provisions of the Privacy Act for 
the reasons indicated.
    (b) Authority. These rules are promulgated pursuant to the authority 
vested in the Secretary of the Treasury by 5 U.S.C. 552a (j) and (k) and 
pursuant to the authority of Sec. 123(c).
    (c) General exemptions under 5 U.S.C. 552a(j)(2). (1) Under 5 U.S.C. 
552a(j)(2), the head of any agency may promulgate rules to exempt any 
system of records within the agency from certain provisions of the 
Privacy Act of 1974 if the agency or component thereof that maintains 
the system performs as its principal function any activities pertaining 
to the enforcement of criminal laws. Certain components of the 
Department of the Treasury have as their principal function activities 
pertaining to the enforcement of criminal laws and protective service 
activities which are necessary to assure the safety of individuals 
protected by the Department pursuant to the provisions of 18 U.S.C. 
3056. This paragraph applies to the following systems of records 
maintained by the Department of the Treasury:
    (i) Departmental Offices:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .190...................................  Investigation Data
                                             Management System.
DO .303...................................  TIGTA General
                                             Correspondence.
DO .307...................................  TIGTA Employee Relations
                                             Matters, Appeals,
                                             Grievances, and Complaint
                                             Files.
DO .308...................................  TIGTA Data Extracts.
DO .309...................................  TIGTA Chief Counsel Case
                                             Files.
DO .310...................................  TIGTA Chief Counsel
                                             Disclosure Section Records.
DO .311...................................  TIGTA Office of
                                             Investigations Files.
------------------------------------------------------------------------

    (ii) Alcohol and Tobacco Tax and Trade Bureau.
    (iii) Comptroller of the Currency:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CC .110...................................  Reports of Suspicious
                                             Activities
CC .120...................................  Bank Fraud Information
                                             System
CC .500...................................  Chief Counsel's Management
                                             Information System.
CC .510...................................  Litigation Information
                                             System
------------------------------------------------------------------------

    (iv) U.S. Customs Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CS .053...................................  Confidential Source
                                             Identification File.
CS .127...................................  Internal Affairs Records
                                             System.
CS .129...................................  Investigations Record
                                             System.
CS .171...................................  Pacific Basin Reporting
                                             Network.
CS .213...................................  Seized Assets and Case
                                             Tracking System (SEACATS).
CS .244...................................  Treasury Enforcement
                                             Communications System
                                             (TECS).
CS .270...................................  Background-Record File of
                                             Non-Customs Employees.
CS .285...................................  Automated Index to Central
                                             Enforcement Files.
------------------------------------------------------------------------

    (v) Bureau of Engraving and Printing.
    (vi) Federal Law Enforcement Training Center.
    (vii) Financial Management Service.
    (viii) Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 46.002................................  Case Management and Time
                                             Reporting System, Criminal
                                             Investigation Division.
IRS 46.003................................  Confidential Informants,
                                             Criminal Investigation
                                             Division.
IRS 46.005................................  Electronic Surveillance
                                             Files, Criminal
                                             Investigation Division.
IRS 46.009................................  Centralized Evaluation and
                                             Processing of Information
                                             Items (CEPIIs), Criminal
                                             Investigation Division.
IRS 46.015................................  Relocated Witnesses,
                                             Criminal Investigation
                                             Division.
IRS 46.016................................  Secret Service Details,
                                             Criminal Investigation
                                             Division.
IRS 46.022................................  Treasury Enforcement
                                             Communications System
                                             (TECS).
IRS 46.050................................  Automated Information
                                             Analysis System.
IRS 90.001................................  Chief Counsel Criminal Tax
                                             Case Files.
------------------------------------------------------------------------

    (ix) U.S. Mint
    (x) Bureau of the Public Debt
    (xi) U.S. Secret Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
USSS .003.................................  Criminal Investigation
                                             Information System.
USSS .006.................................  Non-Criminal Investigation
                                             Information System.
USSS .007.................................  Protection Information
                                             System.
------------------------------------------------------------------------

    (xii) Office of Thrift Supervision:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
OTS .001..................................  Confidential Individual
                                             Information System.
OTS .004..................................  Criminal Referral Database
------------------------------------------------------------------------

    (xiii) Financial Crimes Enforcement Network:

------------------------------------------------------------------------
                  Number                           Name of System
------------------------------------------------------------------------
FinCEN .001...............................  FinCEN DataBase.

[[Page 54]]

 
FinCEN .002...............................  Suspicious Activity
                                             Reporting System.
FinCEN .003...............................  Bank Secrecy Act Reports
                                             System.
------------------------------------------------------------------------

    (2) The Department hereby exempts the systems of records listed in 
paragraphs (c)(1)(i) through (xiii) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(j)(2): 5 U.S.C. 
552a(c)(3) and (4), 5 U.S.C. 552a(d)(1), (2), (3), (4), 5 U.S.C. 
552a(e)(1), (2) and (3), 5 U.S.C. 552a(e)(4)(G), (H), and (I), 5 U.S.C. 
552a(e)(5) and (8), 5 U.S.C. 552a(f), and 5 U.S.C. 552a(g).
    (d) Reasons for exemptions under 5 U.S.C. 552a(j)(2). (1) 5 U.S.C. 
552a(e)(4)(G) and (f)(l) enable individuals to inquire whether a system 
of records contains records pertaining to them. Application of these 
provisions to the systems of records would give individuals an 
opportunity to learn whether they have been identified as suspects or 
subjects of investigation. As further described in the following 
paragraph, access to such knowledge would impair the Department's 
ability to carry out its mission, since individuals could:
    (i) Take steps to avoid detection;
    (ii) Inform associates that an investigation is in progress;
    (iii) Learn the nature of the investigation;
    (iv) Learn whether they are only suspects or identified as law 
violators;
    (v) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (vi) Destroy evidence needed to prove the violation.
    (2) 5 U.S.C. 552a(d)(1), (e)(4)(H) and (f)(2), (3) and (5) grant 
individuals access to records pertaining to them. The application of 
these provisions to the systems of records would compromise the 
Department's ability to provide useful tactical and strategic 
information to law enforcement agencies.
    (i) Permitting access to records contained in the systems of records 
would provide individuals with information concerning the nature of any 
current investigations and would enable them to avoid detection or 
apprehension by:
    (A) Discovering the facts that would form the basis for their 
arrest;
    (B) Enabling them to destroy or alter evidence of criminal conduct 
that would form the basis for their arrest; and
    (C) Using knowledge that criminal investigators had reason to 
believe that a crime was about to be committed, to delay the commission 
of the crime or commit it at a location that might not be under 
surveillance.
    (ii) Permitting access to either on-going or closed investigative 
files would also reveal investigative techniques and procedures, the 
knowledge of which could enable individuals planning crimes to structure 
their operations so as to avoid detection or apprehension.
    (iii) Permitting access to investigative files and records could, 
moreover, disclose the identity of confidential sources and informers 
and the nature of the information supplied and thereby endanger the 
physical safety of those sources by exposing them to possible reprisals 
for having provided the information. Confidential sources and informers 
might refuse to provide criminal investigators with valuable information 
unless they believed that their identities would not be revealed through 
disclosure of their names or the nature of the information they 
supplied. Loss of access to such sources would seriously impair the 
Department's ability to carry out its mandate.
    (iv) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers who compiled information regarding the individual's 
criminal activities and thereby endanger the physical safety of those 
undercover officers or their families by exposing them to possible 
reprisals.
    (v) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (d)(2)(i) through (iv) of 
this section, permitting access in keeping with these provisions would 
discourage other law enforcement and regulatory agencies, foreign and 
domestic, from freely sharing information with the Department and thus 
would restrict the

[[Page 55]]

Department's access to information necessary to accomplish its mission 
most effectively.
    (vi) Limitation on access to the material contained in the 
protective intelligence files is considered necessary to the 
preservation of the utility of intelligence files and in safeguarding 
those persons the Department is authorized to protect. Access to the 
protective intelligence files could adversely affect the quality of 
information available to the Department; compromise confidential 
sources, hinder the ability of the Department to keep track of persons 
of protective interest; and interfere with the Department's protective 
intelligence activities by individuals gaining access to protective 
intelligence files.
    (vii) Many of the persons on whom records are maintained in the 
protective intelligence suffer from mental aberrations. Knowledge of 
their condition and progress comes from authorities, family members and 
witnesses. Many times this information comes to the Department as a 
result of two party conversations where it would be impossible to hide 
the identity of informants. Sources of information must be developed, 
questions asked and answers recorded. Trust must be extended and 
guarantees of confidentiality and anonymity must be maintained. Allowing 
access to information of this kind to individuals who are the subjects 
of protective interest may well lead to violence directed against an 
informant by a mentally disturbed individual.
    (viii) Finally, the dissemination of certain information that the 
Department may maintain in the systems of records is restricted by law.
    (3) 5 U.S.C. 552a(d)(2), (3) and (4), (e)(4)(H), and (f)(4) permit 
an individual to request amendment of a record pertaining to him or her 
and require the agency either to amend the record, or to note the 
disputed portion of the record and to provide a copy of the individual's 
statement of disagreement with the agency's refusal to amend a record to 
persons or other agencies to whom the record is thereafter disclosed. 
Since these provisions depend on the individual's having access to his 
or her records, and since these rules exempt the systems of records from 
the provisions of 5 U.S.C. 552a relating to access to records, for the 
reasons set out in paragraph (d)(2) of this section, these provisions 
should not apply to the systems of records.
    (4) 5 U.S.C. 552a(c)(3) requires an agency to make accountings of 
disclosures of a record available to the individual named in the record 
upon his or her request. The accountings must state the date, nature, 
and purpose of each disclosure of the record and the name and address of 
the recipient.
    (i) The application of this provision would impair the ability of 
law enforcement agencies outside the Department of the Treasury to make 
effective use of information provided by the Department. Making 
accountings of disclosures available to the subjects of an investigation 
would alert them to the fact that another agency is conducting an 
investigation into their criminal activities and could reveal the 
geographic location of the other agency's investigation, the nature and 
purpose of that investigation, and the dates on which that investigation 
was active. Violators possessing such knowledge would be able to take 
measures to avoid detection or apprehension by altering their 
operations, by transferring their criminal activities to other 
geographical areas, or by destroying or concealing evidence that would 
form the basis for arrest. In the case of a delinquent account, such 
release might enable the subject of the investigation to dissipate 
assets before levy.
    (ii) Moreover, providing accountings to the subjects of 
investigations would alert them to the fact that the Department has 
information regarding their criminal activities and could inform them of 
the general nature of that information. Access to such information could 
reveal the operation of the Department's information-gathering and 
analysis systems and permit violators to take steps to avoid detection 
or apprehension.
    (iii) The release of such information to the subject of a protective 
intelligence file would provide significant information concerning the 
nature of an investigation, and could result in impeding or compromising 
the efforts of Department personnel to detect persons suspected of 
criminal activities or

[[Page 56]]

to collect information necessary for the proper evaluation of persons 
considered to be of protective interest.
    (5) 5 U.S.C. 552(c)(4) requires an agency to inform any person or 
other agency about any correction or notation of dispute that the agency 
made in accordance with 5 U.S.C. 552a(d) to any record that the agency 
disclosed to the person or agency if an accounting of the disclosure was 
made. Since this provision depends on an individual's having access to 
and an opportunity to request amendment of records pertaining to him or 
her, and since these rules exempt the systems of records from the 
provisions of 5 U.S.C. 552a relating to access to and amendment of 
records, for the reasons set out in paragraph (f)(3) of this section, 
this provision should not apply to the systems of records.
    (6) 5 U.S.C. 552a(e)(4)(I) requires an agency to publish a general 
notice listing the categories of sources for information contained in a 
system of records. The application of this provision to the systems of 
records could compromise the Department's ability to provide useful 
information to law enforcement agencies, since revealing sources for the 
information could:
    (i) Disclose investigative techniques and procedures;
    (ii) Result in threats or reprisals against informers by the 
subjects of investigations; and
    (iii) Cause informers to refuse to give full information to criminal 
investigators for fear of having their identities as sources disclosed.
    (7) 5 U.S.C. 552a(e)(1) requires an agency to maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or executive order. The term ``maintain,'' as 
defined in 5 U.S.C. 552a(a)(3), includes ``collect'' and 
``disseminate.'' The application of this provision to the systems of 
records could impair the Department's ability to collect and disseminate 
valuable law enforcement information.
    (i) At the time that the Department collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Treasury Department purpose.
    (ii) In many cases, especially in the early stages of investigation, 
it may be impossible to immediately determine whether information 
collected is relevant and necessary, and information that initially 
appears irrelevant and unnecessary often may, upon further evaluation or 
upon collation with information developed subsequently, prove 
particularly relevant to a law enforcement program.
    (iii) Compliance with the records maintenance criteria listed in the 
foregoing provision would require the periodic up-dating of the 
Department's protective intelligence files to insure that the records 
maintained in the system remain timely and complete.
    (iv) Not all violations of law discovered by the Department fall 
within the investigative jurisdiction of the Department of the Treasury. 
To promote effective law enforcement, the Department will have to 
disclose such violations to other law enforcement agencies, including 
State, local and foreign agencies, that have jurisdiction over the 
offenses to which the information relates. Otherwise, the Department 
might be placed in the position of having to ignore information relating 
to violations of law not within the jurisdiction of the Department of 
the Treasury when that information comes to the Department's attention 
during the collation and analysis of information in its records.
    (8) 5 U.S.C. 552a(e)(2) requires an agency to collect information to 
the greatest extent practicable directly from the subject individual 
when the information may result in adverse determinations about an 
individual's rights, benefits, and privileges under Federal programs. 
The application of this provision to the systems of records would impair 
the Department's ability to collate, analyze, and disseminate 
investigative, intelligence, and enforcement information.
    (i) Most information collected about an individual under criminal 
investigation is obtained from third parties, such as witnesses and 
informants. It is usually not feasible to rely upon the subject of the 
investigation as a source

[[Page 57]]

for information regarding his criminal activities.
    (ii) An attempt to obtain information from the subject of a criminal 
investigation will often alert that individual to the existence of an 
investigation, thereby affording the individual an opportunity to 
attempt to conceal his criminal activities so as to avoid apprehension.
    (iii) In certain instances, the subject of a criminal investigation 
is not required to supply information to criminal investigators as a 
matter of legal duty.
    (iv) During criminal investigations it is often a matter of sound 
investigative procedure to obtain information from a variety of sources 
to verify information already obtained.
    (9) 5 U.S.C. 552a(e)(3) requires an agency to inform each individual 
whom it asks to supply information, on the form that it uses to collect 
the information or on a separate form that the individual can retain, of 
the agency's authority for soliciting the information; whether 
disclosure of information is voluntary or mandatory; the principal 
purposes for which the agency will use the information; the routine uses 
that may be made of the information; and the effects on the individual 
of not providing all or part of the information. The systems of records 
should be exempted from this provision to avoid impairing the 
Department's ability to collect and collate investigative, intelligence, 
and enforcement data.
    (i) Confidential sources or undercover law enforcement officers 
often obtain information under circumstances in which it is necessary to 
keep the true purpose of their actions secret so as not to let the 
subject of the investigation or his or her associates know that a 
criminal investigation is in progress.
    (ii) If it became known that the undercover officer was assisting in 
a criminal investigation, that officer's physical safety could be 
endangered through reprisal, and that officer may not be able to 
continue working on the investigation.
    (iii) Individuals often feel inhibited in talking to a person 
representing a criminal law enforcement agency but are willing to talk 
to a confidential source or undercover officer whom they believe not to 
be involved in law enforcement activities.
    (iv) Providing a confidential source of information with written 
evidence that he or she was a source, as required by this provision, 
could increase the likelihood that the source of information would be 
subject to retaliation by the subject of the investigation.
    (v) Individuals may be contacted during preliminary information 
gathering, surveys, or compliance projects concerning the administration 
of the internal revenue laws before any individual is identified as the 
subject of an investigation. Informing the individual of the matters 
required by this provision would impede or compromise subsequent 
investigations.
    (vi) Finally, application of this provision could result in an 
unwarranted invasion of the personal privacy of the subject of the 
criminal investigation, particularly where further investigation reveals 
that the subject was not involved in any criminal activity.
    (10) 5 U.S.C. 552a(e)(5) requires an agency to maintain all records 
it uses in making any determination about any individual with such 
accuracy, relevance, timeliness, and completeness as is reasonably 
necessary to assure fairness to the individual in the determination.
    (i) Since 5 U.S.C. 552a(a)(3) defines ``maintain'' to include 
``collect'' and ``disseminate,'' application of this provision to the 
systems of records would hinder the initial collection of any 
information that could not, at the moment of collection, be determined 
to be accurate, relevant, timely, and complete. Similarly, application 
of this provision would seriously restrict the Department's ability to 
disseminate information pertaining to a possible violation of law to law 
enforcement and regulatory agencies. In collecting information during a 
criminal investigation, it is often impossible or unfeasible to 
determine accuracy, relevance, timeliness, or completeness prior to 
collection of the information. In disseminating information to law 
enforcement and regulatory agencies, it is often impossible to determine 
accuracy, relevance, timeliness, or completeness prior to dissemination, 
because the Department may not have

[[Page 58]]

the expertise with which to make such determinations.
    (ii) Information that may initially appear inaccurate, irrelevant, 
untimely, or incomplete may, when collated and analyzed with other 
available information, become more pertinent as an investigation 
progresses. In addition, application of this provision could seriously 
impede criminal investigators and intelligence analysts in the exercise 
of their judgment in reporting results obtained during criminal 
investigations.
    (iii) Compliance with the records maintenance criteria listed in the 
foregoing provision would require the periodic up-dating of the 
Department's protective intelligence files to insure that the records 
maintained in the system remain timely and complete.
    (11) 5 U.S.C. 552a(e)(8) requires an agency to make reasonable 
efforts to serve notice on an individual when the agency makes any 
record on the individual available to any person under compulsory legal 
process, when such process becomes a matter of public record. The 
systems of records should be exempted from this provision to avoid 
revealing investigative techniques and procedures outlined in those 
records and to prevent revelation of the existence of an ongoing 
investigation where there is need to keep the existence of the 
investigation secret.
    (12) 5 U.S.C. 552a(g) provides for civil remedies to an individual 
when an agency wrongfully refuses to amend a record or to review a 
request for amendment, when an agency wrongfully refuses to grant access 
to a record, when an agency fails to maintain accurate, relevant, 
timely, and complete records which are used to make a determination 
adverse to the individual, and when an agency fails to comply with any 
other provision of 5 U.S.C. 552a so as to adversely affect the 
individual. The systems of records should be exempted from this 
provision to the extent that the civil remedies may relate to provisions 
of 5 U.S.C. 552a from which these rules exempt the systems of records, 
since there should be no civil remedies for failure to comply with 
provisions from which the Department is exempted. Exemption from this 
provision will also protect the Department from baseless civil court 
actions that might hamper its ability to collate, analyze, and 
disseminate investigative, intelligence, and law enforcement data.
    (e) Specific exemptions under 5 U.S.C. 552a(k)(1). (1) Under 5 
U.S.C. 552a(k)(1), the head of any agency may promulgate rules to exempt 
any system of records within the agency from certain provisions of the 
Privacy Act of 1974 to the extent that the system contains information 
subject to the provisions of 5 U.S.C. 552(b)(1). This paragraph applies 
to the following system of records maintained by the Department of the 
Treasury:
    Financial Crimes Enforcement Network:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
FinCEN .001...............................  FinCEN Database.
------------------------------------------------------------------------

    (2) The Department of the Treasury hereby exempts the system of 
records listed in paragraph (e)(1) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(1): 5 U.S.C. 
552a(c)(3), 5 U.S.C. 552a(d)(1), (2), (3) and (4), 5 U.S.C. 552a(e)(1), 
5 U.S.C. 552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (f) Reasons for exemptions under 5 U.S.C. 552a(k)(1). The reason for 
invoking the exemption is to protect material required to be kept secret 
in the interest of national defense or foreign policy pursuant to 
Executive Order 12958 (or successor or prior Executive Order).
    (g) Specific exemptions under 5 U.S.C. 552a(k)(2). (1) Under 5 
U.S.C. 552a(k)(2), the head of any agency may promulgate rules to exempt 
any system of records within the agency from certain provisions of the 
Privacy Act of 1974 if the system is investigatory material compiled for 
law enforcement purposes and for the purposes of assuring the safety of 
individuals protected by the Department pursuant to the provisions of 18 
U.S.C. 3056. This paragraph applies to the following systems of records 
maintained by the Department of the Treasury:
    (i) Departmental Offices:

[[Page 59]]



------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .114...................................  Foreign Assets Control
                                             Enforcement Records.
DO .144...................................  General Counsel Litigation
                                             Referral and Reporting
                                             System.
DO .190...................................  Investigation Data
                                             Management System.
DO .303...................................  TIGTA General
                                             Correspondence.
DO .307...................................  TIGTA Employee Relations
                                             Matters, Appeals,
                                             Grievances, and Complaint
                                             Files.
DO .308...................................  TIGTA Data Extracts.
DO .309...................................  TIGTA Chief Counsel Case
                                             Files.
DO .310...................................  TIGTA Chief Counsel
                                             Disclosure Section Records.
DO .311...................................  TIGTA Office of
                                             Investigations Files.
------------------------------------------------------------------------

    (ii) Alcohol and Tobacco Tax and Trade Bureau:

------------------------------------------------------------------------
                  Number                           Name of system
------------------------------------------------------------------------
TTB .001..................................  Regulatory Enforcement
                                             Record System.
------------------------------------------------------------------------

    (iii) Comptroller of the Currency

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CC .100...................................  Enforcement Action Report
                                             System
CC .110...................................  Reports of Suspicious
                                             Activities
CC .120...................................  Bank Fraud Information
                                             System
CC .220...................................  Section 914 Tracking System
CC .500...................................  Chief Counsel's Management
                                             Information System.
CC .510...................................  Litigation Information
                                             System
CC .600...................................  Consumer Complaint Inquiry
                                             and Information System
------------------------------------------------------------------------

    (iv) U.S. Customs Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CS .021...................................  Arrest/Seizure/Search Report
                                             and Notice of Penalty File.
CS .022...................................  Attorney Case File.
CS .041...................................  Cartmen or Lightermen.
CS .043...................................  Case Files (Associate Chief
                                             Counsel--Gulf Custom
                                             Management Center).
CS .046...................................  Claims Case File.
CS .053...................................  Confidential Source
                                             Identification File.
CS .057...................................  Container Station Operator
                                             Files.
CS .058...................................  Cooperating Individual
                                             Files.
CS .061...................................  Court Case File.
CS .069...................................  Customhouse Brokers File
                                             (Chief Counsel).
CS .077...................................  Disciplinary Action,
                                             Grievances and Appeal Case
                                             Files.
CS .098...................................  Fines, Penalties, and
                                             Forfeitures Records.
CS .099...................................  Fines, Penalties, and
                                             Forfeiture Files
                                             (Supplemental Petitions).
CS .100...................................  Fines, Penalties, and
                                             Forfeiture Records
                                             (Headquarters).
CS .122...................................  Information Received File.
CS .125...................................  Intelligence Log.
CS .127...................................  Internal Affairs Records
                                             System.
CS .129...................................  Investigations Record
                                             System.
CS .133...................................  Justice Department Case
                                             File.
CS .138...................................  Litigation Issue Files.
CS .159...................................  Notification of Personnel
                                             Management Division when an
                                             employee is placed under
                                             investigation by the Office
                                             of Internal Affairs.
CS .171...................................  Pacific Basin Reporting
                                             Network.
CS .186...................................  Personnel Search.
CS .190...................................  Personnel Case File.
CS .197...................................  Private Aircraft/Vessel
                                             Inspection Reporting
                                             System.
CS .206...................................  Regulatory Audits of
                                             Customhouse Brokers.
CS .212...................................  Search/Arrest/Seizure
                                             Report.
CS .213...................................  Seized Assets and Case
                                             Tracking System (SEACATS).
CS .214...................................  Seizure File.
CS .224...................................  Suspect Persons Index.
CS .232...................................  Tort Claims Act File.
CS .244...................................  Treasury Enforcement
                                             Communications System
                                             (TECS).
CS .258...................................  Violator's Case Files.
CS .260...................................  Warehouse Proprietor Files.
CS .270...................................  Background-Record File of
                                             Non-Customs Employees.
CS .271...................................  Cargo Security Record
                                             System.
CS .285...................................  Automated Index to Central
                                             Investigative Files.
------------------------------------------------------------------------

    (v) Bureau of Engraving and Printing:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
BEP .021..................................  Investigative files.
------------------------------------------------------------------------

    (vi) Federal Law Enforcement Training Center
    (vii) Financial Management Service
    (viii) Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 00.002................................  Correspondence File-
                                             Inquiries about Enforcement
                                             Activities.
IRS 00.007................................  Employee Complaint and
                                             Allegation Referral
                                             Records.
IRS 00.334................................  Third Party Contact Reprisal
                                             Records
IRS 22.061................................  Wage and Information Returns
                                             Processing (IRP).
IRS 26.001................................  Acquired Property Records.
IRS 26.006................................  Form 2209, Courtesy
                                             Investigations.
IRS 26.008................................  IRS and Treasury Employee
                                             Delinquency.
IRS 26.011................................  Litigation Case Files.
IRS 26.012................................  Offer in Compromise (OIC)
                                             Files.
IRS 26.013................................  One-hundred Per Cent Penalty
                                             Cases.
IRS 26.016................................  Returns Compliance Programs
                                             (RCP).
IRS 26.019................................  TDA (Taxpayer Delinquent
                                             Accounts).
IRS 26.020................................  TDI (Taxpayer Delinquency
                                             Investigations) Files.
IRS 26.021................................  Transferee Files.
IRS 26.022................................  Delinquency Prevention
                                             Programs.
IRS 34.020................................  IRS Audit Trail Lead
                                             Analysis System.
IRS 34.037................................  IRS Audit Trail and Security
                                             Records System.
IRS 37.007................................  Practitioner Disciplinary
                                             Records.
IRS 37.009................................  Enrolled Agents Records.
IRS 42.001................................  Examination Administrative
                                             File.

[[Page 60]]

 
IRS 42.002................................  Excise Compliance Programs.
IRS 42.005................................  Whistleblower Office
                                             Records.
IRS 42.008................................  Audit Information Management
                                             System (AIMS).
IRS 42.012................................  Combined Case Control Files.
IRS 42.016................................  Classification and
                                             Examination Selection
                                             Files.
IRS 42.017................................  International Enforcement
                                             Program Files.
IRS 42.021................................  Compliance Programs and
                                             Projects Files.
IRS 42.029................................  Audit Underreporter Case
                                             Files.
IRS 42.030................................  Discriminant Function File
                                             (DIF) Appeals Case Files.
IRS 42.031................................  Anti-Money Laundering/Bank
                                             Secrecy Act BSA) and Form
                                             8300 Records.
IRS 44.001................................  Appeals Case Files.
IRS 46.050................................  Automated Information
                                             Analysis System.
IRS 48.001................................  Disclosure Records.
IRS 49.001................................  Collateral and Information
                                             Requests System.
IRS 49.002................................  Component Authority and
                                             Index Card Mircofilm
                                             Retrieval System.
IRS 49.007................................  Overseas Compliance Projects
                                             System.
IRS 60.000................................  Employee Protection System
                                             Records
IRS 90.002................................  Chief Counsel Disclosure
                                             Litigation Division Case
                                             Files.
IRS 90.004................................  Chief Counsel General Legal
                                             Services Case Files.
IRS 90.005................................  Chief Counsel General
                                             Litigation Case Files.
IRS 90.009................................  Chief Counsel Field Case
                                             Service Files.
IRS 90.010................................  Digest Room Files Containing
                                             Briefs, Legal Opinions,
                                             Digests of Documents
                                             Generated Internally or by
                                             the Department of Justice
                                             Relating to the
                                             Administration of the
                                             Revenue Laws.
IRS 90.013................................  Legal case files of the
                                             Chief Counsel, Deputy Chief
                                             Counsel, Associate Chief
                                             Counsels (Enforcement
                                             Litigation) and
                                             (technical).
IRS 90.016................................  Counsel Automated Tracking
                                             System (CATS).
------------------------------------------------------------------------

    (ix) U.S. Mint:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
Mint .008.................................  Criminal investigation files
                                             (formerly: Investigatory
                                             Files on Theft of Mint
                                             Property).
------------------------------------------------------------------------

    (x) Bureau of the Public Debt.

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
BPD.009...................................  U.S. Treasury Securities
                                             Fraud Information System.
------------------------------------------------------------------------

    (xi) U.S. Secret Service:.

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
USSS .003.................................  Criminal Investigation
                                             Information System.
USSS .006.................................  Non-Criminal Investigation
                                             Information System.
USSS .007.................................  Protection Information
                                             System.
------------------------------------------------------------------------

    (xii) Office of Thrift Supervision:.

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
OTS .001..................................  Confidential Individual
                                             Information System.
OTS .004..................................  Criminal Referral Database.
------------------------------------------------------------------------

    (xiii) Financial Crimes Enforcement Network:

------------------------------------------------------------------------
                  Number                           Name of System
------------------------------------------------------------------------
FinCEN .001...............................  FinCEN Database.
FinCEN .002...............................  Suspicious Activity
                                             Reporting System.
FinCEN .003...............................  Bank Secrecy Act Reports
                                             System.
------------------------------------------------------------------------

    (2) The Department hereby exempts the systems of records listed in 
paragraphs (g)(1)(i) through (xiii) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(2): 5 U.S.C. 
552a(c)(3), 5 U.S.C. 552a(d)(1), (2), (3), (4), 5 U.S.C. 552a(e)(1), 5 
U.S.C. 552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (h) Reasons for exemptions under 5 U.S.C. 552a(k)(2). (1) 5 U.S.C. 
552a(c)(3) requires an agency to make accountings of disclosures of a 
record available to the individual named in the record upon his or her 
request. The accountings must state the date, nature, and purpose of 
each disclosure of the record and the name and address of the recipient.
    (i) The application of this provision would impair the ability of 
the Department and of law enforcement agencies outside the Department of 
the Treasury to make effective use of information maintained by the 
Department. Making accountings of disclosures available to the subjects 
of an investigation would alert them to the fact that an agency is 
conducting an investigation into their illegal activities and could 
reveal the geographic location of the investigation, the nature and 
purpose of that investigation, and the dates on which that investigation 
was active. Violators possessing such knowledge would be able to take 
measures to avoid detection or apprehension by altering their 
operations, by transferring their illegal activities to other 
geographical areas, or by destroying or concealing evidence that would 
form

[[Page 61]]

the basis for detection or apprehension. In the case of a delinquent 
account, such release might enable the subject of the investigation to 
dissipate assets before levy.
    (ii) Providing accountings to the subjects of investigations would 
alert them to the fact that the Department has information regarding 
their illegal activities and could inform them of the general nature of 
that information.
    (2) 5 U.S.C. 552a(d)(1), (e)(4)(H) and (f)(2), (3) and (5) grant 
individuals access to records pertaining to them. The application of 
these provisions to the systems of records would compromise the 
Department's ability to utilize and provide useful tactical and 
strategic information to law enforcement agencies.
    (i) Permitting access to records contained in the systems of records 
would provide individuals with information concerning the nature of any 
current investigations and would enable them to avoid detection or 
apprehension by:
    (A) discovering the facts that would form the basis for their 
detection or apprehension;
    (B) enabling them to destroy or alter evidence of illegal conduct 
that would form the basis for their detection or apprehension, and
    (C) using knowledge that investigators had reason to believe that a 
violation of law was about to be committed, to delay the commission of 
the violation or commit it at a location that might not be under 
surveillance.
    (ii) Permitting access to either on-going or closed investigative 
files would also reveal investigative techniques and procedures, the 
knowledge of which could enable individuals planning non-criminal acts 
to structure their operations so as to avoid detection or apprehension.
    (iii) Permitting access to investigative files and records could, 
moreover, disclose the identity of confidential sources and informers 
and the nature of the information supplied and thereby endanger the 
physical safety of those sources by exposing them to possible reprisals 
for having provided the information. Confidential sources and informers 
might refuse to provide investigators with valuable information unless 
they believed that their identities would not be revealed through 
disclosure of their names or the nature of the information they 
supplied. Loss of access to such sources would seriously impair the 
Department's ability to carry out its mandate.
    (iv) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers or other persons who compiled information regarding 
the individual's illegal activities and thereby endanger the physical 
safety of those undercover officers, persons, or their families by 
exposing them to possible reprisals.
    (v) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (h)(2)(i) through (iv) of 
this section, permitting access in keeping with these provisions would 
discourage other law enforcement and regulatory agencies, foreign and 
domestic, from freely sharing information with the Department and thus 
would restrict the Department's access to information necessary to 
accomplish its mission most effectively.
    (vi) Finally, the dissemination of certain information that the 
Department may maintain in the systems of records is restricted by law.
    (3) 5 U.S.C. 552a(d)(2), (3) and (4), (e)(4)(H), and (f)(4) permit 
an individual to request amendment of a record pertaining to him or her 
and require the agency either to amend the record, or to note the 
disputed portion of the record and to provide a copy of the individual's 
statement of disagreement with the agency's refusal to amend a record to 
persons or other agencies to whom the record is thereafter disclosed. 
Since these provisions depend on the individual's having access to his 
or her records, and since these rules exempt the systems of records from 
the provisions of 5 U.S.C. 552a relating to access to records, for the 
reasons set out in paragraph (h)(2) of this section, these provisions 
should not apply to the systems of records.
    (4) 5 U.S.C. 552a(e)(1) requires an agency to maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required

[[Page 62]]

to be accomplished by statute or executive order. The term ``maintain,'' 
as defined in 5 U.S.C. 552a(a)(3), includes ``collect'' and 
``disseminate.'' The application of this provision to the system of 
records could impair the Department's ability to collect, utilize and 
disseminate valuable law enforcement information.
    (i) At the time that the Department collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Department purpose.
    (ii) In many cases, especially in the early stages of investigation, 
it may be impossible immediately to determine whether information 
collected is relevant and necessary, and information that initially 
appears irrelevant and unnecessary often may, upon further evaluation or 
upon collation with information developed subsequently, prove 
particularly relevant to a law enforcement program.
    (iii) Not all violations of law discovered by the Department 
analysts fall within the investigative jurisdiction of the Department of 
the Treasury. To promote effective law enforcement, the Department will 
have to disclose such violations to other law enforcement agencies, 
including State, local and foreign agencies that have jurisdiction over 
the offenses to which the information relates. Otherwise, the Department 
might be placed in the position of having to ignore information relating 
to violations of law not within the jurisdiction of the Department of 
the Treasury when that information comes to the Department's attention 
during the collation and analysis of information in its records.
    (5) 5 U.S.C. 552a (e)(4)(G) and (f)(1) enable individuals to inquire 
whether a system of records contains records pertaining to them. 
Application of these provisions to the systems of records would allow 
individuals to learn whether they have been identified as suspects or 
subjects of investigation. As further described in the following 
paragraph, access to such knowledge would impair the Department's 
ability to carry out its mission, since individuals could:
    (i) Take steps to avoid detection;
    (ii) Inform associates that an investigation is in progress;
    (iii) Learn the nature of the investigation;
    (iv) Learn whether they are only suspects or identified as law 
violators;
    (v) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (vi) Destroy evidence needed to prove the violation.
    (6) 5 U.S.C. 552a(e)(4)(I) requires an agency to publish a general 
notice listing the categories of sources for information contained in a 
system of records. The application of this provision to the systems of 
records could compromise the Department's ability to complete or 
continue investigations or to provide useful information to law 
enforcement agencies, since revealing sources for the information could:
    (i) Disclose investigative techniques and procedures;
    (ii) Result in threats or reprisals against informers by the 
subjects of investigations; and
    (iii) Cause informers to refuse to give full information to 
investigators for fear of having their identities as sources disclosed.
    (i) Specific exemptions under 5 U.S.C. 552a(k)(3). (1) The head of 
any agency may promulgate rules to exempt any system of records within 
the agency from certain provisions of the Privacy Act of 1974 if it is 
maintained in connection with providing protective intelligence to the 
President of the United States or other individuals pursuant to section 
3056 of Title 18. This paragraph applies to the following system of 
records maintained by the Department which contains material relating to 
criminal investigations concerned with the enforcement of criminal 
statutes involving the security of persons and property. Further, this 
system contains records described in 5 U.S.C. 552a(k) including, but not 
limited to, classified material and investigatory material compiled for 
law enforcement purposes, for which exemption is claimed under 5 U.S.C. 
552a(k)(3):
    U.S. Secret Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
USSS .007.................................  Protection Information
                                             System.
------------------------------------------------------------------------


[[Page 63]]

    (2) The Department hereby exempts the system of records listed in 
(i)(1) of this section from the following provisions of 5 U.S.C. 552a, 
pursuant to 5 U.S.C. 552a(k)(3): 5 U.S.C. 552a(c)(3), 5 U.S.C. 
552a(d)(1), (2), (3),and (4), 5 U.S.C. 552a(e)(1), 5 U.S.C. 
552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (j) Reasons for exemptions under 5 U.S.C. 552a(k)(3). (1) 5 U.S.C. 
552a(c)(3) requires an agency to make accountings of disclosures of a 
record available to the individual named in the record upon his or her 
request. The accountings must state the date, nature, and purpose of 
each disclosure of the record and the name and address of the recipient.
    (i) The application of this provision would impair the ability of 
law enforcement agencies outside the Department of the Treasury to make 
effective use of information provided by the Department. Making 
accountings of disclosures available to the subjects of an investigation 
would alert them to the fact that another agency is conducting an 
investigation into their criminal activities and could reveal the 
geographic location of the other agency's investigation, the nature and 
purpose of that investigation, and the dates on which the investigation 
was active. Violators possessing such knowledge would be able to take 
measures to avoid detection or apprehension by altering their 
operations, by transferring their criminal activities to other 
geographical areas, or by destroying or concealing evidence that would 
form the basis for arrest.
    (ii) Providing accountings to the subjects of investigations would 
alert them to the fact that the Department has information regarding 
their criminal activities and could inform them of the general nature of 
that information. Access to such information could reveal the operation 
of the Department's information-gathering and analysis systems and 
permit violators to take steps to avoid detection or apprehension.
    (iii) The release of such information to the subject of a protective 
intelligence file would provide significant information concerning the 
nature and scope of an investigation, and could result in impeding or 
compromising the efforts of Department personnel to detect persons 
suspected of criminal activities or to collect information necessary for 
the proper evaluation of persons considered to be of protective 
interest.
    (2) 5 U.S.C. 552a(d)(1), (e)(4)(H) and (f)(2), (3) and (5) grant 
individuals access to records pertaining to them. The application of 
these provisions to the systems of records would compromise the 
Department's ability to provide useful tactical and strategic 
information to law enforcement agencies.
    (i) Permitting access to records contained in the systems of records 
would provide individuals with information concerning the nature of any 
current investigations and would enable them to avoid detection or 
apprehension by:
    (A) Discovering the facts that would form the basis for their 
arrest;
    (B) Enabling them to destroy or alter evidence of criminal conduct 
that would form the basis for their arrest, and
    (C) Using knowledge that criminal investigators had reason to 
believe that a crime was about to be committed, to delay the commission 
of the crime or commit it at a location that might not be under 
surveillance.
    (ii) Permitting access to either on-going or closed investigative 
files would also reveal investigative techniques and procedures, the 
knowledge of which could enable individuals planning crimes to structure 
their operations so as to avoid detection or apprehension.
    (iii) Permitting access to investigative files and records could, 
moreover, disclose the identity of confidential sources, and informers 
and the nature of the information supplied and thereby endanger the 
physical safety of those sources by exposing them to possible reprisals 
for having provided the information. Confidential sources and informers 
might refuse to provide criminal investigators with valuable information 
unless they believed that their identities would not be revealed through 
disclosure of their names or the nature of the information they 
supplied. Loss of access to such sources would seriously impair the 
Department's ability to carry out its mandate.

[[Page 64]]

    (iv) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers who compiled information regarding the individual's 
criminal activities and thereby endanger the physical safety of those 
undercover officers or their families by exposing them to possible 
reprisals.
    (v) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (j)(2)(i) through (iv) of 
this section, permitting access in keeping with these provisions would 
discourage other law enforcement and regulatory agencies, foreign and 
domestic, from freely sharing information with the Department and thus 
would restrict the Department's access to information necessary to 
accomplish its mission most effectively.
    (vi) Limitation on access to the materials contained in the 
protective intelligence files is considered necessary to the 
preservation of the utility of intelligence files and in safeguarding 
those persons the Department is authorized to protect. Access to the 
protective intelligence files could adversely affect the quality of 
information available to the Department; compromise confidential 
sources; hinder the ability of the Department to keep track of persons 
of protective interest; and interfere with the Department's protective 
intelligence activities by individuals gaining access to protective 
intelligence files.
    (vii) Many of the persons on whom records are maintained in the 
protective intelligence files suffer from mental aberrations. Knowledge 
of their condition and progress comes from authorities, family members 
and witnesses. Many times this information comes to the Department as a 
result of two-party conversations where it would be impossible to hide 
the identity of informants. Sources of information must be developed, 
questions asked and answers recorded. Trust must be extended and 
guarantees of confidentiality and anonymity must be maintained. Allowing 
access of information of this kind to individuals who are the subjects 
of protective interest may well lead to violence directed against an 
informant by a mentally disturbed individual.
    (viii) Finally, the dissemination of certain information that the 
Department may maintain in the systems of records is restricted by law.
    (3) 5 U.S.C. 552a(d)(2), (3) and (4), (e)(4)(H), and (f)(4) permit 
an individual to request amendment of a record pertaining to him or her 
and require the agency either to amend the record, or to note the 
disputed portion of the record and to provide a copy of the individual's 
statement of disagreement with the agency's refusal to amend a record to 
persons or other agencies to whom the record is thereafter disclosed. 
Since these provisions depend on the individual's having access to his 
or her records, and since these rules exempt the systems of records from 
the provisions of 5 U.S.C. 552a relating to access to records, for the 
reasons set out in paragraph (j)(2) of this section, these provisions 
should not apply to the systems of records.
    (4) 5 U.S.C. 552a(e)(1) requires an agency to maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or executive order. The term ``maintain,'' as 
defined in 5 U.S.C. 552a(a)(3), includes ``collect'' and 
``disseminate.'' The application of this provision to the systems of 
records could impair the Department's ability to collect and disseminate 
valuable law enforcement information.
    (i) At the time that the Department collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Department purpose.
    (ii) In many cases, especially in the early stages of investigation, 
it may be impossible immediately to determine whether information 
collected is relevant and necessary, and information that initially 
appears irrelevant and unnecessary often may, upon further evaluation or 
upon collation with information developed subsequently, prove 
particularly relevant to a law enforcement program.
    (iii) Not all violations of law discovered by the Department 
analysts fall

[[Page 65]]

within the scope of the protective intelligence jurisdiction of the 
Department of the Treasury. To promote effective law enforcement, the 
Department will have to disclose such violations to other law 
enforcement agencies, including State, local and foreign agencies, that 
have jurisdiction over the offenses to which the information relates. 
Otherwise, the Department might be placed in the position of having to 
ignore information relating to violations of law not within the 
jurisdiction of the Department of the Treasury when that information 
comes to the Department's attention during the collation and analysis of 
information in its records.
    (5) 5 U.S.C. 552a (e)(4)(G) and (f)(1) enable individuals to inquire 
whether a system of records contains records pertaining to them. 
Application of these provisions to the systems of records would allow 
individuals to learn whether they have been identified as suspects or 
subjects of investigation. As further described in the following 
paragraph, access to such knowledge would impair the Department's 
ability to carry out its mission to safeguard those persons the 
Department is authorized to protect, since individuals could:
    (i) Take steps to avoid detection;
    (ii) Inform associates that an investigation is in progress;
    (iii) Learn the nature of the investigation;
    (iv) Learn whether they are only suspects or identified as law 
violators;
    (v) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (vi) Destroy evidence needed to prove the violation.
    (6) 5 U.S.C. 552a(e)(4)(I) requires an agency to publish a general 
notice listing the categories of sources for information contained in a 
system of records. The application of this provision to the systems of 
records could compromise the Department's ability to provide useful 
information to law enforcement agencies, since revealing sources for the 
information could:
    (i) Disclose investigative techniques and procedures;
    (ii) Result in threats or reprisals against informers by the 
subject(s) of a protective intelligence file; and
    (iii) Cause informers to refuse to give full information to criminal 
investigators for fear of having their identities as sources disclosed.
    (k) Specific exemptions under 5 U.S.C. 552a(k)(4). (1) Under 5 
U.S.C. 552a(k)(4), the head of any agency may promulgate rules to exempt 
any system of records within the agency from certain provisions of the 
Privacy Act of 1974 if the system is required by statute to be 
maintained and used solely as statistical records. This paragraph 
applies to the following system of records maintained by the Department, 
for which exemption is claimed under 5 U.S.C. 552a(k)(4):
    Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 70.001................................  Statistics of Income-
                                             Individual Tax Returns.
------------------------------------------------------------------------

    (2) The Department hereby exempts the system of records listed in 
paragraph (k)(1) of this section from the following provisions of 5 
U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(4): 5 U.S.C. 552a(c)(3), 5 
U.S.C. 552a(d)(1), (2), (3), and (4), 5 U.S.C. 552a(e)(1), 5 U.S.C. 
552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (3) The system of records is maintained under section 6108 of the 
Internal Revenue Code, which provides that ``the Secretary or his 
delegate shall prepare and publish annually statistics reasonably 
available with respect to the operation of the income tax laws, 
including classifications of taxpayers and of income, the amounts 
allowed as deductions, exemptions, and credits, and any other facts 
deemed pertinent and valuable.''
    (l) Reasons for exemptions under 5 U.S.C. 552a(k)(4). The reason for 
exempting the system of records is that disclosure of statistical 
records (including release of accounting for disclosures) would in most 
instances be of no benefit to a particular individual since the records 
do not have a direct effect on a given individual.
    (m) Specific exemptions under 5 U.S.C. 552a(k)(5). (1) Under 5 
U.S.C. 552a(k)(5),

[[Page 66]]

the head of any agency may promulgate rules to exempt any system of 
records within the agency from certain provisions of the Privacy Act of 
1974 if the system is investigatory material compiled solely for the 
purpose of determining suitability, eligibility, and qualifications for 
Federal civilian employment or access to classified information, but 
only to the extent that the disclosure of such material would reveal the 
identity of a source who furnished information to the Government under 
an express promise that the identity of the source would be held in 
confidence, or, prior to September 27, 1975, under an implied promise 
that the identity of the source would be held in confidence. Thus to the 
extent that the records in this system can be disclosed without 
revealing the identity of a confidential source, they are not within the 
scope of this exemption and are subject to all the requirements of the 
Privacy Act. This paragraph applies to the following systems of records 
maintained by the Department or one of its bureaus:
    (i) Departmental Offices:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .004...................................  Personnel Security System.
DO .306...................................  TIGTA Recruiting and
                                             Placement.
------------------------------------------------------------------------

    (ii) Alcohol and Tobacco Tax and Trade Bureau.
    (iii) Comptroller of the Currency:
    (iv) U.S. Customs Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CS .127...................................  Internal Affairs Records.
------------------------------------------------------------------------

    (v) Bureau of Engraving and Printing:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
[Reserved]................................  ............................
------------------------------------------------------------------------

    (vi) Federal Law Enforcement Training Center
    (vii) Financial Management Service
    (viii) Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 34.021................................  Personnel Security
                                             Investigations, National
                                             Background Investigations
                                             Center.
IRS 34.022................................  Automated Background
                                             Investigations System
                                             (ABIS)
IRS 36.008................................  Recruiting, Examining and
                                             Placement Records.
IRS 90.003................................  Chief Counsel General
                                             Administrative Systems.
IRS 90.011................................  Attorney Recruiting Files.
------------------------------------------------------------------------

    (ix) U.S. Mint
    (x) Bureau of the Public Debt
    (xi) U.S. Secret Service
    (xii) Office of Thrift Supervision
    (xiii) Financial Crimes Enforcement Network:
    (2) The Department hereby exempts the systems of records listed in 
paragraph (m)(1)(i) through (xiii) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(5): 5 U.S.C. 
552a(c)(3), 5 U.S.C. 552a(d)(1), (2), (3), and (4), 5 U.S.C. 552a(e)(1), 
5 U.S.C. 552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (n) Reasons for exemptions under 5 U.S.C. 552a(k)(5). (1) The 
sections of 5 U.S.C. 552a from which the systems of records are exempt 
include in general those providing for individuals' access to or 
amendment of records. When such access or amendment would cause the 
identity of a confidential source to be revealed, it would impair the 
future ability of the Department to compile investigatory material for 
the purpose of determining suitability, eligibility, or qualifications 
for Federal civilian employment, Federal contracts, or access to 
classified information. In addition, the systems shall be exempt from 5 
U.S.C. 552a(e)(1) which requires that an agency maintain in its records 
only such information about an individual as is relevant and necessary 
to accomplish a purpose of the agency required to be accomplished by 
statute or executive order. The Department believes that to fulfill the 
requirements of 5 U.S.C. 552a(e)(1) would unduly restrict the agency in 
its information gathering inasmuch as it is often not until well after 
the investigation that it is possible to determine the relevance and 
necessity of particular information.
    (2) If any investigatory material contained in the above-named 
systems becomes involved in criminal or civil matters, exemptions of 
such material under 5 U.S.C. 552a (j)(2) or (k)(2) is hereby claimed.
    (o) Exemption under 5 U.S.C. 552a(k)(6). (1) Under 5 U.S.C. 
552a(k)(6), the head

[[Page 67]]

of any agency may promulgate rules to exempt any system of records that 
is testing or examination material used solely to determine individual 
qualifications for appointment or promotion in the Federal service the 
disclosure of which would compromise the objectivity or fairness of the 
testing or examination process. This paragraph applies to the following 
system of records maintained by the Department, for which exemption is 
claimed under 5 U.S.C. 552a(k)(6):
    Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 36.008................................  Recruiting, Examining and
                                             Placement Records.
DO .306...................................  TIGTA Recruiting and
                                             Placement.
------------------------------------------------------------------------

    (2) The Department hereby exempts the system of records listed in 
paragraph (o)(1) of this section from the following provisions of 5 
U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(6): 5 U.S.C. 552a(c)(3), 5 
U.S.C. 552a(d)(1), (2), (3), and (4), 5 U.S.C. 552a(e)(1), 5 U.S.C. 
552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (p) Reasons for exemptions under 5 U.S.C. 552a(k)(6). The reason for 
exempting the system of records is that disclosure of the material in 
the system would compromise the objectivity or fairness of the 
examination process.
    (q) Exempt information included in another system. Any information 
from a system of records for which an exemption is claimed under 5 
U.S.C. 552a(j) or (k) which is also included in another system of 
records retains the same exempt status such information has in the 
system for which such exemption is claimed.

[65 FR 69867, Nov. 21, 2000]

    Editorial Note: For Federal Register citations affecting Sec. 1.36, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



      Sec. Appendix A to Subpart C of Part 1--Departmental Offices

    1. In general. This appendix applies to the Departmental Offices as 
defined in 31 CFR part 1, subpart C, Sec. 1.20. It sets forth specific 
notification and access procedures with respect to particular systems of 
records, identifies the officers designated to make the initial 
determinations with respect to notification and access to records, the 
officers designated to make the initial and appellate determinations 
with respect to requests for amendment of records, the officers 
designated to grant extensions of time on appeal, the officers with whom 
``Statement of Disagreement'' may be filed, the officer designated to 
receive service of process and the addresses for delivery of requests, 
appeals, and service of process. In addition, it references the notice 
of systems of records and notices of the routine uses of the information 
in the system required by 5 U.S.C. 552a(e)(4) and (11) and published 
annually by the Office of the Federal Register in ``Privacy Act 
Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Departmental Offices, will be made by the head of 
the organizational unit having immediate custody of the records 
requested, or the delegate of such official. This information is 
contained in the appropriate system notice in the ``Privacy Act 
Issuances'', published annually by the Office of the Federal Register. 
Requests for information and specific guidance on where to send requests 
for records should be addressed to:
    Privacy Act Request, DO, Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220.
    Requests may be delivered personally to the Main Treasury Building, 
Room 5030, 1500 Pennsylvania Avenue NW., Washington, DC.
    3. Requests for amendments of records. Initial determinations under 
31 CFR 1.27(a) through (d) with respect to requests to amend records for 
records maintained by the Departmental Offices will be made by the head 
of the organization or unit having immediate custody of the records or 
the delegate of such official. Requests for amendment of records should 
be addressed as indicated in the appropriate system notice in ``Privacy 
Act Issuances'' published by the Office of the Federal Register. 
Requests for information and specific guidance on where to send these 
requests should be addressed to: Privacy Act Amendment Request, DO, 
Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, 
DC 20220.
    4. Administrative appeal of initial determination refusing to amend 
record. Appellate determinations under 31 CFR 1.27(e) with respect to 
records of the Departmental Offices, including extensions of time on 
appeal, will be made by the Secretary, Deputy Secretary, Under 
Secretary, General Counsel, or Assistant Secretary having jurisdiction 
over the organizational unit which has immediate custody of the records, 
or the delegate of such official, as limited by 5 U.S.C. 552a(d) (2)

[[Page 68]]

and (3). Appeals made by mail should be addressed as indicated in the 
letter of initial decision or to:
    Privacy Act Amendment Request, DO Department of the Treasury, 1500 
Pennsylvania Avenue, NW., Washington, DC 20220. Appeals may be delivered 
personally to the Library, Room 5030, Main Treasury Building, 1500 
Pennsylvania Avenue, NW., Washington, DC.
    5. Statements of disagreement. ``Statements of Disagreement'' as 
described in 31 CFR 1.27(e)(4) shall be filed with the official signing 
the notification of refusal to amend at the address indicated in the 
letter of notification within 35 days of the date of notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
General Counsel of the Department of the Treasury or the delegate of 
such official and shall be delivered to the following location:
    General Counsel, Department of the Treasury, Room 3000, Main 
Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC 20220.
    7. Annual notice of systems of records. The annual notice of systems 
of records required to be published by the Office of the Federal 
Register in the publication entitled ``Privacy Act Issuances'', as 
specified in 5 U.S.C. 552a (f). Any specific requirements for access, 
including identification requirements, in addition to the requirements 
set forth in 31 CFR 1.26 and 1.27 and 8 of this appendix, and locations 
for access are indicated in the notice for the pertinent system.
    8. Verification of identity. An individual seeking notification or 
access to records, or seeking to amend a record, must satisfy one of the 
following identification requirements before action will be taken by the 
Departmental Offices on any such request:
    (i) An individual seeking notification or access to records in 
person, or seeking to amend a record in person, may establish identity 
by the presentation of a single official document bearing a photograph 
(such as a passport or identification badge) or by the presentation of 
two items of identification which do not bear a photograph but do bear 
both a name and signature (such as a driver's license or credit card).
    (ii) An individual seeking notification or access to records by 
mail, or seeking to amend a record by mail, may establish identity by a 
signature, address, and one other identifier such as a photocopy of a 
driver's license or other official document bearing the individual's 
signature.
    (iii) Notwithstanding subdivisions (i) and (ii) of this 
subparagraph, an individual seeking notification or access to records by 
mail or in person, or seeking to amend a record by mail or in person, 
who so desires, may establish identity by providing a notarized 
statement, swearing or affirming to such individual's identity and to 
the fact that the individual understands the penalties provided in 5 
U.S.C. 552a(i)(3) for requesting or obtaining access to records under 
false pretenses.
Notwithstanding subdivision (i), (ii), or (iii) of this subparagraph, a 
designated official may require additional proof of an individual's 
identity before action will be taken on any request, if such official 
determines that it is necessary to protect against unauthorized 
disclosure of information in a particular case. In addition, a parent of 
any minor or a legal guardian of any individual will be required to 
provide adequate proof of legal relationship before such person may act 
on behalf of such minor or such individual.



    Sec. Appendix B to Subpart C of Part 1--Internal Revenue Service

    1. Purpose. The purpose of this section is to set forth the 
procedures that have been established by the Internal Revenue Service 
for individuals to exercise their rights under the Privacy Act of 1974 
(88 Stat. 1896) with respect to systems of records maintained by the 
Internal Revenue Service, including the Office of the Chief Counsel. The 
procedures contained in this section are to be promulgated under the 
authority of 5 U.S.C. 552a(f). The procedures contained in this section 
relate to the following:
    (a) The procedures whereby an individual can be notified in response 
to a request if a system of records named by the individual contains a 
record pertaining to such individual (5 U.S.C. 552a(f)(1)).
    (b) The procedures governing reasonable times, places, and 
requirements for identifying an individual who requests a record of 
information pertaining to such individual before the Internal Revenue 
Service will make the record or information available to the individual 
(5 U.S.C. 552a (f)(2)).
    (c) The procedures for the disclosure to an individual upon a 
request of a record of information pertaining to such individual, 
including special procedures for the disclosure to an individual of 
medical records, including psychological records. (5 U.S.C. 552a 
(f)(3)).
    (d) The procedures for reviewing a request from an individual 
concerning the amendment of any record or information pertaining to the 
individual, for making a determination on the request, for an appeal 
within the Internal Revenue Service of an initial adverse agency 
determination, and for whatever additional means may be necessary for 
individuals to be able to exercise fully their right under 5 U.S.C. 552a 
(5 U.S.C. 552a (f)(4)).
    Any individual seeking to determine whether a system of records 
maintained by any office of the Internal Revenue Service contains a 
record or information pertaining to such individual, or seeking access 
to, or amendment of, such a record, must comply

[[Page 69]]

fully with the applicable procedure contained in paragraph (3) or (4) of 
this section before the Internal Revenue Service will act on the 
request. Neither the notification and access (or accounting of 
disclosures) procedures under paragraph (3) of this section nor the 
amendment procedures under paragraph (4) of this section are applicable 
to (i) systems of records exempted pursuant to 5 U.S.C. 552a (j) and 
(k), (ii) information compiled in reasonable anticipation of a civil 
action or proceeding (see 5 U.S.C. 552a (d)(5)), or (iii) information 
pertaining to an individual which is contained in, and inseparable from, 
another individual's record.
    2. Access to and amendment of tax records. The provisions of the 
Privacy Act of 1974 may not be used by an individual to amend or correct 
any tax record. The determination of liability for taxes imposed by the 
Internal Revenue Service Code, the collection of such taxes, and the 
payment (including credits or refunds of overpayments) of such taxes are 
governed by the provisions of the Internal Revenue Service Code and by 
the procedural rules of the Internal Revenue Service. These provisions 
set forth the established procedures governing the determination of 
liability for tax, the collection of such taxes, and the payment 
(including credits or refunds of overpayments) of such taxes. In 
addition, these provisions set forth the procedures (including 
procedures for judicial review) for resolving disputes between taxpayers 
and the Internal Revenue Service involving the amount of tax owed, or 
the payment or collection of such tax. These procedures are the 
exclusive means available to an individual to contest the amount of any 
liability for tax or the payment or collection thereof. See, for 
example, 26 CFR 601.103 for summary of general tax procedures. 
Individuals are advised that Internal Revenue Service procedures permit 
the examination of tax records during the course of an investigation, 
audit, or collection activity. Accordingly, individuals should contact 
the Internal Revenue Service employee conducting an audit or effecting 
the collection of tax liabilities to gain access to such records, rather 
than seeking access under the provisions of the Privacy Act. Where, on 
the other hand, an individual desires information or records not in 
connection with an investigation, audit, or collection activity, the 
individual may follow these procedures.
    3. Procedures for access to records--(a) In general. This paragraph 
sets forth the procedure whereby an individual can be notified in 
response to a request if a system of records named by the individual 
which is maintained by the Internal Revenue Service contains a record 
pertaining to such individual. In addition, this paragraph sets forth 
the procedure for the disclosure to an individual upon a request of a 
record or information pertaining to such individual, including the 
procedures for verifying the identity of the individual before the 
Internal Revenue Service will make a record available, and the procedure 
for requesting an accounting of disclosures of such records. An 
individual seeking to determine whether a particular system of records 
contains a record or records pertaining to such individual and seeking 
access to such records (or seeking an accounting of disclosures of such 
records) shall make a request for notification and access (or a request 
for an accounting of disclosures) in accordance with the rules provided 
in paragraph 3(b) of this section.
    (b) Form of request for notification and access or request for an 
accounting of disclosures. (i) A request for notification and access (or 
request for an accounting of disclosures) shall be made in writing and 
shall be signed by the person making the request.
    (ii) Such request shall be clearly marked, ``Request for 
notification and access,'' or ``Request for accounting of disclosures.''
    (iii) Such a request shall contain a statement that it is being made 
under the provisions of the Privacy Act of 1974.
    (iv) Such request shall contain the name and address of the 
individual making the request. In addition, if a particular system 
employs an individual's social security number as an essential means of 
accessing the system, the request must include the individual's social 
security number. In the case of a record maintained in the name of two 
or more individuals (e.g., husband and wife), the request shall contain 
the names, addresses, and social security numbers (if necessary) of both 
individuals.
    (v) Such request shall specify the name and location of the 
particular system of records (as set forth in the Notice of Systems) for 
which the individual is seeking notification and access (or an 
accounting of disclosures), and the title and business address of the 
official designated in the access section for the particular system (as 
set forth in the Notice of Systems). In the case of two or more systems 
of records which are under the control of the same designated official 
at the same systems location, a single request may be made for such 
systems. In the case of two or more systems of records which are not in 
the control of the same designated official at the same systems 
location, a separate request must be made for each such system.
    (vi) If an individual wishes to limit a request for notification and 
access to a particular record or records, the request should identify 
the particular record. In the absence of a statement to the contrary, a 
request for notification and access for a particular system of records 
shall be considered to be limited to records which are currently 
maintained by the designated official at the systems location specified 
in the request.

[[Page 70]]

    (vii) If such request is seeking notification and access to material 
maintained in a system of records which is exempt from disclosure and 
access under 5 U.S.C. 552a (k)(2), the individual making the request 
must establish that such individual has been denied a right, privilege, 
or benefit that such individual would otherwise be entitled to under 
Federal law as a result of the maintenance of such material.
    (viii) Such request shall state whether the individual wishes to 
inspect the record in person, or desires to have a copy made and 
furnished without first inspecting it. If the individual desires to have 
a copy made, the request must include an agreement to pay the fee for 
duplication ultimately determined to be due. If the individual does not 
wish to inspect a record, but merely wishes to be notified whether a 
particular system or records contains a record pertaining to such 
individual, the request should so state.
    (c) Time and place for making a request. A request for notification 
and access to records under the Privacy Act (or a request for accounting 
of disclosures) shall be addressed to or delivered in person to the 
office of the official designated in the access section for the 
particular system of records for which the individual is seeking 
notification and access (or an accounting of disclosures). The title and 
office address of such official is set forth for each system of records 
in the Notice of Systems of Records. A request delivered to an office in 
person must be delivered during the regular office hours of that office.
    (d) Sample request for notification and access to records. The 
following are sample requests for notification and access to records 
which will satisfy the requirements of this paragraph:

         Request for Notification and Access to Records by Mail

    I, John Doe, of 100 Main Street, Boston, MA 02108 (soc. sec. num. 
000-00-0000) request under the Privacy Act of 1974 that the following 
system of records be examined and that I be furnished with a copy of any 
record (or a specified record) contained therein pertaining to me. I 
agree that I will pay the fees ultimately determined to be due for 
duplication of such record. I have enclosed the necessary information.

System Name:
System Location:
Designated Official:

________________________________________________________________________
                                                                John Doe

        Request for Notification and Access to Records in Person

    I, John Doe, of 100 Main Street, Boston, MA 02108 (soc. sec. num. 
000-00-0000) request under the provisions of the Privacy Act of 1974, 
that the following system of records be examined and that I be granted 
access in person to inspect any record (or a specified record) contained 
therein pertaining to me. I have enclosed the necessary identification.

System Name:
System Location:
Designated Official:

________________________________________________________________________
                                                                John Doe

    (e) Processing a request for notification and access to records or a 
request for an accounting of disclosures. (i) If a request for 
notification and access (or request for an accounting of disclosures) 
omits any information which is essential to processing the request, the 
request will not be acted upon and the individual making the request 
will be promptly advised of the additional information which must be 
submitted before the request can be processed.
    (ii) Within 30 days (not including Saturdays, Sundays, and legal 
public holidays) after the receipt of a request for notification and 
access (or a request for an accounting of disclosures), to a particular 
system of records by the designated official for such system, a 
determination will be made as to whether the particular system of 
records is exempt from the notification and access provisions of the 
Privacy Act, and if such system is not exempt, whether it does or does 
not contain a record pertaining to the individual making the request. If 
a determination cannot be made within 30 days, the individual will be 
notified of the delay, the reasons therefor, and the approximate time 
required to make a determination. If it is determined by the designated 
official that the particular system of records is exempt from the 
notification and access provisions of the Privacy Act, the individual 
making the request will be notified of the provisions of the Privacy Act 
under which the exemption is claimed. On the other hand, if it is 
determined by the designated official that the particular system of 
records is not exempted from the notification and access provisions of 
the Privacy Act and that such system contains a record pertaining to the 
individual making the request, the individual will be notified of the 
time and place where inspection may be made. If an individual has not 
requested that access be granted to inspect the record in person, but 
merely requests that a copy of the record be furnished, or if it is 
determined by the designated official that the granting of access to 
inspect a record in person is not feasible in a particular case, then 
the designated official will furnish a copy of the record with the 
notification, or if a copy cannot be furnished at such time, a statement 
indicating the approximate time such copy will be furnished. If the 
request is for an accounting of disclosures from a system of records 
which is not exempt from the accounting of disclosure

[[Page 71]]

provisions of the Privacy Act, the individual will be furnished with an 
accounting of such disclosures.
    (f) Granting of access. Normally, an individual will be granted 
access to inspect a record in person within 30 days (excluding 
Saturdays, Sundays, and legal public holidays) after the receipt for a 
request for notification and access by the designated official. If 
access cannot be granted within 30 days, the notification will state the 
reasons for the delay and the approximate time such access will be 
granted. An individual wishing to inspect a record may be accompanied by 
another person of his choosing. Both the individual seeking access and 
the individual accompanying him may be required to sign a form supplied 
by the IRS indicating that the Service is authorized to disclose or 
discuss the contents of the record in the presence of both individuals. 
See 26 CFR 601.502 for requirements to be met by taxpayer's 
representatives in order to discuss the contents of any tax records.
    (g) Medical records. When access is requested to medical records 
(including psychological records), the designated official may determine 
that release of such records will be made only to a physician designated 
by the individual to have access to such records.
    (h) Verification of identity. An individual seeking notification or 
access to records, or seeking to amend a record, must satisfy one of the 
following identification requirements before action will be taken by the 
IRS on any such request:
    (i) An individual seeking notification or access to records in 
person, or seeking to amend a record in person, may establish identity 
by the presentation of a single document bearing a photograph (such as a 
passport or identification badge) or by the presentation of two items of 
identification which do not bear a photograph but do bear both a name 
and signature (such as a driver's license or credit card).
    (ii) An individual seeking notification or access to records by 
mail, or seeking to amend a record by mail, may establish identity by a 
signature, address, and one other identifier such as a photocopy of a 
driver's license or other document bearing the individual's signature.
    (iii) Notwithstanding subdivisions (i) and (ii) of this 
subparagraph, an individual seeking notification or access to records by 
mail or in person, or seeking to amend a record by mail or in person, 
who so desires, may establish identity by providing a notarized 
statement, swearing or affirming to such individual's identity and to 
the fact that the individual understands the penalties provided in 5 
U.S.C. 552a(i)(3) for requesting or obtaining access to records under 
false pretenses.
    (iv) Notwithstanding subdivisions (i), (ii), or (iii) of this 
subparagraph, a designated official may require additional proof of an 
individual's identity before action will be taken on any request if such 
official determines that it is necessary to protect unauthorized 
disclosure of information in a particular case. In addition, a parent of 
any minor or a legal guardian of any individual will be required to 
provide adequate proof of legal relationship before such person may act 
on behalf of such minor or such individual.
    (i) Fees. The fee for costs required of the IRS in copying records 
pursuant to this paragraph is $0.15 per page. However, no fee will be 
charged if the aggregate costs required of the IRS in copying records is 
less than $3.00. If an individual who has requested access to inspect a 
record in person is denied such access by the designated official 
because it would not be feasible in a particular case, copies of such 
record will be furnished to the individual without payment of the fees 
otherwise required under this subparagraph. If the IRS estimates that 
the total fees for costs incurred in complying with a request for copies 
of records will amount to $50 or more, the individual making the request 
may be required to enter into a contract for the payment of the actual 
fees with respect to the request before the Service will furnish the 
copies requested. Payment of fees for copies of records should be made 
by check or money order payable to the Internal Revenue Service.
    4. Procedures for amendment of records. (a) In general. This 
paragraph sets forth the procedures for reviewing a request from an 
individual concerning the amendment of any record or information 
pertaining to such individual, for making a determination on the 
request, for making an appeal within the IRS of an initial adverse 
determination, and for judicial review of a final determination.
    (b) Amendment of record. Under 5 U.S.C. 552a(d)(2), an individual 
who has been granted access to a record pertaining to such individual 
may, after inspecting the record, request that the record be amended to 
make any correction of any portion thereof which the individual believes 
is not accurate, relevant, timely, or complete. An individual may seek 
to amend a record in accordance with the rules provided in paragraph 
(d)(3) of this section. See paragraph (b) of this section for 
prohibition against amendment of tax records.
    (c) Form of request for amendment of record. (i) A request for 
amendment of a record shall be in writing and shall be signed by the 
individual making the request.
    (ii) Such request shall be clearly marked ``Request for amendment of 
record.''
    (iii) Such request shall contain a statement that it is being made 
under the provisions of the Privacy Act of 1974.

[[Page 72]]

    (iv) Such request shall contain the name and address of the 
individual making the request. In addition, if a particular system 
employs an individual's social security number as an essential means of 
accessing the system, the request must include the individual's social 
security number. In the case of a record maintained in the name of two 
or more individuals (e.g., husband and wife), the request shall contain 
the names, addresses, and social security numbers (if necessary) of both 
individuals.
    (v) Such request shall specify the name and location of the system 
of records (as set forth in the Notice of Systems) in which such record 
is maintained, and the title and business address of the official 
designated in the access section for such system (as set forth in the 
Notice of Systems).
    (vi) Such request shall specify the particular record in the system 
which the individual is seeking to amend.
    (vii) Such request shall clearly state the specific changes which 
the individual wishes to make in the record and a concise explanation of 
the reasons for the changes. If the individual wishes to correct or add 
any information, the request shall contain specific language making the 
desired correction or addition.
    (d) Time and place for making request. A request to amend a record 
under the Privacy Act shall be addressed to or delivered in person to 
the office of the official designated in the access section for the 
particular system of records. The title and office address of such 
official is set forth for each system of records in the Notice of 
Systems of Records. A request delivered to an office in person must be 
delivered during the regular office hours of that office.
    (e) Processing a request for amendment of a record. (i) Within 10 
days (not including Saturdays, Sundays, and legal public holidays) after 
the receipt of a request to amend a record by the designated official, 
the individual will be sent a written acknowledgement that will state 
that the request has been received, that action is being taken thereon, 
and that the individual will be notified within 30 days (not including 
Saturdays, Sundays, and legal public holidays) after the receipt of the 
request whether the requested amendments will or will not be made. If a 
request for amendment of a record omits any information which is 
essential to processing the request, the request will not be acted upon 
and the individual making the request will be promptly advised on the 
additional information which must be submitted before the request can be 
processed.
    (ii) Within 30 days (not including Saturdays, Sundays, and legal 
public holidays) after the receipt of a request to amend a record by the 
designated official, a determination will be made as to whether to grant 
the request in whole or part. The individual will then be notified in 
writing of the determination. If a determination cannot be made within 
30 days, the individual will be notified in writing within such time of 
the reasons for the delay and the approximate time required to make a 
determination. If it is determined by the designated official that the 
request will be granted, the requested changes will be made in the 
record and the individual will be notified of the changes. In addition, 
to the extent an accounting was maintained, all prior recipients of such 
record will be notified of the changes. Upon request, an individual will 
be furnished with a copy of the record, as amended, subject to the 
payment of the appropriate fees. On the other hand, if it is determined 
by the designated official that the request, or any portion thereof, 
will not be granted, the individual will be notified in writing of the 
adverse determination. The notification of an adverse determination will 
set forth the reasons for refusal to amend the record. In addition, the 
notification will contain a statement informing the individual of such 
individual's right to request an independent review of the adverse 
determination by a reviewing officer in the national office of the IRS 
and the procedures for requesting such a review.
    (f) Administrative review of adverse determination. Under 5 U.S.C. 
552a (d)(3), an individual who disagrees with the refusal of the agency 
to amend a record may, within 35 days of being notified of the adverse 
determination, request an independent review of such refusal by a 
reviewing officer in the national office of the IRS. The reviewing 
officer for the IRS is the Commission of Internal Revenue, the Deputy 
Commissioner, or an Assistant Commissioner. In the case of an adverse 
determination relating to a system of records maintained by the Office 
of General Counsel for the IRS, the reviewing officer is the Chief 
Counsel or his delegate. An individual seeking a review of an adverse 
determination shall make a request for review in accordance with the 
rules provided in paragraph (d)(7) of this section.
    (g) Form of request for review. (i) A request for review of an 
adverse determination shall be in writing and shall be signed by the 
individual making the request.
    (ii) Such request shall be clearly marked ``Request for review of 
adverse determination''.
    (iii) Such request shall contain a statement that it is being made 
under the provisions of the Privacy Act of 1974.
    (iv) Such request shall contain the name and address of the 
individual making the request. In addition, if a particular system 
employs an individual's social security number as an essential means of 
accessing the system, the request must include the individual's social 
security number. In the case of a record maintained in the name of two 
or

[[Page 73]]

more individuals (e.g. husband and wife), the request shall contain the 
names, addresses, and social security numbers (if necessary) of both 
individuals.
    (v) Such request shall specify the particular record which the 
individual is seeking to amend, the name and location of the system of 
records (as set forth in the Notice of Systems) in which such record is 
maintained, and the title and business address of the designated 
official for such system (as set forth in the Notice of Systems).
    (vi) Such request shall include the date of the initial request for 
amendment of the record, and the date of the letter notifying the 
individual of the initial adverse determination with respect to such 
request.
    (vii) such request shall clearly state the specific changes which 
the individual wishes to make in the record and a concise explanation of 
the reasons for the changes. If the individual wishes to correct or add 
any information, the request shall contain specific language making the 
desired correction or addition.
    (h) Time and place for making the request. A request for review of 
an adverse determination under the Privacy Act shall be addressed to or 
delivered in person to the Director, Office of Disclosure, Attention: 
OP:EX:D Internal Revenue Service, 1111 Constitution Avenue, NW, 
Washington, DC 20224. A request for review of an adverse determination 
will be promptly referred by the Director, Office of Disclosure to the 
appropriate reviewing officer for his review and final determination.
    (i) Processing a request for review of adverse determination. Within 
30 days (not including Saturdays, Sundays, and legal public holidays) 
after the receipt of a request for review of an adverse determination by 
the appropriate reviewing officer, the reviewing officer will review the 
initial adverse determination, make a final determination whether to 
grant the request to amend the record in whole or in part, and notify 
the individual in writing of the final determination. If a final 
determination cannot be made within 30 days, the Commissioner of 
Internal Revenue may extend such 30-day period. The individual will be 
notified in writing within the 30 day period of the cause for the delay 
and the approximate time required to make a final determination. If it 
is determined by the reviewing officer that the request to amend the 
record will be granted, the reviewing officer will cause the requested 
changes to be made and the individual will be so notified. Upon request, 
an individual will be furnished with a copy of the record as amended 
subject to the payment of appropriate fees. On the other hand, if it is 
determined by the reviewing officer that the request to amend the 
record, or any portion thereof, will not be granted, the individual will 
be notified in writing of the final adverse determination. The 
notification of a final adverse determination will set forth the reasons 
for the refusal of the reviewing officer to amend the record. The 
notification shall include a statement informing the individual of the 
right to submit a concise statement for insertion in the record setting 
forth the reasons for the disagreement with the refusal of the reviewing 
officer to amend the record. In addition, the notification will contain 
a statement informing the individual of the right to seek judicial 
review by a United States district court of a final adverse 
determination.
    (j) Statement of disagreement. Under 5 U.S.C. 552a (d)(3), an 
individual who disagrees with a final adverse determination not to amend 
a record subject to amendment under the Privacy Act may submit a concise 
statement for insertion in the record setting forth the reasons for 
disagreement with the refusal of the reviewing officer to amend the 
record. A statement of disagreement should be addressed to or delivered 
in person to the Director, Office of Disclosure, Attention: OP:EX:D, 
Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 
20224. The Director, Office of Disclosure will foward the statement of 
disagreement to the appropriate designated official who will cause the 
statement to be inserted in the individual's record. Any such statement 
will be available to anyone to whom the record is subsequently disclosed 
and the prior recipients of the record will be provided with a copy of 
the statement of disagreement, to the extent an accounting of 
disclosures was maintained.
    (k) Judicial review. If, after a review and final determination on a 
request to amend a record by the appropriate reviewing officer, the 
individual is notified that the request will not be granted, or if, 
after the expiration of 30 days (not including Sundays, Saturdays, and 
legal public holidays) from the receipt of such request by the Director, 
Disclosure Operations Division, action is not taken thereon in 
accordance with the requirements of paragraph (d)(9) of this section, an 
individual may commence an action within the time prescribed by law in a 
U.S. District Court pursuant to 5 U.S.C. 552a (g)(1). The statute 
authorizes an action only against the agency. With respect to records 
maintained by the IRS, the agency is the Internal Revenue Service, not 
an officer or employee thereof. Service of process in such an action 
shall be in accordance with the Federal Rules of Civil Procedure (28 
U.S.C. App.) applicable to actions against an agency of the United 
States. Where provided in such Rules, delivery of process upon the IRS 
must be directed to the Commissioner of Internal Revenue, Attention: 
CC:GLS, 1111 Constitution Avenue, NW, Washington, DC 20224. The district 
court will determine the matter de novo.

[[Page 74]]

    5. Records transferred to Federal Records Centers. Records 
transferred to the Administrator of General Services for storage in a 
Federal Records Center are not used by the Internal Revenue Service in 
making any determination about any individual while stored at such 
location and therefore are not subject to the provisions of 5 U.S.C. 
552a (e)(5) during such time.



  Sec. Appendix C to Subpart C of Part 1--United States Customs Service

    1. In general. This appendix applies to the United States Customs 
Service. It sets forth specific notification and access procedures with 
respect to particular systems of records, identifies the officer 
designated to make the initial determinations with respect to 
notification and access to records and accountings of disclosures of 
records. This appendix also sets forth the specific procedures for 
requesting amendment of records and identifies the officers designated 
to make the initial and appellate determinations with respect to 
requests for amendment of records. It identifies the officers designated 
to grant extensions of time on appeal, the officers with whom 
``Statements of Disagreement may be filed, the officer designated to 
receive service of process and the addresses for delivery of requests, 
appeals, and service of process. In addition, it references the notice 
of systems of records and notices of the routine uses of the information 
in the system required by 5 U.S.C. 552a(e) (4) and (11) and published 
annually by the Office of the Federal Register in ``Privacy Act 
Issuances''.
    2. Requests for notification and access to records and accounting of 
disclosures. (a) For records which are maintained at the United States 
Customs Service Headquarters, initial requests for notification and 
access to records and accountings of disclosures under 31 CFR 1.26, 
should be mailed or personally delivered to the Director, Office of 
Regulations & Rulings, U.S. Customs Service, 1301 Constitution Avenue 
NW., Washington, DC 20229. The official who has authority over the 
maintenance of the file will have the authority to grant or deny the 
request.
    (b) For records maintained at Regional Offices, initial requests for 
notification and access to records and accountings of disclosures under 
31 CFR 1.26, should be mailed or personally delivered to the Regional 
Commissioner of Customs in whose region the records are located. This 
official shall have the authority to grant the request or deny the 
request. The appropriate location of the regional offices is specified 
in Customs Appendix A in ``Privacy Act Issuances'' published annually by 
the Office of the Federal Register.
    (c) Each request shall comply with the identification and other 
requirements set forth in 31 CFR 1.26, and in the appropriate system 
notice in the ``Privacy Act Issuances'' published annually by the Office 
of the Federal Register. Each request should be conspicuously labeled on 
the face of the envelope ``Privacy Act Request''.
    3. Request for amendment of records. (a) For records which are 
maintained at Customs Service Headquarters, initial requests for 
amendment of records under 31 CFR 1.27 (a) through (d) should be mailed 
or personally delivered to the Director, Office of Regulations & 
Rulings, U.S. Customs Service, 1301 Constitution Avenue NW., Washington, 
DC 20229. The official who has authority over the maintenance of the 
file will have the authority to grant or deny the request.
    (b) For records not maintained at Customs Service Headquarters, 
initial requests for amendment of records under 31 CFR 1.27 (a) through 
(d) should be mailed or personally delivered to the Regional 
Commissioner of Customs in whose region the records are located. This 
official shall have the authority to grant or deny the request. A 
request directed to a Regional Commissioner should be mailed to or 
personally delivered at the appropriate location specified in Customs 
Appendix A in ``Privacy Act Issuances'' published annually by the Office 
of the Federal Register.
    (c) Each request shall comply with the identification and other 
requirements set forth in 31 CFR 1.27, and in the appropriate system 
notice in ``Privacy Act Issuance published by the Office of the Federal 
Register. Each request should be conspicuously labeled on the face of 
the envelope ``Privacy Act Amendment Request''.
    4. Administrative appeal of initial determination refusing to amend 
records. Appellate determinations (including extensions of time on 
appeal under 31 CFR 1.27 (e) with respect to all Customs Service records 
will be made by the Director, Office of Regulations & Rulings or the 
delegate of such official. All such appeals should be mailed or 
personally delivered to the United States Customs Service, Office of 
Regulations & Rulings, 1301 Constitution Avenue NW., Washington, DC 
20229. Each appeal should be conspicuously labeled on the face of the 
envelope ``Privacy Act Amendment Appeal''.
    5. Statements of disagreement. ``Statements of Disagreement'' 
pursuant to 31 CFR 1.27 (e)(4)(i) shall be filed with the official 
signing the notification of refusal to amend at the address indicated in 
the letter of notification within 35 days of the date of such 
notification and should be limited to one page.
    6. Service of process. Service of process will be received by the 
Chief Counsel, United States Customs Service, 1301 Constitution Avenue 
NW., Washington, DC 20229.
    7. Annual notice of systems of records. The annual notice of the 
United States Customs Service systems of records required to be

[[Page 75]]

published by the Office of the Federal Register, as specified in 5 
U.S.C. 552a(f), is included in the publication entitled ``Privacy Act 
Issuances''.
    8. Verification of identity. Each request shall comply with the 
identification and other requirements set forth in 31 CFR 1.26 and in 
the appropriate system notice published by the Office of the Federal 
Register. Each request should be conspicuously labeled on the face of 
the envelope ``Privacy Act Request''.



  Sec. Appendix D to Subpart C of Part 1--United States Secret Service

    1. In general. This appendix applies to the United States Secret 
Service. It sets forth specific notification and access procedures with 
respect to particular systems of records including identification 
requirements, and time and places where records may be reviewed; 
identifies the officers designated to make the initial determinations 
with respect to notification and access to records and accountings of 
disclosures of records. This appendix also sets forth the specific 
procedures for requesting amendment of records and identifies the 
officers designated to make the initial and appellate determinations 
with respect to requests for amendment of records. It identifies the 
officers designated to grant extensions of time on appeal, the officers 
with whom ``Statements of Disagreement may be filed, the officer 
designated to receive service of process and the addresses for delivery 
of requests, appeals, and service of process. In addition, it references 
the notice of systems of records and notices of the routine uses of the 
information in the system required by 5 U.S.C. 552a(e) (4) and (11) and 
published annually by the Office of the Federal Register in ``Privacy 
Act Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the United States Secret Service, will be made by the 
Freedom of Information and Privacy Act Officer, United States Secret 
Service. Requests for notification should be made by mail or delivered 
personally between the hours of 9:00 a.m. and 5:30 of any day excluding 
Saturdays, Sundays, and legal holidays to: Privacy Act Request, Freedom 
of Information and Privacy Act Officer, United States Secret Service, 
Suite 3000, 950 H Street, NW., Washington, DC 20373-5802.
    a. Identification requirements. In addition to the requirements 
specified in 31 CFR 1.26, each request for notification, access or 
amendment of records made by mail shall contain the requesting 
individual's date and place of birth and a duly notarized statement 
signed by the requester asserting his or her identity and stipulating 
that the requesting individual understands that knowingly or willfully 
seeking or obtaining access to records about another person under false 
pretences is punishable by a fine of up to $5,000.
    b. Individuals making requests in person. Individuals making 
requests in person will be required to exhibit acceptable identifying 
documents such as employee identification numbers, drivers licenses, 
medical cards or other documents sufficient to verify the identity of 
the requester.
    c. Physical inspection of records. Upon determining that a request 
for the physical inspection of records is to be granted, the requester 
shall be notified in writing of the determination, and when and where 
the requested records may be inspected. The inspection of records will 
be conducted at the Secret Service field office or other facility 
located nearest to the residence of the individual making the request. 
Such inspection shall be conducted during the regular business hours of 
the Secret Service Field Office or other facility where the disclosure 
is made. A person of his or her own choosing may accompany the 
individual making the request provided the individual furnishes a 
written statement authorizing the disclosure of that individual's record 
in the accompanying person's presence. Any disclosure of a record will 
be made in the presence of a representative of the United States Secret 
Service.
    3. Requests for amendment of records. Initial determination under 31 
CFR part 1, whether to grant requests to amend records will be made by 
the Freedom of Information and Privacy Act Officer. Requests should be 
mailed or delivered personally between the hours of 9:00 a.m. and 5:30 
p.m. to: Privacy Act Amendment Request, Freedom of Information and 
Privacy Acts Officer, United States Secret Service, Suite 3000, 950 H 
Street, NW., Washington, DC 20373-5802.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations, including extensions of 
time on appeal, with respect to records of the United States Secret 
Service will be made by the Deputy Director, United States Secret 
Service. Appeals may be mailed or delivered personally to: Privacy Act 
Amendment Appeal, Deputy Director, United States Secret Service, 950 H 
Street, NW., Suite 8300, Washington, DC 20373-5802.
    5. Statements of disagreement. ``Statements of Disagreements'' under 
31 CFR 1.27 (e)(4)(i) shall be filed with the official signing of the 
notification of refusal to amend at the address indicated in the letter 
of notification within 35 days of the date of such notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
United States Secret Service General Counsel and shall be delivered to 
the following location: General Counsel, United States Secret Service, 
Suite 8300, 950 H Street, NW., Washington, DC 20373-5802.

[[Page 76]]

    7. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register, as 
specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy Act 
Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.

[52 FR 26305, July 14, 1987, as amended at 66 FR 9959, Feb. 13, 2001]



 Sec. Appendix E to Subpart C of Part 1--Bureau of Alcohol, Tobacco and 
                                Firearms

    1. In general. This appendix applies to the Bureau of Alcohol, 
Tobacco and Firearms. It sets forth specific notification and access 
procedures with respect to particular systems of records, identifies the 
officers designated to make the initial determinations with respect to 
notification and access to records and accountings of disclosures of 
records. This appendix also sets forth the specific procedures for 
requesting amendment of records and identifies the officers designated 
to make the initial and appellate determinations with respect to 
requests for amendment of records. It identifies the officers designated 
to grant extensions of time on appeal, the officers with whom 
``Statements of Disagreement'' may be filed, the officer designated to 
receive service of process and the addresses for delivery of requests, 
appeals, and service of process. In addition, it references the notice 
of systems of records and notices of the routine uses of the information 
in the system required by 5 U.S.C. 552a (3) (4) and (11) and published 
annually by the Office of the Federal Register in ``Privacy Act 
Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determination under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Bureau of Alcohol, Tobacco, and Firearms, will be 
made by the Chief, Disclosure Branch, Office of the Assistant to the 
Director or the delegate of such officer. Requests may be mailed or 
delivered in person to: Privacy Act Request, Chief, Disclosure Branch, 
Room 4406, Bureau of Alcohol, Tobacco and Firearms, 1200 Pennsylvania 
Avenue, NW., Washington, DC 20226.
    3. Requests for amendment of record. Initial determinations under 31 
CFR 1.27 (a) through (d) with respect to requests to amend records 
maintained by the Bureau of Alcohol, Tobacco and Firearms will be made 
by the Chief, Disclosure Branch, Office of the Assistant to the 
Director. Requests for amendment of records may be mailed or delivered 
in person to: Privacy Act Request, Chief, Disclosure Branch, Room 4406, 
Bureau of Alcohol, Tobacco and Firearms, 1200 Pennsylvania Avenue, NW., 
Washington, DC 20226.
    4. Verification of identity. (a) In addition to the requirements 
specified in 31 CFR 1.26(d) of this appendix, each request for 
notification, access or amendment of records made by mail shall contain 
the requesting individual's date and place of birth and a statement 
signed by the requester asserting his or her identity and stipulating 
that the requester understands that knowingly or willfully seeking or 
obtaining access to records about another person under false pretenses 
is a misdemeanor and punishable by a fine of up to $5,000 provided, that 
the Bureau of Alcohol, Tobacco and Firearms may require a signed 
notarized statement verifying the identity of the requester.
    (b) Individuals making requests in person will be required to 
exhibit at least two acceptable identifying documents such as employee 
identification cards, driver's license, medical cards, or other 
documents sufficient to verify the identity of the requester.
    (c) The parent or guardian of a minor or a person judicially 
determined to be incompetent, shall in addition to establishing the 
identity of the minor or other person he represents as required in (a) 
and (b), establish his own parentage or guardianship by furnishing a 
copy of a birth certificate showing parentage (or other satisfactory 
documentation) or a court order establishing the guardianship.
    5. Request for physical inspection of records. Upon determining that 
a request for the physical inspection of records is to be granted, the 
requester shall be notified in writing of the determination, and when 
and where the records may be inspected. The inspection of records will 
be made at the Bureau of Alcohol, Tobacco and Firearms Field Office or 
other facility located nearest to the residence of the individual making 
the request. Such inspection shall be conducted during the regular 
business hours of the field office or other facility where the 
disclosure is made. A person of the requester's own choosing may 
accompany the requester provided the requester furnishes a written 
statement authorizing the disclosure of the requester's record in the 
accompanying person's presence. The record inspection will be made in 
the presence of a representative of the Bureau. Following the inspection 
of the record, the individual will acknowledge in writing the fact that 
he or she had an opportunity to inspect the requested record.
    6. Requests for copies of records without prior physical inspection. 
Upon determining that an individual's request for copies of his or her 
records without prior physical inspection is to be granted, the 
requester shall be notified in writing of the determination, and the 
location and time for his or her receipt of the requested copies. The 
copies will be made

[[Page 77]]

available at the Bureau of Alcohol, Tobacco and Firearms field office or 
other facility located nearest to the residence of the individual making 
the request. Copies shall be received by the requester during the 
regular business hours of the field office or other facility where the 
disclosure is made. Transfer of the copies to the individual shall be 
conditioned upon payment of copying costs and his presentation of at 
least two acceptable identifying documents such as employee 
identification cards, driver's license, medical cards, or other 
documents sufficient to verify the identity of the requester. Following 
the receipt of the copies, the individual will acknowledge receipt in 
writing.
    7. Administrative appeal of initial determination refusing to amend 
record. Appellate determinations under 31 CFR 1.27(e) with respect to 
records of the Bureau of Alcohol, Tobacco and Firearms, including 
extensions of time on appeal, will be made by the Director or the 
delegate of such officer. Appeals should be addressed to, or delivered 
in person to: Privacy Act Amendment Appeal, Director, Bureau of Alcohol, 
Tobacco and Firearms, Room 4406, 1200 Pennsylvania Avenue, NW., 
Washington, DC 20226.
    8. Statements of disagreement. ``Statements of Disagreement'' as 
described in 31 CFR 1.27(e) (4) shall be filed with the official signing 
the notification within 35 days of the date of such notification and 
should be limited to one page.
    9. Service of process. Service of process will be received by the 
Director of the Bureau of Alcohol, Tobacco and Firearms or the delegate 
of such official and shall be delivered to the following location: 
Director, Bureau of Alcohol, Tobacco and Firearms, 1200 Pennsylvania 
Avenue, NW., Washington, DC 20226, Attention: Chief Counsel.
    10. Annual notice of systems of records. The annual notice of 
systems of records is published by the Office of the Federal Register, 
as specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy 
Act Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for each pertinent 
system.



Sec. Appendix F to Subpart C of Part 1--Bureau of Engraving and Printing

    1. In general. This appendix applies to the Bureau of Engraving and 
Printing. It sets forth specific notification and access procedures with 
respect to particular systems of records including identification 
requirements, identifies the officers designated to make the initial 
determinations with respect to notification and access to records and 
accountings of disclosures of records. This appendix also sets forth the 
specific procedures for requesting amendment of records and identifies 
the officers designated to make the initial and appellate determinations 
with respect to requests for amendment of records. It identifies the 
officers designated to grant extensions of time on appeal, the officers 
with whom ``Statements of Disagreement may be filed, the officer 
designated to receive service of process and the addresses for delivery 
of requests, appeals, and service of process. In addition, it references 
the notice of systems of records and notices of the routine uses of the 
information in the system required by 5 U.S.C. 552a (e) (4) and (11) and 
published annually by the Office of the Federal Register in ``Privacy 
Act Issuances.''
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Bureau of Engraving and Printing, will be made by 
the head of the organizational unit having immediate custody of the 
records requested, or the delegate of such official. Requests for access 
to records contained within a particular system of records should be 
submitted to the address indicated for that system in the access section 
of the notices published by the Office of the Federal Register in 
``Privacy Act Issuances.'' Requests for information and specific 
guidance should be addressed to: Privacy Act Request, Disclosure Officer 
(Executive Assistant to the Director), Room 104-18M, Bureau of Engraving 
and Printing, Washington, DC 20228.
    3. Requests for amendment of records. Initial determination under 31 
CFR 1.27 (a) through (d), whether to grant request to amend records will 
be made by the head of the organizational unit having immediate custody 
of the records or the delegate of such official. Requests for amendment 
should be addressed as indicated in the appropriate system notice in 
``Privacy Act Issuances'' published by the Office of the Federal 
Register. Requests for information and specific guidance on where to 
send requests for amendment should be addressed to: Privacy Act 
Amendment Request, Disclosure Officer (Executive Assistant to the 
Director), Bureau of Engraving and Printing, Room 104-18M, Washington, 
DC 20228.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27(e) including extensions of time on appeal, 
with respect to records of the Bureau of Engraving and Printing will be 
made by the Director of the Bureau or the delegate of such officer. 
Appeals made by mail should be addressed to, or delivered personally to: 
Privacy Act Amendment Appeal, Disclosure Officer (Executive Assistant to 
the Director), Room 104-18M, Bureau of Engraving and Printing, 
Washington, DC 20228.

[[Page 78]]

    5. Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27(e)(4)(8) shall be filed with the official signing the 
notification of refusal to amend at the address indicated in the letter 
of notification within 35 days of the date of such notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
Chief Counsel of the Bureau of Engraving and Printing and shall be 
delivered to the following location: Chief Counsel, Bureau of Engraving 
and Printing, Room 109-M, 14th and C Streets, SW., Washington, DC 20228.
    7. Verification of identity. An individual seeking notification or 
access to records, or seeking to amend a record, or seeking an 
accounting of disclosures, must satisfy one of the following 
identification requirements before action will be taken by the Bureau of 
Engraving and Printing on any such request:
    (i) An individual appearing in person may establish identity by the 
presentation of a single document bearing a photograph (such as a 
passport or identification badge) or by the presentation of two items of 
identification which do not bear a photograph, but do bear both a name 
and signature (such as a credit card).
    (ii) An individual may establish identity through the mail by a 
signature, address, and one other identifier such as a photocopy of a 
driver's license or other document bearing the individual's signature.
    (iii) Notwithstanding subdivisions (i) and (ii) of this 
subparagraph, an individual who so desires, may establish identity by 
providing a notarized statement, swearing or affirming to such 
individual's identity and to the fact that the individual understands 
the penalties provided in 5 U.S.C. 552a(1)(3) for requesting or 
obtaining access to records under false pretenses.
    Notwithstanding subdivision (i), (ii), or (iii) of this 
subparagraph, the Executive Assistant or other designated official may 
require additional proof of an individual's identity before action will 
be taken on any request if such official determines that it is necessary 
to protect against unauthorized disclosure of information in a 
particular case. In addition, a parent of any minor or a legal guardian 
of any individual will be required to provide adequate proof of legal 
relationship before such person may act on behalf of such minor or such 
individual.
    8. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register, as 
specified in 5 U.S.C. 522a(f). The publication is entitled ``Privacy Act 
Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.



  Sec. Appendix G to Subpart C of Part 1--Financial Management Service

    1. In general. This appendix applies to the Financial Management 
Service. It sets forth specific notification and access procedures with 
respect to particular systems of records, identifies the officers 
designated to make the initial determinations with respect to 
notification and access to records and accountings of disclosures of 
records. This appendix also sets forth the specific procedures for 
requesting amendment of records and identifies the officers designated 
to make the initial and appellate determinations with respect to 
requests for amendment of records. It identifies the officers designated 
to grant extensions of time on appeal, the officers with whom 
``Statements of Disagreement'' may be filed, the officer designated to 
receive service of process and the addresses for delivery of requests, 
appeals, and service of process. In addition, it references the notice 
of systems of records and notices of the routine uses of the information 
in the system required by 5 U.S.C. 552a(e) (4) and (11) and published 
annually by the Office of the Federal Register in ``Privacy Act 
Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Financial Management Service, will be made by the 
head of the organizational unit having immediate custody of the records 
requested or an official designated by this official. This is indicated 
in the appropriate system notice in ``Privacy Act Issuances'' published 
annually by the Office of the Federal Register. Requests for information 
and specific guidance on where to send requests for records may be 
mailed or delivered personally to: Privacy Act Request, Disclosure 
Officer, Financial Management Service, Room 108, Treasury Department 
Annex No. 1, Pennsylvania Avenue and Madison Place, NW., Washington, DC 
20226.
    3. Requests for amendment of records. Initial determination under 31 
CFR 1.27(a) through (d), whether to grant requests to amend records will 
be made by the head of the organzational unit having immediate custody 
of the records or the delegate of such official. Requests for amendment 
should be addressed as indicated in the appropriate system notice in 
``Privacy Act Issuances'' published by the Office of the Federal 
Register. Requests for information and specific guidance on where to 
send requests for amendment should be addressed to: Privacy Act 
Amendment Request, Disclosure Officer, Financial Management Service, 
Department of the Treasury, Treasury Annex No. 1, Washington, DC 20226.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate

[[Page 79]]

determinations refusing amendment of records under 31 CFR 1.27(e) 
incuding extensions of time on appeal, with respect to records of the 
Financial Management Service will be made by the Commissioner or the 
delegate of such official. Appeals made by mail should be addressed to, 
or delivered personally to: Privacy Act Amendment Appeal Commissioner, 
Financial Management Service (Privacy), Department of the Treasury, Room 
618, Treasury Annex No. 1, Pennsylvania Avenue and Madison Place, NW., 
Washington, DC 20226.
    5. Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27(e)(4)(i) shall be filed with the official signing the 
notification of refusal to amend at the address indicated in the letter 
of notification within 35 days of the date of such notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
Commissioner, Financial Management Service or the delegate of such 
official and shall be delivered to the following location: Commissioner, 
Financial Management Service (Privacy), Department of the Treasury, Room 
618, Treasury Annex No. 1, Pennsylvania Avenue and Madison Place, NW, 
Washington, DC 20226.
    7. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register, as 
specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy Act 
Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.



       Sec. Appendix H to Subpart C of Part 1--United States Mint

    1. In general. This appendix applies to the United States Mint. It 
sets forth specific notification and access procedures with respect to 
particluar systems of records, identifies the officers designated to 
make the initial determinations with respect to notification and access 
to records and accountings of disclosures of records. This appendix also 
sets forth the specific procedures for requesting amendment of records 
and identifies the officers designated to make the initial and appellate 
determinations with respect to requests for amendment of records. It 
identifies the officers designated to grant extensions of time on 
appeal, the officers with whom ``Statements of Disagreement'' may be 
filed, the officer designated to receive service of process and the 
addresses for delivery of requests, appeals, and service of process. In 
addition, it references the notice of systems of records and notices of 
the routine uses of the information in the system required by 5 U.S.C. 
552a(e) (4) and (11) and published annually by the Office of the Federal 
Register in ``Privacy Act Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the United States Mint will be made by the head of the 
organizational unit having immediate custody of the records requested or 
an official designated by this official. This is indicated in the 
appropriate system notice in ``Privacy Act Issuances'' published 
annually by the Office of the Federal Register. Requests should be 
directed to the Superintendent or Officer in charge of the facility in 
which the records are located or to the Chief, Administrative Programs 
Division. Requests for information and specific guidance on where to 
send requests for records may be mailed or delivered personally to: 
Privacy Act Request, Chief, Administrative Programs Division, United 
States Mint, Judiciary Square Building, 633 3rd Street, N.W, Washington, 
DC 20220.
    3. Requests for amendment of records. Initial determination under 31 
CFR 1.27 (a) through (d), whether to grant requests to amend records 
will be made by the head of the Mint installation having immediate 
custody of the records or the delegated official. Requests should be 
mailed or delivered personally to: Privacy Act Amendment Request, 
Freedom of Information and Privacy Acts Officer, United States Mint, 
Judiciary Square Building, 633 3rd Street, Washington, DC 20220.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27 including extensions of time on appeal, with 
respect to records of the United States Mint will be made by the 
Director of the Mint or the delegate of the Director. Appeals made by 
mail should be addressed to, or delivered personally to: Privacy Act 
Amendment Appeal, United States Mint, Judiciary Square Building, 633 3rd 
Street, NW, Washington, DC 20220.
    5. Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27 (e)(4)(i) shall be filed with the official signing the 
notification of refusal to amend at the address indicated in the letter 
of notification within 35 days of the date of such notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
Director of the Mint and shall be delivered to the following location: 
Director of the Mint, Judiciary Square Building, 633 3rd street, NW., 
Washington, DC 20220.
    7. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register,

[[Page 80]]

as specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy 
Act Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.



    Sec. Appendix I to Subpart C of Part 1--Bureau of the Public Debt

    1. In general. This appendix applies to the Bureau of the Public 
Debt. It sets forth specific notification and access procedures with 
respect to particular systems of records, identifies the officers 
designated to make the initial determinations with respect to 
notification and access to records and accountings of disclosures of 
records. This appendix also sets forth the specific procedures for 
requesting amendment of records and identifies the officers designated 
to make the initial and appellate determinations with respect to 
requests for amendment of records. It identifies the officer designated 
to grant extension of time on appeal, the officers with whom 
``Statements of Disagreement'' may be filed, the officer designated to 
receive service of process and the addresses for delivery of requests, 
appeals, and service of process. In addition, it references the notice 
of systems of records and notices of the routine uses of the information 
in the system required by 5 U.S.C. 552a(e) (4) and (11) and published 
annually by the Office of the Federal Register in ``Privacy Act 
Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Bureau of Public Debt, will be made by the head of 
the organizational unit having immediate custody of the records 
requested or an official designated by this official. This is indicated 
in the appropriate system notice in ``Privacy Act Issuances'' published 
annually by the Office of the Federal Register. Requests for information 
and specific guidance on where to send requests for records may be 
mailed or delivered personally to: Privacy Act Request, Disclosure 
Officer, Administrative Resource Center, Bureau of the Public Debt, 
Department of the Treasury, 200 Third Street, Room 211, Parkersburg, WV 
26101-5312.
    3. Requests for amendment of records. Initial determination under 31 
CFR 1.27 (a) through (d), whether to grant requests to amend records 
will be made by the head of the organizational unit having immediate 
custody of the records or the delegate of such official. Requests for 
amendment should be addressed as indicated in the appropriate system 
notice in ``Privacy Act Issuances'' published by the Office of the 
Federal Register. Requests for information and specific guidance on 
where to send requests for amendment should be addressed to: Privacy Act 
Amendment Request, Disclosure Officer, Administrative Resource Center, 
Bureau of the Public Debt, Department of the Treasury, 200 Third Street, 
Room 211, Parkersburg, WV 26101-5312.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27(e) including extensions of time on appeal, 
with respect to records of the Bureau of the Public Debt will be made by 
the Executive Director, Administrative Resource Center, Bureau of the 
Public Debt or the delegate of such officer. Appeals made by mail should 
be addressed to, or delivered personally to: Privacy Act Amendment 
Appeal, Chief Counsel, Bureau of the Public Debt, Department of the 
Treasury, Executive Director, Administrative Resource Center, Bureau of 
the Public Debt.
    5. Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27 (e)(4)(i) shall be filed with the official signing the 
notification of refusal to amend at the address indicated in the letter 
of notification within 35 days of the date of such notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
Chief Counsel of the Bureau of the Public Debt and shall be delivered to 
the following location: Chief Counsel, Bureau of the Public Debt, 
Department of the Treasury, 200 Third Street, Room G-15, Parkersburg, WV 
26106-1328.
    7. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register, as 
specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy Act 
Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.



Sec. Appendix J to Subpart C of Part 1--Office of the Comptroller of the 
                                Currency

    1. In general. This appendix applies to the Office of the 
Comptroller of the Currency. It sets forth specific notification and 
access procedures with respect to particular systems of records, 
identifies the officers designated to make the initial determinations 
with respect to notification and access to records and accountings of 
disclosures of records. This appendix also sets forth the specific 
procedures for requesting amendment of records and identifies the 
officers designated to make the intial and appellate determinations with 
respect to requests for amendment of records. It identifies the officers 
designated to grant extensions of time

[[Page 81]]

on appeal, the officers with whom ``Statements of Disagreement'' may be 
filed, the officer designated to receive service of process and the 
addresses for delivery of requests, appeals, and service of process. In 
addition, it references the notice of systems of records and notices of 
the routine uses of the information in the system required by 5 U.S.C. 
552a(e) (4) and (11) and published annually by the Office of the Federal 
Register in ``Privacy Act Issuances''.
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26 whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Office of the Comptroller of the Currency will be 
made by the head of the organizational unit having immediate custody of 
the records requested or the delegate of that official. This is 
indicated in the appropriate system notice in ``Privacy Act Issuances'' 
published biennially by the Office of the Federal Register. Requests for 
information and specific guidance on where to send requests for records 
shall be mailed or delivered personally to: Disclosure Officer, 
Communications Division, Office of the Comptroller of the Currency, 250 
E Street, SW, Washington, DC 20219.
    3. Requests for amendment of records. Initial determinations under 
31 CFR 1.27 (a) through (d) whether to grant requests to amend records 
will be made by the Comptroller's delegate or the head of the 
organizational unit having immediate custody of the records or the 
delegate of that official. Requests for amendment shall be mailed or 
delivered personally to: Disclosure Officer, Communications Division, 
Office of the Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27(e) including extensions of time on appeal, 
with respect to records of the Office of the Comptroller of the Currency 
will be made by the Comptroller of the Currency or the Comptroller's 
delegate. Appeals shall be mailed or delivered personally to: Disclosure 
Officer, Communications Division, Office of the Comptroller of the 
Currency, 250 E Street, SW., Washington, DC 20219.
    5. Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27(e)(4)(i) shall be filed with the OCC's Director of 
Communications at the address indicated in the letter of notification 
within 35 days of the date of such notification and should be limited to 
one page.
    6. Service of process. Service of process shall be delivered to the 
Chief Counsel or the Chief Counsel's delegate at the following location: 
Office of the Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.
    7. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register, as 
specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy Act 
Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.

[52 FR 26305, July 14, 1987, as amended at 60 FR 57333, Nov. 15, 1995; 
67 FR 34402, May 14, 2002]



Sec. Appendix K to Subpart C of Part 1--Federal Law Enforcement Training 
                                 Center

    1. In general. This appendix applies to the Federal Law Enforcement 
Training Center. It sets forth specific notification and access 
procedures with respect to particular systems of records, identifies the 
officers designated to make the initial determinations with respect to 
notification and access to records and accountings of disclosure of 
records. This appendix also sets forth the specific procedures for 
requesting amendment of records and identifies the officers designated 
to make the initial and appellate determinations with respect to 
requests for amendment of records. It identifies the officers designated 
to grant extensions of time on appeal, the officers with whom 
``Statements of Disagreement'' may be filed, the officer designated to 
receive service of process and the addresses for delivery of requests, 
appeals, and service of process. In addition, it references the notice 
of systems of records and notices of the routine uses of the information 
in the system required by 5 U.S.C. 552a(e) (4) and (11) and published 
annually by the Office of the Federal Register, in ``Privacy Act 
Issuances''.
    2. Requests for notification and access to records and accounting of 
disclosures. Initial determinations under 31 CFR 1.26, whether to grant 
requests for notification and acesss to records and accounting of 
disclosures for the Federal Law Enforcement Training Center, will be 
made by the head of the organizational unit having immediate custody of 
the records requested or an official designated by this official. This 
is indicated in the appropriate system notice in ``Privacy Act 
Issuances'' published annually by the Office of the Federal Register. 
Requests for information and specific guidance on where to send requests 
for records may be mailed or delivered personally to: Privacy Act 
Request, Library Building 262, Federal Law Enforcement Training Center, 
Glynco, Georgia 31524.
    3. Requests for amendment of records. Initial determinations under 
31 CFR 1.27 (a) through (d), whether to grant requests to amend

[[Page 82]]

records will be made by the head of the organizational unit having 
immediate custody of the records or the delegate of such official. 
Requests for amendment should be addressed as indicated in the 
appropriate system notice in ``Privacy Act Issuances'' published by the 
Office of the Federal Register. Requests for information and specific 
guidance on where to send requests for amendment should be addressed to: 
Privacy Act Amendment Request, Federal Law Enforcement Training Center, 
Glynco, Georgia 31524.
    4. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27(e) including extensions of time on appeal, 
with respect to records of the Federal Law Enforcement Training Center 
will be made by the Assistant Secretary (Enforcement), Department of the 
Treasury or the delegate of such officer. Appeals made by mail should be 
addressed to, or delivered personally to: Privacy Act Amendment Appeal, 
FLETC, Assistant Secretary (Enforcement), Department of the Treasury, 
1500 Pennsylvania Avenue, NW., Room 4312, Washington, DC 20220.
    5. Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27(e)(4)(i) shall be filed with the official signing the 
notification of refusal to amend at the address indicated in the letter 
of notification within 35 days of the date of such notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
General Counsel of the Department of the Treasury or the delegate of 
such official and shall be delivered to the following location: General 
Counsel, Department of the Treasury, Room 3000, Main Treasury Building, 
1500 Pennsylvania Avenue, NW., Washington, DC 20220.
    7. Annual notice of systems of records. The annual notice of systems 
of records is published by the Office of the Federal Register, as 
specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy Act 
Issuances''. Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.

[52 FR 26305, July 14, 1987. Redesignated at 65 FR 2334, Jan. 14, 2000]



  Sec. Appendix L to Subpart C of Part 1--Office of Thrift Supervision

    1. In general. This appendix applies to the Office of Thrift 
Supervision. It sets forth specific notification and access procedures 
with respect to particular systems of records, and identifies the 
officers designated to make the initial determinations with respect to 
notification and access to records, the officers designated to make the 
initial and appellate determinations with respect to requests for 
amendment of records, the officers designated to grant extensions of 
time on appeal, the officers with whom ``Statement of Disagreement'' may 
be filed, the officer designated to receive services of process and the 
addresses for delivery of requests, appeals, and service of process. In 
addition, it references the notice of systems of records and notices of 
the routine uses of the information in the system required by 5 U.S.C. 
552a(e) (4) and (11) and published biennially by the Office of the 
Federal Register in ``Privacy Act Issuances.''
    2. Requests for notification and access to records and accounting of 
disclosures. Initial determinations under 31 CFR 1.26, whether to grant 
requests for notification and access to records and accountings of 
disclosures for the Office of Thrift Supervision, will be made by the 
head of the organizational unit having immediate custody of the records 
requested, or the delegate of such official. This information is 
contained in the appropriate system notice in the ``Privacy Act 
Issuances,'' published biennially by the Office of the Federal Register. 
Requests for information and specific guidance on where to send requests 
for records should be addressed to: Privacy Act Request, Chief, 
Disclosure Branch, Information Services Division, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.
    Requests may be delivered in person to: Office of Thrift 
Supervision, Information Services Division, 1700 G Street, NW., 
Washington, DC.
    3. Requests for amendments of records. Initial determinations under 
31 CFR 1.27 (a) through (d) with respect to requests to amend records 
maintained by the Office of Thrift Supervision will be made by the head 
of the organization or unit having immediate custody of the records or 
the delegates of such official. Requests for amendment of records should 
be addressed as indicated in the appropriate system notice in ``Privacy 
Act Issuances'' published by the Office of the Federal Register. 
Requests for information and specific guidance on where to send these 
requests should be addressed to: Privacy Act Amendment Request, Chief, 
Disclosure Branch, Information Services Division, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.
    Privacy Act Amendment Requests may be delivered in person to: Office 
of Thrift Supervision, Information Services Division, 1700 G Street, 
NW., Washington, DC.
    4. Administrative appeal of initial determination refusing to amend 
record. Appellate determination under 31 CFR 1.27(e) with respect to 
records of the Office of Thrift Supervision, including extensions of 
time on appeal, will be made by the Director, Public Affairs, Office of 
Thrift Supervision, or the delegate of such official, as limited by 5 
U.S.C. 552a(d) (2)

[[Page 83]]

and (3). Appeals made by mail should be addressed as indicated in the 
letter of initial decision or to: Privacy Act Amendment Request, Chief, 
Disclosure Branch, Information Services Division, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.
    Appeals may be delivered in person to: Office of Thrift Supervision, 
Information Services Division, 1700 G Street, NW., Washington, DC.
    5. Statements of Disagreement. ``Statements of Disagreement'' as 
described in 31 CFR 1.27(e)(4) shall be filed with the official signing 
the notification of refusal to amend at the address indicated in the 
letter of notification within 35 days of the date of notification and 
should be limited to one page.
    6. Service of process. Service of process will be received by the 
Corporate Secretary of the Office of Thrift Supervision or the delegate 
of such official and shall be delivered to the following location: 
Corporate Secretary, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552.
    7. Annual notice of systems of record. The annual notice of systems 
of records required to be published by the Office of the Federal 
Register is included in the publication entitled ``Privacy Act 
Issuances,'' as specified in 5 U.S.C. 552a(f). Any specific requirements 
for access, including identification requirements, in addition to the 
requirements set forth in 31 CFR 1.26 and 1.27 and (8) below, and 
locations for access are indicated in the notice for the pertinent 
system.
    8. Verification of identity. An individual seeking notification or 
access to records, or seeking to amend a record, must satisfy one of the 
following identification requirements before action will be taken by the 
Office of Thrift Supervision on any such request:
    (i) An individual seeking notification or access to records in 
person, or seeking to amend a record in person, may establish identity 
by the presentation of a single official document bearing a photograph 
(such as a passport or identification badge) or by the presentation of 
two items of identification which do not bear a photograph but do bear 
both a name and signature (such as a driver's license or credit card).
    (ii) An individual seeking notification or access to records by 
mail, or seeking to amend a record by mail, may establish identity by a 
signature, address, and one other identifier such as a photocopy of a 
driver's license or other official document bearing the individual's 
signature.
    (iii) Notwithstanding subdivisions (i) and (ii) of this 
subparagraph, an individual seeking notification or access to records by 
mail or in person, or seeking to amend a record by mail or in person, 
who so desires, may establish identity by providing a notarized 
statement, swearing or affirming to such individual's identity and to 
the fact that the individual understands the penalties provided in 5 
U.S.C. 552a(i)(3) for requesting or obtaining access to records under 
false pretenses. Alternatively, an individual may provide a statement 
that the individual understands the penalties provided in 5 U.S.C. 
552a(i)(3) for requesting or obtaining access to records under false 
pretenses which is subscribed by the individual as true and correct 
under penalty of perjury pursuant to 28 U.S.C. 1746. Notwithstanding 
subdivision (i), (ii), or (iii) of this subparagraph, a designated 
official may require additional proof of an individual's identity before 
action will be taken on any request, if such official determines that it 
is necessary to protect against unauthorized disclosure of information 
in a particular case. In addition, a parent of any minor or a legal 
guardian of any individual will be required to provide adequate proof of 
legal relationship before such person may act on behalf of such minor or 
such individual.

[60 FR 31633, June 16, 1995. Redesignated at 65 FR 2334, Jan. 14, 2000]



            Sec. Appendix M to Subpart C of Part 1 [Reserved]



  Sec. Appendix N to Subpart C of Part 1--Financial Crimes Enforcement 
                                 Network

    1. In general. This appendix applies to the Financial Crimes 
Enforcement Network (FinCEN). It sets forth specific notification and 
access procedures with respect to particular systems of records, and 
identifies the officers designated to make the initial determinations 
with respect to notification and access to records and accountings of 
disclosures of records. This appendix also sets forth the specific 
procedures for requesting amendment of records and identifies the 
officers designated to make the initial and appellate determinations 
with respect to requests for amendment of records. It identifies the 
officers designated to grant extensions of time on appeal, the officers 
with whom ``Statements of Disagreement'' may be filed, the officer 
designated to receive service of process and the addresses for delivery 
of requests, appeals, and service of process. In addition, it references 
the notice of systems of records and notices of the routine uses of the 
information in the system required by 5 U.S.C. 552a(4) and (11) and 
published biennially by the Office of the Federal Register in ``Privacy 
Act Issuances.''
    2. Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for

[[Page 84]]

FinCEN will be made by the Freedom of Information/Privacy Act officer, 
FinCEN. Requests may be mailed to: Privacy Act Request, Financial Crimes 
Enforcement Network, Post Office Box 39, Vienna, VA 22183.
    3. Requests for amendments of records. Initial determinations under 
31 CFR 1.27(a) through (d) whether to grant requests to amend records 
maintained by FinCEN will be made by the Freedom of Information/Privacy 
Act officer, FinCEN. Requests may be mailed to: Privacy Act Request, 
Financial Crimes Enforcement Network, Post Office Box 39, Vienna, VA 
22183.
    4. Verification of Identity. An individual seeking notification or 
access to records, or seeking to amend a record, or seeking an 
accounting of disclosures, must satisfy one of the following 
identification requirements before action will be taken by FinCEN on any 
such request:
    (i) An individual may establish identity through the mail by a 
signature, address, and one other identifier such as a photocopy of a 
driver's license or other official document bearing the individual's 
signature.
    (ii) Notwithstanding this paragraph (4)(i), an individual may 
establish identity by providing a notarized statement, swearing or 
affirming to such individual's identity and to the fact that the 
individual understands the penalties provided in 5 U.S.C. 552a(i)(3) for 
requesting or obtaining access to records under false pretenses.
    (iii) Notwithstanding this paragraph (4)(i) and (ii), the Freedom of 
Information Act/Privacy Act Officer or other designated official may 
require additional proof of an individual's identity before action will 
be taken on any request, if such official determines that it is 
necessary to protect against unauthorized disclosure of information in a 
particular case. In addition, a parent of any minor or a legal guardian 
of any individual will be required to provide adequate proof of legal 
relationship before such person may act on behalf of such minor or such 
individual.
    5. Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27(e) including extensions of time on appeal with 
respect to the records of FinCEN will be made by the Director of FinCEN 
or the delegate of the Director. Appeals should be addressed to: Privacy 
Act Amendment Appeal, Financial Crimes Enforcement Network, Post Office 
Box 39, Vienna, VA 22183.
    6. Statements of Disagreement. ``Statements of Disagreement'' as 
described in 31 CFR 1.27(e)(4) shall be filed with the official signing 
the notification of refusal to amend at the address indicated in the 
letter of notification within 35 days of the date of such notification 
and should be limited to one page.
    7. Service of Process. Service of process will be received by the 
Chief Counsel of FinCEN and shall be delivered to the following 
location: Office of Chief Counsel, Financial Crimes Enforcement Network, 
Post Office Box 39, Vienna, VA 22183.
    8. Biennial notice of systems of records. The biennial notice of 
systems of records is published by the Office of the Federal Register, 
as specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy 
Act Issuances.'' Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 and paragraph 4 of this appendix are indicated 
in the notice for the pertinent system.

[68 FR 55311, Sept. 25, 2003]



PART 2_NATIONAL SECURITY INFORMATION--Table of Contents




Sec.
2.1 Processing of mandatory declassification review requests.
2.2 Access to classified information by historical researchers, former 
          Treasury Presidential and Vice Presidential appointees, and 
          former Presidents and Vice Presidents.

    Authority: 31 U.S.C. 321, E.O. 12958, 60 FR 19825, E.O. 13292, 68 FR 
15315.

    Source: 72 FR 63104, Nov. 8, 2007, unless otherwise noted.



Sec. 2.1  Processing of mandatory declassification review requests.

    (a) Except as provided by section 3.4(b) of Executive Order 13292, 
Further Amendment to Executive Order 12958, as amended, Classified 
National Security Information, all information classified by the 
Department of the Treasury under these Orders or any predecessor 
Executive Order shall be subject to mandatory declassification review by 
the Department, if:
    (1) The request for a mandatory declassification review describes 
the document or material containing the information with sufficient 
specificity to enable Treasury personnel to locate it with a reasonable 
amount of effort;
    (2) The information is not exempt from search and review under 
sections 105C, 105D, or 701 of the National Security Act of 1947 (50 
U.S.C. 431, 432 and 432a); and
    (3) The information has not been reviewed for declassification 
within the past 2 years or the information is not the subject of pending 
litigation.

[[Page 85]]

    (b) Requests for classified records originated by the Department of 
the Treasury shall be directed to the Office of Security Programs, 
Attention: Assistant Director (Information Security), 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220. Upon receipt of each request for 
mandatory declassification review, pursuant to section 3.5 of Executive 
Order 13292, the following procedures will apply:
    (1) The Office of Security Programs will acknowledge receipt of the 
request.
    (2)(i) A mandatory declassification review request need not identify 
the requested information by date or title of the responsive records, 
but must be of sufficient specificity to allow Treasury personnel to 
locate records containing the information sought with a reasonable 
amount of effort. Whenever a request does not reasonably describe the 
information sought, the requester will be notified by the Office of 
Security Programs that unless additional information is provided or the 
scope of the request is narrowed, no further action will be undertaken 
with respect to the request.
    (ii) If Treasury has reviewed the information within the past 2 
years and determined that all or part thereof remains classified, or the 
information is the subject of pending litigation, the requester shall be 
so informed and advised of the requester's appeal rights.
    (3) The Office of Security Programs will determine the appropriate 
Treasury offices or bureaus to conduct the mandatory declassification 
review. The Office of Security Programs will also advise Treasury and/or 
bureau reviewing officials concerning the mandatory declassification 
review process. Classified information relating to intelligence 
activities (including special activities), intelligence sources or 
methods, or cryptology will also be coordinated with the Office of the 
Assistant Secretary (Intelligence and Analysis). As appropriate, the 
Office of Security Programs will refer requests to other Federal 
departments and agencies having a direct interest in the requested 
documents.
    (4)(i) Treasury personnel undertaking a mandatory declassification 
review shall make reasonable efforts to determine if particular 
information may be declassified. Reviewing officials may rely on 
applicable exemption criteria under the Freedom of Information Act, the 
Privacy Act, and any other applicable law that authorizes the 
withholding of information. Reviewing officials shall also identify the 
amount of search and review time required to process each request. 
Barring extenuating circumstances, mandatory declassification reviews 
for reasonably small volumes of records should be completed in a timely 
fashion. A final determination regarding large volumes of records should 
ordinarily be made within one year of Treasury's receipt of any 
mandatory declassification review request.
    (ii) If the Director, Office of Security Programs determines that a 
Treasury office or bureau responsible for conducting a mandatory 
declassification review is not making reasonable efforts to review 
classified information subject to a mandatory declassification request, 
the Director may authorize Treasury-and/or bureau-originated information 
to be declassified in consultation with the Department's Senior Agency 
Official.
    (iii) If information cannot be declassified in its entirety, 
reasonable efforts, consistent with applicable law, will be made to 
release those declassified portions of the requested information that 
constitute a coherent segment. Upon the denial or partial denial of a 
declassification request, the requester will be so informed by the 
Office of Security Programs and advised of the requester's appeal 
rights.
    (5)(i) If Treasury receives a mandatory declassification review 
request for information in its possession that were originated by 
another Federal department or agency, the Office of Security Programs 
will forward the request to that department or agency for a 
declassification determination, together with a copy of the requested 
records, a recommendation concerning a declassification determination, 
and a request to be advised of that department's or agency's 
declassification determination. The Office of Security Programs may, 
after consultation with the originating department or agency, inform any 
requester of the referral unless

[[Page 86]]

such association is itself classified under Executive Order 13292 or 
prior orders.
    (ii) Mandatory declassification review requests concerning 
classified information originated by a Treasury office or bureau that 
has been transferred to another Federal department or agency will be 
forwarded to the appropriate successor department or agency for a 
declassification determination.
    (6) If another Federal department or agency forwards a mandatory 
declassification review request to Treasury for information in its 
custody that was classified by Treasury, the Office of Security Programs 
will:
    (i) Advise the referring department or agency as to whether it may 
notify the requester of the referral; and
    (ii) Respond to the Federal department, agency, or requester, as 
applicable, in accordance with the requirements of this section.
    (7)(i) Upon the denial, in whole or in part, of a request for the 
mandatory declassification review of information, the Office of Security 
Programs will so notify the requester in writing and will inform the 
requester of the right to appeal the classification determination within 
60 calendar days of the receipt of the classification determination. The 
notice will also advise the requester of the name and address of the 
Treasury official who will be responsible for deciding an appeal (the 
Deciding Official). The Office of Security Programs will coordinate 
appeals with the appropriate Treasury offices and bureaus.
    (ii) The Deciding Official should make a determination on an appeal 
within 30 working days following the receipt of the appeal, or within 60 
working days following receipt if the Deciding Official determines that 
additional time is required to make a determination and so notifies the 
requester. The Deciding Official should notify the requester in writing 
of Treasury's determination on appeal and, if applicable, the reasons 
for any whole or partial denial of the appeal. The Office of Security 
Programs will also notify the requester of their right of a final appeal 
to the Interagency Security Classification Appeals Panel, as 
appropriate, under 32 CFR 2001.33.
    (8)(i) Treasury may charge fees for search, review, and duplicating 
costs in connection with a mandatory declassification review request.
    (A) The fee for services of Treasury personnel involved in locating 
and/or reviewing records will be charged at the rate of a GS-11, Step 1 
employee, in the Washington-Baltimore Federal pay area, in effect when 
the mandatory declassification review request is received by the Office 
of Security Programs for searches that take more than two hours or for 
review times that are greater than two hours. Fees may be waived, in 
writing, by a bureau head or the equivalent Treasury official at the 
Assistant Secretary level.
    (B) There is no fee for duplicating the first 100 pages of fully or 
partially releasable documents. The cost of additional pages is 20 cents 
per page. No charges shall be levied for search and/or review time 
requiring less than 2 hours.
    (ii) If it is estimated that the fees associated with a mandatory 
declassification review will exceed $100, the Office of Security 
Programs will notify the requester in writing of the estimated costs and 
shall obtain satisfactory written assurance of full payment or require 
the requester to make an advance payment of the entire estimated fee 
before proceeding to process the request. Treasury may request pre-
payment where the fee is likely to exceed $500. After 60 calendar days 
without receiving the requester's written assurance of full payment or 
agreement to make pre-payment of estimated fees (or to amend the 
mandatory declassification review request in a manner as to result in 
fees acceptable to the requester), Treasury may administratively 
terminate the mandatory declassification review request. Failure of a 
requester to pay fees after billing will result in future requests not 
being honored. Nothing in this paragraph will preclude Treasury from 
taking any other lawful action to recover payment for costs incurred in 
processing a mandatory declassification review request.
    (iii) Payment of fees shall be made by check or money order to the 
Treasurer of the United States. Fees charged by

[[Page 87]]

Treasury for mandatory declassification review are separate and distinct 
from any other fees that may be imposed by a Presidential Library, the 
National Archives and Records Administration, or another Federal 
department or agency.



Sec. 2.2  Access to classified information by historical researchers, former 

Treasury Presidential and Vice Presidential appointees, and former Presidents 

and Vice Presidents.

    (a) Access to classified information may be granted only to 
individuals who have a need-to-know the information. This requirement 
may be waived, however, for individuals who:
    (1) Are engaged in historical research projects;
    (2) Previously occupied a position in the Treasury to which they 
were appointed by the President under 3 U.S.C. 105(a)(2)(A), or the Vice 
President under 3 U.S.C. 106(a)(1)(A); or
    (3) Served as President or Vice President.
    (b) Access to classified information may be granted to individuals 
described in paragraph (a) of this section upon:
    (1) A written determination by Treasury's Senior Agency Official, 
under Section 5.4(d) of Executive Order 13292, that access is consistent 
with the interest of the national security; and
    (2) Receipt of the individual's written agreement to safeguard 
classified information, including taking all appropriate steps to 
protect classified information from unauthorized disclosure or 
compromise. This written agreement must also include the individual's 
consent to have any and all notes (including those prepared or stored in 
electronic media, whether written or oral) reviewed by authorized 
Treasury personnel to ensure that no classified information is contained 
therein and, if so, that the classified information is not published.
    (c)(i)(A) A historical researcher is not authorized to have access 
to foreign government information or information classified by another 
Federal department or agency.
    (B) A former Treasury Presidential or Vice Presidential appointee is 
only authorized access to classified information that the former 
official originated, reviewed, signed or received while serving as such 
an appointee.
    (C) A former President or Vice President is only authorized access 
to classified information that was prepared by Treasury while that 
individual was serving as President or Vice President.
    (ii) Granting access to classified information pursuant to this 
section does not constitute the granting of a security clearance for 
access to classified information.
    (d) Treasury personnel will coordinate access to classified 
information by individuals described in paragraph (a) of this section 
with the Director, Office of Security Programs, who will ensure that the 
written agreement described in paragraph (b)(2) of this section is 
signed as a condition of being granted access to classified information.
    (e) Any review of classified information by an individual described 
in paragraph (a) of this section shall take place in a location 
designated by the Director, Office of Security Programs. Such persons 
must be accompanied at all times by appropriately authorized Treasury 
personnel authorized to have access to the classified information being 
reviewed. All notes (including those prepared or stored in electronic 
media, whether written or oral) made by an individual described in 
paragraph (a) of this section shall remain in the custody of the Office 
of Security Programs pending a determination by appropriately cleared 
subject matter experts that no classified information is contained 
therein.
    (f) An individual described in paragraph (a) of this section is 
subject to search, as are all packages or carrying cases prior to 
entering or leaving Treasury. Access to Treasury-originated classified 
information at another Federal department or agency, as may be 
authorized by the Director, Office of Security Programs shall be 
governed by security protocols in effect at the other Federal department 
or agency.
    (g) Treasury personnel must perform a physical verification and an 
accounting of all classified information each time such information is 
viewed by an individual described in paragraph (a) of this section. 
Physical verification and

[[Page 88]]

an accounting of all classified information shall be made both prior to 
and after viewing. Any discrepancy must be immediately reported to the 
Director, Office of Security Programs.
    (h) An individual described in paragraph (a) of this section may be 
charged reasonable fees for services rendered by Treasury in connection 
with the review of classified information under this section. To the 
extent such services involve searching, reviewing, and copying material, 
the provisions of Sec. 2.1(b)(8) shall apply.



PART 3_CLAIMS REGULATIONS AND INDEMNIFICATION OF DEPARTMENT OF TREASURY 

EMPLOYEES--Table of Contents




           Subpart A_Claims Under the Federal Tort Claims Act

Sec.
3.1 Scope of regulations.
3.2 Filing of claims.
3.3 Legal review.
3.4 Approval of claims not in excess of $25,000.
3.5 Limitations on authority to approve claims.
3.6 Final denial of a claim.
3.7 Action on approved claims.
3.8 Statute of limitations.

               Subpart B_Claims Under the Small Claims Act

3.20 General.
3.21 Action by claimant.
3.22 Legal review.
3.23 Approval of claims.
3.24 Statute of limitations.

      Subpart C_Indemnification of Department of Treasury Employees

3.30 Policy.

    Authority: 28 U.S.C. 2672; 28 CFR part 14; 5 U.S.C. 301.

    Source: 35 FR 6429, Apr. 22, 1970, unless otherwise noted.



           Subpart A_Claims Under the Federal Tort Claims Act



Sec. 3.1  Scope of regulations.

    (a) The regulations in this part shall apply to claims asserted 
under the Federal Tort Claims Act, as amended, 28 U.S.C. 2672, accruing 
on or after January 18, 1967, for money damages against the United 
States for injury to or loss of property or personal injury or death 
caused by the negligent or wrongful act or omission of an employee of 
the Department while acting within the scope of his office or 
employment, under circumstances where the United States if a private 
person, would be liable to the claimant for such damage, loss, injury, 
or death, in accordance with the law of the place where the act or 
omission occurred. The regulations in this subpart do not apply to any 
tort claims excluded from the Federal Tort Claims Act, as amended, under 
28 U.S.C. 2680.
    (b) Unless specifically modified by the regulations in this part, 
procedures and requirements for filing and handling claims under the 
Federal Tort Claims Act shall be in accordance with the regulations 
issued by the Department of Justice, at 28 CFR part 14, as amended.



Sec. 3.2  Filing of claims.

    (a) When presented. A claim shall be deemed to have been presented 
upon the receipt from a claimant, his duly authorized agent or legal 
representative of an executed Standard Form 95 or other written 
notification of an incident, accompanied by a claim for money damages in 
a sum certain for injury to or loss of property, or personal injury, or 
death alleged to have occurred by reason of the incident.
    (b) Place of filing claim. Claims shall be submitted directly or 
through the local field headquarters to the head of the bureau or office 
of the Department out of whose activities the incident occurred, if 
known; or if not known, to the General Counsel, Treasury Department, 
Washington, DC 20220.
    (c) Contents of claim. The evidence and information to be submitted 
with the claim shall conform to the requirements of 28 CFR 14.4.



Sec. 3.3  Legal review.

    Any claim that exceeds $500, involves personal injuries or 
automobile damage, or arises out of an incident that is likely to result 
in multiple claimants, shall be forwarded to the legal division

[[Page 89]]

of the bureau or office out of whose activities the claim arose. The 
claim, together with the reports of the employee and the investigation, 
shall be reviewed in the legal division which shall thereupon make a 
recommendation that the claim be approved, disapproved, or compromised, 
and shall advise on the need for referral of the claim to the Department 
of Justice. This recommendation and advice, together with the file, 
shall be forwarded to the head of the bureau or office or his designee.

[35 FR 6429, Apr. 22, 1970, as amended at 48 FR 16253, Apr. 15, 1983]



Sec. 3.4  Approval of claims not in excess of $25,000.

    (a) Claims not exceeding $25,000 and not otherwise requiring 
consultation with the Department of Justice pursuant to 28 CFR 14.6(b) 
shall be approved, disapproved, or compromised by the head of the bureau 
or office or his designee, taking into consideration the recommendation 
of the legal division.



Sec. 3.5  Limitations on authority to approve claims.

    (a) All proposed awards, compromises or settlements in excess of 
$25,000 require the prior written approval of the Attorney General.
    (b) All claims which fall within the provisions of 28 CFR 14.6(b) 
require referral to and consultation with the Department of Justice.
    (c) Any claim which falls within paragraph (a) or (b) of this 
section shall be reviewed by the General Counsel. If the claim, award, 
compromise, or settlement receives the approval of the General Counsel 
and the head of the bureau or office or his designee, a letter shall be 
prepared for the signature of the General Counsel transmitting to the 
Assistant Attorney General, Civil Division, Department of Justice, the 
case for approval or consultation as required by 28 CFR 14.6. Such 
letter shall conform with the requirements set forth in 28 CFR 14.7.



Sec. 3.6  Final denial of a claim.

    The final denial of an administrative claim shall conform with the 
requirements of 28 CFR 14.9 and shall be signed by the head of the 
bureau or office, or his designee.



Sec. 3.7  Action on approved claims.

    (a) Any award, compromise, or settlement in an amount of $2,500 or 
less shall be processed for payment from the appropriations of the 
bureau or office out of whose activity the claim arose.
    (b) Payment of an award, compromise, or settlement in excess of 
$2,500 and not more than $100,000 shall be obtained by the bureau or 
office by forwarding Standard Form 1145 to the Claims Division, General 
Accounting Office.
    (c) Payment of an award, compromise, or settlement in excess of 
$100,000 shall be obtained by the bureau by forwarding Standard Form 
1145 to the Bureau of Government Financial Operations, Department of the 
Treasury, which will be responsible for transmitting the award, 
compromise, or settlement to the Bureau of the Budget for inclusion in a 
deficiency appropriation bill.
    (d) When an award is in excess of $25,000, Standard Form 1145 must 
be accompanied by evidence that the award, compromise, or settlement has 
been approved by the Attorney General or his designee.
    (e) When the use of Standard Form 1145 is required, it shall be 
executed by the claimant. When a claimant is represented by an attorney, 
the voucher for payment shall designate both the claimant and his 
attorney as payees; the check shall be delivered to the attorney, whose 
address shall appear on the voucher.
    (f) Acceptance by the claimant, his agent, or legal representative, 
of any award, compromise or settlement made pursuant to the provisions 
of section 2672 or 2677 of title 28, United States Code, shall be final 
and conclusive on the claimant, his agent or legal representative and 
any other person on whose behalf or for whose benefit the claim has been 
presented, and shall constitute a complete release of any claim against 
the United States and against any employee of the Government whose act 
or omission gave rise

[[Page 90]]

to the claim, by reason of the same subject matter.

[35 FR 6429, Apr. 22, 1970, as amended at 39 FR 19470, June 3, 1974]



Sec. 3.8  Statute of limitations.

    Claims under this subpart must be presented in writing to the 
Department within 2 years after the claim accrued.



               Subpart B_Claims Under the Small Claims Act



Sec. 3.20  General.

    The Act of December 28, 1922, 42 Stat. 1066, the Small Claims Act, 
authorized the head of each department and establishment to consider, 
ascertain, adjust, and determine claims of $1,000 or less for damage to, 
or loss of, privately owned property caused by the negligence of any 
officer or employee of the Government acting within the scope of his 
employment. The Federal Tort Claims Act superseded the Small Claims Act 
with respect to claims that are allowable under the former act. 
Therefore, claims that are not allowable under the Federal Tort Claims 
Act, for example, claims arising abroad, may be allowable under the 
Small Claims Act.



Sec. 3.21  Action by claimant.

    Procedures and requirements for filing claims under this section 
shall be the same as required for filing claims under the Federal Tort 
Claims Act as set forth in Subpart A of this part.



Sec. 3.22  Legal review.

    Claims filed under this subpart shall be forwarded to the legal 
division of the bureau or office out of whose activities the claim 
arose. The claim, together with the reports of the employee and the 
investigation, shall be reviewed in the legal division which shall 
thereupon make a recommendation that the claim be approved, disapproved 
or compromised.



Sec. 3.23  Approval of claims.

    Claims shall be approved, disapproved, or compromised by the head of 
the bureau or office or his designee, taking into consideration the 
recommendation of the legal division.



Sec. 3.24  Statute of limitations.

    No claim will be considered under this subpart unless filed within 1 
year from the date of the accrual of said claim.



      Subpart C_Indemnification of Department of Treasury Employees

    Source: 56 FR 42938, Aug. 30, 1991, unless otherwise noted.



Sec. 3.30  Policy.

    (a) The Department of the Treasury may indemnify, in whole or in 
part, a Department employee (which for purposes of this regulation shall 
include a former employee) for any verdict, judgment or other monetary 
award rendered against such employee, provided the Secretary or his or 
her designee determines that (1) the conduct giving rise to such 
verdict, judgment or award was within the scope of his or her employment 
and (2) such indemnification is in the interest of the Department of the 
Treasury.
    (b) The Department of the Treasury may pay for the settlement or 
compromise of a claim against a Department employee at any time, 
provided the Secretary or his or her designee determines that (1) the 
alleged conduct giving rise to the claim was within the scope of the 
employee's employment and (2) such settlement or compromise is in the 
interest of the Department of the Treasury.
    (c) Absent exceptional circumstances, as determined by the Secretary 
or his or her designee, the Department will not entertain a request to 
indemnify or to pay for settlement of a claim before entry of an adverse 
judgment, verdict or other determination.
    (d) When a Department employee becomes aware that he or she has been 
named as a party in a proceeding in his or her individual capacity as a 
result of conduct within the scope of his or her employment, the 
employee should immediately notify his or her supervisor that such an 
action is pending. The supervisor shall promptly thereafter notify the 
chief legal officer of the employee's employing component. The

[[Page 91]]

employee shall immediately apprise the chief legal officer of his or her 
employing component of any offer to settle the proceeding.
    (e) A Department employee may request indemnification to satisfy a 
verdict, judgment or monetary award entered against the employee or to 
compromise a claim pending against the employee. The employee shall 
submit a written request, with appropriate documentation including a 
copy of the verdict, judgment, award or other order or settlement 
proposal, in a timely manner to the Secretary or his or her designee for 
decision.
    (f) Any payment under this section either to indemnify a Department 
employee or to settle a claim shall be contingent upon the availability 
of appropriated funds for the payment of salaries and expenses of the 
employing component.



PART 4_EMPLOYEES' PERSONAL PROPERTY CLAIMS--Table of Contents




    Authority: 31 U.S.C. 3721(j).

    Source: 62 FR 18518, Apr. 16, 1997, unless otherwise noted.



Sec. 4.1  Procedures.

    The procedures for filing a claim with the Treasury Department for 
personal property that is lost or damaged incident to service are 
contained in Treasury Directive 32-13, ``Claims for Loss or Damage to 
Personal Property,'' and Treasury Department Publication 32-13, 
``Policies and Procedures For Employees' Claim for Loss or Damage to 
Personal Property Incident to Service.''



PART 5_TREASURY DEBT COLLECTION--Table of Contents




                      Subpart A_General Provisions

Sec.
5.1 What definitions apply to the regulations in this part?
5.2 Why is the Treasury Department issuing these regulations and what do 
          they cover?
5.3 Do these regulations adopt the Federal Claims Collection Standards 
          (FCCS)?

             Subpart B_Procedures To Collect Treasury Debts

5.4 What notice will Treasury entities send to a debtor when collecting 
          a Treasury debt?
5.5 How will Treasury entities add interest, penalty charges, and 
          administrative costs to a Treasury debt?
5.6 When will Treasury entities allow a debtor to pay a Treasury debt in 
          installments instead of one lump sum?
5.7 When will Treasury entities compromise a Treasury debt?
5.8 When will Treasury entities suspend or terminate debt collection on 
          a Treasury debt?
5.9 When will Treasury entities transfer a Treasury debt to the Treasury 
          Department's Financial Management Service for collection?
5.10 How will Treasury entities use administrative offset (offset of 
          non-tax Federal payments) to collect a Treasury debt?
5.11 How will Treasury entities use tax refund offset to collect a 
          Treasury debt?
5.12 How will Treasury entities offset a Federal employee's salary to 
          collect a Treasury debt?
5.13 How will Treasury entities use administrative wage garnishment to 
          collect a Treasury debt from a debtor's wages?
5.14 How will Treasury entities report Treasury debts to credit bureaus?
5.15 How will Treasury entities refer Treasury debts to private 
          collection agencies?
5.16 When will Treasury entities refer Treasury debts to the Department 
          of Justice?
5.17 Will a debtor who owes a Treasury debt be ineligible for Federal 
          loan assistance or Federal licenses, permits or privileges?
5.18 How does a debtor request a special review based on a change in 
          circumstances such as catastrophic illness, divorce, death, or 
          disability?
5.19 Will Treasury entities issue a refund if money is erroneously 
          collected on a debt?

   Subpart C_Procedures for Offset of Treasury Department Payments To 
              Collect Debts Owed to Other Federal Agencies

5.20 How do other Federal agencies use the offset process to collect 
          debts from payments issued by a Treasury entity?
5.21 What does a Treasury entity do upon receipt of a request to offset 
          the salary of a Treasury entity employee to collect a debt 
          owed by the employee to another Federal agency?

Appendix A to Part 5--Treasury Directive 34-01--Waiving Claims Against 
          Treasury Employees for Erroneous Payments


[[Page 92]]


    Authority: 5 U.S.C. 5514; 26 U.S.C. 6402; 31 U.S.C. 321, 3701, 3711, 
3716, 3717, 3718, 3720A, 3720B, 3720D.

    Source: 67 FR 65845, Oct. 28, 2002, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 5.1  What definitions apply to the regulations in this part?

    As used in this part:
    Administrative offset or offset means withholding funds payable by 
the United States (including funds payable by the United States on 
behalf of a State Government) to, or held by the United States for, a 
person to satisfy a debt owed by the person. The term ``administrative 
offset'' includes, but is not limited to, the offset of Federal salary, 
vendor, retirement, and Social Security benefit payments. The terms 
``centralized administrative offset'' and ``centralized offset'' refer 
to the process by which the Treasury Department's Financial Management 
Service offsets Federal payments through the Treasury Offset Program.
    Administrative wage garnishment means the process by which a Federal 
agency orders a non-Federal employer to withhold amounts from a debtor's 
wages to satisfy a debt, as authorized by 31 U.S.C. 3720D, 31 CFR 
285.11, and this part.
    Agency or Federal agency means a department, agency, court, court 
administrative office, or instrumentality in the executive, judicial, or 
legislative branch of the Federal Government, including government 
corporations.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal Government to be 
owed to the United States by a person. As used in this part, the term 
``debt'' does not include debts arising under the Internal Revenue Code 
of 1986 (26 U.S.C. 1 et seq.).
    Debtor means a person who owes a debt to the United States.
    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency payment 
agreement) unless other satisfactory payment arrangements have been 
made.
    Delinquent Treasury debt means a delinquent debt owed to a Treasury 
entity.
    Disposable pay has the same meaning as that term is defined in 5 CFR 
550.1103.
    Employee or Federal employee means a current employee of the 
Treasury Department or other Federal agency, including a current member 
of the Armed Forces, Reserve of the Armed Forces of the United States, 
or the National Guard.
    FCCS means the Federal Claims Collection Standards, which were 
jointly published by the Departments of the Treasury and Justice and 
codified at 31 CFR parts 900-904.
    Financial Management Service means the Financial Management Service, 
a bureau of the Treasury Department, which is responsible for the 
centralized collection of delinquent debts through the offset of Federal 
payments and other means.
    Payment agency or Federal payment agency means any Federal agency 
that transmits payment requests in the form of certified payment 
vouchers, or other similar forms, to a disbursing official for 
disbursement. The ``payment agency'' may be the agency that employs the 
debtor. In some cases, the Treasury Department may be both the creditor 
agency and payment agency.
    Person means an individual, corporation, partnership, association, 
organization, State or local government, or any other type of entity 
other than a Federal agency.
    Salary offset means a type of administrative offset to collect a 
debt owed by a Federal employee from the current pay account of the 
employee.
    Secretary means the Secretary of the Treasury.
    Tax refund offset is defined in 31 CFR 285.2(a).
    Treasury debt means a debt owed to a Treasury entity by a person.
    Treasury Department means the United States Department of the 
Treasury.
    Treasury entity means the Office of Inspector General, the Office of 
Inspector General for Tax Administration, or

[[Page 93]]

a bureau of the Treasury Department, including the Departmental Offices, 
responsible for the collection of the applicable Treasury debt. 
Departmental Offices include, but are not limited to, the Office of D.C. 
Pensions, the Community Development Financial Institution Fund, the 
Executive Office of Asset Forfeiture, and the Office of Foreign Assets 
Control. Other bureaus include, but are not limited to, the Bureau of 
Public Debt; Bureau of Engraving and Printing; U.S. Mint; U.S. Secret 
Service; Customs Service; Financial Management Service; Internal Revenue 
Service; Bureau of Alcohol, Tobacco, and Firearms; Office of Comptroller 
of the Currency; the Office of Thrift Supervision; Federal Law 
Enforcement Training Center; and the Financial Crimes Enforcement 
Network.



Sec. 5.2  Why is the Treasury Department issuing these regulations and what do 

they cover?

    (a) Scope. This part provides procedures for the collection of 
Treasury debts. This part also provides procedures for collection of 
other debts owed to the United States when a request for offset of a 
Treasury payment is received by the Treasury Department from another 
agency (for example, when a Treasury Department employee owes a debt to 
the United States Department of Education).
    (b) Applicability. (1) This part applies to the Treasury Department 
when collecting a Treasury debt, to persons who owe Treasury debts, and 
to Federal agencies requesting offset of a payment issued by the 
Treasury Department as a payment agency (including salary payments to 
Treasury Department employees).
    (2) This part does not apply to tax debts nor to any debt for which 
there is an indication of fraud or misrepresentation, as described in 
Sec. 900.3 of the FCCS, unless the debt is returned by the Department 
of Justice to the Treasury Department for handling.
    (3) This part does not apply to the Financial Management Service 
when acting on behalf of other Federal agencies and states to collect 
delinquent debt referred to the Financial Management Service for 
collection action as required or authorized by Federal law. See 31 CFR 
part 285.
    (4) Nothing in this part precludes collection or disposition of any 
debt under statutes and regulations other than those described in this 
part. See, for example, 5 U.S.C. 5705, Advancements and Deductions, 
which authorizes Treasury entities to recover travel advances by offset 
of up to 100% of a Federal employee's accrued pay. See, also, 5 U.S.C. 
4108, governing the collection of training expenses. To the extent that 
the provisions of laws, other regulations, and Treasury Department 
enforcement policies differ from the provisions of this part, those 
provisions of law, other regulations, and Treasury Department 
enforcement policies apply to the remission or mitigation of fines, 
penalties, and forfeitures, and debts arising under the tariff laws of 
the United States, rather than the provisions of this part.
    (c) Additional policies and procedures. Treasury entities may, but 
are not required to, promulgate additional policies and procedures 
consistent with this part, the FCCS, and other applicable Federal law, 
policies, and procedures.
    (d) Duplication not required. Nothing in this part requires a 
Treasury entity to duplicate notices or administrative proceedings 
required by contract, this part, or other laws or regulations.
    (e) Use of multiple collection remedies allowed. Treasury entities 
and other Federal agencies may simultaneously use multiple collection 
remedies to collect a debt, except as prohibited by law. This part is 
intended to promote aggressive debt collection, using for each debt all 
available collection remedies. These remedies are not listed in any 
prescribed order to provide Treasury entities with flexibility in 
determining which remedies will be most efficient in collecting the 
particular debt.



Sec. 5.3  Do these regulations adopt the Federal Claims Collection Standards 

(FCCS)?

    This part adopts and incorporates all provisions of the FCCS. This 
part also supplements the FCCS by prescribing procedures consistent with 
the FCCS,

[[Page 94]]

as necessary and appropriate for Treasury Department operations.



             Subpart B_Procedures To Collect Treasury Debts



Sec. 5.4  What notice will Treasury entities send to a debtor when collecting 

a Treasury debt?

    (a) Notice requirements. Treasury entities shall aggressively 
collect Treasury debts. Treasury entities shall promptly send at least 
one written notice to a debtor informing the debtor of the consequences 
of failing to pay or otherwise resolve a Treasury debt. The notice(s) 
shall be sent to the debtor at the most current address of the debtor in 
the records of the Treasury entity collecting the debt. Generally, 
before starting the collection actions described in Sec. Sec. 5.5 and 
5.9 through 5.17 of this part, Treasury entities will send no more than 
two written notices to the debtor. The purpose of the notice(s) is to 
explain why the debt is owed, the amount of the debt, how a debtor may 
pay the debt or make alternate repayment arrangements, how a debtor may 
review documents related to the debt, how a debtor may dispute the debt, 
the collection remedies available to Treasury entities if the debtor 
refuses to pay the debt, and other consequences to the debtor if the 
debt is not paid. Except as otherwise provided in paragraph (b) of this 
section, the written notice(s) shall explain to the debtor:
    (1) The nature and amount of the debt, and the facts giving rise to 
the debt;
    (2) How interest, penalties, and administrative costs are added to 
the debt, the date by which payment should be made to avoid such 
charges, and that such assessments must be made unless excused in 
accordance with 31 CFR 901.9 (see Sec. 5.5 of this part);
    (3) The date by which payment should be made to avoid the enforced 
collection actions described in paragraph (a)(6) of this section;
    (4) The Treasury entity's willingness to discuss alternative payment 
arrangements and how the debtor may enter into a written agreement to 
repay the debt under terms acceptable to the Treasury entity (see Sec. 
5.6 of this part);
    (5) The name, address, and telephone number of a contact person or 
office within the Treasury entity;
    (6) The Treasury entity's intention to enforce collection if the 
debtor fails to pay or otherwise resolve the debt, by taking one or more 
of the following actions:
    (i) Offset. Offset the debtor's Federal payments, including income 
tax refunds, salary, certain benefit payments (such as Social Security), 
retirement, vendor, travel reimbursements and advances, and other 
Federal payments (see Sec. Sec. 5.10 through 5.12 of this part);
    (ii) Private collection agency. Refer the debt to a private 
collection agency (see Sec. 5.15 of this part);
    (iii) Credit bureau reporting. Report the debt to a credit bureau 
(see Sec. 5.14 of this part);
    (iv) Administrative wage garnishment. Garnish the debtor's wages 
through administrative wage garnishment (see Sec. 5.13 of this part);
    (v) Litigation. Refer the debt to the Department of Justice to 
initiate litigation to collect the debt (see Sec. 5.16 of this part);
    (vi) Treasury Department's Financial Management Service. Refer the 
debt to the Financial Management Service for collection (see Sec. 5.9 
of this part);
    (7) That Treasury debts over 180 days delinquent must be referred to 
the Financial Management Service for the collection actions described in 
paragraph (a)(6) of this section (see Sec. 5.9 of this part);
    (8) How the debtor may inspect and copy records related to the debt;
    (9) How the debtor may request a review of the Treasury entity's 
determination that the debtor owes a debt and present evidence that the 
debt is not delinquent or legally enforceable (see Sec. Sec. 5.10(c) 
and 5.11(c) of this part);
    (10) How a debtor may request a hearing if the Treasury entity 
intends to garnish the debtor's private sector (i.e., non-Federal) wages 
(see Sec. 5.13(a) of this part), including:
    (i) The method and time period for requesting a hearing;
    (ii) That the timely filing of a request for a hearing on or before 
the 15th business day following the date of

[[Page 95]]

the notice will stay the commencement of administrative wage 
garnishment, but not necessarily other collection procedures; and
    (iii) The name and address of the office to which the request for a 
hearing should be sent.
    (11) How a debtor who is a Federal employee subject to Federal 
salary offset may request a hearing (see Sec. 5.12(e) of this part), 
including:
    (i) The method and time period for requesting a hearing;
    (ii) That the timely filing of a request for a hearing on or before 
the 15th calendar day following receipt of the notice will stay the 
commencement of salary offset, but not necessarily other collection 
procedures;
    (iii) The name and address of the office to which the request for a 
hearing should be sent;
    (iv) That the Treasury entity will refer the debt to the debtor's 
employing agency or to the Financial Management Service to implement 
salary offset, unless the employee files a timely request for a hearing;
    (v) That a final decision on the hearing, if requested, will be 
issued at the earliest practical date, but not later than 60 days after 
the filing of the request for a hearing, unless the employee requests 
and the hearing official grants a delay in the proceedings;
    (vi) That any knowingly false or frivolous statements, 
representations, or evidence may subject the Federal employee to 
penalties under the False Claims Act (31 U.S.C. 3729-3731) or other 
applicable statutory authority, and criminal penalties under 18 U.S.C. 
286, 287, 1001, and 1002, or other applicable statutory authority;
    (vii) That unless prohibited by contract or statute, amounts paid on 
or deducted for the debt which are later waived or found not owed to the 
United States will be promptly refunded to the employee; and
    (viii) That proceedings with respect to such debt are governed by 5 
U.S.C. 5514 and 31 U.S.C. 3716;
    (12) How the debtor may request a waiver of the debt, if applicable 
(see, for example, Treasury Directive 34-01 (Waiving Claims Against 
Treasury Employees for Erroneous Payments), set forth at Appendix A of 
this part and at http://www.treas.gov/regs);
    (13) How the debtor's spouse may claim his or her share of a joint 
income tax refund by filing Form 8379 with the Internal Revenue Service 
(see http://www.irs.gov)
    (14) How the debtor may exercise other statutory or regulatory 
rights and remedies available to the debtor;
    (15) That certain debtors may be ineligible for Federal Government 
loans, guaranties and insurance (see 31 U.S.C. 3720B, 31 CFR 285.13, and 
Sec. 5.17(a) of this part);
    (16) If applicable, the Treasury entity's intention to suspend or 
revoke licenses, permits or privileges (see Sec. 5.17(b) of this part); 
and
    (17) That the debtor should advise the Treasury entity of a 
bankruptcy proceeding of the debtor or another person liable for the 
debt being collected.
    (b) Exceptions to notice requirements. A Treasury entity may omit 
from a notice to a debtor one or more of the provisions contained in 
paragraphs (a)(6) through (a)(17) of this section if the Treasury 
entity, in consultation with its legal counsel, determines that any 
provision is not legally required given the collection remedies to be 
applied to a particular debt.
    (c) Respond to debtors; comply with FCCS. Treasury entities should 
respond promptly to communications from debtors and comply with other 
FCCS provisions applicable to the administrative collection of debts. 
See 31 CFR part 901.



Sec. 5.5  How will Treasury entities add interest, penalty charges, and 

administrative costs to a Treasury debt?

    (a) Assessment and notice. Treasury entities shall assess interest, 
penalties and administrative costs on Treasury debts in accordance with 
the provisions of 31 U.S.C. 3717 and 31 CFR 901.9, on Treasury debts. 
Interest shall be charged in accordance with the requirements of 31 
U.S.C. 3717(a). Penalties shall accrue at the rate of 6% per year, or 
such other higher rate as authorized by law. Administrative costs,

[[Page 96]]

that is the costs of processing and handling a delinquent debt, shall be 
determined by the Treasury entity collecting the Treasury debt. Treasury 
entities may have additional policies regarding how interest, penalties, 
and administrative costs are assessed on particular types of debts. 
Treasury entities are required to explain in the notice to the debtor 
described in Sec. 5.4 of this part how interest, penalties, costs, and 
other charges are assessed, unless the requirements are included in a 
contract or repayment agreement.
    (b) Waiver of interest, penalties, and administrative costs. Unless 
otherwise required by law, Treasury entities may not charge interest if 
the amount due on the debt is paid within 30 days after the date from 
which the interest accrues. See 31 U.S.C. 3717(d). Treasury entities may 
waive interest, penalties, and administrative costs, or any portion 
thereof, when it would be against equity and good conscience or not in 
the Treasury entity's best interest to collect such charges, in 
accordance with Treasury guidelines for waiving claims against Treasury 
employees for erroneous overpayments. See Treasury Directive 34-01 
(Waiving Claims Against Treasury Employees for Erroneous Payments) set 
forth at Appendix A of this part and at http://www.treas.gov/regs. Legal 
counsel approval is not required to waive such charges. Cf., Sec. Sec. 
5.7 and 5.8 of this part, which require legal counsel approval when 
compromising a debt or terminating debt collection activity on a debt.
    (c) Accrual during suspension of debt collection. In most cases, 
interest, penalties and administrative costs will continue to accrue 
during any period when collection has been suspended for any reason (for 
example, when the debtor has requested a hearing). Treasury entities may 
suspend accrual of any or all of these charges when accrual would be 
against equity and good conscience or not in the Treasury entity's best 
interest, in accordance with Treasury guidelines for waiving claims 
against Treasury employees for erroneous overpayments. See Treasury 
Directive 34-01 (Waiving Claims Against Treasury Employees for Erroneous 
Payments), set forth at Appendix A of this part and http://
www.treas.gov/regs.



Sec. 5.6  When will Treasury entities allow a debtor to pay a Treasury debt in 

installments instead of one lump sum?

    If a debtor is financially unable to pay the debt in one lump sum, a 
Treasury entity may accept payment of a Treasury debt in regular 
installments, in accordance with the provisions of 31 CFR 901.8 and the 
Treasury entity's policies and procedures.



Sec. 5.7  When will Treasury entities compromise a Treasury debt?

    If a Treasury entity cannot collect the full amount of a Treasury 
debt, the Treasury entity may compromise the debt in accordance with the 
provisions of 31 CFR part 902 and the Treasury entity's policies and 
procedures. Legal counsel approval to compromise a Treasury debt is 
required as described in Treasury Directive 34-02 (Credit Management and 
Debt Collection), which may be found at http://www.treas.gov/regs.



Sec. 5.8  When will Treasury entities suspend or terminate debt collection on 

a Treasury debt?

    If, after pursuing all appropriate means of collection, a Treasury 
entity determines that a Treasury debt is uncollectible, the Treasury 
entity may suspend or terminate debt collection activity in accordance 
with the provisions of 31 CFR part 903 and the Treasury entity's 
policies and procedures. Legal counsel approval to terminate debt 
collection activity is required as described in Treasury Directive 34-02 
(Credit Management and Debt Collection), which may be found at http://
www.treas.gov/regs.



Sec. 5.9  When will Treasury entities transfer a Treasury debt to the Treasury 

Department's Financial Management Service for collection?

    (a) Treasury entities will transfer any eligible debt that is more 
than 180 days delinquent to the Financial Management Service for debt 
collection services, a process known as ``cross-servicing.'' See 31 
U.S.C. 3711(g) and 31 CFR 285.12. Treasury entities may transfer debts 
delinquent 180 days or

[[Page 97]]

less to the Financial Management Service in accordance with the 
procedures described in 31 CFR 285.12. The Financial Management Service 
takes appropriate action to collect or compromise the transferred debt, 
or to suspend or terminate collection action thereon, in accordance with 
the statutory and regulatory requirements and authorities applicable to 
the debt and the collection action to be taken. See 31 CFR 285.12(b)(2). 
Appropriate action includes, but is not limited to, contact with the 
debtor, referral of the debt to the Treasury Offset Program, private 
collection agencies or the Department of Justice, reporting of the debt 
to credit bureaus, and administrative wage garnishment.
    (b) At least sixty (60) days prior to transferring a Treasury debt 
to the Financial Management Service, Treasury entities will send notice 
to the debtor as required by Sec. 5.4 of this part. Treasury entities 
will certify to the Financial Management Service, in writing, that the 
debt is valid, delinquent, legally enforceable, and that there are no 
legal bars to collection. In addition, Treasury entities will certify 
their compliance with all applicable due process and other requirements 
as described in this part and other Federal laws. See 31 CFR 285.12(i) 
regarding the certification requirement.
    (c) As part of its debt collection process, the Financial Management 
Service uses the Treasury Offset Program to collect Treasury debts by 
administrative and tax refund offset. See 31 CFR 285.12(g). The Treasury 
Offset Program is a centralized offset program administered by the 
Financial Management Service to collect delinquent debts owed to Federal 
agencies and states (including past-due child support). Under the 
Treasury Offset Program, before a Federal payment is disbursed, the 
Financial Management Service compares the name and taxpayer 
identification number (TIN) of the payee with the names and TINs of 
debtors that have been submitted by Federal agencies and states to the 
Treasury Offset Program database. If there is a match, the Financial 
Management Service (or, in some cases, another Federal disbursing 
agency) offsets all or a portion of the Federal payment, disburses any 
remaining payment to the payee, and pays the offset amount to the 
creditor agency. Federal payments eligible for offset include, but are 
not limited to, income tax refunds, salary, travel advances and 
reimbursements, retirement and vendor payments, and Social Security and 
other benefit payments.



Sec. 5.10  How will Treasury entities use administrative offset (offset of 

non-tax Federal payments) to collect a Treasury debt?

    (a) Centralized administrative offset through the Treasury Offset 
Program. (1) In most cases, the Financial Management Service uses the 
Treasury Offset Program to collect Treasury debts by the offset of 
Federal payments. See Sec. 5.9(c) of this part. If not already 
transferred to the Financial Management Service under Sec. 5.9 of this 
part, Treasury entities will refer any eligible debt over 180 days 
delinquent to the Treasury Offset Program for collection by centralized 
administrative offset. See 31 U.S.C. 3716(c)(6); 31 CFR part 285, 
subpart A; and 31 CFR 901.3(b). Treasury entities may refer any eligible 
debt less than 180 days delinquent to the Treasury Offset Program for 
offset.
    (2) At least sixty (60) days prior to referring a debt to the 
Treasury Offset Program, in accordance with paragraph (a)(1) of this 
section, Treasury entities will send notice to the debtor in accordance 
with the requirements of Sec. 5.4 of this part. Treasury entities will 
certify to the Financial Management Service, in writing, that the debt 
is valid, delinquent, legally enforceable, and that there are no legal 
bars to collection by offset. In addition, Treasury entities will 
certify their compliance with the requirements described in this part.
    (b) Non-centralized administrative offset for Treasury debts. (1) 
When centralized administrative offset through the Treasury Offset 
Program is not available or appropriate, Treasury entities may collect 
past-due, legally enforceable Treasury debts through non-centralized 
administrative offset. See 31 CFR 901.3(c). In these cases, Treasury 
entities may offset a payment internally or make an offset request 
directly to a Federal payment agency. If

[[Page 98]]

the Federal payment agency is another Treasury entity, the Treasury 
entity making the request shall do so through the Deputy Chief Financial 
Officer as described in Sec. 5.20(c) of this part.
    (2) At least thirty (30) days prior to offsetting a payment 
internally or requesting a Federal payment agency to offset a payment, 
Treasury entities will send notice to the debtor in accordance with the 
requirements of Sec. 5.4 of this part. When referring a debt for offset 
under this paragraph (b), Treasury entities making the request will 
certify, in writing, that the debt is valid, delinquent, legally 
enforceable, and that there are no legal bars to collection by offset. 
In addition, Treasury entities will certify their compliance with these 
regulations concerning administrative offset. See 31 CFR 
901.3(c)(2)(ii).
    (c) Administrative review. The notice described in Sec. 5.4 of this 
part shall explain to the debtor how to request an administrative review 
of a Treasury entity's determination that the debtor owes a Treasury 
debt and how to present evidence that the debt is not delinquent or 
legally enforceable. In addition to challenging the existence and amount 
of the debt, the debtor may seek a review of the terms of repayment. In 
most cases, Treasury entities will provide the debtor with a ``paper 
hearing'' based upon a review of the written record, including 
documentation provided by the debtor. Treasury entities shall provide 
the debtor with a reasonable opportunity for an oral hearing when the 
debtor requests reconsideration of the debt and the Treasury entity 
determines that the question of the indebtedness cannot be resolved by 
review of the documentary evidence, for example, when the validity of 
the debt turns on an issue of credibility or veracity. Unless otherwise 
required by law, an oral hearing under this section is not required to 
be a formal evidentiary hearing, although Treasury entities should 
carefully document all significant matters discussed at the hearing. 
Treasury entities may suspend collection through administrative offset 
and/or other collection actions pending the resolution of a debtor's 
dispute. Each Treasury entity will have its own policies and procedures 
concerning the administrative review process consistent with the FCCS 
and the regulations in this section.
    (d) Procedures for expedited offset. Under the circumstances 
described in 31 CFR 901.3(b)(4)(iii), Treasury entities may effect an 
offset against a payment to be made to the debtor prior to sending a 
notice to the debtor, as described in Sec. 5.4 of this part, or 
completing the procedures described in paragraph (b)(2) and (c) of this 
section. Treasury entities shall give the debtor notice and an 
opportunity for review as soon as practicable and promptly refund any 
money ultimately found not to have been owed to the Government.



Sec. 5.11  How will Treasury entities use tax refund offset to collect a 

Treasury debt?

    (a) Tax refund offset. In most cases, the Financial Management 
Service uses the Treasury Offset Program to collect Treasury debts by 
the offset of tax refunds and other Federal payments. See Sec. 5.9(c) 
of this part. If not already transferred to the Financial Management 
Service under Sec. 5.9 of this part, Treasury entities will refer to 
the Treasury Offset Program any past-due, legally enforceable debt for 
collection by tax refund offset. See 26 U.S.C. 6402(d), 31 U.S.C. 3720A 
and 31 CFR 285.2.
    (b) Notice. At least sixty (60) days prior to referring a debt to 
the Treasury Offset Program, Treasury entities will send notice to the 
debtor in accordance with the requirements of Sec. 5.4 of this part. 
Treasury entities will certify to the Financial Management Service's 
Treasury Offset Program, in writing, that the debt is past-due and 
legally enforceable in the amount submitted and that the Treasury 
entities have made reasonable efforts to obtain payment of the debt as 
described in 31 CFR 285.2(d). In addition, Treasury entities will 
certify their compliance with all applicable due process and other 
requirements described in this part and other Federal laws. See 31 
U.S.C. 3720A(b) and 31 CFR 285.2.
    (c) Administrative review. The notice described in Sec. 5.4 of this 
part shall provide the debtor with at least 60 days

[[Page 99]]

prior to the initiation of tax refund offset to request an 
administrative review as described in Sec. 5.10(c) of this part. 
Treasury entities may suspend collection through tax refund offset and/
or other collection actions pending the resolution of the debtor's 
dispute.



Sec. 5.12  How will Treasury entities offset a Federal employee's salary to 

collect a Treasury debt?

    (a) Federal salary offset. (1) Salary offset is used to collect 
debts owed to the United States by Treasury Department and other Federal 
employees. If a Federal employee owes a Treasury debt, Treasury entities 
may offset the employee's Federal salary to collect the debt in the 
manner described in this section. For information on how a Federal 
agency other than a Treasury entity may collect debt from the salary of 
a Treasury Department employee, see Sec. Sec. 5.20 and 5.21, subpart C, 
of this part.
    (2) Nothing in this part requires a Treasury entity to collect a 
Treasury debt in accordance with the provisions of this section if 
Federal law allows otherwise. See, for example, 5 U.S.C. 5705 (travel 
advances not used for allowable travel expenses are recoverable from the 
employee or his estate by setoff against accrued pay and other means) 
and 5 U.S.C. 4108 (recovery of training expenses).
    (3) Treasury entities may use the administrative wage garnishment 
procedure described in Sec. 5.13 of this part to collect a debt from an 
individual's non-Federal wages.
    (b) Centralized salary offset through the Treasury Offset Program. 
As described in Sec. 5.9(a) of this part, Treasury entities will refer 
Treasury debts to the Financial Management Service for collection by 
administrative offset, including salary offset, through the Treasury 
Offset Program. When possible, Treasury entities should attempt salary 
offset through the Treasury Offset Program before applying the 
procedures in paragraph (c) of this section. See 5 CFR 550.1109.
    (c) Non-centralized salary offset for Treasury debts. When 
centralized salary offset through the Treasury Offset Program is not 
available or appropriate, Treasury entities may collect delinquent 
Treasury debts through non-centralized salary offset. See 5 CFR 
550.1109. In these cases, Treasury entities may offset a payment 
internally or make a request directly to a Federal payment agency to 
offset a salary payment to collect a delinquent debt owed by a Federal 
employee. If the Federal payment agency is another Treasury entity, the 
Treasury entity making the request shall do so through the Deputy Chief 
Financial Officer as described in Sec. 5.20(c) of this part. At least 
thirty (30) days prior to offsetting internally or requesting a Federal 
agency to offset a salary payment, Treasury entities will send notice to 
the debtor in accordance with the requirements of Sec. 5.4 of this 
part. When referring a debt for offset, Treasury entities will certify 
to the payment agency, in writing, that the debt is valid, delinquent 
and legally enforceable in the amount stated, and there are no legal 
bars to collection by salary offset. In addition, Treasury entities will 
certify that all due process and other prerequisites to salary offset 
have been met. See 5 U.S.C. 5514, 31 U.S.C. 3716(a), and this section 
for a description of the due process and other prerequisites for salary 
offset.
    (d) When prior notice not required. Treasury entities are not 
required to provide prior notice to an employee when the following 
adjustments are made by a Treasury entity to a Treasury employee's pay:
    (1) Any adjustment to pay arising out of any employee's election of 
coverage or a change in coverage under a Federal benefits program 
requiring periodic deductions from pay, if the amount to be recovered 
was accumulated over four pay periods or less;
    (2) A routine intra-agency adjustment of pay that is made to correct 
an overpayment of pay attributable to clerical or administrative errors 
or delays in processing pay documents, if the overpayment occurred 
within the four pay periods preceding the adjustment, and, at the time 
of such adjustment, or as soon thereafter as practical, the individual 
is provided written notice of the nature and the amount of the 
adjustment and point of contact for contesting such adjustment; or
    (3) Any adjustment to collect a debt amounting to $50 or less, if, 
at the time

[[Page 100]]

of such adjustment, or as soon thereafter as practical, the individual 
is provided written notice of the nature and the amount of the 
adjustment and a point of contact for contesting such adjustment.
    (e) Hearing procedures--(1) Request for a hearing. A Federal 
employee who has received a notice that his or her Treasury debt will be 
collected by means of salary offset may request a hearing concerning the 
existence or amount of the debt. The Federal employee also may request a 
hearing concerning the amount proposed to be deducted from the 
employee's pay each pay period. The employee must send any request for 
hearing, in writing, to the office designated in the notice described in 
Sec. 5.4. See Sec. 5.4(a)(11). The request must be received by the 
designated office on or before the 15th calendar day following the 
employee's receipt of the notice. The employee must sign the request and 
specify whether an oral or paper hearing is requested. If an oral 
hearing is requested, the employee must explain why the matter cannot be 
resolved by review of the documentary evidence alone. All travel 
expenses incurred by the Federal employee in connection with an in-
person hearing will be borne by the employee.
    (2) Failure to submit timely request for hearing. If the employee 
fails to submit a request for hearing within the time period described 
in paragraph (e)(1) of this section, the employee will have waived the 
right to a hearing, and salary offset may be initiated. However, 
Treasury entities should accept a late request for hearing if the 
employee can show that the late request was the result of circumstances 
beyond the employee's control or because of a failure to receive actual 
notice of the filing deadline.
    (3) Hearing official. Treasury entities must obtain the services of 
a hearing official who is not under the supervision or control of the 
Secretary. Treasury entities may contact the Deputy Chief Financial 
Officer as described in Sec. 5.20(c) of this part or an agent of any 
agency designated in Appendix A to 5 CFR part 581 (List of Agents 
Designated to Accept Legal Process) to request a hearing official.
    (4) Notice of hearing. After the employee requests a hearing, the 
designated hearing official shall inform the employee of the form of the 
hearing to be provided. For oral hearings, the notice shall set forth 
the date, time and location of the hearing. For paper hearings, the 
notice shall notify the employee of the date by which he or she should 
submit written arguments to the designated hearing official. The hearing 
official shall give the employee reasonable time to submit documentation 
in support of the employee's position. The hearing official shall 
schedule a new hearing date if requested by both parties. The hearing 
official shall give both parties reasonable notice of the time and place 
of a rescheduled hearing.
    (5) Oral hearing. The hearing official will conduct an oral hearing 
if he or she determines that the matter cannot be resolved by review of 
documentary evidence alone (for example, when an issue of credibility or 
veracity is involved). The hearing need not take the form of an 
evidentiary hearing, but may be conducted in a manner determined by the 
hearing official, including but not limited to:
    (i) Informal conferences with the hearing official, in which the 
employee and agency representative will be given full opportunity to 
present evidence, witnesses and argument;
    (ii) Informal meetings with an interview of the employee by the 
hearing official; or
    (iii) Formal written submissions, with an opportunity for oral 
presentation.
    (6) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, he or she will make the determination based 
upon a review of the available written record, including any 
documentation submitted by the employee in support of his or her 
position.
    (7) Failure to appear or submit documentary evidence. In the absence 
of good cause shown (for example, excused illness), if the employee 
fails to appear at an oral hearing or fails to submit documentary 
evidence as required for a paper hearing, the employee will have waived 
the right to a hearing, and salary offset may be initiated. Further,

[[Page 101]]

the employee will have been deemed to admit the existence and amount of 
the debt as described in the notice of intent to offset. If the Treasury 
entity representative fails to appear at an oral hearing, the hearing 
official shall proceed with the hearing as scheduled, and make his or 
her determination based upon the oral testimony presented and the 
documentary evidence submitted by both parties.
    (8) Burden of proof. Treasury entities will have the initial burden 
to prove the existence and amount of the debt. Thereafter, if the 
employee disputes the existence or amount of the debt, the employee must 
prove by a preponderance of the evidence that no debt exists or that the 
amount of the debt is incorrect. In addition, the employee may present 
evidence that the proposed terms of the repayment schedule are unlawful, 
would cause a financial hardship to the employee, or that collection of 
the debt may not be pursued due to operation of law.
    (9) Record. The hearing official shall maintain a summary record of 
any hearing provided by this part. Witnesses will testify under oath or 
affirmation in oral hearings.
    (10) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, based upon documentary evidence and 
information developed at the hearing, as soon as practicable after the 
hearing, but not later than 60 days after the date on which the request 
for hearing was received by the Treasury entity. If the employee 
requests a delay in the proceedings, the deadline for the decision may 
be postponed by the number of days by which the hearing was postponed. 
When a decision is not timely rendered, the Treasury entity shall waive 
penalties applied to the debt for the period beginning with the date the 
decision is due and ending on the date the decision is issued.
    (11) Content of decision. The written decision shall include:
    (i) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (ii) The hearing official's findings, analysis, and conclusions; and
    (iii) The terms of any repayment schedules, if applicable.
    (12) Final agency action. The hearing official's decision shall be 
final.
    (f) Waiver not precluded. Nothing in this part precludes an employee 
from requesting waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 
10 U.S.C. 2774, 32 U.S.C. 716, or other statutory authority.
    (g) Salary offset process--(1) Determination of disposable pay. The 
office of the Deputy Chief Financial Officer will consult with the 
appropriate Treasury entity payroll office to determine the amount of a 
Treasury Department employee's disposable pay (as defined in Sec. 5.1 
of this part) and will implement salary offset when requested to do so 
by a Treasury entity, as described in paragraph (c) of this section, or 
another agency, as described in Sec. 5.20 of this part. If the debtor 
is not employed by the Treasury Department, the agency employing the 
debtor will determine the amount of the employee's disposable pay and 
will implement salary offset upon request.
    (2) When salary offset begins. Deductions shall begin within three 
official pay periods following receipt of the creditor agency's request 
for offset.
    (3) Amount of salary offset. The amount to be offset from each 
salary payment will be up to 15 percent of a debtor's disposable pay, as 
follows:
    (i) If the amount of the debt is equal to or less than 15 percent of 
the disposable pay, such debt generally will be collected in one lump 
sum payment;
    (ii) Installment deductions will be made over a period of no greater 
than the anticipated period of employment. An installment deduction will 
not exceed 15 percent of the disposable pay from which the deduction is 
made unless the employee has agreed in writing to the deduction of a 
greater amount or the creditor agency has determined that smaller 
deductions are appropriate based on the employee's ability to pay.
    (4) Final salary payment. After the employee has separated either 
voluntarily or involuntarily from the payment agency, the payment agency 
may make a lump sum deduction exceeding 15 percent of disposable pay 
from any final salary or other payments pursuant to 31 U.S.C. 3716 in 
order to satisfy a debt.

[[Page 102]]

    (h) Payment agency's responsibilities. (1) As required by 5 CFR 
550.1109, if the employee separates from the payment agency from which a 
Treasury entity has requested salary offset, the payment agency must 
certify the total amount of its collection and notify the Treasury 
entity and the employee of the amounts collected. If the payment agency 
is aware that the employee is entitled to payments from the Civil 
Service Retirement Fund and Disability Fund, the Federal Employee 
Retirement System, or other similar payments, it must provide written 
notification to the payment agency responsible for making such payments 
that the debtor owes a debt, the amount of the debt, and that the 
Treasury entity has complied with the provisions of this section. 
Treasury entities must submit a properly certified claim to the new 
payment agency before the collection can be made.
    (2) If the employee is already separated from employment and all 
payments due from his or her former payment agency have been made, 
Treasury entities may request that money due and payable to the employee 
from the Civil Service Retirement Fund and Disability Fund, the Federal 
Employee Retirement System, or other similar funds, be administratively 
offset to collect the debt. Generally, Treasury entities will collect 
such monies through the Treasury Offset Program as described in Sec. 
5.9(c) of this part.
    (3) When an employee transfers to another agency, Treasury entities 
should resume collection with the employee's new payment agency in order 
to continue salary offset.



Sec. 5.13  How will Treasury entities use administrative wage garnishment to 

collect a Treasury debt from a debtor's wages?

    (a) Treasury entities are authorized to collect debts from a 
debtor's wages by means of administrative wage garnishment in accordance 
with the requirements of 31 U.S.C. 3720D and 31 CFR 285.11. This part 
adopts and incorporates all of the provisions of 31 CFR 285.11 
concerning administrative wage garnishment, including the hearing 
procedures described in 31 CFR 285.11(f). Treasury entities may use 
administrative wage garnishment to collect a delinquent Treasury debt 
unless the debtor is making timely payments under an agreement to pay 
the debt in installments (see Sec. 5.6 of this part). At least thirty 
(30) days prior to initiating an administrative wage garnishment, 
Treasury entities will send notice to the debtor in accordance with the 
requirements of Sec. 5.4 of this part, including the requirements of 
Sec. 5.4(a)(10) of this part. For Treasury debts referred to the 
Financial Management Service under Sec. 5.9 of this part, Treasury 
entities may authorize the Financial Management Service to send a notice 
informing the debtor that administrative wage garnishment will be 
initiated and how the debtor may request a hearing as described in Sec. 
5.4(a)(10) of this part. If a debtor makes a timely request for a 
hearing, administrative wage garnishment will not begin until a hearing 
is held and a decision is sent to the debtor. See 31 CFR 285.11(f)(4). 
If a debtor's hearing request is not timely, Treasury entities may 
suspend collection by administrative wage garnishment in accordance with 
the provisions of 31 CFR 285.11(f)(5). All travel expenses incurred by 
the debtor in connection with an in-person hearing will be borne by the 
debtor.
    (b) This section does not apply to Federal salary offset, the 
process by which Treasury entities collect debts from the salaries of 
Federal employees (see Sec. 5.12 of this part).



Sec. 5.14  How will Treasury entities report Treasury debts to credit bureaus?

    Treasury entities shall report delinquent Treasury debts to credit 
bureaus in accordance with the provisions of 31 U.S.C. 3711(e), 31 CFR 
901.4, and the Office of Management and Budget Circular A-129, 
``Policies for Federal Credit Programs and Nontax Receivables.'' For 
additional information, see Financial Management Service's ``Guide to 
the Federal Credit Bureau Program,'' which may be found at http://
www.fms.treas.gov/debt. At least sixty (60) days prior to reporting a 
delinquent debt to a consumer reporting agency, Treasury entities will 
send notice to the debtor in accordance with the requirements of Sec. 
5.4 of this part.

[[Page 103]]

Treasury entities may authorize the Financial Management Service to 
report to credit bureaus those delinquent Treasury debts that have been 
transferred to the Financial Management Service under Sec. 5.9 of this 
part.



Sec. 5.15  How will Treasury entities refer Treasury debts to private 

collection agencies?

    Treasury entities will transfer delinquent Treasury debts to the 
Financial Management Service to obtain debt collection services provided 
by private collection agencies. See Sec. 5.9 of this part.



Sec. 5.16  When will Treasury entities refer Treasury debts to the Department 

of Justice?

    (a) Compromise or suspension or termination of collection activity. 
Treasury entities shall refer Treasury debts having a principal balance 
over $100,000, or such higher amount as authorized by the Attorney 
General, to the Department of Justice for approval of any compromise of 
a debt or suspension or termination of collection activity. See 
Sec. Sec. 5.7 and 5.8 of this part; 31 CFR 902.1; 31 CFR 903.1.
    (b) Litigation. Treasury entities shall promptly refer to the 
Department of Justice for litigation delinquent Treasury debts on which 
aggressive collection activity has been taken in accordance with this 
part and that should not be compromised, and on which collection 
activity should not be suspended or terminated. See 31 CFR part 904. 
Treasury entities may authorize the Financial Management Service to 
refer to the Department of Justice for litigation those delinquent 
Treasury debts that have been transferred to the Financial Management 
Service under Sec. 5.9 of this part.



Sec. 5.17  Will a debtor who owes a Treasury debt be ineligible for Federal 

loan assistance or Federal licenses, permits or privileges?

    (a) Delinquent debtors barred from obtaining Federal loans or loan 
insurance or guaranties. As required by 31 U.S.C. 3720B and 31 CFR 
901.6, Treasury entities will not extend financial assistance in the 
form of a loan, loan guarantee, or loan insurance to any person 
delinquent on a debt owed to a Federal agency. This prohibition does not 
apply to disaster loans. Treasury entities may extend credit after the 
delinquency has been resolved. See 31 CFR 285.13 for standards defining 
when a ``delinquency'' is ``resolved'' for purposes of this prohibition.
    (b) Suspension or revocation of eligibility for licenses, permits, 
or privileges. Unless prohibited by law, Treasury entities should 
suspend or revoke licenses, permits, or other privileges for any 
inexcusable or willful failure of a debtor to pay a debt. The Treasury 
entity responsible for distributing the licenses, permits, or other 
privileges will establish policies and procedures governing suspension 
and revocation for delinquent debtors. If applicable, Treasury entities 
will advise the debtor in the notice required by Sec. 5.4 of this part 
of the Treasury entities' ability to suspend or revoke licenses, permits 
or privileges. See Sec. 5.4(a)(16) of this part.



Sec. 5.18  How does a debtor request a special review based on a change in 

circumstances such as catastrophic illness, divorce, death, or disability?

    (a) Material change in circumstances. A debtor who owes a Treasury 
debt may, at any time, request a special review by the applicable 
Treasury entity of the amount of any offset, administrative wage 
garnishment, or voluntary payment, based on materially changed 
circumstances beyond the control of the debtor such as, but not limited 
to, catastrophic illness, divorce, death, or disability.
    (b) Inability to pay. For purposes of this section, in determining 
whether an involuntary or voluntary payment would prevent the debtor 
from meeting essential subsistence expenses (costs incurred for food, 
housing, clothing, transportation, and medical care), the debtor shall 
submit a detailed statement and supporting documents for the debtor, his 
or her spouse, and dependents, indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Expenses for food, housing, clothing, and transportation;
    (6) Medical expenses; and
    (7) Exceptional expenses, if any.

[[Page 104]]

    (c) Alternative payment arrangement. If the debtor requests a 
special review under this section, the debtor shall submit an 
alternative proposed payment schedule and a statement to the Treasury 
entity collecting the debt, with supporting documents, showing why the 
current offset, garnishment or repayment schedule imposes an extreme 
financial hardship on the debtor. The Treasury entity will evaluate the 
statement and documentation and determine whether the current offset, 
garnishment, or repayment schedule imposes extreme financial hardship on 
the debtor. The Treasury entity shall notify the debtor in writing of 
such determination, including, if appropriate, a revised offset, 
garnishment, or payment schedule. If the special review results in a 
revised offset, garnishment, or repayment schedule, the Treasury entity 
will notify the appropriate agency or other persons about the new terms.



Sec. 5.19  Will Treasury entities issue a refund if money is erroneously 

collected on a debt?

    Treasury entities shall promptly refund to a debtor any amount 
collected on a Treasury debt when the debt is waived or otherwise found 
not to be owed to the United States, or as otherwise required by law. 
Refunds under this part shall not bear interest unless required by law.



   Subpart C_Procedures for Offset of Treasury Department Payments To 
              Collect Debts Owed to Other Federal Agencies



Sec. 5.20  How do other Federal agencies use the offset process to collect 

debts from payments issued by a Treasury entity?

    (a) Offset of Treasury entity payments to collect debts owed to 
other Federal agencies. (1) In most cases, Federal agencies submit 
eligible debts to the Treasury Offset Program to collect delinquent 
debts from payments issued by Treasury entities and other Federal 
agencies, a process known as ``centralized offset.'' When centralized 
offset is not available or appropriate, any Federal agency may ask a 
Treasury entity (when acting as a ``payment agency'') to collect a debt 
owed to such agency by offsetting funds payable to a debtor by the 
Treasury entity, including salary payments issued to Treasury entity 
employees. This section and Sec. 5.21 of this subpart C apply when a 
Federal agency asks a Treasury entity to offset a payment issued by the 
Treasury entity to a person who owes a debt to the United States.
    (2) This subpart C does not apply to Treasury debts. See Sec. Sec. 
5.10 through 5.12 of this part for offset procedures applicable to 
Treasury debts.
    (3) This subpart C does not apply to the collection of non-Treasury 
debts through tax refund offset. See 31 CFR 285.2 for tax refund offset 
procedures.
    (b) Administrative offset (including salary offset); certification. 
A Treasury entity will initiate a requested offset only upon receipt of 
written certification from the creditor agency that the debtor owes the 
past-due, legally enforceable debt in the amount stated, and that the 
creditor agency has fully complied with all applicable due process and 
other requirements contained in 31 U.S.C. 3716, 5 U.S.C. 5514, and the 
creditor agency's regulations, as applicable. Offsets will continue 
until the debt is paid in full or otherwise resolved to the satisfaction 
of the creditor agency.
    (c) Where a creditor agency makes requests for offset. Requests for 
offset under this section shall be sent to the U.S. Department of the 
Treasury, ATTN: Deputy Chief Financial Officer, 1500 Pennsylvania 
Avenue, NW., Attention: Metropolitan Square, Room 6228, Washington, DC 
20220. The Deputy Chief Financial Officer will forward the request to 
the appropriate Treasury entity for processing in accordance with this 
subpart C.
    (d) Incomplete certification. A Treasury entity will return an 
incomplete debt certification to the creditor agency with notice that 
the creditor agency must comply with paragraph (b) of this section 
before action will be taken to collect a debt from a payment issued by a 
Treasury entity.
    (e) Review. A Treasury entity is not authorized to review the merits 
of the creditor agency's determination with respect to the amount or 
validity of

[[Page 105]]

the debt certified by the creditor agency.
    (f) When Treasury entities will not comply with offset request. A 
Treasury entity will comply with the offset request of another agency 
unless the Treasury entity determines that the offset would not be in 
the best interests of the United States, or would otherwise be contrary 
to law.
    (g) Multiple debts. When two or more creditor agencies are seeking 
offsets from payments made to the same person, or when two or more debts 
are owed to a single creditor agency, the Treasury entity that has been 
asked to offset the payments may determine the order in which the debts 
will be collected or whether one or more debts should be collected by 
offset simultaneously.
    (h) Priority of debts owed to Treasury entity. For purposes of this 
section, debts owed to a Treasury entity generally take precedence over 
debts owed to other agencies. The Treasury entity that has been asked to 
offset the payments may determine whether to pay debts owed to other 
agencies before paying a debt owed to a Treasury entity. The Treasury 
entity that has been asked to offset the payments will determine the 
order in which the debts will be collected based on the best interests 
of the United States.



Sec. 5.21  What does a Treasury entity do upon receipt of a request to offset 

the salary of a Treasury entity employee to collect a debt owed by the 

employee to another Federal agency?

    (a) Notice to the Treasury employee. When a Treasury entity receives 
proper certification of a debt owed by one of its employees, the 
Treasury entity will begin deductions from the employee's pay at the 
next officially established pay interval. The Treasury entity will send 
a written notice to the employee indicating that a certified debt claim 
has been received from the creditor agency, the amount of the debt 
claimed to be owed by the creditor agency, the date deductions from 
salary will begin, and the amount of such deductions.
    (b) Amount of deductions from Treasury employee's salary. The amount 
deducted under Sec. 5.20(b) of this part will be the lesser of the 
amount of the debt certified by the creditor agency or an amount up to 
15% of the debtor's disposable pay. Deductions shall continue until the 
Treasury entity knows that the debt is paid in full or until otherwise 
instructed by the creditor agency. Alternatively, the amount offset may 
be an amount agreed upon, in writing, by the debtor and the creditor 
agency. See Sec. 5.12(g) (salary offset process).
    (c) When the debtor is no longer employed by the Treasury entity--
(1) Offset of final and subsequent payments. If a Treasury entity 
employee retires or resigns or if his or her employment ends before 
collection of the debt is complete, the Treasury entity will continue to 
offset, under 31 U.S.C. 3716, up to 100% of an employee's subsequent 
payments until the debt is paid or otherwise resolved. Such payments 
include a debtor's final salary payment, lump-sum leave payment, and 
other payments payable to the debtor by the Treasury entity. See 31 
U.S.C. 3716 and 5 CFR 550.1104(l) and 550.1104(m).
    (2) Notice to the creditor agency. If the employee is separated from 
the Treasury entity before the debt is paid in full, the Treasury entity 
will certify to the creditor agency the total amount of its collection. 
If the Treasury entity is aware that the employee is entitled to 
payments from the Civil Service Retirement and Disability Fund, Federal 
Employee Retirement System, or other similar payments, the Treasury 
entity will provide written notice to the agency making such payments 
that the debtor owes a debt (including the amount) and that the 
provisions of 5 CFR 550.1109 have been fully complied with. The creditor 
agency is responsible for submitting a certified claim to the agency 
responsible for making such payments before collection may begin. 
Generally, creditor agencies will collect such monies through the 
Treasury Offset Program as described in Sec. 5.9(c) of this part.
    (3) Notice to the debtor. The Treasury entity will provide to the 
debtor a copy of any notices sent to the creditor agency under paragraph 
(c)(2) of this section.
    (d) When the debtor transfers to another Federal agency--(1) Notice 
to the creditor agency. If the debtor transfers to another Federal 
agency before the

[[Page 106]]

debt is paid in full, the Treasury entity will notify the creditor 
agency and will certify the total amount of its collection on the debt. 
The Treasury entity will provide a copy of the certification to the 
creditor agency. The creditor agency is responsible for submitting a 
certified claim to the debtor's new employing agency before collection 
may begin.
    (2) Notice to the debtor. The Treasury entity will provide to the 
debtor a copy of any notices and certifications sent to the creditor 
agency under paragraph (d)(1) of this section.
    (e) Request for hearing official. A Treasury entity will provide a 
hearing official upon the creditor agency's request with respect to a 
Treasury entity employee. See 5 CFR 550.1107(a).



  Sec. Appendix A to Part 5--Treasury Directive 34-01--Waiving Claims 
            Against Treasury Employees for Erroneous Payments

                        Treasury Directive 34-01

    Date: July 12, 2000.
    Sunset Review: July 12, 2004.
    Subject: Waiving Claims Against Treasury Employees for Erroneous 
Payments.

                               1. Purpose

    This Directive establishes the Department of the Treasury's policies 
and procedures for waiving claims by the Government against an employee 
for erroneous payments of: (1) Pay and allowances (e.g., health and life 
insurance) and (2) travel, transportation, and relocation expenses and 
allowances.

                              2. Background

    a. 5 U.S.C. Sec. 5584 authorizes the waiver of claims by the United 
States in whole or in part against an employee arising out of erroneous 
payments of pay and allowances, travel, transportation, and relocation 
expenses and allowances. A waiver may be considered when collection of 
the claim would be against equity and good conscience and not in the 
best interest of the United States provided that there does not exist, 
in connection with the claim, an indication of fraud, misrepresentation, 
fault, or lack of good faith on the part of the employee or any other 
person having an interest in obtaining a waiver of the claim.
    b. The General Accounting Office Act of 1996 (Pub. L. 104-316), 
Title I, Sec. 103(d), enacted October 19, 1996, amended 5 U.S.C. Sec. 
5584 by transferring the authority to waive claims for erroneous 
payments exceeding $1,500 from the Comptroller General of the United 
States to the Office of Management and Budget (OMB). OMB subsequently 
redelegated this waiver authority to the executive agency that made the 
erroneous payment. The authority to waive claims not exceeding $1,500, 
which was vested in the head of each agency prior to the enactment of 
Pub. L. 104-316, was unaffected by the Act.
    c. 5 U.S.C. Sec. 5514 authorizes the head of each agency, upon a 
determination that an employee is indebted to the United States for 
debts to which the United States is entitled to be repaid at the time of 
the determination, to deduct up to 15%, or a greater amount if agreed to 
by the employee, from the employee's pay at officially established pay 
intervals in order to repay the debt.

                              3. Delegation

    a. The Deputy Assistant Secretary (Administration), the heads of 
bureaus, the Inspector General, and the Inspector General for Tax 
Administration are delegated the authority to waive, in whole or in 
part, a claim of the United States against an employee for an erroneous 
payment of pay and allowances, travel, transportation, and relocation 
expenses and allowances, aggregating less than $5,000 per claim, in 
accordance with the limitations and standards in 5 U.S.C. Sec. 5584.
    b. Treasury's Deputy Chief Financial Officer is delegated the 
authority to waive, in whole or in part, a claim of the United States 
against an employee for an erroneous payment of pay and allowances, 
travel, transportation, and relocation expenses and allowances, 
aggregating $5,000 or more per claim, in accordance with the limitations 
and standards in 5 U.S.C. Sec. 5584.

                               4. Appeals

    a. Requests for waiver of claims aggregating less than $5,000 per 
claim which are denied in whole or in part may be appealed to the Deputy 
Chief Financial Officer for the Department of the Treasury.
    b. Requests for waiver of claims aggregating $5,000 or more per 
claim which are denied in whole or in part may be appealed to the 
Assistant Secretary (Management)/Chief Financial Officer.

                             5. Redelegation

    The Deputy Assistant Secretary (Administration), the heads of 
bureaus, the Inspector General, and the Inspector General for Tax 
Administration may redelegate their respective authority and 
responsibility in writing no lower than the bureau deputy chief 
financial officer unless authorized by Treasury's Deputy Chief Financial 
Officer. Copies of each redelegation shall be submitted to the 
Department's Deputy Chief Financial Officer.

[[Page 107]]

                           6. Responsibilities

    a. The Deputy Assistant Secretary (Administration), the heads of 
bureaus, the Inspector General, and the Inspector General for Tax 
Administration shall:
    (1) Promptly notify an employee upon discovery of an erroneous 
payment to that employee;
    (2) Promptly act to collect the erroneous overpayment, following 
established debt collection policies and procedures;
    (3) Establish time frames for employees to request a waiver in 
writing and for the bureau to review the waiver request. These time 
frames must take into consideration the responsibilities of the United 
States to take prompt action to pursue enforced collection on overdue 
debts, which may arise from erroneous payments.
    (4) Notify employees whose requests for waiver of claims aggregating 
less than $5,000 per claim are denied in whole or in part of the basis 
for the denial and the right to appeal the denial to the Deputy Chief 
Financial Officer of the Department of the Treasury. All such appeals 
shall:
    (a) Be made in writing;
    (b) Specify the basis for the appeal;
    (c) Include a chronology of the events surrounding the erroneous 
payments;
    (d) Include a statement regarding any mitigating factors; and
    (e) Be submitted to the official who denied the waiver request no 
later than 60 days from receipt by the employee of written notice of the 
denial of the waiver; and
    (f) Attach at least the following documents: the employee's original 
request for a waiver; the bureau's denial of the request; any personnel 
actions, e.g., promotions, demotions, step increases, etc. that relate 
to the overpayment.
    (5) Forward to Treasury's Deputy Chief Financial Officer the appeal 
and supporting documentation, the bureau's recommendation as to why the 
appeal should be approved or denied; and a statement as to the action 
taken by the bureau to avoid a recurrence of the error.
    (6) Pay a refund when appropriate if a waiver is granted;
    (7) Fulfill all labor relations responsibilities when implementing 
this directive; and
    (8) Fulfill any other responsibility of the agency imposed by 5 
U.S.C. Sec. 5584, or other applicable laws and regulations.
    b. Treasury's Deputy Chief Financial Officer shall advise employees 
whose requests for waiver of claims aggregating $5,000 or more per claim 
are denied in whole or in part of the basis for the denial and the right 
to appeal the denial to the Assistant Secretary (Management)/Chief 
Financial Officer. All such appeals shall be in the format and contain 
the information and documentation described in subsection 6.a.(4), 
above. The Deputy Chief Financial Officer shall forward to Assistant 
Secretary (Management)/Chief Financial Officer the appeal and supporting 
documentation, his/her recommendation as to why the appeal should be 
approved or denied, and a statement obtained from the bureau from which 
the claim arose as to the action taken by the bureau to avoid a 
recurrence of the error.

                        7. Reporting Requirements

    a. Each bureau, the Deputy Assistant Secretary (Administration) for 
Departmental Offices, the Inspector General, and the Inspector General 
for Tax Administration shall maintain a register of waiver actions 
subject to Departmental review. The register shall cover each fiscal 
year and be prepared by December 31 of each year for the preceding 
fiscal year. The register shall contain the following information:
    (1) The total amount waived by the bureau;
    (2) The number and dollar amount of waiver applications granted in 
full;
    (3) The number and dollar amount of waiver applications granted in 
part and denied in part, and the dollar amount of each;
    (4) The number and dollar amount of waiver applications denied in 
their entirety;
    (5) The number of waiver applications referred to the Deputy Chief 
Financial Officer for initial action or for appeal;
    (6) The dollar amount refunded as a result of waiver action by the 
bureau; and
    (7) The dollar amount refunded as a result of waiver action by the 
Deputy Chief Financial Officer or the Assistant Secretary (Management)/
Chief Financial Officer.
    b. Each bureau, the Deputy Assistant Secretary (Administration) for 
Departmental Offices, the Inspector General, and the Inspector General 
for Tax Administration shall retain a written record of each waiver 
action for 6 years and 3 months. At a minimum, the written record shall 
contain:
    (1) The bureau's summary of the events surrounding the erroneous 
payment;
    (2) Any written comments submitted by the employee from whom 
collection is sought;
    (3) An account of the waiver action taken and the reasons for such 
action; and
    (4) Other pertinent information such as any action taken to refund 
amounts repaid.

                     8. Effect of Request for Waiver

    A request for a waiver of a claim shall not affect an employee's 
opportunity under 5 U.S.C. Sec. 5514(a)(2)(D) for a hearing on the 
determination of the agency concerning the existence or the amount of 
the debt, or the terms of the repayment schedule. A request by an 
employee for a hearing under 5 U.S.C. Sec. 5514(a)(2)(D) shall not 
affect an employee's right to request a waiver of the claim. The 
determination whether to waive a claim may

[[Page 108]]

be made at the discretion of the deciding official either before or 
after a final decision is rendered pursuant to 5 U.S.C. Sec. 
5514(a)(2)(D) concerning the existence or the amount of the debt, or the 
terms of the repayment schedule.

                 9. Guidelines for Determining Requests

    a. A request for a waiver shall not be granted if the deciding 
official determines there exists, in connection with the claim, an 
indication of fraud, misrepresentation, fault, or lack of good faith on 
the part of the employee or any other person having an interest in 
obtaining a waiver of the claim. There are no exceptions to this rule 
for financial hardship or otherwise.
    (1) ``Fault'' exists if, in light of all the circumstances, it is 
determined that the employee knew or should have known that an error 
existed, but failed to take action to have it corrected. Fault can 
derive from an act or a failure to act. Unlike fraud, fault does not 
require a deliberate intent to deceive. Whether an employee should have 
known about an error in pay is determined from the perspective of a 
reasonable person. Pertinent considerations in finding fault include 
whether:
    (a) The payment resulted from the employee's incorrect, but not 
fraudulent, statement that the employee should have known was incorrect;
    (b) The payment resulted from the employee's failure to disclose 
material facts in the employee's possession which the employee should 
have known to be material; or
    (c) The employee accepted a payment, which the employee knew or 
should have known to be erroneous.
    (2) Every case must be examined in light of its particular facts. 
For example, where an employee is promoted to a higher grade but the 
step level for the employee's new grade is miscalculated, it may be 
appropriate to conclude that there is no fault on the employee's part 
because employees are not typically expected to be aware of and 
understand the rules regarding determination of step level upon 
promotion. On the other hand, a different conclusion as to fault 
potentially may be reached if the employee in question is a personnel 
specialist or an attorney who concentrates on personnel law.
    b. If the deciding official finds an indication of fraud, 
misrepresentation, fault, or lack of good faith on the part of the 
employee or any other person having an interest in obtaining a waiver of 
the claim, then the request for a waiver must be denied.
    c. If the deciding official finds no indication of fraud, 
misrepresentation, fault, or lack of good faith on the part of the 
employee or any other person having an interest in obtaining a waiver of 
the claim, the employee is not automatically entitled to a waiver. 
Before a waiver can be granted, the deciding official must also 
determine that collection of the claim against an employee would be 
against equity and good conscience and not in the best interests of the 
United States. Factors to consider when determining if collection of a 
claim against an employee would be against equity and good conscience 
and not in the best interests of the United States include, but are not 
limited to:
    (1) Whether collection of the claim would cause serious financial 
hardship to the employee from whom collection is sought.
    (2) Whether, because of the erroneous payment, the employee either 
has relinquished a valuable right or changed positions for the worse, 
regardless of the employee's financial circumstances.
    (a) To establish that a valuable right has been relinquished, it 
must be shown that the right was, in fact, valuable; that it cannot be 
regained; and that the action was based chiefly or solely on reliance on 
the overpayment.
    (b) To establish that the employee's position has changed for the 
worse, it must be shown that the decision would not have been made but 
for the overpayment, and that the decision resulted in a loss.
    (c) An example of a ``detrimental reliance'' would be a decision to 
sign a lease for a more expensive apartment based chiefly or solely upon 
reliance on an erroneous calculation of salary, and the funds spent for 
rent cannot be recovered.
    (3) The cost of collecting the claim equals or exceeds the amount of 
the claim;
    (4) The time elapsed between the erroneous payment and discovery of 
the error and notification of the employee;
    (5) Whether failure to make restitution would result in unfair gain 
to the employee;
    (6) Whether recovery of the claim would be unconscionable under the 
circumstances.
    d. The burden is on the employee to demonstrate that collection of 
the claim would be against equity and good conscience and not in the 
best interest of the United States.

                             10. Authorities

    a. 5 U.S.C. Sec. 5584, ``Claims for Overpayment of Pay and 
Allowances, and of Travel, Transportation and Relocation Expenses and 
Allowances.''
    b. 31 U.S.C. Sec. 3711, ``Collection and Compromise.''
    c. 31 U.S.C. Sec. 3716, ``Administrative Offset.''
    d. 31 U.S.C. Sec. 3717, ``Interest and Penalty on Claims.''
    e. 5 CFR Part 550, subpart K, ``Collection by Offset from Indebted 
Government Employees.''
    f. 31 CFR Part 5, subpart B, ``Salary Offset.''
    g. Determination with Respect to Transfer of Functions Pursuant to 
Public Law 104-316, OMB, December 17, 1996.

[[Page 109]]

                            11. Cancellation

    TD 34-01, ``Waiver of Claims for Erroneous Payments,'' dated October 
25, 1995, is superseded.

                     12. Office of Primary Interest

    Office of Accounting and Internal Control.



PART 6_APPLICATIONS FOR AWARDS UNDER THE EQUAL ACCESS TO JUSTICE ACT--Table of 

Contents




                      Subpart A_General Provisions

Sec.
6.1 Purpose of these rules.
6.2 When the Act applies.
6.3 Proceedings covered.
6.4 Eligibility of applicants.
6.5 Standards for awards.
6.6 Allowable fees and other expenses.
6.7 Delegations of authority.

             Subpart B_Information Required From Applicants

6.8 Contents of application.
6.9 Net worth exhibit.
6.10 Documentation of fees and expenses.
6.11 When an application may be filed.

            Subpart C_Procedures for Considering Applications

6.12 Filing and service of documents.
6.13 Answer to application.
6.14 Decision.
6.15 Agency review.
6.16 Judicial review.
6.17 Payment of award.

    Authority: Sec. 203(a)(1), Pub. L. 96-481, 94 Stat. 2325 (5 U.S.C. 
504(c)(1)).

    Source: 47 FR 20765, May 14, 1982, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 6.1  Purpose of these rules.

    The Equal Access to Justice Act, 5 U.S.C. 504 (called ``the Act'' in 
this part), provides for the award of attorney fees and other expenses 
to eligible individuals and entities who are parties to certain 
administrative proceedings (called ``adversary adjudications'') before 
agencies of the Government of the United States. An eligible party may 
receive an award when it prevails over an agency, unless the agency's 
position in the proceeding was substantially justified or special 
circumstances make an award unjust. The rules in this part describe the 
parties eligible for awards and the proceedings that are covered. They 
also explain how to apply for awards, and the procedures and standards 
that the Treasury Department will use to make them.



Sec. 6.2  When the Act applies.

    The Act applies to any adversary adjudication pending before an 
agency at any time between October 1, 1981 and September 30, 1984. This 
includes proceedings begun before October 1, 1981, if final agency 
action has not been taken before that date, and proceedings pending on 
September 30, 1984, regardless of when they were initiated or when final 
agency action occurs.



Sec. 6.3  Proceedings covered.

    The Act applies to adversary adjudications required to be conducted 
by the Treasury Department under 5 U.S.C. 554. Within the Treasury 
Department, these proceedings are:
    (a) Bureau of Alcohol, Tobacco and Firearms: (1) Permit proceedings 
under the Federal Alcohol Administration Act (27 U.S.C. 204); (2) Permit 
proceedings under the Internal Revenue Code of 1954 (26 U.S.C. 5171, 
5271, 5713); (3) License and permit proceedings under the Federal 
Explosives Laws (18 U.S.C. 843).
    (b) Comptroller of the Currency:

All proceedings conducted under 12 CFR part 19, subpart A.



Sec. 6.4  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks an award. The term ``party'' is defined 
in 5 U.S.C. 551(3). The applicant must show that it meets all conditions 
of eligibility set out in this subpart and has complied with the 
requirements in Subpart B of this part.
    (b) The types of eligible applicants are as follows:
    (1) An individual with a net worth of not more than $1 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $5 million, including both personal and business 
interests, and not more than 500 employees;

[[Page 110]]

    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141(a)) with not more than 500 
employees, or
    (5) Any other partnership, corporation, association, or public or 
private organization with a net worth of not more than $5 million and 
not more than 500 employees.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated.
    (d) An applicant who owns an unincorporated business will be 
considered as an ``individual'' rather than a ``sole owner of an 
unincorporated business'' if the matter in controversy is primarily 
related to personal interests rather than to business interests.
    (e) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be 
included.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual or group of individuals, corporation or other entity that 
directly or indirectly controls or owns a majority of the voting shares 
of another business, or controls in any manner the election of a 
majority of that business's board of directors, trustees, or other 
persons exercising similar functions, will be considered an affiliate of 
that business for purposes of this part, unless the adjudicative officer 
determines that such treatment would be unjust and contrary to the 
purposes of the Act in light of the actual relationship between the 
afffiliated entities. In addition, the adjudicative officer may 
determine that financial relationships of the applicant other than those 
described in this paragraph constitute special circumstances that would 
make an award unjust.
    (g) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.



Sec. 6.5  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses incurred in connection with the final disposition of a 
proceeding, unless (1) the position of the agency was substantially 
justified, or (2) special circumstances make the award unjust. No 
presumption arises that the agency's position was not substantially 
justified simply because the agency did not prevail.
    (b) An award will be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding or if special circumstances 
make the award sought unjust.



Sec. 6.6  Allowable fees and other expenses.

    (a) The following fees and other expenses are allowable under the 
Act:
    (1) Reasonable expenses of expert witnesses;
    (2) Reasonable cost of any study, analysis, engineering report, 
test, or project which the agency finds necessary for the preparation of 
the party's case;
    (3) Reasonable attorney or agent fees.
    (b) The amount of fees awarded will be based upon the prevailing 
market rates for the kind and quality of services furnished, except that
    (1) Compensation for an expert witness will not exceed the highest 
rate paid by the agency for expert witnesses; and
    (2) Attorney or agent fees will not be in excess of $75 per hour.



Sec. 6.7  Delegations of authority.

    The Director, Bureau of Alcohol, Tobacco and Firearms and the 
Comptroller of the Currency are authorized to take final action on 
matters pertaining to the Equal Access to Justice Act, 5 U.S.C. 504, in 
proceedings listed in Sec. 6.3 under the respective bureau or office. 
The Secretary of the Treasury may by order delegate authority to take 
final action on matters pertaining to the Equal Access to Justice Act in 
particular cases to other subordinate officials.

[[Page 111]]



             Subpart B_Information Required From Applicants



Sec. 6.8  Contents of application.

    (a) An application for an award of fees and expenses under the Act 
shall identify the applicant and the proceeding for which an award is 
sought. The application shall show that the applicant has prevailed and 
identify the position of the agency in the proceeding that the applicant 
alleges was not substantially justified. The application shall state the 
basis for the applicant's belief that the position was not substantially 
justified. Unless the applicant is an individual, the application shall 
also state the number of employees of the applicant and describe briefly 
the type and purpose of its organization or business.
    (b) The application shall also include a statement that the 
applicant's net worth does not exceed $1 million (if an individual) or 
$5 million (for all other applicants, including their affiliates). 
However, an applicant may omit this statement if:
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code (26 U.S.C. 501(c)(3)) or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualifies under 
such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)).
    (c) The application shall itemize the amount of fees and expenses 
for which an award is sought.
    (d) The application may also include any other matters that the 
applicant wishes the agency to consider in determining whether and in 
what amount an award should be made.
    (e) The application shall be signed by the applicant or an 
authorized officer with respect to the eligibility of the applicant and 
by the attorney of the applicant with respect to fees and expenses 
sought. It shall also contain or be accompanied by a written 
verification under oath or under penalty of perjury that the information 
provided in the application is true and correct.

(Approved by the Office of Management and Budget under control number 
1512-0444, for applications filed with the Bureau of Alcohol, Tobacco 
and Firearms)

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[47 FR 20765, May 14, 1982, as amended at 49 FR 14944, Apr. 16, 1984]



Sec. 6.9  Net worth exhibit.

    (a) Each applicant except a qualified tax-exempt organization, or 
cooperative association must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
defined in Sec. 6.4(f)) when the proceeding was initiated. In the case 
of national banking associations, ``net worth'' shall be considered to 
be the total capital and surplus as reported, in conformity with the 
applicable instructions and guidelines, on the bank's last Consolidated 
Report of Condition filed before the initiation of the underlying 
proceeding.
    (b) The exhibit may be in any form convenient to the applicant that 
provides full disclosure of the applicant's and its affiliates assets 
and liabilities and is sufficient to determine whether the applicant 
qualifies under the standards in this part. The adjudicative officer may 
require an applicant to file additional information to determine its 
eligibility for an award.



Sec. 6.10  Documentation of fees and expenses.

    (a) The application shall be accompanied by full documentation of 
the fees and expenses, including the cost of any study, engineering 
report, test, or project, for which an award is sought.
    (b) The documentation shall include an affidavit from any attorney, 
agent, or expert witness representing or appearing in behalf of the 
party, stating the actual time expended and the rate at which fees and 
other expenses were computed and describing the specific services 
performed.
    (1) The affidavit shall state the services performed. In order to 
establish the hourly rate, the affidavit shall state the hourly rate 
which is billed

[[Page 112]]

and paid by the majority of clients during the relevant time periods.
    (2) If not hourly rate is paid by the majority of clients because, 
for instance, the attorney or agent represents most clients on a 
contingency basis, the attorney or agent shall provide information about 
two attorneys or agents with similar experience, who perform similar 
work, stating their hourly rate.
    (c) The documentation shall also include a description of any 
expenses for which reimbursement is sought and a statement of the 
amounts paid and payable by the applicant or by any other person or 
entity for the services provided.
    (d) The adjudicative officer may require the applicant to provide 
vouchers, receipts, or other substantiation for any expenses claimed.



Sec. 6.11  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the proceeding but in no case later than 30 days after the agency's 
final disposition of the proceeding.
    (b) If review or reconsideration is sought or taken of a decision as 
to which an appplicant believes it has prevailed, proceedings for the 
award of fees shall be stayed pending final disposition of the 
underlying controversy.



            Subpart C_Procedures for Considering Applications



Sec. 6.12  Filing and service of documents.

    Any application for an award or other pleading or document related 
to an application shall be filed and served on all parties to the 
proceeding in the same manner as other pleadings in the proceeding.



Sec. 6.13  Answer to application.

    (a) Within 30 days after service of an application, counsel 
representing the agency against which an award is sought shall file an 
answer to the application.
    (b) If agency counsel and the applicant believe that the issues in 
the fee application can be settled, they may jointly file a statement of 
their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 60 days and 
further extensions may be granted by the adjudicative officer upon 
request by agency counsel and the applicant.
    (c) The answer shall explain any objections to the award requested 
and identify the facts relied on in support of agency counsel's 
position. If the answer is based on any alleged facts not already in the 
record of the proceeding, agency counsel shall include with the answer 
supporting affidavits.



Sec. 6.14  Decision.

    The adjudicative officer shall issue an initial decision on the 
application within 60 days after completion of proceedings on the 
application. The decision shall include written findings and conclusions 
on the applicant's eligibility and status as a prevailing party, and an 
explanation of the reasons for any difference between the amount 
requested and the amount awarded. The decision shall also include, if at 
issue, findings on whether the agency's position was substantially 
justified, whether the applicant unduly protracted the proceedings, or 
whether special circumstances make an award unjust.



Sec. 6.15  Agency review.

    Either the applicant or agency counsel may seek review of the 
initial decision on the fee application, or the agency may decide to 
review the decision on its own initiative. If neither the applicant nor 
agency counsel seeks a review and the agncy does not take review on its 
own initiative, the initial decision on the application shall become a 
final decision of the agency 30 days after it is issued. Whether to 
review a decision is a matter within the discretion of the agency. If 
review is taken, the agency will issue a final decision on the 
application or remand the application to the adjudicative officer for 
further proceedings.



Sec. 6.16  Judicial review.

    Judicial review of final agency decisions on awards may be sought as 
provided in 5 U.S.C. 504(c)(2).

[[Page 113]]



Sec. 6.17  Payment of award.

    An applicant seeking payment of an award shall submit to the agency 
a copy of the agency's final decision granting the award, accompanied by 
a statement that the applicant will not seek review of the decision in 
the United States courts. An applicant shall be paid the amount awarded 
unless judicial review of the award or of the underlying decision of the 
adversary adjudication has been sought by the applicant or any other 
party to the proceeding.



PART 7_EMPLOYEE INVENTIONS--Table of Contents




Sec.
7.1 Purpose.
7.2 Responsibilities of the Department.
7.3 Responsibilities of heads of offices.
7.4 Responsibilities of the General Counsel.
7.5 Responsibilities of employees.
7.6 Effect of awards.
7.7 Appeals.
7.8 Delegation.

    Authority: 80 Stat. 379; 5 U.S.C. 301, sec. 6, E.O. 10096; 3 CFR, 
1949-1953 Comp., p. 292, as amended by E.O. 10930; 3 CFR, 1959-1963 
Comp., p. 456.

    Source: 33 FR 10088, July 13, 1968, unless otherwise noted.



Sec. 7.1  Purpose.

    Provisions defining the right, title, and interest of the Government 
in and to an invention made by a Government employee under various 
circumstances and the duties of Government agencies with respect thereto 
are set forth in Executive Order 10096, 15 FR 389, as amended (35 U.S.C. 
266 note). Further definition of the circumstances under which the 
Government will acquire the right to a patent in such an invention or a 
nonexclusive, irrevocable, royalty-free license in the invention, and 
the procedures for the determination of these interests, are set forth 
in the regulations issued under that Executive order by the Patent 
Office, 37 CFR part 100. The purpose of this part 7 is to implement for 
the Treasury Department the foregoing Executive order and regulations of 
the Patent Office by (a) bringing to the attention of Treasury employees 
the law and procedure governing their rights to, and interest in, 
inventions made by them, (b) defining responsibility within the 
Department for making the necessary determinations, and, (c) 
establishing internal procedures for action in conformity with the 
Executive order and the Patent Office regulations.



Sec. 7.2  Responsibilities of the Department.

    The responsibilities of the Treasury Department are to determine 
initially (a) the occurrence of an invention by an employee, (b) his 
rights in the invention and the rights of the Government therein, and 
(c) whether patent protection will be sought in the United States by the 
Department, and to furnish the required reports to the Patent Office.



Sec. 7.3  Responsibilities of heads of offices.

    (a) Heads of bureaus or offices in the Department shall be 
responsible for determining initially whether the results of research, 
development, or other activity of an employee within that bureau or 
office constitute an invention which falls within the purview of 
Executive Order 10096, as amended, and is to be handled in accordance 
with the regulations in this part.
    (b) Heads of bureaus or offices are responsible for obtaining from 
the employee the necessary information and, if the determination under 
paragraph (a) of this section is affirmative, preparing on behalf of the 
bureau or office a description of the invention and its relationship to 
the employee's duties and work assignments.
    (c) Heads of bureaus or offices, after such examination and 
investigation as may be necessary, shall refer to the General Counsel 
all information obtained concerning the invention and such determination 
as the head of the bureau or office has made with respect to the 
character of the activity as an invention. These reports shall include 
any determination as to the giving of a cash award to the employee for 
his performance relating to that invention.



Sec. 7.4  Responsibilities of the General Counsel.

    (a) The General Counsel shall be responsible for determining, 
subject to

[[Page 114]]

review by the Commissioner of Patents, the respective rights of the 
Government and of the inventor in and to any invention made by an 
employee of the Department.
    (b) On the basis of the foregoing determination, the General Counsel 
shall determine whether patent protection will be sought by the 
Department for such an invention.
    (c) The General Counsel will prepare and furnish to the Patent 
Office the reports required by the regulations of that Office and will 
serve as the liaison officer between the Department and the Commissioner 
of Patents.



Sec. 7.5  Responsibilities of employees.

    All employees are required to report to the heads of their bureaus 
or offices any result of research, development, or other activity on 
their part which may constitute an invention and the circumstances under 
which this possible invention came into being.



Sec. 7.6  Effect of awards.

    The acceptance by an employee of a cash award for performance which 
constitutes an invention shall, in accordance with 5 U.S.C. 4502(c), 
constitute an agreement that the use by the Government of the idea, 
method, or device for which the award is made does not form the basis of 
any further claim against the Government by the employee, his heirs or 
assigns.



Sec. 7.7  Appeals.

    (a) Any employee who is aggrieved by a determination made by the 
head of his bureau or office under this part may obtain a review of the 
determination by filing an appeal with the General Counsel within 30 
days after receiving the notice of the determination complained of.
    (b) Any employee who is aggrieved by a determination made by the 
General Counsel under this part may obtain a review of the determination 
by filing a written appeal with the Commissioner of Patents within 30 
days after receiving notice of the determination complained of, or 
within such longer period as the Commissioner may provide. The appeal to 
the Commissioner shall be processed in accordance with the provisions in 
the regulations of the Patent Office for an appeal from an agency 
determination.



Sec. 7.8  Delegation.

    The heads of bureaus or offices and the General Counsel may 
delegate, as appropriate, the performance of the responsibilities 
assigned to them under this part.



PART 8_PRACTICE BEFORE THE BUREAU OF ALCOHOL, TOBACCO AND FIREARMS--Table of 

Contents




                     Subpart A_General Requirements

Sec.
8.1 Scope.
8.2 Persons who may practice.
8.3 Conference and practice requirements.
8.4 Director of Practice.
8.5 Records.
8.6 Special orders.

                          Subpart B_Definitions

8.11 Meaning of terms.

                     Subpart C_Enrollment Procedures

8.21 Eligibility for enrollment.
8.22 Application for enrollment.
8.23 Denial of enrollment; appeal.
8.24 Enrollment cards.
8.25 Renewal of enrollment card.
8.26 Change in enrollment.
8.27 Enrollment registers.
8.28 Termination of enrollment.
8.29 Limited practice without enrollment.

         Subpart D_Duties and Restrictions Relating to Practice

8.31 Furnishing of information.
8.32 Prompt disposition of pending matters.
8.33 Accuracy.
8.34 Knowledge of client's omission.
8.35 Assistance from disbarred or suspended persons and former Treasury 
          employees.
8.36 Practice by partners of Government employees.
8.37 Practice by former Government employees.
8.38 Notaries.
8.39 Fees.
8.40 Conflicting interests.
8.41 Solicitation.
8.42 Practice of law.

                   Subpart E_Disciplinary Proceedings

8.51 Authority to disbar or suspend.
8.52 Disreputable conduct.
8.53 Initiation of disciplinary proceedings.
8.54 Conferences.

[[Page 115]]

8.55 Contents of complaint.
8.56 Service of complaint and other papers.
8.57 Answer.
8.58 Supplemental charges.
8.59 Proof; variance; amendment of pleadings.
8.60 Motions and requests.
8.61 Representation.
8.62 Administrative Law Judge.
8.63 Hearings.
8.64 Evidence.
8.65 Depositions.
8.66 Transcript.
8.67 Proposed findings and conclusions.
8.68 Decision of Administrative Law Judge.
8.69 Appeal to the Secretary.
8.70 Decision of the Secretary.
8.71 Effect of disbarment or suspension.
8.72 Petition for reinstatement.

    Authority: Sec. 3, 23 Stat. 258 (31 U.S.C. 1026); 5 U.S.C. 301, 500, 
551-559; and Reorganization Plan No. 26 of 1950, 15 FR 4935, 64 Stat. 
1280, as amended.

    Source: 42 FR 33026, June 29, 1977, unless otherwise noted.



                     Subpart A_General Requirements



Sec. 8.1  Scope.

    This part contains rules governing the recognition of attorneys, 
certified public accountants, enrolled practitioners, and other persons 
representing clients before the Bureau of Alcohol, Tobacco and Firearms.



Sec. 8.2  Persons who may practice.

    (a) Attorneys. Any attorney who is not currently under suspension or 
disbarment from practice before the Bureau of Alcohol, Tobacco and 
Firearms, may practice before the Bureau upon filing a written 
declaration with the Bureau, that he or she is currently qualified as an 
attorney and is authorized to represent the particular party on whose 
behalf he or she acts.
    (b) Certified public accountants. Any certified public accountant 
who is not currently under suspension or disbarment before the Bureau of 
Alcohol, Tobacco and Firearms, may practice before the Bureau upon 
filing a written declaration with the Bureau, that he or she is 
currently qualified as a certified public accountant and is authorized 
to represent the particular party on whose behalf he or she acts.
    (c) Enrollment practitioners. Any person enrolled as a practitioner 
under the provisions of subpart C of this part and who is not under 
suspension or disbarment from enrollment may practice before the Bureau.
    (d) Limited practitioners. Any person qualified for limited practice 
without enrollment under the provisions of Sec. 8.29 may practice 
before the Bureau.
    (e) Restrictions on Government officers and employees. Any officer 
or employee of the United States in the executive, legislative, or 
judicial branch of the Government, or in any agency of the United 
States, including the District of Columbia, who is otherwise eligible to 
practice under the provisions of this part, may represent parties before 
the Bureau when doing so in the conduct of his or her official duties. A 
Government officer or employee may not otherwise practice before the 
Bureau except that, subject to the requirements of 18 U.S.C. 205, he or 
she may represent a member of his or her immediate family or a person or 
estate for which he or she serves as guardian, executor, administrator, 
trustee or other personal fiduciary. Member of Congress or Resident 
Commissioners (elect or serving) may not practice before the Bureau in 
connection with any matter for which they directly or indirectly seek 
any compensation.
    (f) Restrictions on State officers and employees. No officer or 
employee of any State, or subdivision thereof, whose official 
responsibilities require him or her to pass upon, investigate, or deal 
with any State law or regulation concerning alcohol, tobacco, firearms, 
explosives matters or wagering, may practice before the Bureau if his or 
her official responsibility may disclose pertinent facts or information 
relating to matters administered by the Bureau.
    (g) Customhouse brokers. Customhouse brokers, licensed by the 
Commissioner of Customs according to 19 CFR part 111, may represent a 
party for whom they have acted as a customhouse broker before the Bureau 
with respect to matters relating to the importation

[[Page 116]]

or exportation of merchandise under customs or intenal revenue laws.

(Approved by the Office of Management and Budget under control number 
1512-0418)

(18 U.S.C. 203, 205; 5 U.S.C. 552(a) (80 Stat. 383, as amended))

[42 FR 33026, June 29, 1977, as amended at 49 FR 14944, Apr. 16, 1984]



Sec. 8.3  Conference and practice requirements.

    Conference and practice requrements of the Bureau of Alcohol, 
Tobacco and Firearms, including requirements for powers of attorney are 
set forth in:
    (a) 26 CFR part 601, subpart E (or those regulations as recodified 
in 27 CFR part 71 subsequent to the effective date of these regulations, 
31 CFR part 8) with respect to all representations before the Bureau 
except those concerning license or permit proceedings;
    (b) 27 CFR part 200 with respect to proceedings concerning permits 
issued under the Federal Alcohol Administration Act or the Internal 
Revenue Code;
    (c) 27 CFR 47.44 with respect to proceedings concerning licenses 
issued under the Arms Export Control Act (22 U.S.C. 2778);
    (d) 27 CFR part 178, subpart E, with respect to proceedings 
concerning licenses issued under the Gun Control Act of 1968 (18 U.S.C. 
Chapter 44); and
    (e) 27 CFR part 181, subpart E, with respect to proceedings 
concerning licenses or permits issued under the Organized Crime Control 
Act of 1970 (18 U.S.C. Chapter 40).



Sec. 8.4  Director of Practice.

    (a) Appointment. The Secretary shall appoint the Director of 
Practice. In the event of the absence of the Director of Practice or a 
vacancy in that office, the Secretary shall designate an officer or 
employee of the Treasury Department to act as Director of Practice.
    (b) Duties. The Director of Practice, Office of the Secretary of the 
Treasury, shall: Act upon appeals from decisions of the Director denying 
applications for enrollment to practice before the Bureau; institute and 
provide for the conduct of disciplinary proceedings relating to 
attorneys, certified public accountants, and enrolled practitioners; 
make inquiries with respect to matters under his or her jurisdiction; 
and perform other duties as are necessary or appropriate to carry out 
his or her functions under this part or as are prescribed by the 
Secretary.



Sec. 8.5  Records.

    (a) Availability. Registers of all persons admitted to practice 
before the Bureau, and of all persons disbarred or suspended from 
practice, which are required to be maintained by the director under the 
provisions of Sec. 8.27, will be available for public inspection at the 
Office of the Director. Other records may be disclosed upon specific 
request in accordance with the disclosure regulations of the Bureau (27 
CFR part 71) and the Office of the Secretary.
    (b) Disciplinary proceedings. The Director, may grant a request by 
an attorney, certified public accountant, or enrolled practitioner to 
make public a hearing in a disciplinary proceeding, conducted under the 
provisions of subpart E of this part concerning the attorney, certified 
public accountant or enrolled practioner, and to make the record of the 
proceeding available for public inspection by interested persons, if an 
agreement is reached by stipulation in advance to prevent disclosure of 
any information which is confidential, in accordance with applicable 
laws and regulations.



Sec. 8.6  Special orders.

    The secretary reserves the power to issue special orders as he or 
she may deem proper in any cases within the scope of this part.



                          Subpart B_Definitions



Sec. 8.11  Meaning of terms.

    As used in this part, terms shall have the meaning given in this 
section. Words in the plural shall include the singular, and vice versa. 
The terms include and including do not exclude things not enumerated 
which are in the same general class.
    Administrative Law Judge. The person appointed pursuant to 5 U.S.C. 
3105, designated to preside over any administrative proceedings under 
this part.

[[Page 117]]

    Attorney. A person who is a member in good standing of the bar of 
the highest court of any State, possession, territory, Commonwealth, or 
the District of Columbia.
    Bureau. The Bureau of Alcohol, Tobacco and Firearms, the Department 
of the Treasury, Washington, DC 20226.
    Certified public accountant. Any person who is qualified to practice 
as a certified public accountant in any State, possession, territory, 
Commonwealth, or the District of Columbia.
    CFR. The Code of Federal Regulations.
    Director. The Director, Bureau of Alcohol, Tobacco and Firearms, the 
Department of the Treasury, Washington, DC.
    Enrolled practitioner. Any person enrolled to practice before the 
Bureau of Alcohol, Tobacco and Firearms pursuant to Subpart C of this 
part.
    Practice before the Bureau. This comprehends all matters connected 
with presentation to the Bureau or any of its officers or employees 
relating to a client's rights, privileges or liabilities under laws or 
regulations administered by the Bureau. Presentations include the 
preparation and filing of necessary documents, correspondence with and 
communications to the Bureau, and the representation of a client at 
conferences, hearings, and meetings. Preparation of a tax return, 
appearance of an individual as a witness for any party, or furnishing 
information at the request of the Bureau of any of its officers or 
employees is not considered practice before the Bureau.
    Secretary. The Secretary of the Treasury.
    U.S.C. The United States Code.



                     Subpart C_Enrollment Procedures



Sec. 8.21  Eligibility for enrollment.

    (a) General qualifications. The Director may grant enrollment to 
practice to any person who has not engaged in conduct which would 
justify the disbarment or suspension of any attorney, certified public 
accountant, or enrolled practioner. Each person shall demonstrate to the 
satisfaction of the Director that he or she possesses the necessary 
technical qualifications to enable him or her to render valuable service 
before the Bureau, and that he or she is otherwise competent to advise 
and assists in the presentation of matters before the Bureau.
    (b) Technical qualifications. The Director may grant enrollment to 
practice only to persons possessing technical knowledge of the laws and 
regulations administered by the Bureau.
    (1) Minimum criteria required of an enrolled practioner will consist 
of: 5 years employment with the Treasury Department in a responsible 
position which would familiarize the person with applicable laws and 
regualtions; or 5 years employment in a regulated industry in a 
responsible position which would familiarize the person with applicable 
laws and regulations; or possession of a law degree; or other 
significant experience such as the prior respresentation of persons 
before the Internal Revenue Service or the Bureau of Alcohol, Tobacco 
and Firearms.
    (2) An enrolled paractioner may demonstrate technical knowledge in 
one or more of the several areas of laws and regulations administered by 
the Bureau (alcohol, tobacco firearms, or explosives matters).
    (c) Natural persons. Enrollment to practice may only be granted to 
natural persons who have become 18 years of age.
    (d) Attorneys, certified public accountants. Enrollment if not 
available to persons who are attorneys or certified public accountants 
who qualify to practice without enrollment under Sec. 8.2 (a) or (b).

[42 FR 33026, June 29, 1977; 42 FR 36455, July 15, 1977]



Sec. 8.22  Application for enrollment.

    (a) Information to be furnished. An applicant for enrollment to 
practice shall state his or her name, address, and business address, 
citizenship, and age on the application. The applicant shall also state 
if he or she has ever been suspended or disbarred as an attorney or 
certified public accountant, or if the applicant's right to practice has 
ever been revoked by any court, commission, or administrative agency in 
any jurisdiction. The applicant shall set forth his or her technical 
qualifications as required by Sec. 8.21(b) which enable him or her to 
render valuable service

[[Page 118]]

before the Bureau. The applicant shall indicate which area or areas of 
Bureau matters in which he or she desires to practice (alcohol, tobacco, 
firearms, or explosives matters).
    (b) Fee. Each application for enrollment will be accompanied by a 
check or money order in the amount of $25, payable to the Bureau of 
Alcohol, Tobacco and Firearms. This fee will be retained by the United 
States whether or not the applicant is granted enrollment. Agents who 
are enrolled to practice before the Internal Revenue Service prior to 
September 27, 1977, need not include this fee and should indicate their 
enrollment number on the application.
    (c) Execution under oath. All applications for enrollment will be 
executed under oath or affirmation.
    (d) Filing. Applications for enrollment will be filed with the 
Assistant Director, Regulatory Enforcement, Bureau of Alcohol, Tobacco 
and Firearms, 1200 Pensylvania Avenue NW., Washington, DC 20226.
    (e) Additional information. The Director, as a condition to 
consideration for enrollment, may require the applicant to file 
additional information as necessary to determine if the applicant is 
qualified. The Director shall, upon written request, afford an applicant 
the opportunity to be heard with respect to his or her application for 
enrollment.

(Approved by the Office of Management and Budget under control number 
1512-0418)

(Sec. 501, Pub. L. 82-137, 65 Stat. 290 (31 U.S.C. 483a); 5 U.S.C. 
552(a) (80 Stat. 383, as amended))

[42 FR 33026, June 29, 1977; 42 FR 36455, July 15, 1977, as amended at 
49 FR 14944, Apr. 16, 1984]



Sec. 8.23  Denial of enrollment; appeal.

    (a) The Director, in denying an application for enrollment, shall 
inform the applicant as to the reasons. The applicant may, within 30 
days after receipt of the notice of denial, file a written appeal 
together with reasons in support thereof, with the Director of Practice. 
The Director of Practice shall render a decision on the appeal as soon 
as practicable.
    (b) An applicant may, within 30 days after receipt of the decision 
of the Director of Practice in sustaining a denial of enrollment, appeal 
the decision to the Secretary.



Sec. 8.24  Enrollment cards.

    The Director shall issue an enrollment card to each practitioner who 
is enrolled to practice before the Bureau. Each enrollment card is valid 
for a period of 5 years as long as the holder remains enrolled and in 
good standing before the Bureau. Unless advised to the contrary by the 
Director, any officer or employee of the Bureau may consider the holder 
of an unexpired enrollment card to be authorized to practice before the 
Bureau in the subject area or areas indicated upon the card (alcohol, 
tobacco, firearms, or explosives matters).



Sec. 8.25  Renewal of enrollment card.

    (a) Period of renewal. An enrolled practitioner may apply for 
renewal of his or her enrollment card during a 12-month period prior to 
the expiration of the enrollment card.
    (b) Application. Each enrolled practitioner applying for a renewal 
of enrollment shall apply to the Director. The enrolled practitioner 
shall include in the application all information required by Sec. 8.22 
except information relating to technical qualifications unless the 
enrolled practitioner is applying for enrollment in a subject area or 
areas in which he or she was not previously qualified to practice.
    (c) Fee. Each application for renewal of enrollment will be 
accompanied by a check or money order in the amount of $5, payable to 
the Bureau of Alcohol, Tobacco and Firearms.

(Approved by the Office of Management and Budget under control number 
1512-0418)

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[42 FR 33026, June 29, 1977, as amended at 49 FR 14944, Apr. 16, 1984]



Sec. 8.26  Change in enrollment.

    (a) Change in area of practice. At any time during a period of 
enrollment, an enrolled practitioner may apply to practice in a subject 
area or areas in which he or she was not previously qualified to 
practice (alcohol, tobacco, firearms, or explosives matters).

[[Page 119]]

    (b) Application. Each enrolled practitioner applying for a change in 
enrollment shall apply to the Director. The enrolled practitioner shall 
include in the application all information required by Sec. 8.22 but 
shall include information relating to technical qualifications only in 
those additional subject areas in which he or she is applying to 
practice.
    (c) Fee. Each application for change in enrollment will be 
accompanied by a check or money order in the amount of $5, payable to 
the Bureau of Alcohol, Tobacco and Firearms.

(Approved by the Office of Management and Budget under control number 
1512-0418)

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[42 FR 33026, June 29, 1977, as amended at 49 FR 14944, Apr. 16, 1984]



Sec. 8.27  Enrollment registers.

    The Director shall maintain, for public inspection, a register of 
all persons enrolled to practice before the Bureau and the subject areas 
in which each person is enrolled to practice, a register of all persons 
disbarred or suspended from practice, and a register of all persons 
whose applications for enrollment before the Bureau have been denied.



Sec. 8.28  Termination of enrollment.

    (a) Attorneys, certified public accountants. The enrollment of a 
practitioner to whom an enrollment card has been issued will terminate 
when that person becomes eligible to practice without enrollment under 
Sec. 8.2 (a) or (b), and that person shall surrender his or her 
enrollment card to the Director for cancellation.
    (b) Expiration of enrollment. The enrollment of any person will 
automatically terminate after the date indicated on the enrollment card 
unless, during the 12-month period prior to the expiration date, that 
person applies for renewal of enrollment with the Director as provided 
in Sec. 8.25. In this case, the person may continue to practice before 
the Bureau until his or her application has been finally determined.



Sec. 8.29  Limited practice without enrollment.

    (a) General. Individuals may appear on their own behalf and may 
otherwise appear without enrollment, providing they present satisfactory 
identification, in the following classes of cases:
    (1) An individual may represent another individual who is his or her 
regular full-time employer, may represent a partnership of which he or 
she is a member or a regular full-time employee, of may represent 
without compensation a member of his or her immediate family.
    (2) Corporations (including parent corporations, subsidiaries or 
affiliated corporations), trusts, estates, associations, or organized 
groups may be represented by bona fide officers or regular full-time 
employees.
    (3) Trusts, receiverships, guardianships, or estates may be 
represented by their trustees, receivers, guardians, administrators, 
executors, or their regular full-time employees.
    (4) Any government unit, agency, or authority may be represented by 
an officer or regular employee in the course of his or her official 
duties.
    (5) Unenrolled persons may participate in rulemaking as provided in 
5 U.S.C. 553.
    (b) Special appearances. The Director, subject to conditions he or 
she deems appropriate, may authorize any person to represent a party 
without enrollment, for the purpose of a particular matter.



         Subpart D_Duties and Restrictions Relating to Practice



Sec. 8.31  Furnishing of information.

    (a) To the Bureau. No attorney, certified public accountant, or 
enrolled practitioner may neglect or refuse promptly to submit records 
or information in any matter before the Bureau, upon proper and lawful 
request by an authorized officer or employee of the Bureau, or may 
interfere, or attempt to interfere, with any proper and lawful effort by 
the Bureau or its officers or employees, to obtain the requested record 
or information, unless he or she

[[Page 120]]

believes in good faith and on reasonable grounds that the record or 
information is privileged or that the request for, or effort to obtain, 
that record or information is of doubtful legality.
    (b) To the Director of Practice. It is the duty of an attorney or 
certified public accountant, who practices before the Bureau, or 
enrolled practitioner when requested by the Director of Practice, to 
provide the Director of Practice with any information he or she may have 
concerning violation of the regulations in this part by any person, and 
to testify thereto in any proceeding instituted under this part for the 
disbarment or suspension of an attorney, certified public accountant, or 
enrolled practitioner, unless he or she believes in good faith and on 
reasonable grounds that that information is privileged or that the 
request is of doubtful legality.



Sec. 8.32  Prompt disposition of pending matters.

    No attorney, certified public accountant, or enrolled practitioner 
may unreasonably delay the prompt disposition of any matter before the 
Bureau.



Sec. 8.33  Accuracy.

    Each attorney, certified public accountant, and enrolled 
practitioner shall exercise due diligence in:
    (a) Preparing or assisting in the preparation of, approving, and 
filing returns, documents, affidavits, and other papers relating to 
Bureau matters;
    (b) Determining the correctness of any representations made by him 
or her to the Bureau; and
    (c) Determining the correctness of any information which he or she 
imparts to a client with reference to any matter administered by the 
Bureau.



Sec. 8.34  Knowledge of client's omission.

    Each attorney, certified public accountant, or enrolled practitioner 
who knows that a client has not complied with applicable law, or has 
made an error in or omission from any document, affidavit, or other 
paper which the law requires the client to execute, shall advise the 
client promptly of the fact of such noncompliance, error, or omission.



Sec. 8.35  Assistance from disbarred or suspended persons and former Treasury employees.

    No attorney, certified public accountant or enrolled practitioner 
shall, in practice before the Bureau, knowingly and directly or 
indirectly:
    (a) Employ or accept assistance from any person who is under 
disbarment or suspension from practice before any agency of the Treasury 
Department;
    (b) Accept employment as associate, correspondent, or subagent from, 
or share fees with, any such person;
    (c) Accept assistance in a specific matter from any person who 
participated personally and substantially in the matter as an employee 
of the Treasury Department.

[44 FR 47059, Aug. 10, 1979]



Sec. 8.36  Practice by partners of Government employees.

    No partner of an officer or employee of the executive branch of the 
U.S. Government, of any independent agency of the United States, or of 
the District of Columbia, may represent anyone in any matter 
administered by the Bureau in which the Government employee participates 
or has participated personally and substantially as a Government 
employee, or which is the subject of that employee's official 
responsibility.



Sec. 8.37  Practice by former Government employees.

    (a) Violation of law. No former officer or employee of the U.S. 
Government, of any independent agency of the United States, or of the 
District of Columbia, may represent anyone in any matter administered by 
the Bureau if the representation would violate any of the laws of the 
United States.
    (b) Personal and substantial participation. No former officer or 
employee of the executive branch of the U.S. Goverment, of any 
independent agency of the United States, or of the District of Columbia, 
may represent anyone with repect to any matter under the administration 
of the Bureau, if he or she participated personally and substantially in 
that matter as a Government employee.
    (c) Official responsibility. No former officer or employee of the 
executive

[[Page 121]]

branch of the U.S. Government, of any indepenednt agency of the United 
States, or of the District of Columbia, may within one year after his or 
her employment has ceased, appear personally as a practitioner before 
the Bureau with respect to any matter administered by the Bureau if that 
representation involves a specific matter under the former employee's 
official responsibility as a Government employee, within a one-year 
period prior to the termination of that responsibility.
    (d) Aid or assistance. No former officer or employee of the Bureau, 
who is eligible to practice before the Bureau, may aid or assist any 
person in the representation of a specific matter in which the former 
officer or employee participated personally and substantially as an 
officer or employee of the Bureau.

(18 U.S.C. 207)



Sec. 8.38  Notaries.

    No attorney, certified public accountant, or enrolled practitioner 
may, with respect to any matter administered by the Bureau, take 
acknowledgements, administer oaths, certify papers, or perform any 
official act in connection with matters in which he or she is employed 
as counsel, attorney, or practioner, or in which he or she may be in any 
way interested before the Bureau.

(26 Op. Atty. Gen. 236)



Sec. 8.39  Fees.

    No attorney, certified public accountant, or enrolled practitioner 
may charge an unconscionable fee for representing a client in any matter 
before the Bureau.



Sec. 8.40  Conflicting interests.

    No attorney, certified public accountant, or enrolled practitioner 
may represent conflicting interests in practice before the Bureau, 
except by express consent of all directly interested parties after full 
disclosure has been made.



Sec. 8.41  Solicitation.

    (a) Advertising and solicitation restrictions. (1) No attorney, 
certified public accountant or enrolled practitioner shall, with respect 
to any Bureau matter, in any way use or participate in the use of any 
form of public communication containing a false, fraudulent, misleading, 
deceptive, unduly influencing, coercive or unfair statement or claim. 
For the purposes of this subsection, the prohibition includes, but is 
not limited to, statements pertaining to the quality of services 
rendered unless subject to factual verification, claims of specialized 
expertise not authorized by State or Federal agencies having 
jurisdiction over the practitioner, and statements or suggestions that 
the ingenuity and/or prior record of a representative rather than the 
merit of the matter are principal factors likely to determine the result 
of the matter.
    (2) No attorney, certified public accountant or enrolled 
practitioner shall make, directly or indirectly, an uninvited 
solicitation of employment, in matters related to the Bureau. 
Solicitation includes, but is not limited to, in-person contacts, 
telephone communications, and personal mailings directed to the specific 
circumstances unique to the recipient. This restriction does not apply 
to: (i) Seeking new business from an existing or former client in a 
related matter; (ii) solicitation by mailings, the contents of which are 
designed for the general public; or (iii) non-coercive in-person 
solicitation by those eligible to practice before the Bureau while 
acting as an employee, member, or officer of an exempt organization 
listed in sections 501(c) (3) or (4) of the Internal Revenue Code of 
1954 (26 U.S.C.).
    (b) Permissible advertising. (1) Attorneys, certified public 
accountants and enrolled practitioners may publish, broadcast, or use in 
a dignified manner through any means of communication set forth in 
paragraph (d) of this section:
    (i) The name, address, telephone number, and office hours of the 
practitioner or firm.
    (ii) The names of individuals associated with the firm.
    (iii) A factual description of the services offered.
    (iv) Acceptable credit cards and other credit arrangements.
    (v) Foreign language ability.

[[Page 122]]

    (vi) Membership in pertinent, professional organizations.
    (vii) Pertinent professional licenses.
    (viii) A statement that an individual's or firm's practice is 
limited to certain areas.
    (ix) In the case of an enrolled practitioner, the phrase ``enrolled 
to practice before the Bureau of Alcohol, Tobacco and Firearms.''
    (x) Other facts relevant to the selection of a practitioner in 
matters related to the Bureau which are not prohibited by these 
regulations.
    (2) Attorneys, certified public accountants and enrolled 
practitioners may use, to the extent they are consistent with the 
regulations in this section, customary biographical insertions in 
approved law lists and reputable professional journals and directories, 
as well as professional cards, letterheads and announcements: Provided, 
That (i) attorneys do not violate applicable standards of ethical 
conduct adopted by the American Bar Association, (ii) certified public 
accountants do not violate applicable standards of ethical conduct 
adopted by the American Institute of Certified Public Accountants, and 
(iii) enrolled practitioners do not violate applicable standards of 
ethical conduct adopted by the National Society of Public Accountants.
    (c) Fee information. (1) Attorneys, certified public accountants and 
enrolled practitioners may disseminate the following fee information:
    (i) Fixed fees for specific routine services.
    (ii) Hourly rates.
    (iii) Range of fees for particular services.
    (iv) Fee charged for an initial consultation.
    (2) Attorneys, certified public accountants and enrolled 
practitioners may also publish the availability of a written schedule of 
fees.
    (3) Attorneys, certified public accountants and enrolled 
practitioners shall be bound to charge the hourly rate, the fixed fee 
for specific routine services, the range of fees for particular 
services, or the fee for an initial consultation published for a 
reasonable period of time, but no less than thirty days from the last 
publication of such hourly rate or fees.
    (d) Communications. Communications, including fee information, shall 
be limited to professional lists, telephone directories, print media, 
permissible mailings as provided in these regulations, radio and 
television. In the case of radio and television broadcasting, the 
broadcast shall be pre-recorded and the practitioner shall retain a 
recording of the actual audio transmission.
    (e) Improper associations. An attorney, certified public accountant 
or enrolled practitioner may, in matters related to the Bureau, employ 
or accept employment or assistance as an associate, correspondent, or 
subagent from, or share fees with, any person or entity who, to the 
knowledge of the practitioner, obtains clients or otherwise practices in 
a manner forbidden under this section: Provided, That an attorney, 
certified public accountant or enrolled practitioner does not, directly 
or indirectly, act or hold himself out as authorized to practice before 
the Bureau in connection with that relationship. Nothing herein shall 
prohibit an attorney, certified public accountant, or enrolled 
practitioner from practice before the Bureau in a capacity other than 
that described above.

[44 FR 47060, Aug. 10, 1979]



Sec. 8.42  Practice of law.

    Nothing in the regulations in this part may be construed as 
authorizing persons not members of the bar to practice law.



                   Subpart E_Disciplinary Proceedings



Sec. 8.51  Authority to disbar or suspend.

    The Secretary, after due notice and opportunity for hearing, may 
suspend or disbar from practice before the Bureau any attorney, 
certified public accountant, or enrolled practitioner shown to be 
incompetent, disreputable or who refuses to comply with the rules and 
regulations in this part or who shall, with intent to defraud, in any 
manner willfully and knowingly deceive, mislead, or threaten any client

[[Page 123]]

or prospective client, by word, circular, letter, or by advertisement.

(Sec. 3, 23 Stat. 258 (31 U.S.C. 1026))



Sec. 8.52  Disreputable conduct.

    Disreputable conduct for which an attorney, certified public 
accountant, or enrolled practitioner may be disbarred or suspended from 
practice before the Bureau includes, but is not limited to:
    (a) Conviction of any criminal offense under the revenue laws of the 
United States; under any other law of the United States which the Bureau 
enforces pursuant to Treasury Department Order No. 221 (37 FR 11696) 
effective July 1, 1972; or for any offense involving dishonesty or 
breach of trust.
    (b) Giving false or misleading information, or participating in any 
way in the giving of false or misleading information, to the Bureau or 
any officer or employee thereof, or to any tribunal authorized to pass 
upon matters administered by the Bureau in connection with any matter 
pending or likely to be pending before them, knowing the information to 
be false or misleading. Facts or other matters contained in testimony, 
Federal tax returns, financial statements, applications for enrollment, 
affidavits, declarations, or any other document or statement, written or 
oral, are included in the term ``information''.
    (c) Solicitation of employment as prohibited under Sec. 8.41, the 
use of false or misleading representations with intent to deceive a 
client or a prospective client in order to procure employment, or 
intimating that the practitioner is able improperly to obtain special 
consideration or action from the Bureau or an officer or employee 
thereof.
    (d) Willfully failing to make a Federal tax return in violation of 
the revenue laws of the United States, or evading, attempting to evade, 
or participating in any way in evading or attempting to evade any 
Federal tax or payment thereof; knowingly counseling or suggesting to a 
client or prospective client an illegal plan to evade Federal taxes or 
payment thereof, or concealing assets of himself or herself, or of 
another in order to evade Federal taxes or payment thereof.
    (e) Misappropriation of, or failure properly and promptly to remit 
funds received from a client for the purpose of payment of taxes or 
other obligations due the United States.
    (f) Directly or indirectly attempting to influence, or offering or 
agreeing to attempt to influence, the official action of any officer or 
employee of the Bureau by the use of threats, false accusations, duress 
or coercion, by the offer of any special inducement or promise of 
advantage or by the bestowing of any gift, favor, or thing of value.
    (g) Disbarment or suspension from practice as an attorney or 
certified public accountant by any duly constituted authority of any 
State, possession, Commonwealth, the District of Columbia, or by any 
Federal court of record.
    (h) Disbarment or suspension from practice as an attorney, certified 
public accountant, or other person admitted to practice before the 
Internal Revenue Service.
    (i) Knowingly aiding and abetting another person to practice before 
the Bureau during a period of suspension, disbarment, or ineligibility 
of the other person. Maintaining a partnership for the practice of law, 
accountancy, or other related professional service with a person who is 
under disbarment from practice before the Bureau or the Intenal Revenue 
Service is presumed to be a violation of this provision.
    (j) Contemptuous conduct in connection with practice before the 
Bureau, including the use of abusive language, making false accusations 
and statements knowing them to be false, or circulating or publishing 
malicious or libelous matter.
    (k) Willful violatin of any of the regulations contained in this 
part.

[42 FR 33026, June 29, 1977; 42 FR 36455, July 15, 1977]



Sec. 8.53  Initiation of disciplinary proceedings.

    (a) Receipt of information. If an officer or employee of the Bureau 
has reason to believe that an attorney, certified public accountant, or 
enrolled practitioner has violated any of the provisions of this part or 
engaged in any disreputable conduct as defined in Sec. 8.52, the 
employee shall promptly make a

[[Page 124]]

report thereof which will be forwarded to the Director of Practice. Any 
other person possessing information concerning violations or 
disreputable conduct may make a report thereof to the Director of 
Practice or to any officer or employee of the Bureau.
    (b) Institution of proceeding. When the Director of Practice has 
reason to believe that any attorney, certified public accountant, or 
enrolled practitioner has violated any provisions of the laws or 
regulations governing practice before the Bureau, he or she may 
reprimand the person or institute a proceeding for the disbarment or 
suspension of that person. The proceeding will be instituted by a 
complaint which names the respondent and is signed by the Director of 
Practice and filed in his or her office. Except in cases of willfulness, 
or when time, the nature of the proceeding, or the public interest does 
not permit, the Director of Practice may not institute a proceeding 
until he or she has called to the attention of the proposed respondent, 
in writing, facts or conduct which warrant institution of a proceeding, 
and has accorded the proposed respondent the opportuity to demonstrate 
or achieve compliance with all lawful requirements.



Sec. 8.54  Conferences.

    (a) General. The Director of Practice may confer with an attorney, 
certified public accountant, or enrolled practioner concerning 
allegations of misconduct whether or not a proceeding for disbarment or 
suspension has been instituted. If a conference results in a stipulation 
in connection with a proceeding in which that person is the respondent, 
the stipulation may be entered in the record at the instance of either 
party to the proceeding.
    (b) Resignation or voluntary suspension. An attorney, certified 
public accountant, or enrolled practitioner, in order to avoid the 
institution or conclusion of a disbarment or suspension proceeding, may 
offer his or her consent to suspension from practice before the Bureau. 
An enrolled practitioner may also offer a resignation. The Director of 
Practice, at his or her discretion, may accept the offered resignation 
of an enrolled practitioner and may suspend an attorney, certified 
public accountant, or enrolled practitioner in accordance with the 
consent offered.



Sec. 8.55  Contents of complaint.

    (a) Charges. A complaint will give a plain and concise description 
of the allegations which constitute the basis for the proceeding. A 
complaint will be deemed sufficient if it fairly informs the respondent 
of the charges to that he or she is able to prepare a defense.
    (b) Demand for answer. The complaint will give notification of the 
place and time prescribed for the filing of an answer by the respondent; 
that time will be not less than 15 days from the date of service of the 
complaint. Notice will be given that a decision by default may be 
rendered against the respondent if the complaint is not answered as 
required.



Sec. 8.56  Service of complaint and other papers.

    (a) Complaint. A copy of the complaint may be served upon the 
respondent by certified mail or by first-class mail. The copy of the 
complaint may be delivered to the respondent or the respondent's 
attorney or agent of record either in person or by leaving it at the 
office or place of business of the respondent, attorney or agent, or the 
complaint may be delivered in any manner which has been agreed to by the 
respondent. If the service is by certified mail, the post office receipt 
signed by or on behalf of the respondent will be proof of service. If 
the certified matter is not claimed or accepted by the respondent and is 
returned undelivered, complete service may be made upon the respondent 
by mailing the complaint to him or her by first-class mail, addressed to 
the respondent at the address under which he or she is enrolled or at 
the last address known to the Director of Practice. If service is made 
upon the respondent or the respondent's attorney or agent in person, or 
by leaving the complaint at the office or place of business of the 
respondent, attorney or agent, the verified return by the person making 
service, setting forth the manner of service, will be proof of service.
    (b) Service of other papers. Any paper other than the complaint may 
be

[[Page 125]]

served upon an attorney, certified public accountant, or enrolled 
practitioner as provided in paragraph (a) of this section, or by mailing 
the paper by first-class mail to the respondent at the last address 
known to the Director of Practice, or by mailing the paper by first-
class mail to the respondent's attorney or agent of record. This mailing 
will constitute complete service. Notices may be served upon the 
respondent or his attorney or agent by telegram.
    (c) Filing of papers. When the filing of a paper is required or 
permitted in connection with a disbarment or suspension proceeding, and 
the place of filing is not specified by this subpart or by rule or order 
of the Administrative Law Judge, the papers will be filed with the 
Director of Practice, Treasury Department, Washington, DC 20220. All 
papers will be filed in duplicate.



Sec. 8.57  Answer.

    (a) Filing. The respondent shall file the answer in writing within 
the time specified in the complaint or notice of institution of the 
proceeding, unless on application the time is extended by the Director 
of Practice or the Administrative Law Judge. The respondent shall file 
the answer in duplicate with the director of Practice.
    (b) Contents. The respondent shall include in the answer a statement 
of facts which constitute the grounds of defense, and shall specifically 
admit or deny each allegation set forth in the complaint, except that 
the respondent shall not deny a material allegation in the complaint 
which he or she knows to be true, or state that he or she is without 
sufficient information to form a belief when in fact the respondent 
possesses that information. The respondent may also state affirmatively 
special matters of defense.
    (c) Failure to deny or answer allegations in the complaint. Every 
allegation in the complaint which is not denied in the answer is deemed 
to be admitted and may be considered as proven, and no further evidence 
in respect of that allegation need be adduced at a hearing. Failure to 
file an answer within the time prescribed in the notice to the 
respondent, except as the time for answer is extended by the Director of 
Practice or the Administrative Law Judge, will constitute an admission 
of the allegations of the complaint and a waiver of hearing, and the 
Administrative Law Judge may make a decision by default without a 
hearing or further procedure.
    (d) Reply by Director of Practice. No reply to the respondent's 
answer is required, and new matter in the answer will be deemed to be 
denied, but the Director of Practice may file a reply at his or her 
discretion or at the request of the Administrative Law Judge.



Sec. 8.58  Supplemental charges.

    If it appears that the respondent in his or her answer, falsely and 
in bad faith, denies a material allegation of fact in the complaint or 
states that the respondent has no knowledge sufficient to form a belief, 
when he or she in fact possesses that information, or if it appears that 
the respondent has knowingly introduced false testimony during 
proceedings for his or her disbarment or suspension, the Director of 
Practice may file supplemental charges against the respondent. These 
supplemental charges may be tried with other charges in the case, 
provided the respondent is given due notice and is afforded an 
opportunity to prepare to a defense to them.



Sec. 8.59  Proof; variance; amendment of pleadings.

    In the case of a variance between the allegations in a pleading, the 
Administrative Law Judge may order or authorize amendment of the 
pleading to conform to the evidence. The party who would otherwise be 
prejudiced by the amendment will be given reasonable opportunty to meet 
the allegation of the pleading as amended, and the Administrative Law 
Judge shall make findings on an issue presented by the pleadings as so 
amended.



Sec. 8.60  Motions and requests.

    Motions and requests may be filed with the Director of Practice or 
with the Administrative Law Judge.



Sec. 8.61  Representation.

    A respondent or proposed respondent may appear in person or be 
represented by counsel or other representative who need not be enrolled 
to practice before

[[Page 126]]

the Bureau. The Director of Practice may be represented by an Attorney 
or other employee of the Treasury Department.



Sec. 8.62  Administrative Law Judge.

    (a) Appointment. An Administrative Law Judge, appointed as provided 
by 5 U.S.C. 3105, shall conduct proceedings upon complaints for the 
disbarment or suspension of attorneys, certified public accountants, or 
enrolled practitioners.
    (b) Responsibilities. The Administrative Law Judge in connection 
with any disbarment or suspension proceeding shall have authority to:
    (1) Administer oaths and affirmation;
    (2) Make rulings upon motions and requests; these rulings may not be 
appealed prior to the close of the hearing except at the discretion of 
the Administrative Law Judge in extraordinary circumstances;
    (3) Rule upon offers of proof, receive relevant evidence, and 
examine witnesses;
    (4) Take or authorize to the taking of depositions;
    (5) Determine the time and place of hearing and regulate its course 
and conduct;
    (6) Hold or provide for the holding of conferences to settle or 
simplify the issues by consent of the parties;
    (7) Receive and consider oral or written arguments on facts or law;
    (8) Make initial decisions;
    (9) Adopt rules of procedure and modify them from time to time as 
occasion requires for the orderly disposition of proceedings; and
    (10) Perform acts and take measures as necessary to promote the 
efficient conduct of any proceeding.



Sec. 8.63  Hearings.

    (a) Conduct. The Administrative Law Judge shall preside at the 
hearing on a complaint for the disbarment or suspension of an attorney, 
certified public accountant, or enrolled practitioner. Hearings will be 
stenographically recorded and transcribed and the testimony of witnesses 
will be received under oath or affirmation. The Administrative Law Judge 
shall conduct hearings pursuant to 5 U.S.C. 556.
    (b) Failure to appear. If either party to the proceedings fails to 
appear at the hearing, after due notice has been sent, the 
Administrative Law Judge may deem them to have waived the right to a 
hearing and may make a decision against the absent party by default.



Sec. 8.64  Evidence.

    (a) Rules of evidence. The rules of evidence prevailing in courts of 
law and equity are not controlling in hearings. However, the 
Administrative Law Judge shall exclude evidence which is irrelevant, 
immaterial, or unduly repetitious.
    (b) Depositions. Depositions of witnesses taken pursuant to Sec. 
8.65 may be admitted as evidence.
    (c) Government documents. Official documents, records, and papers of 
the Bureau of Alcohol, Tobacco and Firearms and the Office of the 
Director of Practice are admissible in evidence without the prouction of 
an officer or employee to authenticate them. These documents, records 
and papers may be evidenced by a copy attested or identified by an 
officer or employee of the Bureau or the Treasury Department.
    (d) Exhibits. If any document, record, or other paper is introduced 
in evidence as an exhibit, the Administrative Law Judge may authorize 
the withdrawal of the exhibit subject to any conditions he or she deems 
proper.
    (e) Objections. Objections to evidence will be in short form, 
stating the grounds of objection and the record may not include 
arguments thereon, except as ordered by the Administrative Law Judge. 
Rulings on objections will be a part of the record. No exception to the 
ruling is necessary to preserve the rights of the parties.



Sec. 8.65  Depositions.

    Depositions for use at a hearing may, with the written approval of 
the Administrative Law Judge, be taken by either the Director of 
Practice or the respondent or their authorized representatives. 
Depositions may be taken upon oral or written questioning, upon not less 
than 10 days' written notice to the other party before any officer 
authorized to administer an oath for general purposes or before an 
officer or

[[Page 127]]

employee of the Bureau authorized to administer an oath pursuant to 27 
CFR 70.35. The written notice will state the names of the witnesses and 
the time and place where the depositions are to be taken. The 
requirement of 10 days' notice may be waived by the parties in writing, 
and depositions may then be taken from the persons and at the times and 
places mutually agreed to by the parties. When a deposition is taken 
upon written questioning, any cross-examination will be upon written 
questioning. Copies of the written questioning will be served upon the 
other party with the notice, and copies of any written cross-
interrogation will be mailed or delivered to the opposing party at least 
5 days before the date of taking the depositions, unless the parties 
mutually agree otherwise. A party on whose behalf a deposition is taken 
must file it with the Administrative Law Judge and serve one copy upon 
the opposing party. Expenses in the reproduction of depositions will be 
borne by the party at whose instance the deposition is taken.



Sec. 8.66  Transcript.

    In cases in which the hearing is stenographically reported by a 
Government contract reporter, copies of the transcript may be obtained 
from the reporter at rates not to exceed the maximum rates fixed by 
contract between the Government and the reporter. If the hearing is 
stenographically reported by a regular employee of the Bureau, a copy of 
the hearing will be supplied to the respondent either without charge or 
upon the payment of a reasonable fee. Copies of exhibits introduced at 
the hearing or at the taking of depositions will be supplied to the 
parties upon the payment of a reasonable fee.

(Sec. 501, Pub. L. 82-137, 65 Stat. 290 (31 U.S.C. 483a))



Sec. 8.67  Proposed findings and conclusions.

    Except in cases when the respondent has failed to answer the 
complaint or when a party has failed to appear at the hearing, the 
Administrative Law Judge, prior to making his or her decision, shall 
afford the parties a reasonable opportunity to submit proposed findings 
and conclusions and their supporting reasons.



Sec. 8.68  Decision of Administrative Law Judge.

    As soon as practicable after the conclusion of a hearing and the 
receipt of any proposed findings and conclusions timely submitted by the 
parties, the Administrative Law Judge shall make the initial decision in 
the case. The decision will include (a) a statement of findings and 
conclusions, as well as the reasons or basis therefor, upon all the 
material issues of fact, law, or discretion presented on the record, and 
(b) an order of disbarment, suspension, or reprimand or an order of 
dismissal of the complaint. The Administrative Law Judge shall file the 
decision with the Director of Practice and shall transmit a copy to the 
respondent or the respondent's attorney of record. In the absence of an 
appeal to the Secretary, or review of the decision upon motion of the 
Secretary, the decision of the Administrative Law Judge will, without 
further proceedings, become the decision of the Secretary of the 
Treasury 30 days from the date of the Administrative Law Judge's 
decision.



Sec. 8.69  Appeal to the Secretary.

    Within 30 days from the date of the Administrative Law Judge's 
decision, either party may appeal to the Secretary. The appeal will be 
filed with the Director of Practice in duplicate and will include 
exceptions to the decision of the Administrative Law Judge and 
supporting reasons for those exceptions. If the Director of Practice 
files the appeal, he or she shall transmit a copy of it to the 
respondent. Within 30 days after receipt of an appeal or copy thereof, 
the other party may file a reply brief in duplicate with the Director of 
Practice. If the Director of Practice files the reply brief, he or she 
shall transmit a copy of it to the respondent. Upon the filing of an 
appeal and a reply brief, if any, the Director of Practice shall 
transmit the entire record to the Secretary.



Sec. 8.70  Decision of the Secretary.

    On appeal from or review of the intial decision of the 
Administrative Law Judge, the Secretary shall make the

[[Page 128]]

agency decision. In making this decision, the Secretary shall review the 
record or those portions of the records as may be cited by the parties 
in order to limit the issues. The Director of Prasctice shall transmit a 
copy of the Secretary's decision to the respondent.



Sec. 8.71  Effect of disbarment or suspension.

    (a) Disbarment. If the final order against the respondent is for 
disbarment, the respondent will not thereafter be permitted to practice 
before the Bureau unless authorized to do so by the Director of Practice 
pursuant to Sec. 8.72.
    (b) Suspension. If the final order against the respondent is for 
suspension, the respondent will not thereafter be permitted to practice 
before the Bureau during the period of suspension.
    (c) Surrender of enrollment card. If an enrolled practitioner is 
disbarred or suspended, he or she shall surrender the enrollment card to 
the Director of Practice for cancellation, in the case of disbarment, or 
for retention during the period of suspension.
    (d) Notice of disbarment or suspension. Upon the issuance of a final 
order for suspension or disbarment, the Director of Practice shall give 
notice of the order to appropriate officers and employees of the Bureau 
of Alcohol, Tobacco and Firearms and to interested departments and 
agencies of the Federal Government. The Director of Practice may also 
give notice as he or she may determine to the proper authorities of the 
State in which the disbarred or suspended person was licensed to 
practice as an attorney or certified public accountant.



Sec. 8.72  Petition for reinstatement.

    The Director of Practice may entertain a petition for reinstatement 
from any person disbarred from practice before the Bureau after the 
expiration of 5 years following disbarment. The director of Practice may 
not grant reinstatement unless he or she is satisfied that the 
petitioner is not likely to conduct himself or herself contrary to the 
regulations in this part, and that granting reinstatement would not be 
contrary to the public interest.



PART 9_EFFECTS OF IMPORTED ARTICLES ON THE NATIONAL SECURITY--Table of 

Contents




Sec.
9.2 Definitions.
9.3 General.
9.4 Criteria for determining effects of imports on national security.
9.5 Applications for investigation.
9.6 Confidential information.
9.7 Conduct of investigation.
9.8 Emergency action.
9.9 Report.

    Authority: Sec. 232, as amended, 76 Stat. 877, 80 Stat. 369 (19 
U.S.C. 1862); 5 U.S.C. 301; Reorg. Plan No. 1 of 1973; and E.O. 11725, 
June 27, 1973 (38 FR 17175).



Sec. 9.2  Definitions.

    As used herein, Secretary means the Secretary of the Treasury and 
Assistant Secretary means the Assistant Secretary of the Treasury 
(Enforcement, Operations, and Tariff Affairs).

[40 FR 50717, Oct. 31, 1975]



Sec. 9.3  General.

    (a) Upon request of the head of any Government department or agency, 
upon application of an interested party, or upon his own motion, the 
Assistant Secretary shall set in motion an immediate investigation to 
determine the effects on the national security of imports of any 
article.
    (b) The Secretary shall report the findings of his investigation 
under paragraph (a) of this section with respect to the effect of the 
importation of such article in such quantities or under such 
circumstances upon the national security and, based on such findings, 
his recommendation for action or inaction to the President within one 
year after receiving an application from an interested party or 
otherwise beginning an investigation under this section.

[39 FR 10898, Mar. 22, 1974, as amended at 40 FR 50717, Oct. 31, 1975]



Sec. 9.4  Criteria for determining effects of imports on national security.

    (a) In determining the effect on the national security of imports of 
the article which is the subject of the investigation, the Secretary is 
required to take into consideration the following:

[[Page 129]]

    (1) Domestic production needed for projected national defense 
requirements including restoration and rehabilitation.
    (2) The capacity of domestic industries to meet such projected 
requirements, including existing and anticipated availabilities of:
    (i) Human resources.
    (ii) Products.
    (iii) Raw materials.
    (iv) Production equipment and facilities.
    (v) Other supplies and services essential to the national defense.
    (3) The requirement of growth of such industries and such supplies 
and services including the investment, exploration and development 
necessary to assure capacity to meet projected defense requirements.
    (4) The effect which the quantities, availabilities, character and 
uses of imported goods have or will have on such industries and the 
capacity of the United States to meet national security requirements.
    (5) The economic welfare of the Nation as it is related to our 
national security, including the impact of foreign competition on the 
economic welfare of individual domestic industries. In determining 
whether such impact may impair the national security, any substantial 
unemployment, decrease in revenues of government, loss of skills or 
investment, or other serious effects shall be considered.
    (b) The Secretary shall also consider other relevant factors in 
determining whether the national security is affected by imports of the 
article.

[39 FR 10898, Mar. 22, 1974]



Sec. 9.5  Applications for investigation.

    (a) Applications shall be in writing. Twenty-five copies shall be 
filed by mail with the Assistant Secretary (Enforcement, Operations, and 
Tariff Affairs), Department of the Treasury, Washington, DC 20220.
    (b) Applications shall describe how the quantities or circumstances 
of imports of the particular article affect the national security and 
shall contain the following information:
    (1) Identification of the person, partnership, association, 
corporation, or other entity on whose behalf the application is filed.
    (2) A precise description of the article.
    (3) Description of the applicant and the domestic industry 
concerned, including pertinent information regarding companies and their 
plants, locations, capacity and current output of the domestic industry 
concerned with the article in question.
    (4) Pertinent statistics showing the quantities and values of both 
imports and production in the United States.
    (5) Nature, sources, and degree of the competition created by 
imports of the article in question.
    (6) The effect, if any, of imports of the article in question upon 
the restoration of domestic production capacity in an emergency.
    (7) Employment and special skills involved in the domestic 
production of the article.
    (8) Extent to which investment and specialized productive capacity 
is or will be adversely affected.
    (9) Revenues of Federal, State, or local Governments which are or 
may be affected by the volume or circumstances of imports of the 
article.
    (10) Defense or defense supporting uses of the article including 
data on defense contracts or sub-contracts, both past and current.
    (c) Statistical material presented should be on a calendar-year 
basis for sufficient periods of time to indicate trends and afford the 
greatest possible assistance to the Assistant Secretary. Monthly or 
quarterly data for the latest complete years should be included as well 
as any other breakdowns which may be pertinent to show seasonal or 
short-term factors.

[39 FR 10898, Mar. 22, 1974, as amended at 40 FR 50717, Oct. 31, 1975]



Sec. 9.6  Confidential information.

    Information submitted in confidence which the Assistant Secretary 
determines would disclose trade secrets and commercial or financial 
information obtained from a person and privileged, within the meaning of 
5 U.S.C. 552 and 31 CFR part 1, will be accorded confidential treatment. 
All information submitted in confidence must be on

[[Page 130]]

separate pages marked ``Business Confidential.''

[40 FR 50717, Oct. 31, 1975]



Sec. 9.7  Conduct of investigation.

    (a) The investigation by the Assistant Secretary or by such official 
or agency as he may designate, shall be such as to enable the Secretary 
to arrive at a fully informed opinion as to the effect on the national 
security of imports of the article in question.
    (b) If the Assistant Secretary determines that it is appropriate to 
hold public hearings or otherwise afford interested parties an 
opportunity to present information and advice relevant to an 
investigation, he shall issue a public notice which shall be published 
in the Federal Register. Such notice shall include a statement of the 
time, place and nature of any public hearing or shall solicit from any 
interested party written comments, opinions, or data relative to the 
investigation, to be submitted to the Assistant Secretary within the 
time period specified in the notice. Rebuttal to material so submitted 
may be filed with the Assistant Secretary within such time as is 
specified in the public notice. All data, comments and opinions shall be 
submitted with 25 copies.
    (c) All applications filed and all comments, opinions, and data 
submitted pursuant to paragraph (b) of this section, except information 
determined to be confidential as provided in Sec. 9.6, will be 
available for inspection and copying at the Office of the Assistant 
Secretary (Enforcement, Operations, and Tariff Affairs), Department of 
the Treasury, in Washington, DC. The Assistant Secretary will maintain a 
roster of persons who have submitted materials.
    (d) The Assistant Secretary or his designee may also request further 
data from other sources through the use of questionnaires, 
correspondence, or other means.
    (e) The Assistant Secretary or his delegate shall, in the course of 
the investigation, seek information or advice from, and consult with, 
the Secretary of Defense, the Secretary of Commerce, or their delegates, 
and any other appropriate officer of the United States as the Assistant 
Secretary shall determine.
    (f) In addition, the Assistant Secretary, or his designee, may, when 
he deems it appropriate, hold public hearings to elicit further 
information. If a hearing is held:
    (1) The time and place thereof will be published in the Federal 
Register.
    (2) It will be conducted by the Assistant Secretary or his designee, 
and the full record will be considered by the Secretary in arriving at 
his determination.
    (3) Interested parties may appear, either in person or by 
representation, and produce oral or written evidence relevant and 
material to the subject matter of the investigation.
    (4) After a witness has testified the Assistant Secretary or his 
designee may question the witness. Questions submitted to the Assistant 
Secretary or his designee in writing by any interested party may, at the 
discretion of the Assistant Secretary or his designee, be posed to the 
witness for reply for the purpose of assisting the Assistant Secretary 
in obtaining the material facts with respect to the subject matter of 
the investigation.
    (5) The hearing will be stenographically reported. The Assistant 
Secretary will not cause transcripts of the record of the hearing to be 
distributed to the interested parties, but a transcript may be inspected 
at the Office of the Assistant Secretary (Enforcement, Operations, and 
Tariff Affairs), Department of the Treasury, in Washington, DC, or 
purchased from the reporter.

[39 FR 10898, Mar. 22, 1974, as amended at 40 FR 50717, Oct. 31, 1975]



Sec. 9.8  Emergency action.

    In emergency situations or when in his judgment national security 
interests require it, the Secretary may vary or dispense with any of the 
procedures set forth above and may formulate his views without following 
such procedures.

[39 FR 10898, Mar. 22, 1974]



Sec. 9.9  Report.

    A report will be made and published in the Federal Register upon the 
disposition of each request, application or motion under Sec. 9.3. 
Copies of the report will be available at the Office of the

[[Page 131]]

Assistant Secretary (Enforcement, Operations, and Tariff Affairs), 
Department of the Treasury.

[40 FR 50718, Oct. 31, 1975]



PART 10_PRACTICE BEFORE THE INTERNAL REVENUE SERVICE--Table of Contents




Sec.
10.0 Scope of part.

             Subpart A_Rules Governing Authority to Practice

10.1 Director of the Office of Professional Responsibility.
10.2 Definitions.
10.3 Who may practice.
10.4 Eligibility for enrollment as enrolled agent or enrolled retirement 
          plan agent.
10.5 Application for enrollment as an enrolled agent or enrolled 
          retirement plan agent.
10.6 Enrollment as an enrolled agent or enrolled retirement plan agent.
10.7 Representing oneself; participating in rulemaking; limited 
          practice; special appearances; and return preparation.
10.8 Customhouse brokers.

   Subpart B_Duties and Restrictions Relating to Practice Before the 
                        Internal Revenue Service

10.20 Information to be furnished.
10.21 Knowledge of client's omission.
10.22 Diligence as to accuracy.
10.23 Prompt disposition of pending matters.
10.24 Assistance from or to disbarred or suspended persons and former 
          Internal Revenue Service employees.
10.25 Practice by former government employees, their partners and their 
          associates.
10.26 Notaries.
10.27 Fees.
10.28 Return of client's records.
10.29 Conflicting interests.
10.30 Solicitation.
10.31 Negotiation of taxpayer checks.
10.32 Practice of law.
10.33 Best practices for tax advisors.
10.34 Standards with respect to tax returns and documents, affidavits 
          and other papers.
10.35 Requirements for covered opinions.
10.36 Procedures to ensure compliance.
10.37 Requirements for other written advice.
10.38 Establishment of advisory committees.

          Subpart C_Sanctions for Violation of the Regulations

10.50 Sanctions.
10.51 Incompetence and disreputable conduct.
10.52 Violations subject to sanction.
10.53 Receipt of information concerning practitioner.

         Subpart D_Rules Applicable to Disciplinary Proceedings

10.60 Institution of proceeding.
10.61 Conferences.
10.62 Contents of complaint.
10.63 Service of complaint; service of other papers; service of evidence 
          in support of complaint; filing of papers.
10.64 Answer; default.
10.65 Supplemental charges.
10.66 Reply to answer.
10.67 Proof; variance; amendment of pleadings.
10.68 Motions and requests.
10.69 Representation; ex parte communication.
10.70 Administrative Law Judge.
10.71 Discovery.
10.72 Hearings.
10.73 Evidence.
10.74 Transcript.
10.75 Proposed findings and conclusions.
10.76 Decision of Administrative Law Judge.
10.77 Appeal of decision of Administrative Law Judge.
10.78 Decision on review.
10.79 Effect of disbarment, suspension, or censure.
10.80 Notice of disbarment, suspension, censure, or disqualification.
10.81 Petition for reinstatement.
10.82 Expedited suspension.

                      Subpart E_General Provisions

10.90 Records.
10.91 Saving provision.
10.92 Special orders.
10.93 Effective date.

    Authority: Sec. 3, 23 Stat. 258, secs. 2-12, 60 Stat. 237 et seq.; 5 
U.S.C. 301, 500, 551-559; 31 U.S.C. 330; Reorg. Plan No. 26 of 1950, 15 
FR 4935, 64 Stat. 1280, 3 CFR, 1949-1953 Comp., p. 1017.

    Source: Department Circular 230, Revised, 31 FR 10773, Aug. 13, 
1966, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 10 appear by T.D. 9359, 
72 FR 54544, Sept. 26, 2007.



Sec. 10.0  Scope of part.

    This part contains rules governing the recognition of attorneys, 
certified

[[Page 132]]

public accountants, enrolled agents, and other persons representing 
clients before the Internal Revenue Service. Subpart A of this part sets 
forth rules relating to authority to practice before the Internal 
Revenue Service; subpart B of this part prescribes the duties and 
restrictions relating to such practice; subpart C of this part contains 
rules relating to disciplinary proceedings; subpart D of this part 
contains rules applicable to disqualification of appraisers; and Subpart 
E of this part contains general provisions, including provisions 
relating to the availability of official records.

[59 FR 31526, June 20, 1994]



             Subpart A_Rules Governing Authority to Practice

    Source: T.D. 9011, 67 FR 48765, July 26, 2002, unless otherwise 
noted.



Sec. 10.1  Director of the Office of Professional Responsibility.

    (a) Establishment of office. The Office of Professional 
Responsibility is established in the Internal Revenue Service. The 
Director of the Office of Professional Responsibility is appointed by 
the Secretary of the Treasury, or delegate.
    (b) Duties. The Director of the Office of Professional 
Responsibility acts on applications for enrollment to practice before 
the Internal Revenue Service; makes inquiries with respect to matters 
under the Director's jurisdiction; institutes and provides for the 
conduct of disciplinary proceedings relating to practitioners (and 
employers, firms or other entities, if applicable) and appraisers; and 
performs other duties as are necessary or appropriate to carry out the 
functions under this part or as are otherwise prescribed by the 
Secretary of the Treasury, or delegate.
    (c) Acting Director of the Office of Professional Responsibility. 
The Secretary of the Treasury, or delegate, will designate an officer or 
employee of the Treasury Department to act as Director of the Office of 
Professional Responsibility in the absence of the Director or during a 
vacancy in that office.
    (d) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54544, Sept. 26, 2007]



Sec. 10.2  Definitions.

    (a) As used in this part, except where the text provides otherwise--
    (1) Attorney means any person who is a member in good standing of 
the bar of the highest court of any state, territory, or possession of 
the United States, including a Commonwealth, or the District of 
Columbia.
    (2) Certified public accountant means any person who is duly 
qualified to practice as a certified public accountant in any state, 
territory, or possession of the United States, including a Commonwealth, 
or the District of Columbia.
    (3) Commissioner refers to the Commissioner of Internal Revenue.
    (4) Practice before the Internal Revenue Service comprehends all 
matters connected with a presentation to the Internal Revenue Service or 
any of its officers or employees relating to a taxpayer's rights, 
privileges, or liabilities under laws or regulations administered by the 
Internal Revenue Service. Such presentations include, but are not 
limited to, preparing and filing documents, corresponding and 
communicating with the Internal Revenue Service, rendering written 
advice with respect to any entity, transaction, plan or arrangement, or 
other plan or arrangement having a potential for tax avoidance or 
evasion, and representing a client at conferences, hearings and 
meetings.
    (5) Practitioner means any individual described in paragraphs (a), 
(b), (c), (d) or (e) of Sec. 10.3.
    (6) A tax return includes an amended tax return and a claim for 
refund.
    (7) Service means the Internal Revenue Service.
    (b) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54544, Sept. 26, 2007]

[[Page 133]]



Sec. 10.3  Who may practice.

    (a) Attorneys. Any attorney who is not currently under suspension or 
disbarment from practice before the Internal Revenue Service may 
practice before the Internal Revenue Service by filing with the Internal 
Revenue Service a written declaration that the attorney is currently 
qualified as an attorney and is authorized to represent the party or 
parties. Notwithstanding the preceding sentence, attorneys who are not 
currently under suspension or disbarment from practice before the 
Internal Revenue Service are not required to file a written declaration 
with the IRS before rendering written advice covered under Sec. 10.35 
or Sec. 10.37, but their rendering of this advice is practice before 
the Internal Revenue Service.
    (b) Certified public accountants. Any certified public accountant 
who is not currently under suspension or disbarment from practice before 
the Internal Revenue Service may practice before the Internal Revenue 
Service by filing with the Internal Revenue Service a written 
declaration that the certified public accountant is currently qualified 
as a certified public accountant and is authorized to represent the 
party or parties. Notwithstanding the preceding sentence, certified 
public accountants who are not currently under suspension or disbarment 
from practice before the Internal Revenue Service are not required to 
file a written declaration with the IRS before rendering written advice 
covered under Sec. 10.35 or Sec. 10.37, but their rendering of this 
advice is practice before the Internal Revenue Service.
    (c) Enrolled agents. Any individual enrolled as an agent pursuant to 
this part who is not currently under suspension or disbarment from 
practice before the Internal Revenue Service may practice before the 
Internal Revenue Service.
    (d) Enrolled actuaries. (1) Any individual who is enrolled as an 
actuary by the Joint Board for the Enrollment of Actuaries pursuant to 
29 U.S.C. 1242 who is not currently under suspension or disbarment from 
practice before the Internal Revenue Service may practice before the 
Internal Revenue Service by filing with the Internal Revenue Service a 
written declaration stating that he or she is currently qualified as an 
enrolled actuary and is authorized to represent the party or parties on 
whose behalf he or she acts.
    (2) Practice as an enrolled actuary is limited to representation 
with respect to issues involving the following statutory provisions in 
title 26 of the United States Code: sections 401 (relating to 
qualification of employee plans), 403(a) (relating to whether an annuity 
plan meets the requirements of section 404(a)(2)), 404 (relating to 
deductibility of employer contributions), 405 (relating to qualification 
of bond purchase plans), 412 (relating to funding requirements for 
certain employee plans), 413 (relating to application of qualification 
requirements to collectively bargained plans and to plans maintained by 
more than one employer), 414 (relating to definitions and special rules 
with respect to the employee plan area), 419 (relating to treatment of 
funded welfare benefits), 419A (relating to qualified asset accounts), 
420 (relating to transfers of excess pension assets to retiree health 
accounts), 4971 (relating to excise taxes payable as a result of an 
accumulated funding deficiency under section 412), 4972 (relating to tax 
on nondeductible contributions to qualified employer plans), 4976 
(relating to taxes with respect to funded welfare benefit plans), 4980 
(relating to tax on reversion of qualified plan assets to employer), 
6057 (relating to annual registration of plans), 6058 (relating to 
information required in connection with certain plans of deferred 
compensation), 6059 (relating to periodic report of actuary), 6652(e) 
(relating to the failure to file annual registration and other 
notifications by pension plan), 6652(f) (relating to the failure to file 
information required in connection with certain plans of deferred 
compensation), 6692 (relating to the failure to file actuarial report), 
7805(b) (relating to the extent to which an Internal Revenue Service 
ruling or determination letter coming under the statutory provisions 
listed here will be applied without retroactive effect); and 29 U.S.C. 
1083 (relating to the waiver of funding for nonqualified plans).
    (3) An individual who practices before the Internal Revenue Service 
pursuant to paragraph (d)(1) of this section is

[[Page 134]]

subject to the provisions of this part in the same manner as attorneys, 
certified public accountants and enrolled agents.
    (e) Enrolled Retirement Plan Agents--(1) Any individual enrolled as 
a retirement plan agent pursuant to this part who is not currently under 
suspension or disbarment from practice before the Internal Revenue 
Service may practice before the Internal Revenue Service.
    (2) Practice as an enrolled retirement plan agent is limited to 
representation with respect to issues involving the following programs: 
Employee Plans Determination Letter program; Employee Plans Compliance 
Resolution System; and Employee Plans Master and Prototype and Volume 
Submitter program. In addition, enrolled retirement plan agents are 
generally permitted to represent taxpayers with respect to IRS forms 
under the 5300 and 5500 series which are filed by retirement plans and 
plan sponsors, but not with respect to actuarial forms or schedules.
    (3) An individual who practices before the Internal Revenue Service 
pursuant to paragraph (e)(1) of this section is subject to the 
provisions of this part in the same manner as attorneys, certified 
public accountants and enrolled agents.
    (f) Others. Any individual qualifying under paragraph (d) of Sec. 
10.5 or Sec. 10.7 is eligible to practice before the Internal Revenue 
Service to the extent provided in those sections.
    (g) Government officers and employees, and others. An individual, 
who is an officer or employee of the executive, legislative, or judicial 
branch of the United States Government; an officer or employee of the 
District of Columbia; a Member of Congress; or a Resident Commissioner 
may not practice before the Internal Revenue Service if such practice 
violates 18 U.S.C. 203 or 205.
    (h) State officers and employees. No officer or employee of any 
State, or subdivision of any State, whose duties require him or her to 
pass upon, investigate, or deal with tax matters for such State or 
subdivision, may practice before the Internal Revenue Service, if such 
employment may disclose facts or information applicable to Federal tax 
matters.
    (i) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54545, Sept. 26, 2007]



Sec. 10.4  Eligibility for enrollment as enrolled agent or enrolled retirement 

plan agent.

    (a) Enrollment as an enrolled agent upon examination. The Director 
of the Office of Professional Responsibility may grant enrollment as an 
enrolled agent to an applicant who demonstrates special competence in 
tax matters by written examination administered by, or administered 
under the oversight of, the Director of the Office of Professional 
Responsibility and who has not engaged in any conduct that would justify 
the censure, suspension, or disbarment of any practitioner under the 
provisions of this part.
    (b) Enrollment as a retirement plan agent upon examination. The 
Director of the Office of Professional Responsibility may grant 
enrollment as an enrolled retirement plan agent to an applicant who 
demonstrates special competence in qualified retirement plan matters by 
written examination administered by, or administered under the oversight 
of, the Director of the Office of Professional Responsibility and who 
has not engaged in any conduct that would justify the censure, 
suspension, or disbarment of any practitioner under the provisions of 
this part.
    (c) Enrollment of former Internal Revenue Service employees. The 
Director of the Office of Professional Responsibility may grant 
enrollment as an enrolled agent or enrolled retirement plan agent to an 
applicant who, by virtue of past service and technical experience in the 
Internal Revenue Service, has qualified for such enrollment and who has 
not engaged in any conduct that would justify the censure, suspension, 
or disbarment of any practitioner under the provisions of this part, 
under the following circumstances--
    (1) The former employee applies for enrollment to the Director of 
the Office of Professional Responsibility on a form supplied by the 
Director of the Office of Professional Responsibility and supplies the 
information requested on

[[Page 135]]

the form and such other information regarding the experience and 
training of the applicant as may be relevant.
    (2) An appropriate office of the Internal Revenue Service, at the 
request of the Director of the Office of Professional Responsibility, 
will provide the Director of the Office of Professional Responsibility 
with a detailed report of the nature and rating of the applicant's work 
while employed by the Internal Revenue Service and a recommendation 
whether such employment qualifies the applicant technically or otherwise 
for the desired authorization.
    (3) Enrollment as an enrolled agent based on an applicant's former 
employment with the Internal Revenue Service may be of unlimited scope 
or it may be limited to permit the presentation of matters only of the 
particular class or only before the particular unit or division of the 
Internal Revenue Service for which the applicant's former employment has 
qualified the applicant. Enrollment as an enrolled retirement plan agent 
based on an applicant's former employment with the Internal Revenue 
Service will be limited to permit the presentation of matters only with 
respect to qualified retirement plan matters.
    (4) Application for enrollment as an enrolled agent or enrolled 
retirement plan agent based on an applicant's former employment with the 
Internal Revenue Service must be made within 3 years from the date of 
separation from such employment.
    (5) An applicant for enrollment as an enrolled agent who is 
requesting such enrollment based on former employment with the Internal 
Revenue Service must have had a minimum of 5 years continuous employment 
with the Internal Revenue Service during which the applicant must have 
been regularly engaged in applying and interpreting the provisions of 
the Internal Revenue Code and the regulations relating to income, 
estate, gift, employment, or excise taxes.
    (6) An applicant for enrollment as an enrolled retirement plan agent 
who is requesting such enrollment based on former employment with the 
Internal Revenue Service must have had a minimum of 5 years continuous 
employment with the Internal Revenue Service during which the applicant 
must have been regularly engaged in applying and interpreting the 
provisions of the Internal Revenue Code and the regulations relating to 
qualified retirement plan matters.
    (7) For the purposes of paragraphs (b)(5) and (b)(6) of this 
section, an aggregate of 10 or more years of employment in positions 
involving the application and interpretation of the provisions of the 
Internal Revenue Code, at least 3 of which occurred within the 5 years 
preceding the date of application, is the equivalent of 5 years 
continuous employment.
    (d) Natural persons. Enrollment to practice may be granted only to 
natural persons.
    (e) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54545, Sept. 26, 2007]



Sec. 10.5  Application for enrollment as an enrolled agent or enrolled 

retirement plan agent.

    (a) Form; address. An applicant for enrollment as an enrolled agent 
or enrolled retirement plan agent must apply as required by forms or 
procedures established and published by the Office of Professional 
Responsibility, including proper execution of required forms under oath 
or affirmation. The address on the application will be the address under 
which a successful applicant is enrolled and is the address to which all 
correspondence concerning enrollment will be sent.
    (b) Fee. A reasonable nonrefundable fee will be charged for each 
application for enrollment as an enrolled agent filed with the Director 
of the Office of Professional Responsibility in accordance with 26 CFR 
300.5. A reasonable nonrefundable fee will be charged for each 
application for enrollment as an enrolled retirement plan agent filed 
with the Director of the Office of Professional Responsibility.
    (c) Additional information; examination. The Director of the Office 
of Professional Responsibility, as a condition to consideration of an 
application for enrollment, may require the applicant to file additional 
information and to

[[Page 136]]

submit to any written or oral examination under oath or otherwise. The 
Director of the Office of Professional Responsibility will, on written 
request filed by an applicant, afford such applicant the opportunity to 
be heard with respect to his or her application for enrollment.
    (d) Temporary recognition. On receipt of a properly executed 
application, the Director of the Office of Professional Responsibility 
may grant the applicant temporary recognition to practice pending a 
determination as to whether enrollment to practice should be granted. 
Temporary recognition will be granted only in unusual circumstances and 
it will not be granted, in any circumstance, if the application is not 
regular on its face, if the information stated in the application, if 
true, is not sufficient to warrant enrollment to practice, or if there 
is any information before the Director of the Office of Professional 
Responsibility indicating that the statements in the application are 
untrue or that the applicant would not otherwise qualify for enrollment. 
Issuance of temporary recognition does not constitute enrollment to 
practice or a finding of eligibility for enrollment, and the temporary 
recognition may be withdrawn at any time by the Director of the Office 
of Professional Responsibility.
    (e) Appeal from denial of application. The Director of the Office of 
Professional Responsibility must inform the applicant as to the 
reason(s) for any denial of an application for enrollment. The applicant 
may, within 30 days after receipt of the notice of denial of enrollment, 
file a written appeal of the denial of enrollment with the Secretary of 
the Treasury or his or her delegate. A decision on the appeal will be 
rendered by the Secretary of the Treasury, or his or her delegate, as 
soon as practicable.
    (f) Effective/applicability date. This section is applicable to 
enrollment applications received on or after September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359,72 FR 
54544, 54546, Sept. 26, 2007]



Sec. 10.6  Enrollment as an enrolled agent or enrolled retirement plan agent.

    (a) Term of enrollment. Each individual enrolled to practice before 
the Internal Revenue Service will be accorded active enrollment status 
subject to his or her renewal of enrollment as provided in this part.
    (b) Enrollment card. The Director of the Office of Professional 
Responsibility will issue an enrollment card to each individual whose 
application for enrollment to practice before the Internal Revenue 
Service is approved after July 26, 2002. Each enrollment card will be 
valid for the period stated on the enrollment card. An individual is not 
eligible to practice before the Internal Revenue Service if his or her 
enrollment card is not valid.
    (c) Change of address. An enrolled agent or enrolled retirement plan 
agent must send notification of any change of address to the address 
specified by the Director of the Office of Professional Responsibility. 
This notification must include the enrolled agent's or enrolled 
retirement plan agent's name, prior address, new address, social 
security number or tax identification number and the date.
    (d) Renewal of enrollment. To maintain active enrollment to practice 
before the Internal Revenue Service, each individual is required to have 
the enrollment renewed. Failure to receive notification from the 
Director of the Office of Professional Responsibility of the renewal 
requirement will not be justification for the individual's failure to 
satisfy this requirement.
    (1) All individuals licensed to practice before the Internal Revenue 
Service who have a social security number or tax identification number 
that ends with the numbers 0, 1, 2, or 3, except for those individuals 
who received their initial enrollment after November 1, 2003, must apply 
for renewal between November 1, 2003, and January 31, 2004. The renewal 
will be effective April 1, 2004.
    (2) All individuals licensed to practice before the Internal Revenue 
Service who have a social security number or tax identification number 
that ends with the numbers 4, 5, or 6, except for those individuals who 
received their initial enrollment after November 1,

[[Page 137]]

2004, must apply for renewal between November 1, 2004, and January 31, 
2005. The renewal will be effective April 1, 2005.
    (3) All individuals licensed to practice before the Internal Revenue 
Service who have a social security number or tax identification number 
that ends with the numbers 7, 8, or 9, except for those individuals who 
received their initial enrollment after November 1, 2005, must apply for 
renewal between November 1, 2005, and January 31, 2006. The renewal will 
be effective April 1, 2006.
    (4) Thereafter, applications for renewal as an enrolled agent will 
be required between November 1 and January 31 of every subsequent third 
year as specified in paragraph (d)(1), (2) or (3) of this section 
according to the last number of the individual's social security number 
or tax identification number. Those individuals who receive initial 
enrollment as an enrolled agent after November 1 and before April 2 of 
the applicable renewal period will not be required to renew their 
enrollment before the first full renewal period following the receipt of 
their initial enrollment. Applications for renewal as an enrolled 
retirement plan agent will be required of all enrolled retirement plan 
agents between April 1 and June 30 of every third year period subsequent 
to their initial enrollment.
    (5) The Director of the Office of Professional Responsibility will 
notify the individual of the renewal of enrollment and will issue the 
individual a card evidencing enrollment.
    (6) A reasonable nonrefundable fee will be charged for each 
application for renewal of enrollment as an enrolled agent filed with 
the Director of the Office of Professional Responsibility in accordance 
with 26 CFR 300.6. A reasonable nonrefundable fee will be charged for 
each application for renewal of enrollment as an enrolled retirement 
plan agent filed with the Director of the Office of Professional 
Responsibility.
    (7) Forms required for renewal may be obtained by sending a written 
request to the Director of the Office of Professional Responsibility, 
Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC 
20224 or from such other source as the Director of the Office of 
Professional Responsibility will publish in the Internal Revenue 
Bulletin (see 26 CFR 601.601(d)(2)(ii)(b)) and on the Internal Revenue 
Service Web page (http://www.irs.gov).
    (e) Condition for renewal: Continuing professional education. In 
order to qualify for renewal of enrollment, an individual enrolled to 
practice before the Internal Revenue Service must certify, on the 
application for renewal form prescribed by the Director of the Office of 
Professional Responsibility, that he or she has satisfied the following 
continuing professional education requirements.
    (1) Definitions. For purposes of this section--
    (i) Enrollment year means January 1 to December 31 of each year of 
an enrollment cycle.
    (ii) Enrollment cycle means the three successive enrollment years 
preceding the effective date of renewal.
    (iii) The effective date of renewal is the first day of the fourth 
month following the close of the period for renewal described in 
paragraph (d) of this section.
    (2) For renewed enrollment effective after December 31, 2006--(i) 
Requirements for enrollment cycle. A minimum of 72 hours of continuing 
education credit must be completed during each enrollment cycle.
    (ii) Requirements for enrollment year. A minimum of 16 hours of 
continuing education credit, including 2 hours of ethics or professional 
conduct, must be completed during each enrollment year of an enrollment 
cycle.
    (iii) Enrollment during enrollment cycle--(A) In general. Subject to 
paragraph (e)(2)(iii)(B) of this section, an individual who receives 
initial enrollment during an enrollment cycle must complete 2 hours of 
qualifying continuing education credit for each month enrolled during 
the enrollment cycle. Enrollment for any part of a month is considered 
enrollment for the entire month.
    (B) Ethics. An individual who receives initial enrollment during an 
enrollment cycle must complete 2 hours of ethics or professional conduct 
for each enrollment year during the enrollment cycle. Enrollment for any 
part of an

[[Page 138]]

enrollment year is considered enrollment for the entire year.
    (f) Qualifying continuing education--(1) General--(i) Enrolled 
agents. To qualify for continuing education credit for an enrolled 
agent, a course of learning must--
    (A) Be a qualifying program designed to enhance professional 
knowledge in Federal taxation or Federal tax related matters (programs 
comprised of current subject matter in Federal taxation or Federal tax 
related matters, including accounting, tax preparation software and 
taxation or ethics);
    (B) Be a qualifying program consistent with the Internal Revenue 
Code and effective tax administration; and
    (C) Be sponsored by a qualifying sponsor.
    (ii) Enrolled retirement plan agents. To qualify for continuing 
education credit for an enrolled retirement plan agent, a course of 
learning must--
    (i) Be a qualifying program designed to enhance professional 
knowledge in qualified retirement plan matters;
    (ii) Be a qualifying program consistent with the Internal Revenue 
Code and effective tax administration; and
    (iii) Be sponsored by a qualifying sponsor.
    (2) Qualifying programs--(i) Formal programs. A formal program 
qualifies as continuing education programs if it--
    (A) Requires attendance. Additionally, the program sponsor must 
provide each attendee with a certificate of attendance; and
    (B) Requires that the program be conducted by a qualified 
instructor, discussion leader, or speaker, i.e., a person whose 
background, training, education and experience is appropriate for 
instructing or leading a discussion on the subject matter of the 
particular program; and
    (C) Provides or requires a written outline, textbook, or suitable 
electronic educational materials.
    (ii) Correspondence or individual study programs (including taped 
programs). Qualifying continuing education programs include 
correspondence or individual study programs that are conducted by 
qualifying sponsors and completed on an individual basis by the enrolled 
individual. The allowable credit hours for such programs will be 
measured on a basis comparable to the measurement of a seminar or course 
for credit in an accredited educational institution. Such programs 
qualify as continuing education programs if they--
    (A) Require registration of the participants by the sponsor;
    (B) Provide a means for measuring completion by the participants 
(e.g., a written examination), including the issuance of a certificate 
of completion by the sponsor; and
    (C) Provide a written outline, textbook, or suitable electronic 
educational materials.
    (iii) Serving as an instructor, discussion leader or speaker. (A) 
One hour of continuing education credit will be awarded for each contact 
hour completed as an instructor, discussion leader, or speaker at an 
educational program that meets the continuing education requirements of 
paragraph (f) of this section.
    (B) Two hours of continuing education credit will be awarded for 
actual subject preparation time for each contact hour completed as an 
instructor, discussion leader, or speaker at such programs. It is the 
responsibility of the individual claiming such credit to maintain 
records to verify preparation time.
    (C) The maximum credit for instruction and preparation may not 
exceed 50 percent of the continuing education requirement for an 
enrollment cycle.
    (D) An instructor, discussion leader, or speaker who makes more than 
one presentation on the same subject matter during an enrollment cycle, 
will receive continuing education credit for only one such presentation 
for the enrollment cycle.
    (iv) Credit for published articles, books, etc. (A) For enrolled 
agents, continuing education credit will be awarded for publications on 
Federal taxation or Federal tax related matters, including accounting, 
tax preparation software, and taxation or ethics, provided the content 
of such publications is current and designed for the enhancement of the 
professional knowledge of an individual enrolled to practice before the 
Internal Revenue Service. The publication must be consistent with the 
Internal Revenue Code and effective tax

[[Page 139]]

administration. For enrolled retirement plan agents, continuing 
education credit will be awarded for publications on qualified 
retirement plan matters, provided the content of such publications is 
current and designed for the enhancement of the professional knowledge 
of an individual enrolled to practice as an enrolled retirement plan 
agent before the Internal Revenue Service. The publication must be 
consistent with the Internal Revenue Code and effective tax 
administration.
    (B) The credit allowed will be on the basis of one hour credit for 
each hour of preparation time for the material. It is the responsibility 
of the person claiming the credit to maintain records to verify 
preparation time.
    (C) The maximum credit for publications may not exceed 25 percent of 
the continuing education requirement of any enrollment cycle.
    (3) Periodic examination. (i) Individuals may establish eligibility 
for renewal of enrollment for any enrollment cycle by--
    (A) Achieving a passing score on each part of the Special Enrollment 
Examination administered under this part during the three year period 
prior to renewal; and
    (B) Completing a minimum of 16 hours of qualifying continuing 
education during the last year of an enrollment cycle.
    (ii) Courses designed to help an applicant prepare for the 
examination specified in paragraph (a) of Sec. 10.4 are considered 
basic in nature and are not qualifying continuing education.
    (g) Sponsors. (1) Sponsors are those responsible for presenting 
programs.
    (2) To qualify as a sponsor, a program presenter must--
    (i) Be an accredited educational institution;
    (ii) Be recognized for continuing education purposes by the 
licensing body of any State, territory, or possession of the United 
States, including a Commonwealth, or the District of Columbia.
    (iii) Be recognized by the Director of the Office of Professional 
Responsibility as a professional organization or society whose programs 
include offering continuing professional education opportunities in 
subject matters within the scope of paragraph (f)(1)(i) of this section; 
or
    (iv) File a sponsor agreement with the Director of the Office of 
Professional Responsibility and obtain approval of the program as a 
qualified continuing education program.
    (3) A qualifying sponsor must ensure the program complies with the 
following requirements--
    (i) Programs must be developed by individual(s) qualified in the 
subject matter;
    (ii) Program subject matter must be current;
    (iii) Instructors, discussion leaders, and speakers must be 
qualified with respect to program content;
    (iv) Programs must include some means for evaluation of technical 
content and presentation;
    (v) Certificates of completion must be provided to the participants 
who successfully complete the program; and
    (vi) Records must be maintained by the sponsor to verify the 
participants who attended and completed the program for a period of 
three years following completion of the program. In the case of 
continuous conferences, conventions, and the like, records must be 
maintained to verify completion of the program and attendance by each 
participant at each segment of the program.
    (4) Professional organizations or societies wishing to be considered 
as qualified sponsors must request this status from the Director of the 
Office of Professional Responsibility and furnish information in support 
of the request together with any further information deemed necessary by 
the Director of the Office of Professional Responsibility.
    (5) Sponsor renewal--(i) In general. A sponsor maintains its status 
as a qualified sponsor during the sponsor enrollment cycle.
    (ii) Renewal period. Each sponsor must file an application to renew 
its status as a qualified sponsor between May 1 and July 31, 2008. 
Thereafter, applications for renewal will be required between May 1 and 
July 31 of every subsequent third year.
    (iii) Effective date of renewal. The effective date of renewal is 
the first day of

[[Page 140]]

the third month following the close of the renewal period.
    (iv) Sponsor enrollment cycle. The sponsor enrollment cycle is the 
three successive calendar years preceding the effective date of renewal.
    (h) Measurement of continuing education coursework. (1) All 
continuing education programs will be measured in terms of contact 
hours. The shortest recognized program will be one contact hour.
    (2) A contact hour is 50 minutes of continuous participation in a 
program. Credit is granted only for a full contact hour, i.e., 50 
minutes or multiples thereof. For example, a program lasting more than 
50 minutes but less than 100 minutes will count as one contact hour.
    (3) Individual segments at continuous conferences, conventions and 
the like will be considered one total program. For example, two 90-
minute segments (180 minutes) at a continuous conference will count as 
three contact hours.
    (4) For university or college courses, each semester hour credit 
will equal 15 contact hours and a quarter hour credit will equal 10 
contact hours.
    (i) Recordkeeping requirements. (1) Each individual applying for 
renewal must retain for a period of three years following the date of 
renewal of enrollment the information required with regard to qualifying 
continuing professional education credit hours. Such information 
includes--
    (i) The name of the sponsoring organization;
    (ii) The location of the program;
    (iii) The title of the program and description of its content;
    (iv) Written outlines, course syllibi, textbook, and/or electronic 
materials provided or required for the course;
    (v) The dates attended;
    (vi) The credit hours claimed;
    (vii) The name(s) of the instructor(s), discussion leader(s), or 
speaker(s), if appropriate; and
    (viii) The certificate of completion and/or signed statement of the 
hours of attendance obtained from the sponsor.
    (2) To receive continuing education credit for service completed as 
an instructor, discussion leader, or speaker, the following information 
must be maintained for a period of three years following the date of 
renewal of enrollment--
    (i) The name of the sponsoring organization;
    (ii) The location of the program;
    (iii) The title of the program and description of its content;
    (iv) The dates of the program; and
    (v) The credit hours claimed.
    (3) To receive continuing education credit for publications, the 
following information must be maintained for a period of three years 
following the date of renewal of enrollment--
    (i) The publisher;
    (ii) The title of the publication;
    (iii) A copy of the publication;
    (iv) The date of publication; and
    (v) Records that substantiate the hours worked on the publication.
    (j) Waivers. (1) Waiver from the continuing education requirements 
for a given period may be granted by the Director of the Office of 
Professional Responsibility for the following reasons--
    (i) Health, which prevented compliance with the continuing education 
requirements;
    (ii) Extended active military duty;
    (iii) Absence from the United States for an extended period of time 
due to employment or other reasons, provided the individual does not 
practice before the Internal Revenue Service during such absence; and
    (iv) Other compelling reasons, which will be considered on a case-
by-case basis.
    (2) A request for waiver must be accompanied by appropriate 
documentation. The individual is required to furnish any additional 
documentation or explanation deemed necessary by the Director of the 
Office of Professional Responsibility. Examples of appropriate 
documentation could be a medical certificate or military orders.
    (3) A request for waiver must be filed no later than the last day of 
the renewal application period.
    (4) If a request for waiver is not approved, the individual will be 
placed in inactive status, so notified by the Director of the Office of 
Professional Responsibility, and placed on a roster of inactive enrolled 
individuals.

[[Page 141]]

    (5) If a request for waiver is approved, the individual will be 
notified and issued a card evidencing renewal.
    (6) Those who are granted waivers are required to file timely 
applications for renewal of enrollment.
    (k) Failure to comply. (1) Compliance by an individual with the 
requirements of this part is determined by the Director of the Office of 
Professional Responsibility. An individual who fails to meet the 
requirements of eligibility for renewal of enrollment will be notified 
by the Director of the Office of Professional Responsibility at his or 
her enrollment address by first class mail. The notice will state the 
basis for the determination of noncompliance and will provide the 
individual an opportunity to furnish information in writing relating to 
the matter within 60 days of the date of the notice. Such information 
will be considered by the Director of the Office of Professional 
Responsibility in making a final determination as to eligibility for 
renewal of enrollment.
    (2) The Director of the Office of Professional Responsibility may 
require any individual, by notice sent by first class mail to his or her 
enrollment address, to provide copies of any records required to be 
maintained under this part. The Director of the Office of Professional 
Responsibility may disallow any continuing professional education hours 
claimed if the individual fails to comply with this requirement.
    (3) An individual who has not filed a timely application for renewal 
of enrollment, who has not made a timely response to the notice of 
noncompliance with the renewal requirements, or who has not satisfied 
the requirements of eligibility for renewal will be placed on a roster 
of inactive enrolled individuals. During this time, the individual will 
be ineligible to practice before the Internal Revenue Service.
    (4) Individuals placed in inactive enrollment status and individuals 
ineligible to practice before the Internal Revenue Service may not state 
or imply that they are enrolled to practice before the Internal Revenue 
Service, or use the terms enrolled agent or enrolled retirement plan 
agent, the designations ``EA'' or ``ERPA'' or other form of reference to 
eligibility to practice before the Internal Revenue Service.
    (5) An individual placed in an inactive status may be reinstated to 
an active enrollment status by filing an application for renewal of 
enrollment and providing evidence of the completion of all required 
continuing professional education hours for the enrollment cycle. 
Continuing education credit under this paragraph (k)(5) may not be used 
to satisfy the requirements of the enrollment cycle in which the 
individual has been placed back on the active roster.
    (6) An individual placed in an inactive status must file an 
application for renewal of enrollment and satisfy the requirements for 
renewal as set forth in this section within three years of being placed 
in an inactive status. The name of such individual otherwise will be 
removed from the inactive enrollment roster and his or her enrollment 
will terminate. Eligibility for enrollment must then be reestablished by 
the individual as provided in this section.
    (7) Inactive enrollment status is not available to an individual who 
is the subject of a disciplinary matter in the Office of Professional 
Responsibility.
    (l) Inactive retirement status. An individual who no longer 
practices before the Internal Revenue Service may request being placed 
in an inactive retirement status at any time and such individual will be 
placed in an inactive retirement status. The individual will be 
ineligible to practice before the Internal Revenue Service. Such 
individual must file a timely application for renewal of enrollment at 
each applicable renewal or enrollment period as provided in this 
section. An individual who is placed in an inactive retirement status 
may be reinstated to an active enrollment status by filing an 
application for renewal of enrollment and providing evidence of the 
completion of the required continuing professional education hours for 
the enrollment cycle. Inactive retirement status is not available to an 
individual who is the subject of a disciplinary matter in the Office of 
Professional Responsibility.
    (m) Renewal while under suspension or disbarment. An individual who 
is ineligible to practice before the Internal

[[Page 142]]

Revenue Service by virtue of disciplinary action is required to be in 
conformance with the requirements for renewal of enrollment before his 
or her eligibility is restored.
    (n) Verification. The Director of the Office of Professional 
Responsibility may review the continuing education records of an 
enrolled individual and/or qualified sponsor in a manner deemed 
appropriate to determine compliance with the requirements and standards 
for renewal of enrollment as provided in paragraph (f) of this section.
    (o) Enrolled actuaries. The enrollment and the renewal of enrollment 
of actuaries authorized to practice under paragraph (d) of Sec. 10.3 
are governed by the regulations of the Joint Board for the Enrollment of 
Actuaries at 20 CFR 901.1 through 901.71.
    (p) Effective/applicability date. This section is applicable to 
enrollment effective on or after September 26, 2007.

(Approved by the Office of Management and Budget under Control No. 1545-
0946 and 1545-1726)

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54544, 54546, Sept. 26, 2007]



Sec. 10.7  Representing oneself; participating in rulemaking; limited 

practice; special appearances; and return preparation.

    (a) Representing oneself. Individuals may appear on their own behalf 
before the Internal Revenue Service provided they present satisfactory 
identification.
    (b) Participating in rulemaking. Individuals may participate in 
rulemaking as provided by the Administrative Procedure Act. See 5 U.S.C. 
553.
    (c) Limited practice--(1) In general. Subject to the limitations in 
paragraph (c)(2) of this section, an individual who is not a 
practitioner may represent a taxpayer before the Internal Revenue 
Service in the circumstances described in this paragraph (c)(1), even if 
the taxpayer is not present, provided the individual presents 
satisfactory identification and proof of his or her authority to 
represent the taxpayer. The circumstances described in this paragraph 
(c)(1) are as follows:
    (i) An individual may represent a member of his or her immediate 
family.
    (ii) A regular full-time employee of an individual employer may 
represent the employer.
    (iii) A general partner or a regular full-time employee of a 
partnership may represent the partnership.
    (iv) A bona fide officer or a regular full-time employee of a 
corporation (including a parent, subsidiary, or other affiliated 
corporation), association, or organized group may represent the 
corporation, association, or organized group.
    (v) A regular full-time employee of a trust, receivership, 
guardianship, or estate may represent the trust, receivership, 
guardianship, or estate.
    (vi) An officer or a regular employee of a governmental unit, 
agency, or authority may represent the governmental unit, agency, or 
authority in the course of his or her official duties.
    (vii) An individual may represent any individual or entity, who is 
outside the United States, before personnel of the Internal Revenue 
Service when such representation takes place outside the United States.
    (viii) An individual who prepares and signs a taxpayer's tax return 
as the preparer, or who prepares a tax return but is not required (by 
the instructions to the tax return or regulations) to sign the tax 
return, may represent the taxpayer before revenue agents, customer 
service representatives or similar officers and employees of the 
Internal Revenue Service during an examination of the taxable year or 
period covered by that tax return, but, unless otherwise prescribed by 
regulation or notice, this right does not permit such individual to 
represent the taxpayer, regardless of the circumstances requiring 
representation, before appeals officers, revenue officers, Counsel or 
similar officers or employees of the Internal Revenue Service or the 
Department of Treasury.
    (2) Limitations. (i) An individual who is under suspension or 
disbarment from practice before the Internal Revenue Service may not 
engage in limited practice before the Internal Revenue Service under 
paragraph (c)(1) of this section.

[[Page 143]]

    (ii) The Director, after notice and opportunity for a conference, 
may deny eligibility to engage in limited practice before the Internal 
Revenue Service under paragraph (c)(1) of this section to any individual 
who has engaged in conduct that would justify a sanction under Sec. 
10.50.
    (iii) An individual who represents a taxpayer under the authority of 
paragraph (c)(1) of this section is subject, to the extent of his or her 
authority, to such rules of general applicability regarding standards of 
conduct and other matters as the Director of the Office of Professional 
Responsibility prescribes.
    (d) Special appearances. The Director of the Office of Professional 
Responsibility may, subject to such conditions as he or she deems 
appropriate, authorize an individual who is not otherwise eligible to 
practice before the Internal Revenue Service to represent another person 
in a particular matter.
    (e) Preparing tax returns and furnishing information. Any individual 
may prepare a tax return, appear as a witness for the taxpayer before 
the Internal Revenue Service, or furnish information at the request of 
the Internal Revenue Service or any of its officers or employees.
    (f) Fiduciaries. For purposes of this part, a fiduciary (i.e., a 
trustee, receiver, guardian, personal representative, administrator, or 
executor) is considered to be the taxpayer and not a representative of 
the taxpayer.
    (g) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54544, 54547, Sept. 26, 2007]



Sec. 10.8  Customhouse brokers.

    Nothing contained in the regulations in this part will affect or 
limit the right of a customhouse broker, licensed as such by the 
Commissioner of Customs in accordance with the regulations prescribed 
therefor, in any customs district in which he or she is so licensed, at 
a relevant local office of the Internal Revenue Service or before the 
National Office of the Internal Revenue Service, to act as a 
representative in respect to any matters relating specifically to the 
importation or exportation of merchandise under the customs or internal 
revenue laws, for any person for whom he or she has acted as a 
customhouse broker.



   Subpart B_Duties and Restrictions Relating to Practice Before the 
                        Internal Revenue Service

    Source: T.D. 9011, 67 FR 48771, July 26, 2002, unless otherwise 
noted.



Sec. 10.20  Information to be furnished.

    (a) To the Internal Revenue Service. (1) A practitioner must, on a 
proper and lawful request by a duly authorized officer or employee of 
the Internal Revenue Service, promptly submit records or information in 
any matter before the Internal Revenue Service unless the practitioner 
believes in good faith and on reasonable grounds that the records or 
information are privileged.
    (2) Where the requested records or information are not in the 
possession of, or subject to the control of, the practitioner or the 
practitioner's client, the practitioner must promptly notify the 
requesting Internal Revenue Service officer or employee and the 
practitioner must provide any information that the practitioner has 
regarding the identity of any person who the practitioner believes may 
have possession or control of the requested records or information. The 
practitioner must make reasonable inquiry of his or her client regarding 
the identity of any person who may have possession or control of the 
requested records or information, but the practitioner is not required 
to make inquiry of any other person or independently verify any 
information provided by the practitioner's client regarding the identity 
of such persons.
    (b) To the Director of the Office of Professional Responsibility. 
When a proper and lawful request is made by the Director of the Office 
of Professional Responsibility, a practitioner must provide the Director 
of the Office of Professional Responsibility with any information the 
practitioner has concerning an inquiry by the Director of the Office of 
Professional Responsibility into an alleged violation of the regulations 
in this part by any person, and to testify

[[Page 144]]

regarding this information in any proceeding instituted under this part, 
unless the practitioner believes in good faith and on reasonable grounds 
that the information is privileged.
    (c) Interference with a proper and lawful request for records or 
information. A practitioner may not interfere, or attempt to interfere, 
with any proper and lawful effort by the Internal Revenue Service, its 
officers or employees, or the Director of the Office of Professional 
Responsibility, or his or her employees, to obtain any record or 
information unless the practitioner believes in good faith and on 
reasonable grounds that the record or information is privileged.



Sec. 10.21  Knowledge of client's omission.

    A practitioner who, having been retained by a client with respect to 
a matter administered by the Internal Revenue Service, knows that the 
client has not complied with the revenue laws of the United States or 
has made an error in or omission from any return, document, affidavit, 
or other paper which the client submitted or executed under the revenue 
laws of the United States, must advise the client promptly of the fact 
of such noncompliance, error, or omission. The practitioner must advise 
the client of the consequences as provided under the Code and 
regulations of such noncompliance, error, or omission.



Sec. 10.22  Diligence as to accuracy.

    (a) In general. A practitioner must exercise due diligence--
    (1) In preparing or assisting in the preparation of, approving, and 
filing tax returns, documents, affidavits, and other papers relating to 
Internal Revenue Service matters;
    (2) In determining the correctness of oral or written 
representations made by the practitioner to the Department of the 
Treasury; and
    (3) In determining the correctness of oral or written 
representations made by the practitioner to clients with reference to 
any matter administered by the Internal Revenue Service.
    (b) Reliance on others. Except as provided in Sec. Sec. 10.34, 
10.35, and 10.37, a practitioner will be presumed to have exercised due 
diligence for purposes of this section if the practitioner relies on the 
work product of another person and the practitioner used reasonable care 
in engaging, supervising, training, and evaluating the person, taking 
proper account of the nature of the relationship between the 
practitioner and the person.
    (c) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54547, Sept. 26, 2007]



Sec. 10.23  Prompt disposition of pending matters.

    A practitioner may not unreasonably delay the prompt disposition of 
any matter before the Internal Revenue Service.



Sec. 10.24  Assistance from or to disbarred or suspended persons and former 

Internal Revenue Service employees.

    A practitioner may not, knowingly and directly or indirectly:
    (a) Accept assistance from or assist any person who is under 
disbarment or suspension from practice before the Internal Revenue 
Service if the assistance relates to a matter or matters constituting 
practice before the Internal Revenue Service.
    (b) Accept assistance from any former government employee where the 
provisions of Sec. 10.25 or any Federal law would be violated.



Sec. 10.25  Practice by former government employees, their partners and their 

associates.

    (a) Definitions. For purposes of this section--
    (1) Assist means to act in such a way as to advise, furnish 
information to, or otherwise aid another person, directly, or 
indirectly.
    (2) Government employee is an officer or employee of the United 
States or any agency of the United States, including a special 
Government employee as defined in 18 U.S.C. 202(a), or of the District 
of Columbia, or of any State, or a member of Congress or of any State 
legislature.
    (3) Member of a firm is a sole practitioner or an employee or 
associate

[[Page 145]]

thereof, or a partner, stockholder, associate, affiliate or employee of 
a partnership, joint venture, corporation, professional association or 
other affiliation of two or more practitioners who represent 
nongovernmental parties.
    (4) Particular matter involving specific parties is defined at 5 CFR 
2637.201(c), or superseding post-employment regulations issued by the 
U.S. Office of Government Ethics.
    (5) Rule includes Treasury regulations, whether issued or under 
preparation for issuance as notices of proposed rulemaking or as 
Treasury decisions, revenue rulings, and revenue procedures published in 
the Internal Revenue Bulletin (see 26 CFR 601.601(d)(2)(ii)(b)).
    (b) General rules--(1) No former Government employee may, subsequent 
to Government employment, represent anyone in any matter administered by 
the Internal Revenue Service if the representation would violate 18 
U.S.C. 207 or any other laws of the United States.
    (2) No former Government employee who personally and substantially 
participated in a particular matter involving specific parties may, 
subsequent to Government employment, represent or knowingly assist, in 
that particular matter, any person who is or was a specific party to 
that particular matter.
    (3) A former Government employee who within a period of one year 
prior to the termination of Government employment had official 
responsibility for a particular matter involving specific parties may 
not, within two years after Government employment is ended, represent in 
that particular matter any person who is or was a specific party to that 
particular matter.
    (4) No former Government employee may, within one year after 
Government employment is ended, communicate with or appear before, with 
the intent to influence, any employee of the Treasury Department in 
connection with the publication, withdrawal, amendment, modification, or 
interpretation of a rule the development of which the former Government 
employee participated in, or for which, within a period of one year 
prior to the termination of Government employment, the former government 
employee had official responsibility. This paragraph (b)(4) does not, 
however, preclude any former employee from appearing on one's own behalf 
or from representing a taxpayer before the Internal Revenue Service in 
connection with a particular matter involving specific parties involving 
the application or interpretation of a rule with respect to that 
particular matter, provided that the representation is otherwise 
consistent with the other provisions of this section and the former 
employee does not utilize or disclose any confidential information 
acquired by the former employee in the development of the rule.
    (c) Firm representation--(1) No member of a firm of which a former 
Government employee is a member may represent or knowingly assist a 
person who was or is a specific party in any particular matter with 
respect to which the restrictions of paragraph (b)(2) of this section 
apply to the former Government employee, in that particular matter, 
unless the firm isolates the former Government employee in such a way to 
ensure that the former Government employee cannot assist in the 
representation.
    (2) When isolation of a former Government employee is required under 
paragraph (c)(1) of this section, a statement affirming the fact of such 
isolation must be executed under oath by the former Government employee 
and by another member of the firm acting on behalf of the firm. The 
statement must clearly identify the firm, the former Government 
employee, and the particular matter(s) requiring isolation. The 
statement must be retained by the firm and, upon request, provided to 
the Director of the Office of Professional Responsibility.
    (d) Pending representation. The provisions of this regulation will 
govern practice by former Government employees, their partners and 
associates with respect to representation in particular matters 
involving specific parties where actual representation commenced before 
the effective date of this regulation
    (e) Effective/applicability date. This section is applicable on 
September 26, 2007

[T.D. 9359, 72 FR 54548, Sept. 26, 2007]

[[Page 146]]



Sec. 10.26  Notaries.

    A practitioner may not take acknowledgments, administer oaths, 
certify papers, or perform any official act as a notary public with 
respect to any matter administered by the Internal Revenue Service and 
for which he or she is employed as counsel, attorney, or agent, or in 
which he or she may be in any way interested.



Sec. 10.27  Fees.

    (a) In general. A practitioner may not charge an unconscionable fee 
in connection with any matter before the Internal Revenue Service.
    (b) Contingent fees--(1) Except as provided in paragraphs (b)(2), 
(3), and (4) of this section, a practitioner may not charge a contingent 
fee for services rendered in connection with any matter before the 
Internal Revenue Service.
    (2) A practitioner may charge a contingent fee for services rendered 
in connection with the Service's examination of, or challenge to--
    (i) An original tax return; or
    (ii) An amended return or claim for refund or credit where the 
amended return or claim for refund or credit was filed within 120 days 
of the taxpayer receiving a written notice of the examination of, or a 
written challenge to the original tax return.
    (3) A practitioner may charge a contingent fee for services rendered 
in connection with a claim for credit or refund filed solely in 
connection with the determination of statutory interest or penalties 
assessed by the Internal Revenue Service.
    (4) A practitioner may charge a contingent fee for services rendered 
in connection with any judicial proceeding arising under the Internal 
Revenue Code.
    (c) Definitions. For purposes of this section--
    (1) Contingent fee is any fee that is based, in whole or in part, on 
whether or not a position taken on a tax return or other filing avoids 
challenge by the Internal Revenue Service or is sustained either by the 
Internal Revenue Service or in litigation. A contingent fee includes a 
fee that is based on a percentage of the refund reported on a return, 
that is based on a percentage of the taxes saved, or that otherwise 
depends on the specific result attained. A contingent fee also includes 
any fee arrangement in which the practitioner will reimburse the client 
for all or a portion of the client's fee in the event that a position 
taken on a tax return or other filing is challenged by the Internal 
Revenue Service or is not sustained, whether pursuant to an indemnity 
agreement, a guarantee, rescission rights, or any other arrangement with 
a similar effect.
    (2) Matter before the Internal Revenue Service includes tax planning 
and advice, preparing or filing or assisting in preparing or filing 
returns or claims for refund or credit, and all matters connected with a 
presentation to the Internal Revenue Service or any of its officers or 
employees relating to a taxpayer's rights, privileges, or liabilities 
under laws or regulations administered by the Internal Revenue Service. 
Such presentations include, but are not limited to, preparing and filing 
documents, corresponding and communicating with the Internal Revenue 
Service, rendering written advice with respect to any entity, 
transaction, plan or arrangement, and representing a client at 
conferences, hearings, and meetings.
    (d) Effective/applicability date. This section is applicable for fee 
arrangements entered into after March 26, 2008.

[T.D. 9359, 72 FR 54548, Sept. 26, 2007]



Sec. 10.28  Return of client's records.

    (a) In general, a practitioner must, at the request of a client, 
promptly return any and all records of the client that are necessary for 
the client to comply with his or her Federal tax obligations. The 
practitioner may retain copies of the records returned to a client. The 
existence of a dispute over fees generally does not relieve the 
practitioner of his or her responsibility under this section. 
Nevertheless, if applicable state law allows or permits the retention of 
a client's records by a practitioner in the case of a dispute over fees 
for services rendered, the practitioner need only return those records 
that must be attached to the taxpayer's return. The practitioner, 
however, must provide the client with reasonable access to review and 
copy any additional

[[Page 147]]

records of the client retained by the practitioner under state law that 
are necessary for the client to comply with his or her Federal tax 
obligations.
    (b) For purposes of this section, Records of the client include all 
documents or written or electronic materials provided to the 
practitioner, or obtained by the practitioner in the course of the 
practitioner's representation of the client, that preexisted the 
retention of the practitioner by the client. The term also includes 
materials that were prepared by the client or a third party (not 
including an employee or agent of the practitioner) at any time and 
provided to the practitioner with respect to the subject matter of the 
representation. The term also includes any return, claim for refund, 
schedule, affidavit, appraisal or any other document prepared by the 
practitioner, or his or her employee or agent, that was presented to the 
client with respect to a prior representation if such document is 
necessary for the taxpayer to comply with his or her current Federal tax 
obligations. The term does not include any return, claim for refund, 
schedule, affidavit, appraisal or any other document prepared by the 
practitioner or the practitioner's firm, employees or agents if the 
practitioner is withholding such document pending the client's 
performance of its contractual obligation to pay fees with respect to 
such document.



Sec. 10.29  Conflicting interests.

    (a) Except as provided by paragraph (b) of this section, a 
practitioner shall not represent a client before the Internal Revenue 
Service if the representation involves a conflict of interest. A 
conflict of interest exists if--
    (1) The representation of one client will be directly adverse to 
another client; or
    (2) There is a significant risk that the representation of one or 
more clients will be materially limited by the practitioner's 
responsibilities to another client, a former client or a third person, 
or by a personal interest of the practitioner.
    (b) Notwithstanding the existence of a conflict of interest under 
paragraph (a) of this section, the practitioner may represent a client 
if--
    (1) The practitioner reasonably believes that the practitioner will 
be able to provide competent and diligent representation to each 
affected client;
    (2) The representation is not prohibited by law; and
    (3) Each affected client waives the conflict of interest and gives 
informed consent, confirmed in writing by each affected client, at the 
time the existence of the conflict of interest is known by the 
practitioner. The confirmation may be made within a reasonable period 
after the informed consent, but in no event later than 30 days.
    (c) Copies of the written consents must be retained by the 
practitioner for at least 36 months from the date of the conclusion of 
the representation of the affected clients, and the written consents 
must be provided to any officer or employee of the Internal Revenue 
Service on request.
    (d) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54549, Sept. 26, 2007]



Sec. 10.30  Solicitation.

    (a) Advertising and solicitation restrictions. (1) A practitioner 
may not, with respect to any Internal Revenue Service matter, in any way 
use or participate in the use of any form or public communication or 
private solicitation containing a false, fraudulent, or coercive 
statement or claim; or a misleading or deceptive statement or claim. 
Enrolled agents or enrolled retirement plan agents, in describing their 
professional designation, may not utilize the term of art ``certified'' 
or imply an employer/employee relationship with the Internal Revenue 
Service. Examples of acceptable descriptions for enrolled agents are 
``enrolled to represent taxpayers before the Internal Revenue Service,'' 
``enrolled to practice before the Internal Revenue Service,'' and 
``admitted to practice before the Internal Revenue Service.'' Similarly, 
examples of acceptable descriptions for enrolled retirement plan agents 
are ``enrolled to represent taxpayers before the Internal Revenue 
Service as a retirement plan agent'' and ``enrolled to practice before 
the Internal Revenue Service as a retirement plan agent.''

[[Page 148]]

    (2) A practitioner may not make, directly or indirectly, an 
uninvited written or oral solicitation of employment in matters related 
to the Internal Revenue Service if the solicitation violates Federal or 
State law or other applicable rule, e.g., attorneys are precluded from 
making a solicitation that is prohibited by conduct rules applicable to 
all attorneys in their State(s) of licensure. Any lawful solicitation 
made by or on behalf of a practitioner eligible to practice before the 
Internal Revenue Service must, nevertheless, clearly identify the 
solicitation as such and, if applicable, identify the source of the 
information used in choosing the recipient.
    (b) Fee information. (1)(i) A practitioner may publish the 
availability of a written schedule of fees and disseminate the following 
fee information--
    (A) Fixed fees for specific routine services.
    (B) Hourly rates.
    (C) Range of fees for particular services.
    (D) Fee charged for an initial consultation.
    (ii) Any statement of fee information concerning matters in which 
costs may be incurred must include a statement disclosing whether 
clients will be responsible for such costs.
    (2) A practitioner may charge no more than the rate(s) published 
under paragraph (b)(1) of this section for at least 30 calendar days 
after the last date on which the schedule of fees was published.
    (c) Communication of fee information. Fee information may be 
communicated in professional lists, telephone directories, print media, 
mailings, electronic mail, facsimile, hand delivered flyers, radio, 
television, and any other method. The method chosen, however, must not 
cause the communication to become untruthful, deceptive, or otherwise in 
violation of this part. A practitioner may not persist in attempting to 
contact a prospective client if the prospective client has made it known 
to the practitioner that he or she does not desire to be solicited. In 
the case of radio and television broadcasting, the broadcast must be 
recorded and the practitioner must retain a recording of the actual 
transmission. In the case of direct mail and e-commerce communications, 
the practitioner must retain a copy of the actual communication, along 
with a list or other description of persons to whom the communication 
was mailed or otherwise distributed. The copy must be retained by the 
practitioner for a period of at least 36 months from the date of the 
last transmission or use.
    (d) Improper associations. A practitioner may not, in matters 
related to the Internal Revenue Service, assist, or accept assistance 
from, any person or entity who, to the knowledge of the practitioner, 
obtains clients or otherwise practices in a manner forbidden under this 
section.
    (e) Effective/applicability date. This section is applicable on 
September 26, 2007.

(Approved by the Office of Management and Budget under Control No. 1545-
1726)

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54549, Sept. 26, 2007]



Sec. 10.31  Negotiation of taxpayer checks.

    A practitioner who prepares tax returns may not endorse or otherwise 
negotiate any check issued to a client by the government in respect of a 
Federal tax liability.



Sec. 10.32  Practice of law.

    Nothing in the regulations in this part may be construed as 
authorizing persons not members of the bar to practice law.



Sec. 10.33  Best practices for tax advisors.

    (a) Best practices. Tax advisors should provide clients with the 
highest quality representation concerning Federal tax issues by adhering 
to best practices in providing advice and in preparing or assisting in 
the preparation of a submission to the Internal Revenue Service. In 
addition to compliance with the standards of practice provided elsewhere 
in this part, best practices include the following:
    (1) Communicating clearly with the client regarding the terms of the 
engagement. For example, the advisor should determine the client's 
expected purpose for and use of the advice and should have a clear 
understanding with

[[Page 149]]

the client regarding the form and scope of the advice or assistance to 
be rendered.
    (2) Establishing the facts, determining which facts are relevant, 
evaluating the reasonableness of any assumptions or representations, 
relating the applicable law (including potentially applicable judicial 
doctrines) to the relevant facts, and arriving at a conclusion supported 
by the law and the facts.
    (3) Advising the client regarding the import of the conclusions 
reached, including, for example, whether a taxpayer may avoid accuracy-
related penalties under the Internal Revenue Code if a taxpayer acts in 
reliance on the advice.
    (4) Acting fairly and with integrity in practice before the Internal 
Revenue Service.
    (b) Procedures to ensure best practices for tax advisors. Tax 
advisors with responsibility for overseeing a firm's practice of 
providing advice concerning Federal tax issues or of preparing or 
assisting in the preparation of submissions to the Internal Revenue 
Service should take reasonable steps to ensure that the firm's 
procedures for all members, associates, and employees are consistent 
with the best practices set forth in paragraph (a) of this section.
    (c) Applicability date. This section is effective after June 20, 
2005.

[T.D. 9011, 67 FR 48771, July 26, 2002, as amended by T.D. 9165, 69 FR 
75841, Dec. 20, 2004]



Sec. 10.34  Standards with respect to tax returns and documents, affidavits 

and other papers.

    (a) [Reserved]
    (b) Documents, affidavits and other papers--(1) A practitioner may 
not advise a client to take a position on a document, affidavit or other 
paper submitted to the Internal Revenue Service unless the position is 
not frivolous.
    (2) A practitioner may not advise a client to submit a document, 
affidavit or other paper to the Internal Revenue Service--
    (i) The purpose of which is to delay or impede the administration of 
the Federal tax laws;
    (ii) That is frivolous; or
    (iii) That contains or omits information in a manner that 
demonstrates an intentional disregard of a rule or regulation unless the 
practitioner also advises the client to submit a document that evidences 
a good faith challenge to the rule or regulation.
    (c) Advising clients on potential penalties--(1) A practitioner must 
inform a client of any penalties that are reasonably likely to apply to 
the client with respect to--
    (i) A position taken on a tax return if--
    (A) The practitioner advised the client with respect to the 
position; or
    (B) The practitioner prepared or signed the tax return; and
    (ii) Any document, affidavit or other paper submitted to the 
Internal Revenue Service.
    (2) The practitioner also must inform the client of any opportunity 
to avoid any such penalties by disclosure, if relevant, and of the 
requirements for adequate disclosure.
    (3) This paragraph (c) applies even if the practitioner is not 
subject to a penalty under the Internal Revenue Code with respect to the 
position or with respect to the document, affidavit or other paper 
submitted.
    (d) Relying on information furnished by clients. A practitioner 
advising a client to take a position on a tax return, document, 
affidavit or other paper submitted to the Internal Revenue Service, or 
preparing or signing a tax return as a preparer, generally may rely in 
good faith without verification upon information furnished by the 
client. The practitioner may not, however, ignore the implications of 
information furnished to, or actually known by, the practitioner, and 
must make reasonable inquiries if the information as furnished appears 
to be incorrect, inconsistent with an important fact or another factual 
assumption, or incomplete.
    (e) [Reserved]
    (f) Effective/applicability date. Section 10.34 is applicable to tax 
returns, documents, affidavits and other papers filed on or after 
September 26, 2007.

[T.D. 9359, 72 FR 54549, Sept. 26, 2007]

[[Page 150]]



Sec. 10.35  Requirements for covered opinions.

    (a) A practitioner who provides a covered opinion shall comply with 
the standards of practice in this section.
    (b) Definitions. For purposes of this subpart--
    (1) A practitioner includes any individual described in Sec. 
10.2(a)(5).
    (2) Covered opinion--(i) In general. A covered opinion is written 
advice (including electronic communications) by a practitioner 
concerning one or more Federal tax issues arising from--
    (A) A transaction that is the same as or substantially similar to a 
transaction that, at the time the advice is rendered, the Internal 
Revenue Service has determined to be a tax avoidance transaction and 
identified by published guidance as a listed transaction under 26 CFR 
1.6011-4(b)(2);
    (B) Any partnership or other entity, any investment plan or 
arrangement, or any other plan or arrangement, the principal purpose of 
which is the avoidance or evasion of any tax imposed by the Internal 
Revenue Code; or
    (C) Any partnership or other entity, any investment plan or 
arrangement, or any other plan or arrangement, a significant purpose of 
which is the avoidance or evasion of any tax imposed by the Internal 
Revenue Code if the written advice--
    (1) Is a reliance opinion;
    (2) Is a marketed opinion;
    (3) Is subject to conditions of confidentiality; or
    (4) Is subject to contractual protection.
    (ii) Excluded advice. A covered opinion does not include--
    (A) Written advice provided to a client during the course of an 
engagement if a practitioner is reasonably expected to provide 
subsequent written advice to the client that satisfies the requirements 
of this section;
    (B) Written advice, other than advice described in paragraph 
(b)(2)(i)(A) of this section (concerning listed transactions) or 
paragraph (b)(2)(ii)(B) of this section (concerning the principal 
purpose of avoidance or evasion) that--
    (1) Concerns the qualification of a qualified plan;
    (2) Is a State or local bond opinion; or
    (3) Is included in documents required to be filed with the 
Securities and Exchange Commission;
    (C) Written advice prepared for and provided to a taxpayer, solely 
for use by that taxpayer, after the taxpayer has filed a tax return with 
the Internal Revenue Service reflecting the tax benefits of the 
transaction. The preceding sentence does not apply if the practitioner 
knows or has reason to know that the written advice will be relied upon 
by the taxpayer to take a position on a tax return (including for these 
purposes an amended return that claims tax benefits not reported on a 
previously filed return) filed after the date on which the advice is 
provided to the taxpayer;
    (D) Written advice provided to an employer by a practitioner in that 
practitioner's capacity as an employee of that employer solely for 
purposes of determining the tax liability of the employer; or
    (E) Written advice that does not resolve a Federal tax issue in the 
taxpayer's favor, unless the advice reaches a conclusion favorable to 
the taxpayer at any confidence level (e.g., not frivolous, realistic 
possibility of success, reasonable basis or substantial authority) with 
respect to that issue. If written advice concerns more than one Federal 
tax issue, the advice must comply with the requirements of paragraph (c) 
of this section with respect to any Federal tax issue not described in 
the preceding sentence.
    (3) A Federal tax issue is a question concerning the Federal tax 
treatment of an item of income, gain, loss, deduction, or credit, the 
existence or absence of a taxable transfer of property, or the value of 
property for Federal tax purposes. For purposes of this subpart, a 
Federal tax issue is significant if the Internal Revenue Service has a 
reasonable basis for a successful challenge and its resolution could 
have a significant impact, whether beneficial or adverse and under any 
reasonably foreseeable circumstance, on the overall Federal tax 
treatment of the transaction(s) or matter(s) addressed in the opinion.
    (4) Reliance opinion--(i) Written advice is a reliance opinion if 
the advice concludes at a confidence level of at

[[Page 151]]

least more likely than not (a greater than 50 percent likelihood) that 
one or more significant Federal tax issues would be resolved in the 
taxpayer's favor.
    (ii) For purposes of this section, written advice, other than advice 
described in paragraph (b)(2)(i)(A) of this section (concerning listed 
transactions) or paragraph (b)(2)(i)(B) of this section (concerning the 
principal purpose of avoidance or evasion), is not treated as a reliance 
opinion if the practitioner prominently discloses in the written advice 
that it was not intended or written by the practitioner to be used, and 
that it cannot be used by the taxpayer, for the purpose of avoiding 
penalties that may be imposed on the taxpayer.
    (5) Marketed opinion--(i) Written advice is a marketed opinion if 
the practitioner knows or has reason to know that the written advice 
will be used or referred to by a person other than the practitioner (or 
a person who is a member of, associated with, or employed by the 
practitioner's firm) in promoting, marketing or recommending a 
partnership or other entity, investment plan or arrangement to one or 
more taxpayer(s).
    (ii) For purposes of this section, written advice, other than advice 
described in paragraph (b)(2)(i)(A) of this section (concerning listed 
transactions) or paragraph (b)(2)(i)(B) of this section (concerning the 
principal purpose of avoidance or evasion), is not treated as a marketed 
opinion if the practitioner prominently discloses in the written advice 
that--
    (A) The advice was not intended or written by the practitioner to be 
used, and that it cannot be used by any taxpayer, for the purpose of 
avoiding penalties that may be imposed on the taxpayer;
    (B) The advice was written to support the promotion or marketing of 
the transaction(s) or matter(s) addressed by the written advice; and
    (C) The taxpayer should seek advice based on the taxpayer's 
particular circumstances from an independent tax advisor.
    (6) Conditions of confidentiality. Written advice is subject to 
conditions of confidentiality if the practitioner imposes on one or more 
recipients of the written advice a limitation on disclosure of the tax 
treatment or tax structure of the transaction and the limitation on 
disclosure protects the confidentiality of that practitioner's tax 
strategies, regardless of whether the limitation on disclosure is 
legally binding. A claim that a transaction is proprietary or exclusive 
is not a limitation on disclosure if the practitioner confirms to all 
recipients of the written advice that there is no limitation on 
disclosure of the tax treatment or tax structure of the transaction that 
is the subject of the written advice.
    (7) Contractual protection. Written advice is subject to contractual 
protection if the taxpayer has the right to a full or partial refund of 
fees paid to the practitioner (or a person who is a member of, 
associated with, or employed by the practitioner's firm) if all or a 
part of the intended tax consequences from the matters addressed in the 
written advice are not sustained, or if the fees paid to the 
practitioner (or a person who is a member of, associated with, or 
employed by the practitioner's firm) are contingent on the taxpayer's 
realization of tax benefits from the transaction. All the facts and 
circumstances relating to the matters addressed in the written advice 
will be considered when determining whether a fee is refundable or 
contingent, including the right to reimbursements of amounts that the 
parties to a transaction have not designated as fees or any agreement to 
provide services without reasonable compensation.
    (8) Prominently disclosed. An item is prominently disclosed if it is 
readily apparent to a reader of the written advice. Whether an item is 
readily apparent will depend on the facts and circumstances surrounding 
the written advice including, but not limited to, the sophistication of 
the taxpayer and the length of the written advice. At a minimum, to be 
prominently disclosed an item must be set forth in a separate section 
(and not in a footnote) in a typeface that is the same size or larger 
than the typeface of any discussion of the facts or law in the written 
advice.
    (9) State or local bond opinion. A State or local bond opinion is 
written advice with respect to a Federal tax issue included in any 
materials delivered to a

[[Page 152]]

purchaser of a State or local bond in connection with the issuance of 
the bond in a public or private offering, including an official 
statement (if one is prepared), that concerns only the excludability of 
interest on a State or local bond from gross income under section 103 of 
the Internal Revenue Code, the application of section 55 of the Internal 
Revenue Code to a State or local bond, the status of a State or local 
bond as a qualified tax-exempt obligation under section 265(b)(3) of the 
Internal Revenue Code, the status of a State or local bond as a 
qualified zone academy bond under section 1397E of the Internal Revenue 
Code, or any combination of the above.
    (10) The principal purpose. For purposes of this section, the 
principal purpose of a partnership or other entity, investment plan or 
arrangement, or other plan or arrangement is the avoidance or evasion of 
any tax imposed by the Internal Revenue Code if that purpose exceeds any 
other purpose. The principal purpose of a partnership or other entity, 
investment plan or arrangement, or other plan or arrangement is not to 
avoid or evade Federal tax if that partnership, entity, plan or 
arrangement has as its purpose the claiming of tax benefits in a manner 
consistent with the statute and Congressional purpose. A partnership, 
entity, plan or arrangement may have a significant purpose of avoidance 
or evasion even though it does not have the principal purpose of 
avoidance or evasion under this paragraph (b)(10).
    (c) Requirements for covered opinions. A practitioner providing a 
covered opinion must comply with each of the following requirements.
    (1) Factual matters. (i) The practitioner must use reasonable 
efforts to identify and ascertain the facts, which may relate to future 
events if a transaction is prospective or proposed, and to determine 
which facts are relevant. The opinion must identify and consider all 
facts that the practitioner determines to be relevant.
    (ii) The practitioner must not base the opinion on any unreasonable 
factual assumptions (including assumptions as to future events). An 
unreasonable factual assumption includes a factual assumption that the 
practitioner knows or should know is incorrect or incomplete. For 
example, it is unreasonable to assume that a transaction has a business 
purpose or that a transaction is potentially profitable apart from tax 
benefits. A factual assumption includes reliance on a projection, 
financial forecast or appraisal. It is unreasonable for a practitioner 
to rely on a projection, financial forecast or appraisal if the 
practitioner knows or should know that the projection, financial 
forecast or appraisal is incorrect or incomplete or was prepared by a 
person lacking the skills or qualifications necessary to prepare such 
projection, financial forecast or appraisal. The opinion must identify 
in a separate section all factual assumptions relied upon by the 
practitioner.
    (iii) The practitioner must not base the opinion on any unreasonable 
factual representations, statements or findings of the taxpayer or any 
other person. An unreasonable factual representation includes a factual 
representation that the practitioner knows or should know is incorrect 
or incomplete. For example, a practitioner may not rely on a factual 
representation that a transaction has a business purpose if the 
representation does not include a specific description of the business 
purpose or the practitioner knows or should know that the representation 
is incorrect or incomplete. The opinion must identify in a separate 
section all factual representations, statements or findings of the 
taxpayer relied upon by the practitioner.
    (2) Relate law to facts. (i) The opinion must relate the applicable 
law (including potentially applicable judicial doctrines) to the 
relevant facts.
    (ii) The practitioner must not assume the favorable resolution of 
any significant Federal tax issue except as provided in paragraphs 
(c)(3)(v) and (d) of this section, or otherwise base an opinion on any 
unreasonable legal assumptions, representations, or conclusions.
    (iii) The opinion must not contain internally inconsistent legal 
analyses or conclusions.
    (3) Evaluation of significant Federal tax issues--(i) In general. 
The opinion must consider all significant Federal tax issues except as 
provided in paragraphs (c)(3)(v) and (d) of this section.

[[Page 153]]

    (ii) Conclusion as to each significant Federal tax issue. The 
opinion must provide the practitioner's conclusion as to the likelihood 
that the taxpayer will prevail on the merits with respect to each 
significant Federal tax issue considered in the opinion. If the 
practitioner is unable to reach a conclusion with respect to one or more 
of those issues, the opinion must state that the practitioner is unable 
to reach a conclusion with respect to those issues. The opinion must 
describe the reasons for the conclusions, including the facts and 
analysis supporting the conclusions, or describe the reasons that the 
practitioner is unable to reach a conclusion as to one or more issues. 
If the practitioner fails to reach a conclusion at a confidence level of 
at least more likely than not with respect to one or more significant 
Federal tax issues considered, the opinion must include the appropriate 
disclosure(s) required under paragraph (e) of this section.
    (iii) Evaluation based on chances of success on the merits. In 
evaluating the significant Federal tax issues addressed in the opinion, 
the practitioner must not take into account the possibility that a tax 
return will not be audited, that an issue will not be raised on audit, 
or that an issue will be resolved through settlement if raised.
    (iv) Marketed opinions. In the case of a marketed opinion, the 
opinion must provide the practitioner's conclusion that the taxpayer 
will prevail on the merits at a confidence level of at least more likely 
than not with respect to each significant Federal tax issue. If the 
practitioner is unable to reach a more likely than not conclusion with 
respect to each significant Federal tax issue, the practitioner must not 
provide the marketed opinion, but may provide written advice that 
satisfies the requirements in paragraph (b)(5)(ii) of this section.
    (v) Limited scope opinions. (A) The practitioner may provide an 
opinion that considers less than all of the significant Federal tax 
issues if--
    (1) The practitioner and the taxpayer agree that the scope of the 
opinion and the taxpayer's potential reliance on the opinion for 
purposes of avoiding penalties that may be imposed on the taxpayer are 
limited to the Federal tax issue(s) addressed in the opinion;
    (2) The opinion is not advice described in paragraph (b)(2)(i)(A) of 
this section (concerning listed transactions), paragraph (b)(2)(i)(B) of 
this section (concerning the principal purpose of avoidance or evasion) 
or paragraph (b)(5) of this section (a marketed opinion); and
    (3) The opinion includes the appropriate disclosure(s) required 
under paragraph (e) of this section.
    (B) A practitioner may make reasonable assumptions regarding the 
favorable resolution of a Federal tax issue (an assumed issue) for 
purposes of providing an opinion on less than all of the significant 
Federal tax issues as provided in this paragraph (c)(3)(v). The opinion 
must identify in a separate section all issues for which the 
practitioner assumed a favorable resolution.
    (4) Overall conclusion. (i) The opinion must provide the 
practitioner's overall conclusion as to the likelihood that the Federal 
tax treatment of the transaction or matter that is the subject of the 
opinion is the proper treatment and the reasons for that conclusion. If 
the practitioner is unable to reach an overall conclusion, the opinion 
must state that the practitioner is unable to reach an overall 
conclusion and describe the reasons for the practitioner's inability to 
reach a conclusion.
    (ii) In the case of a marketed opinion, the opinion must provide the 
practitioner's overall conclusion that the Federal tax treatment of the 
transaction or matter that is the subject of the opinion is the proper 
treatment at a confidence level of at least more likely than not.
    (d) Competence to provide opinion; reliance on opinions of others. 
(1) The practitioner must be knowledgeable in all of the aspects of 
Federal tax law relevant to the opinion being rendered, except that the 
practitioner may rely on the opinion of another practitioner with 
respect to one or more significant Federal tax issues, unless the 
practitioner knows or should know that the opinion of the other 
practitioner should not be relied on. If a practitioner relies on the 
opinion of another practitioner, the relying practitioner's

[[Page 154]]

opinion must identify the other opinion and set forth the conclusions 
reached in the other opinion.
    (2) The practitioner must be satisfied that the combined analysis of 
the opinions, taken as a whole, and the overall conclusion, if any, 
satisfy the requirements of this section.
    (e) Required disclosures. A covered opinion must contain all of the 
following disclosures that apply--
    (1) Relationship between promoter and practitioner. An opinion must 
prominently disclose the existence of--
    (i) Any compensation arrangement, such as a referral fee or a fee-
sharing arrangement, between the practitioner (or the practitioner's 
firm or any person who is a member of, associated with, or employed by 
the practitioner's firm) and any person (other than the client for whom 
the opinion is prepared) with respect to promoting, marketing or 
recommending the entity, plan, or arrangement (or a substantially 
similar arrangement) that is the subject of the opinion; or
    (ii) Any referral agreement between the practitioner (or the 
practitioner's firm or any person who is a member of, associated with, 
or employed by the practitioner's firm) and a person (other than the 
client for whom the opinion is prepared) engaged in promoting, marketing 
or recommending the entity, plan, or arrangement (or a substantially 
similar arrangement) that is the subject of the opinion.
    (2) Marketed opinions. A marketed opinion must prominently disclose 
that--
    (i) The opinion was written to support the promotion or marketing of 
the transaction(s) or matter(s) addressed in the opinion; and
    (ii) The taxpayer should seek advice based on the taxpayer's 
particular circumstances from an independent tax advisor.
    (3) Limited scope opinions. A limited scope opinion must prominently 
disclose that--
    (i) The opinion is limited to the one or more Federal tax issues 
addressed in the opinion;
    (ii) Additional issues may exist that could affect the Federal tax 
treatment of the transaction or matter that is the subject of the 
opinion and the opinion does not consider or provide a conclusion with 
respect to any additional issues; and
    (iii) With respect to any significant Federal tax issues outside the 
limited scope of the opinion, the opinion was not written, and cannot be 
used by the taxpayer, for the purpose of avoiding penalties that may be 
imposed on the taxpayer.
    (4) Opinions that fail to reach a more likely than not conclusion. 
An opinion that does not reach a conclusion at a confidence level of at 
least more likely than not with respect to a significant Federal tax 
issue must prominently disclose that--
    (i) The opinion does not reach a conclusion at a confidence level of 
at least more likely than not with respect to one or more significant 
Federal tax issues addressed by the opinion; and
    (ii) With respect to those significant Federal tax issues, the 
opinion was not written, and cannot be used by the taxpayer, for the 
purpose of avoiding penalties that may be imposed on the taxpayer.
    (5) Advice regarding required disclosures. In the case of any 
disclosure required under this section, the practitioner may not provide 
advice to any person that is contrary to or inconsistent with the 
required disclosure.
    (f) Effect of opinion that meets these standards--(1) In general. An 
opinion that meets the requirements of this section satisfies the 
practitioner's responsibilities under this section, but the 
persuasiveness of the opinion with regard to the tax issues in question 
and the taxpayer's good faith reliance on the opinion will be determined 
separately under applicable provisions of the law and regulations.
    (2) Standards for other written advice. A practitioner who provides 
written advice that is not a covered opinion for purposes of this 
section is subject to the requirements of Sec. 10.37.
    (g) Effective date. This section applies to written advice that is 
rendered after June 20, 2005.

[T.D. 9011, 67 FR 48771, July 26, 2002, as amended by T.D. 9165, 69 FR 
75842, Dec. 20, 2004; 70 FR 19892, Apr. 15, 2005; 70 FR 28825, May 19, 
2005; T.D. 9359, 72 FR 54549, Sept. 26, 2007]

[[Page 155]]



Sec. 10.36  Procedures to ensure compliance.

    (a) Requirements for covered opinions. Any practitioner who has (or 
practitioners who have or share) principal authority and responsibility 
for overseeing a firm's practice of providing advice concerning Federal 
tax issues must take reasonable steps to ensure that the firm has 
adequate procedures in effect for all members, associates, and employees 
for purposes of complying with Sec. 10.35. Any such practitioner will 
be subject to discipline for failing to comply with the requirements of 
this paragraph if--
    (1) The practitioner through willfulness, recklessness, or gross 
incompetence does not take reasonable steps to ensure that the firm has 
adequate procedures to comply with Sec. 10.35, and one or more 
individuals who are members of, associated with, or employed by, the 
firm are, or have, engaged in a pattern or practice, in connection with 
their practice with the firm, of failing to comply with Sec. 10.35; or
    (2) The practitioner knows or should know that one or more 
individuals who are members of, associated with, or employed by, the 
firm are, or have, engaged in a pattern or practice, in connection with 
their practice with the firm, that does not comply with Sec. 10.35 and 
the practitioner, through willfulness, recklessness, or gross 
incompetence, fails to take prompt action to correct the noncompliance.
    (b) Effective date. This section is applicable after June 20, 2005.

[T.D. 9011, 67 FR 48771, July 26, 2002, as amended by T.D. 9165, 69 FR 
75842, Dec. 20, 2004]



Sec. 10.37  Requirements for other written advice.

    (a) Requirements. A practitioner must not give written advice 
(including electronic communications) concerning one or more Federal tax 
issues if the practitioner bases the written advice on unreasonable 
factual or legal assumptions (including assumptions as to future 
events), unreasonably relies upon representations, statements, findings 
or agreements of the taxpayer or any other person, does not consider all 
relevant facts that the practitioner knows or should know, or, in 
evaluating a Federal tax issue, takes into account the possibility that 
a tax return will not be audited, that an issue will not be raised on 
audit, or that an issue will be resolved through settlement if raised. 
All facts and circumstances, including the scope of the engagement and 
the type and specificity of the advice sought by the client will be 
considered in determining whether a practitioner has failed to comply 
with this section. In the case of an opinion the practitioner knows or 
has reason to know will be used or referred to by a person other than 
the practitioner (or a person who is a member of, associated with, or 
employed by the practitioner's firm) in promoting, marketing or 
recommending to one or more taxpayers a partnership or other entity, 
investment plan or arrangement a significant purpose of which is the 
avoidance or evasion of any tax imposed by the Internal Revenue Code, 
the determination of whether a practitioner has failed to comply with 
this section will be made on the basis of a heightened standard of care 
because of the greater risk caused by the practitioner's lack of 
knowledge of the taxpayer's particular circumstances.
    (b) Effective date. This section applies to written advice that is 
rendered after June 20, 2005.

[T.D. 9011, 67 FR 48771, July 26, 2002, as amended by T.D. 9165, 69 FR 
75842, Dec. 20, 2004; 70 FR 20805, Apr. 21, 2005]



Sec. 10.38  Establishment of advisory committees.

    (a) Advisory committees. To promote and maintain the public's 
confidence in tax advisors, the Director of the Office of Professional 
Responsibility is authorized to establish one or more advisory 
committees composed of at least five individuals authorized to practice 
before the Internal Revenue Service. The Director should ensure that 
membership of an advisory committee is balanced among those who practice 
as attorneys, accountants, and enrolled agents. Under procedures 
prescribed by the Director, an advisory committee may review and make 
general recommendations regarding professional standards or best 
practices for tax advisors, including whether hypothetical

[[Page 156]]

conduct would give rise to a violation of Sec. Sec. 10.35 or 10.36.
    (b) Effective date. This section applies after December 20, 2004.

[T.D. 9011, 67 FR 48771, July 26, 2002, as amended by T.D. 9165, 69 FR 
75842, Dec. 20, 2004]



          Subpart C_Sanctions for Violation of the Regulations

    Source: T.D. 9011, 67 FR 48774, July 26, 2002, unless otherwise 
noted.



Sec. 10.50  Sanctions.

    (a) Authority to censure, suspend, or disbar. The Secretary of the 
Treasury, or delegate, after notice and an opportunity for a proceeding, 
may censure, suspend, or disbar any practitioner from practice before 
the Internal Revenue Service if the practitioner is shown to be 
incompetent or disreputable (within the meaning of Sec. 10.51), fails 
to comply with any regulation in this part (under the prohibited conduct 
standards of Sec. 10.52), or with intent to defraud, willfully and 
knowingly misleads or threatens a client or prospective client. Censure 
is a public reprimand.
    (b) Authority to disqualify. The Secretary of the Treasury, or 
delegate, after due notice and opportunity for hearing, may disqualify 
any appraiser for a violation of these rules as applicable to 
appraisers.
    (1) If any appraiser is disqualified pursuant to this subpart C, the 
appraiser is barred from presenting evidence or testimony in any 
administrative proceeding before the Department of the Treasury or the 
Internal Revenue Service, unless and until authorized to do so by the 
Director of the Office of Professional Responsibility pursuant to Sec. 
10.81, regardless of whether the evidence or testimony would pertain to 
an appraisal made prior to or after the effective date of 
disqualification.
    (2) Any appraisal made by a disqualified appraiser after the 
effective date of disqualification will not have any probative effect in 
any administrative proceeding before the Department of the Treasury or 
the Internal Revenue Service. An appraisal otherwise barred from 
admission into evidence pursuant to this section may be admitted into 
evidence solely for the purpose of determining the taxpayer's reliance 
in good faith on such appraisal.
    (c) Authority to impose monetary penalty--(1) In general. (i) The 
Secretary of the Treasury, or delegate, after notice and an opportunity 
for a proceeding, may impose a monetary penalty on any practitioner who 
engages in conduct subject to sanction under paragraph (a) of this 
section.
    (ii) If the practitioner described in paragraph (c)(1)(i) of this 
section was acting on behalf of an employer or any firm or other entity 
in connection with the conduct giving rise to the penalty, the Secretary 
of the Treasury, or delegate, may impose a monetary penalty on the 
employer, firm, or entity if it knew, or reasonably should have known, 
of such conduct.
    (2) Amount of penalty. The amount of the penalty shall not exceed 
the gross income derived (or to be derived) from the conduct giving rise 
to the penalty.
    (3) Coordination with other sanctions. Subject to paragraph (c)(2) 
of this section--
    (i) Any monetary penalty imposed on a practitioner under this 
paragraph (c) may be in addition to or in lieu of any suspension, 
disbarment or censure and may be in addition to a penalty imposed on an 
employer, firm or other entity under paragraph (c)(1)(ii) of this 
section.
    (ii) Any monetary penalty imposed on an employer, firm or other 
entity may be in addition to or in lieu of penalties imposed under 
paragraph (c)(1)(i) of this section.
    (d) Sanctions to be imposed. The sanctions imposed by this section 
shall take into account all relevant facts and circumstances.
    (e) Effective/applicability date. This section is applicable to 
conduct occurring on or after September 26, 2007, except paragraph (c) 
which applies to prohibited conduct that occurs after October 22, 2004.

[T.D. 9359, 72 FR 54549, Sept. 26, 2007]



Sec. 10.51  Incompetence and disreputable conduct.

    (a) Incompetence and disreputable conduct. Incompetence and 
disreputable

[[Page 157]]

conduct for which a practitioner may be sanctioned under Sec. 10.50 
includes, but is not limited to--
    (1) Conviction of any criminal offense under the Federal tax laws.
    (2) Conviction of any criminal offense involving dishonesty or 
breach of trust.
    (3) Conviction of any felony under Federal or State law for which 
the conduct involved renders the practitioner unfit to practice before 
the Internal Revenue Service.
    (4) Giving false or misleading information, or participating in any 
way in the giving of false or misleading information to the Department 
of the Treasury or any officer or employee thereof, or to any tribunal 
authorized to pass upon Federal tax matters, in connection with any 
matter pending or likely to be pending before them, knowing the 
information to be false or misleading. Facts or other matters contained 
in testimony, Federal tax returns, financial statements, applications 
for enrollment, affidavits, declarations, and any other document or 
statement, written or oral, are included in the term ``information.''
    (5) Solicitation of employment as prohibited under Sec. 10.30, the 
use of false or misleading representations with intent to deceive a 
client or prospective client in order to procure employment, or 
intimating that the practitioner is able improperly to obtain special 
consideration or action from the Internal Revenue Service or any officer 
or employee thereof.
    (6) Willfully failing to make a Federal tax return in violation of 
the Federal tax laws, or willfully evading, attempting to evade, or 
participating in any way in evading or attempting to evade any 
assessment or payment of any Federal tax.
    (7) Willfully assisting, counseling, encouraging a client or 
prospective client in violating, or suggesting to a client or 
prospective client to violate, any Federal tax law, or knowingly 
counseling or suggesting to a client or prospective client an illegal 
plan to evade Federal taxes or payment thereof.
    (8) Misappropriation of, or failure properly or promptly to remit, 
funds received from a client for the purpose of payment of taxes or 
other obligations due the United States.
    (9) Directly or indirectly attempting to influence, or offering or 
agreeing to attempt to influence, the official action of any officer or 
employee of the Internal Revenue Service by the use of threats, false 
accusations, duress or coercion, by the offer of any special inducement 
or promise of an advantage, or by the bestowing of any gift, favor or 
thing of value.
    (10) Disbarment or suspension from practice as an attorney, 
certified public accountant, public accountant or actuary by any duly 
constituted authority of any State, territory, or possession of the 
United States, including a Commonwealth, or the District of Columbia, 
any Federal court of record or any Federal agency, body or board.
    (11) Knowingly aiding and abetting another person to practice before 
the Internal Revenue Service during a period of suspension, disbarment 
or ineligibility of such other person.
    (12) Contemptuous conduct in connection with practice before the 
Internal Revenue Service, including the use of abusive language, making 
false accusations or statements, knowing them to be false or circulating 
or publishing malicious or libelous matter.
    (13) Giving a false opinion, knowingly, recklessly, or through gross 
incompetence, including an opinion which is intentionally or recklessly 
misleading, or engaging in a pattern of providing incompetent opinions 
on questions arising under the Federal tax laws. False opinions 
described in this paragraph (a)(13) include those which reflect or 
result from a knowing misstatement of fact or law, from an assertion of 
a position known to be unwarranted under existing law, from counseling 
or assisting in conduct known to be illegal or fraudulent, from 
concealing matters required by law to be revealed, or from consciously 
disregarding information indicating that material facts expressed in the 
opinion or offering material are false or misleading. For purposes of 
this paragraph (a)(13), reckless conduct is a highly unreasonable 
omission or misrepresentation involving an extreme departure from the 
standards of ordinary care that a practitioner should observe under the 
circumstances. A pattern of conduct is a factor that will be taken

[[Page 158]]

into account in determining whether a practitioner acted knowingly, 
recklessly, or through gross incompetence. Gross incompetence includes 
conduct that reflects gross indifference, preparation which is grossly 
inadequate under the circumstances, and a consistent failure to perform 
obligations to the client.
    (14) Willfully failing to sign a tax return prepared by the 
practitioner when the practitioner's signature is required by the 
Federal tax laws unless the failure is due to reasonable cause and not 
due to willful neglect.
    (15) Willfully disclosing or otherwise using a tax return or tax 
return information in a manner not authorized by the Internal Revenue 
Code, contrary to the order of a court of competent jurisdiction, or 
contrary to the order of an administrative law judge in a proceeding 
instituted under Sec. 10.60.
    (b) Effective/applicability date. This section is applicable to 
conduct occurring on or after September 26, 2007.

[T.D. 9359, 72 FR 54550, Sept. 26, 2007]



Sec. 10.52  Violations subject to sanction.

    (a) A practitioner may be sanctioned under Sec. 10.50 if the 
practitioner--
    (1) Willfully violates any of the regulations (other than Sec. 
10.33) contained in this part; or
    (2) Recklessly or through gross incompetence (within the meaning of 
Sec. 10.51(a)(13)) violates Sec. Sec. 10.34, 10.35, 10.36 or 10.37.
    (b) Effective/applicability date. This section is applicable to 
conduct occurring on or after September 26, 2007.

[T.D. 9359, 72 FR 54551, Sept. 26, 2007]



Sec. 10.53  Receipt of information concerning practitioner.

    (a) Officer or employee of the Internal Revenue Service. If an 
officer or employee of the Internal Revenue Service has reason to 
believe that a practitioner has violated any provision of this part, the 
officer or employee will promptly make a written report to the Director 
of the Office of Professional Responsibility of the suspected violation. 
The report will explain the facts and reasons upon which the officer's 
or employee's belief rests.
    (b) Other persons. Any person other than an officer or employee of 
the Internal Revenue Service having information of a violation of any 
provision of this part may make an oral or written report of the alleged 
violation to the Director of the Office of Professional Responsibility 
or any officer or employee of the Internal Revenue Service. If the 
report is made to an officer or employee of the Internal Revenue 
Service, the officer or employee will make a written report of the 
suspected violation to the Director of the Office of Professional 
Responsibility.
    (c) Destruction of report. No report made under paragraph (a) or (b) 
of this section shall be maintained by the Director of the Office of 
Professional Responsibility unless retention of the report is 
permissible under the applicable records control schedule as approved by 
the National Archives and Records Administration and designated in the 
Internal Revenue Manual. The Director of the Office of Professional 
Responsibility must destroy the reports as soon as permissible under the 
applicable records control schedule.
    (d) Effect on proceedings under subpart D. The destruction of any 
report will not bar any proceeding under subpart D of this part, but 
will preclude the Director of the Office of Professional 
Responsibility's use of a copy of the report in a proceeding under 
subpart D of this part.
    (e) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54551, Sept. 26, 2007]



         Subpart D_Rules Applicable to Disciplinary Proceedings

    Source: T.D. 9011, 67 FR 48774, July 26, 2002, unless otherwise 
noted.



Sec. 10.60  Institution of proceeding.

    (a) Whenever the Director of the Office of Professional 
Responsibility determines that a practitioner (or employer, firm or 
other entity, if applicable) violated any provision of the laws 
governing practice before the Internal Revenue Service or the 
regulations in this part, the Director of the Office of

[[Page 159]]

Professional Responsibility may reprimand the practitioner or, in 
accordance with Sec. 10.62, institute a proceeding for a sanction 
described in Sec. 10.50. A proceeding is instituted by the filing of a 
complaint, the contents of which are more fully described in Sec. 
10.62.
    (b) Whenever the Director of the Office of Professional 
Responsibility is advised or becomes aware that a penalty has been 
assessed against an appraiser under section 6701(a) of the Internal 
Revenue Code, the Director of the Office of Professional Responsibility 
may reprimand the appraiser or, in accordance with Sec. 10.62, 
institute a proceeding for disqualification of the appraiser. A 
proceeding for disqualification of an appraiser is instituted by the 
filing of a complaint, the contents of which are more fully described in 
Sec. 10.62.
    (c) Except as provided in Sec. 10.82, a proceeding will not be 
instituted under this section unless the proposed respondent previously 
has been advised in writing of the law, facts and conduct warranting 
such action and has been accorded an opportunity to dispute facts, 
assert additional facts, and make arguments (including an explanation or 
description of mitigating circumstances).
    (d) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54544, 54551, Sept. 26, 2007]



Sec. 10.61  Conferences.

    (a) In general. The Director of the Office of Professional 
Responsibility may confer with a practitioner, employer, firm or other 
entity, or an appraiser concerning allegations of misconduct 
irrespective of whether a proceeding has been instituted. If the 
conference results in a stipulation in connection with an ongoing 
proceeding in which the practitioner, employer, firm or other entity, or 
appraiser is the respondent, the stipulation may be entered in the 
record by either party to the proceeding.
    (b) Voluntary sanction--(1) In general. In lieu of a proceeding 
being instituted or continued under Sec. 10.60(a), a practitioner or 
appraiser (or employer, firm or other entity, if applicable) may offer a 
consent to be sanctioned under Sec. 10.50.
    (2) Discretion; acceptance or declination. The Director of the 
Office of Professional Responsibility may, in his or her discretion, 
accept or decline the offer described in paragraph (b)(1) of this 
section. In any declination, the Director of the Office of Professional 
Responsibility may state that he or she would accept the offer described 
in paragraph (b)(1) of this section if it contained different terms. The 
Director of the Office of Professional Responsibility may, in his or her 
discretion, accept or reject a revised offer submitted in response to 
the declination or may counteroffer and act upon any accepted 
counteroffer.
    (c) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54551, Sept. 26, 2007]



Sec. 10.62  Contents of complaint.

    (a) Charges. A complaint must name the respondent, provide a clear 
and concise description of the facts and law that constitute the basis 
for the proceeding, and be signed by the Director of the Office of 
Professional Responsibility or a person representing the Director of the 
Office of Professional Responsibility under Sec. 10.69(a)(1). A 
complaint is sufficient if it fairly informs the respondent of the 
charges brought so that the respondent is able to prepare a defense.
    (b) Specification of sanction. The complaint must specify the 
sanction sought by the Director of the Office of Professional 
Responsiblity against the practitioner or appraiser. If the sanction 
sought is a suspension, the duration of the suspension sought must be 
specified.
    (c) Demand for answer. The Director of the Office of Professional 
Responsibility must, in the complaint or in a separate paper attached to 
the complaint, notify the respondent of the time for answering the 
complaint, which may not be less than 30 days from the date of service 
of the complaint, the name and address of the Administrative Law Judge 
with whom the

[[Page 160]]

answer must be filed, the name and address of the person representing 
the Director of the Office of Professional Responsibility to whom a copy 
of the answer must be served, and that a decision by default may be 
rendered against the respondent in the event an answer is not filed as 
required.
    (d) Effective/applicability date.This section is applicable to 
complaints brought on or after September 26, 2007.

[T.D. 9359, 72 FR 54551, Sept. 26, 2007]



Sec. 10.63  Service of complaint; service of other papers; service of evidence 

in support of complaint; filing of papers.

    (a) Service of complaint--(1) In general. The complaint or a copy of 
the complaint must be served on the respondent by any manner described 
in paragraphs (a)(2) or (3) of this section.
    (2) Service by certified or first class mail. (i) Service of the 
complaint may be made on the respondent by mailing the complaint by 
certified mail to the last known address (as determined under section 
6212 of the Internal Revenue Code and the regulations thereunder) of the 
respondent. Where service is by certified mail, the returned post office 
receipt duly signed by the respondent will be proof of service.
    (ii) If the certified mail is not claimed or accepted by the 
respondent, or is returned undelivered, service may be made on the 
respondent, by mailing the complaint to the respondent by first class 
mail. Service by this method will be considered complete upon mailing, 
provided the complaint is addressed to the respondent at the 
respondent's last known address as determined under section 6212 of the 
Internal Revenue Code and the regulations thereunder.
    (3) Service by other than certified or first class mail. (i) Service 
of the complaint may be made on the respondent by delivery by a private 
delivery service designated pursuant to section 7502(f) of the Internal 
Revenue Code to the last known address (as determined under section 6212 
of the Internal Revenue Code and the regulations thereunder) of the 
respondent. Service by this method will be considered complete, provided 
the complaint is addressed to the respondent at the respondent's last 
known address as determined under section 6212 of the Internal Revenue 
Code and the regulations thereunder.
    (ii) Service of the complaint may be made in person on, or by 
leaving the complaint at the office or place of business of, the 
respondent. Service by this method will be considered complete and proof 
of service will be a written statement, sworn or affirmed by the person 
who served the complaint, identifying the manner of service, including 
the recipient, relationship of recipient to respondent, place, date and 
time of service.
    (iii) Service may be made by any other means agreed to by the 
respondent. Proof of service will be a written statement, sworn or 
affirmed by the person who served the complaint, identifying the manner 
of service, including the recipient, relationship of recipient to 
respondent, place, date and time of service.
    (4) For purposes of this section, respondent means the practitioner, 
employer, firm or other entity, or appraiser named in the complaint or 
any other person having the authority to accept mail on behalf of the 
practitioner, employer, firm or other entity, or appraiser.
    (b) Service of papers other than complaint. Any paper other than the 
complaint may be served on the respondent, or his or her authorized 
representative under Sec. 10.69(a)(2) by:
    (1) Mailing the paper by first class mail to the last known address 
(as determined under section 6212 of the Internal Revenue Code and the 
regulations thereunder) of the respondent or the respondent's authorized 
representative,
    (2) Delivery by a private delivery service designated pursuant to 
section 7502(f) of the Internal Revenue Code to the last known address 
(as determined under section 6212 of the Internal Revenue Code and the 
regulations thereunder) of the respondent or the respondent's authorized 
representative, or
    (3) As provided in paragraphs (a)(3)(ii) and (a)(3)(iii) of this 
section.
    (c) Service of papers on the Director of the Office of Professional 
Responsibility.

[[Page 161]]

Whenever a paper is required or permitted to be served on the Director 
of the Office of Professional Responsibility in connection with a 
proceeding under this part, the paper will be served on the Director of 
the Office of Professional Responsibility's authorized representative 
under Sec. 10.69(a)(1) at the address designated in the complaint, or 
at an address provided in a notice of appearance. If no address is 
designated in the complaint or provided in a notice of appearance, 
service will be made on the Director of the Office of Professional 
Responsibility, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC 20224.
    (d) Service of evidence in support of complaint. Within 10 days of 
serving the complaint, copies of the evidence in support of the 
complaint must be served on the respondent in any manner described in 
paragraphs (a)(2) and (3) of this section.
    (e) Filing of papers. Whenever the filing of a paper is required or 
permitted in connection with a proceeding under this part, the original 
paper, plus one additional copy, must be filed with the Administrative 
Law Judge at the address specified in the complaint or at an address 
otherwise specified by the Administrative Law Judge. All papers filed in 
connection with a proceeding under this part must be served on the other 
party, unless the Administrative Law Judge directs otherwise. A 
certificate evidencing such must be attached to the original paper filed 
with the Administrative Law Judge.
    (f) Effective/applicability date. This section is applicable to 
complaints brought on or after September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54544, 54552, Sept. 26, 2007]



Sec. 10.64  Answer; default.

    (a) Filing. The respondent's answer must be filed with the 
Administrative Law Judge, and served on the Director of the Office of 
Professional Responsibility, within the time specified in the complaint 
unless, on request or application of the respondent, the time is 
extended by the Administrative Law Judge.
    (b) Contents. The answer must be written and contain a statement of 
facts that constitute the respondent's grounds of defense. General 
denials are not permitted. The respondent must specifically admit or 
deny each allegation set forth in the complaint, except that the 
respondent may state that the respondent is without sufficient 
information to admit or deny a specific allegation. The respondent, 
nevertheless, may not deny a material allegation in the complaint that 
the respondent knows to be true, or state that the respondent is without 
sufficient information to form a belief, when the respondent possesses 
the required information. The respondent also must state affirmatively 
any special matters of defense on which he or she relies.
    (c) Failure to deny or answer allegations in the complaint. Every 
allegation in the complaint that is not denied in the answer is deemed 
admitted and will be considered proved; no further evidence in respect 
of such allegation need be adduced at a hearing.
    (d) Default. Failure to file an answer within the time prescribed 
(or within the time for answer as extended by the Administrative Law 
Judge), constitutes an admission of the allegations of the complaint and 
a waiver of hearing, and the Administrative Law Judge may make the 
decision by default without a hearing or further procedure. A decision 
by default constitutes a decision under Sec. 10.76.
    (e) Signature. The answer must be signed by the respondent or the 
respondent's authorized representative under Sec. 10.69(a)(2) and must 
include a statement directly above the signature acknowledging that the 
statements made in the answer are true and correct and that knowing and 
willful false statements may be punishable under 18 U.S.C. 1001.



Sec. 10.65  Supplemental charges.

    (a) In general. The Director of the Office of Professional 
Responsibility may file supplemental charges, by amending the complaint 
with the permission of the Administrative Law Judge, against the 
respondent, if, for example--
    (1) It appears that the respondent, in the answer, falsely and in 
bad faith, denies a material allegation of fact in the

[[Page 162]]

complaint or states that the respondent has insufficient knowledge to 
form a belief, when the respondent possesses such information; or
    (2) It appears that the respondent has knowingly introduced false 
testimony during the proceedings against the respondent.
    (b) Hearing. The supplemental charges may be heard with other 
charges in the case, provided the respondent is given due notice of the 
charges and is afforded a reasonable opportunity to prepare a defense to 
the supplemental charges.
    (c) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54552, Sept. 26, 2007]



Sec. 10.66  Reply to answer.

    The Director of the Office of Professional Responsibility may file a 
reply to the respondent's answer, but unless otherwise ordered by the 
Administrative Law Judge, no reply to the respondent's answer is 
required. If a reply is not filed, new matter in the answer is deemed 
denied.



Sec. 10.67  Proof; variance; amendment of pleadings.

    In the case of a variance between the allegations in pleadings and 
the evidence adduced in support of the pleadings, the Administrative Law 
Judge, at any time before decision, may order or authorize amendment of 
the pleadings to conform to the evidence. The party who would otherwise 
be prejudiced by the amendment must be given a reasonable opportunity to 
address the allegations of the pleadings as amended and the 
Administrative Law Judge must make findings on any issue presented by 
the pleadings as amended.



Sec. 10.68  Motions and requests.

    (a) Motions--(1) In general. At any time after the filing of the 
complaint, any party may file a motion with the Administrative Law 
Judge. Unless otherwise ordered by the Administrative Law Judge, motions 
must be in writing and must be served on the opposing party as provided 
in Sec. 10.63(b). A motion must concisely specify its grounds and the 
relief sought, and, if appropriate, must contain a memorandum of facts 
and law in support.
    (2) Summary adjudication. Either party may move for a summary 
adjudication upon all or any part of the legal issues in controversy. If 
the non-moving party opposes summary adjudication in the moving party's 
favor, the non-moving party must file a written response within 30 days 
unless ordered otherwise by the Administrative Law Judge.
    (3) Good Faith. A party filing a motion for extension of time, a 
motion for postponement of a hearing, or any other non-dispositive or 
procedural motion must first contact the other party to determine 
whether there is any objection to the motion, and must state in the 
motion whether the other party has an objection.
    (b) Response. Unless otherwise ordered by the Administrative Law 
Judge, the nonmoving party is not required to file a response to a 
motion. If the Administrative Law Judge does not order the nonmoving 
party to file a response, and the nonmoving party files no response, the 
nonmoving party is deemed to oppose the motion. If a nonmoving party 
does not respond within 30 days of the filing of a motion for decision 
by default for failure to file a timely answer or for failure to 
prosecute, the nonmoving party is deemed not to oppose the motion.
    (c) Oral motions; oral argument--(1) The Administrative Law Judge 
may, for good cause and with notice to the parties, permit oral motions 
and oral opposition to motions.
    (2) The Administrative Law Judge may, within his or her discretion, 
permit oral argument on any motion.
    (d) Orders. The Administrative Law Judge should issue written orders 
disposing of any motion or request and any response thereto.
    (e) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54552, Sept. 26, 2007]



Sec. 10.69  Representation; ex parte communication.

    (a) Representation. (1) The Director of the Office of Professional 
Responsibility may be represented in proceedings under this part by an 
attorney

[[Page 163]]

or other employee of the Internal Revenue Service. An attorney or an 
employee of the Internal Revenue Service representing the Director of 
the Office of Professional Responsibility in a proceeding under this 
part may sign the complaint or any document required to be filed in the 
proceeding on behalf of the Director of the Office of Professional 
Responsibility.
    (2) A respondent may appear in person, be represented by a 
practitioner, or be represented by an attorney who has not filed a 
declaration with the Internal Revenue Service pursuant to Sec. 10.3. A 
practitioner or an attorney representing a respondent or proposed 
respondent may sign the answer or any document required to be filed in 
the proceeding on behalf of the respondent.
    (b) Ex parte communication. The Director of the Office of 
Professional Responsibility, the respondent, and any representatives of 
either party, may not attempt to initiate or participate in ex parte 
discussions concerning a proceeding or potential proceeding with the 
Administrative Law Judge (or any person who is likely to advise the 
Administrative Law Judge on a ruling or decision) in the proceeding 
before or during the pendency of the proceeding. Any memorandum, letter 
or other communication concerning the merits of the proceeding, 
addressed to the Administrative Law Judge, by or on behalf of any party 
shall be regarded as an argument in the proceeding and shall be served 
on the other party.



Sec. 10.70  Administrative Law Judge.

    (a) Appointment. Proceedings on complaints for the sanction (as 
described in Sec. 10.50) of a practitioner, employer, firm or other 
entity, or appraiser will be conducted by an Administrative Law Judge 
appointed as provided by 5 U.S.C. 3105.
    (b) Powers of the Administrative Law Judge. The Administrative Law 
Judge, among other powers, has the authority, in connection with any 
proceeding under Sec. 10.60 assigned or referred to him or her, to do 
the following:
    (1) Administer oaths and affirmations;
    (2) Make rulings on motions and requests, which rulings may not be 
appealed prior to the close of a hearing except in extraordinary 
circumstances and at the discretion of the Administrative Law Judge;
    (3) Determine the time and place of hearing and regulate its course 
and conduct;
    (4) Adopt rules of procedure and modify the same from time to time 
as needed for the orderly disposition of proceedings;
    (5) Rule on offers of proof, receive relevant evidence, and examine 
witnesses;
    (6) Take or authorize the taking of depositions or answers to 
requests for admission;
    (7) Receive and consider oral or written argument on facts or law;
    (8) Hold or provide for the holding of conferences for the 
settlement or simplification of the issues with the consent of the 
parties;
    (9) Perform such acts and take such measures as are necessary or 
appropriate to the efficient conduct of any proceeding; and
    (10) Make decisions.
    (c) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002, as amended by T.D. 9359, 72 FR 
54552, Sept. 26, 2007]



Sec. 10.71  Discovery.

    (a) In general. Discovery may be permitted, at the discretion of the 
Administrative Law Judge, only upon written motion demonstrating the 
relevance, materiality and reasonableness of the requested discovery and 
subject to the requirements of Sec. 10.72(d)(2) and (3). Within 10 days 
of receipt of the answer, the Administrative Law Judge will notify the 
parties of the right to request discovery and the timeframes for filing 
a request. A request for discovery, and objections, must be filed in 
accordance with Sec. 10.68. In response to a request for discovery, the 
Administrative Law Judge may order--
    (1) Depositions upon oral examination; or
    (2) Answers to requests for admission.
    (b) Depositions upon oral examination--(1) A deposition must be 
taken before an officer duly authorized to administer an oath for 
general purposes or

[[Page 164]]

before an officer or employee of the Internal Revenue Service who is 
authorized to administer an oath in Federal tax law matters.
    (2) In ordering a deposition, the Administrative Law Judge will 
require reasonable notice to the opposing party as to the time and place 
of the deposition. The opposing party, if attending, will be provided 
the opportunity for full examination and cross-examination of any 
witness.
    (3) Expenses in the reporting of depositions shall be borne by the 
party at whose instance the deposition is taken. Travel expenses of the 
deponent shall be borne by the party requesting the deposition, unless 
otherwise authorized by Federal law or regulation.
    (c) Requests for admission. Any party may serve on any other party a 
written request for admission of the truth of any matters which are not 
privileged and are relevant to the subject matter of this proceeding. 
Requests for admission shall not exceed a total of 30 (including any 
subparts within a specific request) without the approval from the 
Administrative Law Judge.
    (d) Limitations. Discovery shall not be authorized if--
    (1) The request fails to meet any requirement set forth in paragraph 
(a) of this section;
    (2) It will unduly delay the proceeding;
    (3) It will place an undue burden on the party required to produce 
the discovery sought;
    (4) It is frivolous or abusive;
    (5) It is cumulative or duplicative;
    (6) The material sought is privileged or otherwise protected from 
disclosure by law;
    (7) The material sought relates to mental impressions, conclusions, 
or legal theories of any party, attorney, or other representative, of a 
party prepared in anticipation of a proceeding; or
    (8) The material sought is available generally to the public, 
equally to the parties, or to the party seeking the discovery through 
another source.
    (e) Failure to comply. Where a party fails to comply with an order 
of the Administrative Law Judge under this section, the Administrative 
Law Judge may, among other things, infer that the information would be 
adverse to the party failing to provide it, exclude the information from 
evidence or issue a decision by default.
    (f) Other discovery. No discovery other than that specifically 
provided for in this section is permitted.
    (g) Effective/applicability date. This section is applicable to 
proceedings initiated on or after September 26, 2007.

[T.D. 9359, 72 FR 54552, Sept. 26, 2007]



Sec. 10.72  Hearings.

    (a) In general--(1) Presiding officer. An Administrative Law Judge 
will preside at the hearing on a complaint filed under Sec. 10.60 for 
the sanction of a practitioner, employer, firm or other entity, or 
appraiser.
    (2) Time for hearing. Absent a determination by the Administrative 
Law Judge that, in the interest of justice, a hearing must be held at a 
later time, the Administrative Law Judge should, on notice sufficient to 
allow proper preparation, schedule the hearing to occur no later than 
180 days after the time for filing the answer.
    (3) Procedural requirements. (i) Hearings will be stenographically 
recorded and transcribed and the testimony of witnesses will be taken 
under oath or affirmation.
    (ii) Hearings will be conducted pursuant to 5 U.S.C. 556.
    (iii) A hearing in a proceeding requested under Sec. 10.82(g) will 
be conducted de novo.
    (iv) An evidentiary hearing must be held in all proceedings prior to 
the issuance of a decision by the Administrative Law Judge unless--
    (A) The Director of the Office of Professional Responsibility 
withdraws the complaint;
    (B) A decision is issued by default pursuant to Sec. 10.64(d);
    (C) A decision is issued under Sec. 10.82(e);
    (D) The respondent requests a decision on the written record without 
a hearing; or
    (E) The Administrative Law Judge issues a decision under Sec. 
10.68(d) or rules on another motion that disposes of the case prior to 
the hearing.
    (b) Cross-examination. A party is entitled to present his or her 
case or defense by oral or documentary evidence, to submit rebuttal 
evidence, and to conduct

[[Page 165]]

cross-examination, in the presence of the Administrative Law Judge, as 
may be required for a full and true disclosure of the facts. This 
paragraph (b) does not limit a party from presenting evidence contained 
within a deposition when the Administrative Law Judge determines that 
the deposition has been obtained in compliance with the rules of this 
subpart D.
    (c) Prehearing memorandum. Unless otherwise ordered by the 
Administrative Law Judge, each party shall file, and serve on the 
opposing party or the opposing party's representative, prior to any 
hearing, a prehearing memorandum containing--
    (1) A list (together with a copy) of all proposed exhibits to be 
used in the party's case in chief;
    (2) A list of proposed witnesses, including a synopsis of their 
expected testimony, or a statement that no witnesses will be called;
    (3) Identification of any proposed expert witnesses, including a 
synopsis of their expected testimony and a copy of any report prepared 
by the expert or at his or her direction; and
    (4) A list of undisputed facts.
    (d) Publicity--(1) In general. All reports and decisions of the 
Secretary of the Treasury, or delegate, including any reports and 
decisions of the Administrative Law Judge, under this subpart D are, 
subject to the protective measures in paragraph (d)(4) of this section, 
public and open to inspection within 30 days after the agency's decision 
becomes final.
    (2) Request for additional publicity. The Administrative Law Judge 
may grant a request by a practitioner or appraiser that all the 
pleadings and evidence of the disciplinary proceeding be made available 
for inspection where the parties stipulate in advance to adopt the 
protective measures in paragraph (d)(4) of this section.
    (3) Returns and return information--(i) Disclosure to practitioner 
or appraiser. Pursuant to section 6103(l)(4) of the Internal Revenue 
Code, the Secretary of the Treasury, or delegate, may disclose returns 
and return information to any practitioner or appraiser, or to the 
authorized representative of the practitioner or appraiser, whose rights 
are or may be affected by an administrative action or proceeding under 
this subpart D, but solely for use in the action or proceeding and only 
to the extent that the Secretary of the Treasury, or delegate, 
determines that the returns or return information are or may be relevant 
and material to the action or proceeding.
    (ii) Disclosure to officers and employees of the Department of the 
Treasury.
    Pursuant to section 6103(l)(4)(B) of the Internal Revenue Code, the 
Secretary of the Treasury, or delegate, may disclose returns and return 
information to officers and employees of the Department of the Treasury 
for use in any action or proceeding under this subpart D, to the extent 
necessary to advance or protect the interests of the United States.
    (iii) Use of returns and return information. Recipients of returns 
and return information under this paragraph (d)(3) may use the returns 
or return information solely in the action or proceeding, or in 
preparation for the action or proceeding, with respect to which the 
disclosure was made.
    (iv) Procedures for disclosure of returns and return information. 
When providing returns or return information to the practitioner or 
appraiser, or authorized representative, the Secretary of the Treasury, 
or delegate, will--
    (A) Redact identifying information of any third party taxpayers and 
replace it with a code;
    (B) Provide a key to the coded information; and
    (C) Notify the practitioner or appraiser, or authorized 
representative, of the restrictions on the use and disclosure of the 
returns and return information, the applicable damages remedy under 
section 7431 of the Internal Revenue Code, and that unauthorized 
disclosure of information provided by the Internal Revenue Service under 
this paragraph (d)(3) is also a violation of this part.
    (4) Protective measures--(i) Mandatory protective order. If 
redaction of names, addresses, and other identifying information of 
third party taxpayers may still permit indirect identification of any 
third party taxpayer, the Administrative Law Judge will issue a 
protective order to ensure that the identifying information is available 
to the parties and the Administrative Law Judge for purposes of the 
proceeding, but is not disclosed to, or open to inspection by, the 
public.

[[Page 166]]

    (ii) Authorized orders. (A) Upon motion by a party or any other 
affected person, and for good cause shown, the Administrative Law Judge 
may make any order which justice requires to protect any person in the 
event disclosure of information is prohibited by law, privileged, 
confidential, or sensitive in some other way, including, but not limited 
to, one or more of the following--
    (1) That disclosure of information be made only on specified terms 
and conditions, including a designation of the time or place;
    (2) That a trade secret or other information not be disclosed, or be 
disclosed only in a designated way.
    (iii) Denials. If a motion for a protective order is denied in whole 
or in part, the Administrative Law Judge may, on such terms or 
conditions as the Administrative Law Judge deems just, order any party 
or person to comply with, or respond in accordance with, the procedure 
involved.
    (iv) Public inspection of documents. The Secretary of the Treasury, 
or delegate, shall ensure that all names, addresses or other identifying 
details of third party taxpayers are redacted and replaced with the code 
assigned to the corresponding taxpayer in all documents prior to public 
inspection of such documents.
    (e) Location. The location of the hearing will be determined by the 
agreement of the parties with the approval of the Administrative Law 
Judge, but, in the absence of such agreement and approval, the hearing 
will be held in Washington, D.C.
    (f) Failure to appear. If either party to the proceeding fails to 
appear at the hearing, after notice of the proceeding has been sent to 
him or her, the party will be deemed to have waived the right to a 
hearing and the Administrative Law Judge may make his or her decision 
against the absent party by default.
    (g) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002. Redesignated and amended by T.D. 
9359, 72 FR 54552, 54553, Sept. 26, 2007]



Sec. 10.73  Evidence.

    (a) In general. The rules of evidence prevailing in courts of law 
and equity are not controlling in hearings or proceedings conducted 
under this part. The Administrative Law Judge may, however, exclude 
evidence that is irrelevant, immaterial, or unduly repetitious,
    (b) Depositions. The deposition of any witness taken pursuant to 
Sec. 10.71 may be admitted into evidence in any proceeding instituted 
under Sec. 10.60.
    (c) Requests for admission. Any matter admitted in response to a 
request for admission under Sec. 10.71 is conclusively established 
unless the Administrative Law Judge on motion permits withdrawal or 
modification of the admission. Any admission made by a party is for the 
purposes of the pending action only and is not an admission by a party 
for any other purpose, nor may it be used against a party in any other 
proceeding.
    (d) Proof of documents. Official documents, records, and papers of 
the Internal Revenue Service and the Office of Professional 
Responsibility are admissible in evidence without the production of an 
officer or employee to authenticate them. Any documents, records, and 
papers may be evidenced by a copy attested to or identified by an 
officer or employee of the Internal Revenue Service or the Treasury 
Department, as the case may be.
    (e) Withdrawal of exhibits. If any document, record, or other paper 
is introduced in evidence as an exhibit, the Administrative Law Judge 
may authorize the withdrawal of the exhibit subject to any conditions 
that he or she deems proper.
    (f) Objections. Objections to evidence are to be made in short form, 
stating the grounds for the objection. Except as ordered by the 
Administrative Law Judge, argument on objections will not be recorded or 
transcribed. Rulings on objections are to be a part of the record, but 
no exception to a ruling is necessary to preserve the rights of the 
parties.
    (g) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48765, July 26, 2002. Redesignated and amended by T.D. 
9359, 72 FR 54552, 54554, Sept. 26, 2007]



Sec. 10.74  Transcript.

    In cases where the hearing is stenographically reported by a 
Government

[[Page 167]]

contract reporter, copies of the transcript may be obtained from the 
reporter at rates not to exceed the maximum rates fixed by contract 
between the Government and the reporter. Where the hearing is 
stenographically reported by a regular employee of the Internal Revenue 
Service, a copy will be supplied to the respondent either without charge 
or upon the payment of a reasonable fee. Copies of exhibits introduced 
at the hearing or at the taking of depositions will be supplied to the 
parties upon the payment of a reasonable fee (Sec. 501, Public Law 82-
137)(65 Stat. 290)(31 U.S.C. 483a).



Sec. 10.75  Proposed findings and conclusions.

    Except in cases where the respondent has failed to answer the 
complaint or where a party has failed to appear at the hearing, the 
parties must be afforded a reasonable opportunity to submit proposed 
findings and conclusions and their supporting reasons to the 
Administrative Law Judge.



Sec. 10.76  Decision of Administrative Law Judge.

    (a) In general-- (1) Hearings. Within 180 days after the conclusion 
of a hearing and the receipt of any proposed findings and conclusions 
timely submitted by the parties, the Administrative Law Judge should 
enter a decision in the case. The decision must include a statement of 
findings and conclusions, as well as the reasons or basis for making 
such findings and conclusions, and an order of censure, suspension, 
disbarment, monetary penalty, disqualification, or dismissal of the 
complaint.
    (2) Summary adjudication. In the event that a motion for summary 
adjudication is filed, the Administrative Law Judge should rule on the 
motion for summary adjudication within 60 days after the party in 
opposition files a written response, or if no written response is filed, 
within 90 days after the motion for summary adjudication is filed. A 
decision shall thereafter be rendered if the pleadings, depositions, 
admissions, and any other admissible evidence show that there is no 
genuine issue of material fact and that a decision may be rendered as a 
matter of law. The decision must include a statement of conclusions, as 
well as the reasons or basis for making such conclusions, and an order 
of censure, suspension, disbarment, monetary penalty, disqualification, 
or dismissal of the complaint.
    (3) Returns and return information. In the decision, the 
Administrative Law Judge should use the code assigned to third party 
taxpayers (described in Sec. 10.72(d)).
    (b) Standard of proof. If the sanction is censure or a suspension of 
less than six months' duration, the Administrative Law Judge, in 
rendering findings and conclusions, will consider an allegation of fact 
to be proven if it is established by the party who is alleging the fact 
by a preponderance of the evidence in the record. If the sanction is a 
monetary penalty, disbarment or a suspension of six months or longer 
duration, an allegation of fact that is necessary for a finding against 
the practitioner must be proven by clear and convincing evidence in the 
record. An allegation of fact that is necessary for a finding of 
disqualification against an appraiser must be proven by clear and 
convincing evidence in the record.
    (c) Copy of decision. The Administrative Law Judge will provide the 
decision to the Director of the Office of Professional Responsibility, 
with a copy to the Director's authorized representative, and a copy of 
the decision to the respondent or the respondent's authorized 
representative.
    (d) When final. In the absence of an appeal to the Secretary of the 
Treasury or delegate, the decision of the Administrative Law Judge will, 
without further proceedings, become the decision of the agency 30 days 
after the date of the Administrative Law Judge's decision.
    (e) Effective/applicability date. This section is applicable to 
proceedings initiated on or after September 26, 2007.

[T.D. 9359, 72 FR 54554, Sept. 26, 2007]



Sec. 10.77  Appeal of decision of Administrative Law Judge.

    (a) Appeal. Any party to the proceeding under this subpart D may 
file an appeal of the decision of the Administrative Law Judge with the 
Secretary of the Treasury, or delegate. The appeal must include a brief 
that states

[[Page 168]]

exceptions to the decision of the Administrative Law Judge and 
supporting reasons for such exceptions.
    (b) Time and place for filing of appeal. The appeal and brief must 
be filed, in duplicate, with the Director of the Office of Professional 
Responsibility within 30 days of the date that the decision of the 
Administrative Law Judge is served on the parties. The Director of the 
Office of Professional Responsibility will immediately furnish a copy of 
the appeal to the Secretary of the Treasury or delegate who decides 
appeals. A copy of the appeal for review must be sent to any non-
appealing party. If the Director of the Office of Professional 
Responsibility files an appeal, he or she will provide a copy of the 
appeal and certify to the respondent that the appeal has been filed.
    (c) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54555, Sept. 26, 2007]



Sec. 10.78  Decision on review.

    (a) Decision on review. On appeal from or review of the decision of 
the Administrative Law Judge, the Secretary of the Treasury, or 
delegate, will make the agency decision. The Secretary of the Treasury, 
or delegate, should make the agency decision within 180 days after 
receipt of the appeal.
    (b) Standard of review. The decision of the Administrative Law Judge 
will not be reversed unless the appellant establishes that the decision 
is clearly erroneous in light of the evidence in the record and 
applicable law. Issues that are exclusively matters of law will be 
reviewed de novo. In the event that the Secretary of the Treasury, or 
delegate, determines that there are unresolved issues raised by the 
record, the case may be remanded to the Administrative Law Judge to 
elicit additional testimony or evidence.
    (c) Copy of decision on review. The Secretary of the Treasury, or 
delegate, will provide copies of the agency decision to the Director of 
the Office of Professional Responsibility and the respondent or the 
respondent's authorized representative.
    (d) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54555, Sept. 26, 2007]



Sec. 10.79  Effect of disbarment, suspension, or censure.

    (a) Disbarment. When the final decision in a case is against the 
respondent (or the respondent has offered his or her consent and such 
consent has been accepted by the Director of the Office of Professional 
Responsibility) and such decision is for disbarment, the respondent will 
not be permitted to practice before the Internal Revenue Service unless 
and until authorized to do so by the Director of the Office of 
Professional Responsibility pursuant to Sec. 10.81.
    (b) Suspension. When the final decision in a case is against the 
respondent (or the respondent has offered his or her consent and such 
consent has been accepted by the Director of the Office of Professional 
Responsibility) and such decision is for suspension, the respondent will 
not be permitted to practice before the Internal Revenue Service during 
the period of suspension. For periods after the suspension, the 
practitioner's future representations may be subject to conditions as 
authorized by paragraph (d) of this section.
    (c) Censure. When the final decision in the case is against the 
respondent (or the respondent has offered his or her consent and such 
consent has been accepted by the Director of the Office of Professional 
Responsibility) and such decision is for censure, the respondent will be 
permitted to practice before the Internal Revenue Service, but the 
respondent's future representations may be subject to conditions as 
authorized by paragraph (d) of this section.
    (d) Conditions. After being subject to the sanction of either 
suspension or censure, the future representations of a practitioner so 
sanctioned shall be subject to conditions prescribed by the Director of 
the Office of Professional Responsibility designed to promote high 
standards of conduct. These conditions can be imposed for a reasonable 
period in light of the gravity of the practitioner's violations. For 
example, where a practitioner is censured because he or

[[Page 169]]

she failed to advise his or her clients about a potential conflict of 
interest or failed to obtain the clients' written consents, the Director 
of the Office of Professional Responsibility may require the 
practitioner to provide the Director of the Office of Professional 
Responsibility or another Internal Revenue Service official with a copy 
of all consents obtained by the practitioner for an appropriate period 
following censure, whether or not such consents are specifically 
requested.



Sec. 10.80  Notice of disbarment, suspension, censure, or disqualification.

    On the issuance of a final order censuring, suspending, or 
disbarring a practitioner or a final order disqualifying an appraiser, 
the Director of the Office of Professional Responsibility may give 
notice of the censure, suspension, disbarment, or disqualification to 
appropriate officers and employees of the Internal Revenue Service and 
to interested departments and agencies of the Federal government. The 
Director of the Office of Professional Responsibility may determine the 
manner of giving notice to the proper authorities of the State by which 
the censured, suspended, or disbarred person was licensed to practice.



Sec. 10.81  Petition for reinstatement.

    The Director of the Office of Professional Responsibility may 
entertain a petition for reinstatement from any person disbarred from 
practice before the Internal Revenue Service or any disqualified 
appraiser after the expiration of 5 years following such disbarment or 
disqualification. Reinstatement may not be granted unless the Director 
of the Office of Professional Responsibility is satisfied that the 
petitioner, thereafter, is not likely to conduct himself contrary to the 
regulations in this part, and that granting such reinstatement would not 
be contrary to the public interest.



Sec. 10.82  Expedited suspension.

    (a) When applicable. Whenever the Director of the Office of 
Professional Responsibility determines that a practitioner is described 
in paragraph (b) of this section, the Director of the Office of 
Professional Responsibility may institute a proceeding under this 
section to suspend the practitioner from practice before the Internal 
Revenue Service.
    (b) To whom applicable. This section applies to any practitioner 
who, within five years of the date a complaint instituting a proceeding 
under this section is served:
    (1) Has had a license to practice as an attorney, certified public 
accountant, or actuary suspended or revoked for cause (not including 
failure to pay a professional licensing fee) by any authority or court, 
agency, body, or board described in Sec. 10.51(a)(10).
    (2) Has, irrespective of whether an appeal has been taken, been 
convicted of any crime under title 26 of the United States Code, any 
crime involving dishonesty or breach of trust, or any felony for which 
the conduct involved renders the practitioner unfit to practice before 
the Internal Revenue Service.
    (3) Has violated conditions imposed on the practitioner pursuant to 
Sec. 10.79(d).
    (4) Has been sanctioned by a court of competent jurisdiction, 
whether in a civil or criminal proceeding (including suits for 
injunctive relief), relating to any taxpayer's tax liability or relating 
to the practitioner's own tax liability, for--
    (i) Instituting or maintaining proceedings primarily for delay;
    (ii) Advancing frivolous or groundless arguments; or
    (iii) Failing to pursue available administrative remedies.
    (c) Instituting a proceeding. A proceeding under this section will 
be instituted by a complaint that names the respondent, is signed by the 
Director of the Office of Professional Responsibility or a person 
representing the Director of the Office of Professional Responsibility 
under Sec. 10.69(a)(1), is filed in the Director of the Office of 
Professional Responsibility's office, and is served according to the 
rules set forth in paragraph (a) of Sec. 10.63. The complaint must give 
a plain and concise description of the allegations that constitute the 
basis for the proceeding. The complaint must notify the respondent--

[[Page 170]]

    (1) Of the place and due date for filing an answer;
    (2) That a decision by default may be rendered if the respondent 
fails to file an answer as required;
    (3) That the respondent may request a conference with the Director 
of the Office of Professional Responsibility to address the merits of 
the complaint and that any such request must be made in the answer; and
    (4) That the respondent may be suspended either immediately 
following the expiration of the period within which an answer must be 
filed or, if a conference is requested, immediately following the 
conference.
    (d) Answer. The answer to a complaint described in this section must 
be filed no later than 30 calendar days following the date the complaint 
is served, unless the Director of the Office of Professional 
Responsibility extends the time for filing. The answer must be filed in 
accordance with the rules set forth in Sec. 10.64, except as otherwise 
provided in this section. A respondent is entitled to a conference with 
the Director of the Office of Professional Responsibility only if the 
conference is requested in a timely filed answer. If a request for a 
conference is not made in the answer or the answer is not timely filed, 
the respondent will be deemed to have waived his or her right to a 
conference and the Director of the Office of Professional Responsibility 
may suspend such respondent at any time following the date on which the 
answer was due.
    (e) Conference. The Director of the Office of Professional 
Responsibility or his or her designee will preside at a conference 
described in this section. The conference will be held at a place and 
time selected by the Director of the Office of Professional 
Responsibility, but no sooner than 14 calendar days after the date by 
which the answer must be filed with the Director of the Office of 
Professional Responsibility, unless the respondent agrees to an earlier 
date. An authorized representative may represent the respondent at the 
conference. Following the conference, upon a finding that the respondent 
is described in paragraph (b) of this section, or upon the respondent's 
failure to appear at the conference either personally or through an 
authorized representative, the Director of the Office of Professional 
Responsibility may immediately suspend the respondent from practice 
before the Internal Revenue Service.
    (f) Duration of suspension. A suspension under this section will 
commence on the date that written notice of the suspension is issued. A 
practitioner's suspension will remain effective until the earlier of the 
following--
    (1) The Director of the Office of Professional Responsibility lifts 
the suspension after determining that the practitioner is no longer 
described in paragraph (b) of this section or for any other reason; or
    (2) The suspension is lifted by an Administrative Law Judge or the 
Secretary of the Treasury in a proceeding referred to in paragraph (g) 
of this section and instituted under Sec. 10.60.
    (g) Proceeding instituted under Sec. 10.60. If the Director of the 
Office of Professional Responsibility suspends a practitioner under this 
section, the practitioner may ask the Director of the Office of 
Professional Responsibility to issue a complaint under Sec. 10.60. The 
request must be made in writing within 2 years from the date on which 
the practitioner's suspension commences. The Director of the Office of 
Professional Responsibility must issue a complaint requested under this 
paragraph within 30 calendar days of receiving the request.
    (h) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9011, 67 FR 48774, July 26, 2002, as amended by T.D. 9359, 72 FR 
54555, Sept. 26, 2007]



                      Subpart E_General Provisions

    Source: T.D. 9011, 67 FR 48774, July 26, 2002, unless otherwise 
noted.



Sec. 10.90  Records.

    (a) Roster. The Director of the Office of Professional 
Responsibility will maintain, and may make available for public 
inspection in the time and manner prescribed by the Secretary of the 
Treasury, or delegate, rosters of--
    (1) Enrolled agents, including individuals--

[[Page 171]]

    (i) Granted active enrollment to practice;
    (ii) Whose enrollment has been placed in inactive status for failure 
to meet the requirements for renewal of enrollment;
    (iii) Whose enrollment has been placed in inactive retirement 
status; and
    (iv) Whose offer of consent to resign from enrollment has been 
accepted by the Director of the Office of Professional Responsibility 
under Sec. 10.61;
    (2) Individuals (and employers, firms or other entities, if 
applicable) censured, suspended, or disbarred from practice before the 
Internal Revenue Service or upon whom a monetary penalty was imposed;
    (3) Disqualified appraisers; and
    (4) Enrolled retirement plan agents, including individuals--
    (i) Granted active enrollment to practice;
    (ii) Whose enrollment has been placed in inactive status for failure 
to meet the requirements for renewal of enrollment;
    (iii) Whose enrollment has been placed in inactive retirement 
status; and
    (iv) Whose offer of consent to resign from enrollment has been 
accepted by the Director of the Office of Professional Responsibility 
under Sec. 10.61.
    (b) Other records. Other records of the Director of the Office of 
Professional Responsibility may be disclosed upon specific request, in 
accordance with the applicable law.
    (b) Effective/applicability date. This section is applicable on 
September 26, 2007.

[T.D. 9359, 72 FR 54555, Sept. 26, 2007]

    Editorial Note: By T.D. 9359, 72 FR 54555, Sept. 26, 2007, Sec. 
10.90 was revised. However, the revised text contained two paragraphs 
designated paragraph (b).



Sec. 10.91  Saving provision.

    Any proceeding instituted under this part prior to July 26, 2002, 
for which a final decision has not been reached or for which judicial 
review is still available will not be affected by these revisions. Any 
proceeding under this part based on conduct engaged in prior to 
September 26, 2007, which is instituted after that date, will apply 
subpart D and E or this part as revised, but the conduct engaged in 
prior to the effective date of these revisions will be judged by the 
regulations in effect at the time the conduct occurred.

[T.D. 9359, 72 FR 54555, Sept. 26, 2007]



Sec. 10.92  Special orders.

    The Secretary of the Treasury reserves the power to issue such 
special orders as he or she deems proper in any cases within the purview 
of this part.



Sec. 10.93  Effective date.

    Except as otherwise provided in each section and subject to Sec. 
10.91, Part 10 is applicable on July 26, 2002.

[T.D. 9011, 67 FR 48771, July 26, 2002, as amended by T.D. 9165, 69 FR 
75845, Dec. 20, 2004]



PART 11_OPERATION OF VENDING FACILITIES BY THE BLIND ON FEDERAL PROPERTY UNDER 

THE CONTROL OF THE DEPARTMENT OF THE TREASURY--Table of Contents




Sec.
11.1 Purpose.
11.2 Policy.
11.3 Definitions.
11.4 Establishing vending facilities.
11.5 Application for permit.
11.6 Terms of permit.
11.7 Enforcement procedures.
11.8 Reports.

    Authority: 49 Stat. 1559, as amended by Act of Aug. 3, 1954, Pub. L. 
83-565, 68 Stat. 663, as further amended by Pub. L. 93-516, 88 Stat. 
1622, (20 U.S.C. 107).

    Source: 58 FR 57560, Oct. 26, 1993, unless otherwise noted.



Sec. 11.1  Purpose.

    This part contains policy and procedures to ensure the priority of 
blind vendors in operating vending facilities on property controlled by 
the Department of the Treasury. The provisions of this part apply to all 
bureaus, the Departmental Offices and the Office of Inspector General.



Sec. 11.2  Policy.

    Blind vendors licensed by State licensing agencies designated by the 
Secretary of Education under the provisions of the Randolph-Sheppard Act

[[Page 172]]

(20 U.S.C. 107 et seq.) shall be given priority in the location and 
operation of vending facilities, including vending machines, on property 
controlled by the Department of the Treasury, provided the location or 
operation of such facility would not adversely affect the interests of 
the United States. Treasury bureaus shall ensure that the collection and 
distribution of vending machine income from vending machines on 
Treasury-controlled property shall be in compliance with the regulations 
set forth in 34 CFR 395.32. Blind vendors shall also be given priority 
on Treasury-controlled property in the operation of cafeterias according 
to 34 CFR 395.33.



Sec. 11.3  Definitions.

    Terms used are defined in 34 CFR 395.1, except that as used in this 
part, the following terms shall have the following meanings:
    (a) Department of the Treasury controlled property means any Federal 
building, land, or other real property owned, leased, or occupied by a 
bureau or office of the Department of the Treasury, of which the 
maintenance, operation, and protection is under the control of the 
Department of the Treasury.
    (b) The term bureau means any bureau or office of the Department of 
the Treasury and such comparable administrative units as may hereafter 
be created or made a part of the Department, and includes the 
Departmental Offices and the Office of Inspector General. The ``head of 
the bureau'' for the Departmental Offices is the Deputy Assistant 
Secretary (Administration).



Sec. 11.4  Establishing vending facilities.

    (a) Treasury bureaus shall not acquire a building by ownership, 
rent, or lease, or occupy a building to be constructed, substantially 
altered, or renovated unless it is determined that such buildings 
contain or will contain a ``satisfactory site,'' as defined in 34 CFR 
395.1(q), for the location and operation of a blind vending facility.
    (b) In accordance with 34 CFR 395.31, Treasury bureaus shall provide 
the appropriate State licensing agency with written notice of the 
intention to acquire or otherwise occupy such building. Providing 
notification shall be the responsibility of the bureau on-site property 
management official.



Sec. 11.5  Application for permit.

    Applications for permits for the operation of vending facilities 
other than cafeterias shall be made in writing and submitted for the 
review and approval of the head of the appropriate Treasury bureau or 
that official's designee.



Sec. 11.6  Terms of permit.

    Every permit shall describe the location of the vending facility, 
including any vending machines located on other than facility premises, 
and shall be subject to the following provisions:
    (a) The permit shall be issued in the name of the applicant State 
licensing agency which shall perform the responsibilities set forth in 
34 CFR 395.35 (a);
    (b) The permit shall be issued for an indefinite period of time 
subject to suspension or termination on the basis of compliance or 
noncompliance with agreed upon terms.
    (c) The permit shall provide that:
    (1) No charge shall be made to the State licensing agency for normal 
cleaning, maintenance, and repair of the building structure in and 
adjacent to the vending facility areas;
    (2) Cleaning necessary for sanitation; the maintenance of vending 
facilities and vending machines in an orderly condition at all times; 
the installation, maintenance, repair, replacement, servicing, and 
removal of vending facility equipment shall be without cost to the 
Department of the Treasury; and
    (3) Articles sold at vending facilities operated by blind licensees 
may consist of newspapers, periodicals, publications, confections, 
tobacco products, foods, beverages, chances for any lottery authorized 
by State law and conducted by an agency of a State within such State, 
and other articles or services as are determined by the State licensing 
agency, in consultation with the appropriate Treasury bureau, to be 
suitable for a particular location. Such articles and services may be 
dispensed automatically or manually and may be prepared on or off the 
premises.
    (d) The permit shall further provide that vending facilities shall 
be operated in compliance with applicable

[[Page 173]]

health, sanitation, and building codes or ordinances.
    (e) The permit shall further provide that installation, 
modification, relocation, removal, and renovation of vending facilities 
shall be subject to the prior approval and supervision of the bureau on-
site property management officer of the appropriate Treasury bureau and 
the State licensing agency; that costs of relocations initiated by the 
State licensing agency shall be paid by the State licensing agency; that 
costs of relocations initiated by a Treasury bureau shall be paid by the 
Treasury bureau; and that all plumbing, electrical, and mechanical costs 
related to the renovation of existing facilities shall be paid by the 
appropriate Treasury bureau.
    (f) The operation of a cafeteria by a blind vendor shall be covered 
by a contractual agreement and not by a permit. The State licensing 
agency shall be expected to perform under the same contractual 
arrangement applicable to commercial cafeteria operators.



Sec. 11.7  Enforcement procedures.

    (a) The State licensing agency shall attempt to resolve day-to-day 
problems pertaining to the operation of the vending facility in an 
informal manner with the participation of the blind vendor and the on-
site property management officials of the respective Treasury bureaus 
who are responsible for the Treasury-controlled property.
    (b) Unresolved disagreements concerning the terms of the permit, the 
Act, or the regulations in this part and any other unresolved matters 
shall be reported in writing to the State licensing agency supervisory 
personnel by the bureau on-site supervisory property management official 
in an attempt to resolve the issue.



Sec. 11.8  Reports.

    This section establishes a Department of the Treasury reporting 
requirement to comply with 34 CFR 395.38. At the end of each fiscal 
year, each property managing bureau shall submit a report to the 
Director, Office of Management Support Systems, Departmental Offices, 
containing the elements set forth in 34 CFR 395.38. The Director, Office 
of Management Support Systems, shall submit a consolidated report to the 
Secretary of Education after the end of the fiscal year.



PART 12_RESTRICTION OF SALE AND DISTRIBUTION OF TOBACCO PRODUCTS--Table of 

Contents




Sec.
12.1 Purpose.
12.2 Definitions.
12.3 Sale of tobacco products in vending machines prohibited.
12.4 Distribution of free samples of tobacco products prohibited.
12.5 Prohibitions not applicable in areas designated by the Secretary of 
          the Treasury.

    Authority: Sec. 636, Pub. L. 104-52, 109 Stat. 507.

    Source: 61 FR 25396, May 21, 1996, unless otherwise noted.



Sec. 12.1  Purpose.

    This part contains regulations implementing the ``Prohibition of 
Cigarette Sales to Minors in Federal Buildings Act,'' Public Law 104-52, 
Section 636, with respect to buildings under the jurisdiction of the 
Department of the Treasury.



Sec. 12.2  Definitions.

    As used in this part--
    (1) The term Federal building under the jurisdiction of the 
Secretary of the Treasury includes the real property on which such 
building is located;
    (2) The term minor means an individual under the age of 18 years; 
and
    (3) The term tobacco product means cigarettes, cigars, little 
cigars, pipe tobacco, smokeless tobacco, snuff, and chewing tobacco.



Sec. 12.3  Sale of tobacco products in vending machines prohibited.

    The sale of tobacco products in vending machines located in or 
around any Federal building under the jurisdiction of the Secretary of 
the Treasury is prohibited, except in areas designated pursuant to Sec. 
12.5 of this part.



Sec. 12.4  Distribution of free samples of tobacco products prohibited.

    The distribution of free samples of tobacco products in or around 
any Federal building under the jurisdiction of

[[Page 174]]

the Secretary of the Treasury is prohibited, except in areas designated 
pursuant to Sec. 12.5 of this part.



Sec. 12.5  Prohibitions not applicable in areas designated by the Secretary of 

the Treasury.

    The prohibitions set forth in this part shall not apply in areas 
designated by the Secretary as exempt from the prohibitions, but all 
designated areas must prohibit the presence of minors.



PART 13_PROCEDURES FOR PROVIDING ASSISTANCE TO STATE AND LOCAL GOVERNMENTS IN 

PROTECTING FOREIGN DIPLOMATIC MISSIONS--Table of Contents




Sec.
13.1 Purpose.
13.2 Definitions.
13.3 Eligibility to receive protection or reimbursement.
13.4 Requests for protection and advance notices of reimbursement 
          requests.
13.5 Utilization of the services, personnel, equipment, and facilities 
          of State and local govenments.
13.6 Reimbursement of State and local governments.
13.7 Reimbursement when the Assistant Secretary makes no determination 
          to utilize State and local government services, personnel, 
          equipment and facilities.
13.8 Protection for motorcades and other places associated with a visit 
          qualifying under section 202(7) of Title 3, U.S. Code.

Appendix I(F) to Part 13--Estimated Overhead and Administrative Costs
Appendix II(F) to Part 13--Overhead and Administrative Costs
Appendix I to Part 13--Form of Request for Assistance
Appendix II to Part 13--Form of Bill for Reimbursement

    Authority: Secs. 202 and 208, Title 3, U.S. Code, as amended and 
added, respectively by Pub. L. 94-196 (89 Stat. 1109); 5 U.S.C. 301.

    Source: 41 FR 55179, Dec. 17, 1976, unless otherwise noted.



Sec. 13.1  Purpose.

    This part prescribes the procedures governing protective and 
financial assistance to State and local governments when an 
extraordinary protective need requires the protection of foreign 
diplomatic missions as authorized by sections 202 and 208 of Title 3, 
U.S. Code, as amended and added, respectively, by Pub. L. 94-196 (89 
Stat. 1109).



Sec. 13.2  Definitions.

    As used in this part, these terms shall have the following meaning:
    (a) The term Assistant Secretary means the Assistant Secretary of 
the Treasury (Enforcement and Operations).
    (b) The term extraordinary protective need means a need for 
protection requiring measurable reinforcements of police personnel or 
equipment, or both, significantly beyond the ordinary deployment of the 
State or local government, arising out of actual or potential violence 
related to: (1) Confrontations between nationalist or other groups, (2) 
threats or acts of violence by terrorist or other groups, (3) a specific 
diplomatic event or visit, or (4) a specific international event.
    (c) The term foreign diplomatic mission means a mission (including 
foreign consular offices) of a foreign country located in the United 
States.
    (d) The term full time officers means permanent officers whose 
duties as foreign diplomatic officers occupy their full time.
    (e) The term international organization means those international 
organizations designated by Presidential Executive Order as being 
entitled to the privileges, immunities, and exemptions accorded under 
the International Organization Immunities Act of December 29, 1945 (22 
U.S.C. 288).
    (f) The term metropolitan area means a city in the United States 
(other than the District of Columbia) and those areas contiguous to it.
    (g) The term observer mission means a mission invited to participate 
in the work of an international organization by that organization. The 
invitation to participate shall be extended by the international 
organization pursuant to the same internal rules of the international 
organization as are applicable to any permanent mission.
    (h) The term permanent mission means a fixed continuing mission 
staffed by full time officers and maintained by a member state of an 
international organization.

[[Page 175]]

    (i) The term temporary domicile means a domicile of limited duration 
of a visiting foreign dignitary or officer in connection with a visit to 
a permanent or observer mission to an international organization in a 
metropolitan area.

[41 FR 55179, Dec. 17, 1976, as amended at 45 FR 30621, May 9, 1980]



Sec. 13.3  Eligibility to receive protection or reimbursement.

    (a) Protection, as determined by the Assistant Secretary, will be 
provided by the United States Secret Service Uniformed Division, 
pursuant to section 202 of Title 3, U.S. Code, as amended by Pub. L. 94-
196, only to foreign diplomatic missions located in metropolitan areas 
(other than the District of Columbia) where there are located twenty or 
more such missions, as determined by the Secretary of State, which are 
headed by full time officers. According to present State Department 
figures, the following metropolitan areas have 20 or more such foreign 
diplomatic missions: Chicago, Houston, Los Angeles, Miami, New York 
City, New Orleans and San Francisco. The protection provided by State or 
local governments rather than the United States Secret Service Uniformed 
Division will be reimbursed pursuant to section 208(a) of Title 3, U.S. 
Code and Sec. Sec. 13.6, 13.7 and 13.8 of this part.
    (b) Protection or reimbursement will be provided for the 
metropolitan areas described in paragraph (a) of this section only if:
    (1) The affected metropolitan area requests such protection or 
reimbursement;
    (2) The Assistant Secretary determines that an extraordinary 
protective need exists; and
    (3) The extraordinary need arises in association with a visit to or 
occurs at or, pursuant to Sec. 13.6, in the vicinity of: (i) A 
permanent mission to an international organization of which the United 
States is a member, (ii) an observer mission invited to participate in 
the work of an international organization of which the United States is 
a member, or (iii) in the case of a visit by a foreign official or 
dignitary to participate in an activity of an international organization 
of which the United States is a member, a foreign diplomatic mission, 
including a consular office of the same country as the visitor.
    (c) Protection (or reimbursement) may be extended at places of 
temporary domicile in connection with a visit under paragraph (b) of 
this section.
    (d) Where an extraordinary protective need exists, protection (or 
reimbursement) may be extended to missions as described in Sec. Sec. 
13.3(b)(3) (i) and (ii) whether or not associated with a visit by a 
foreign dignitary.

[45 FR 30621, May 9, 1980]



Sec. 13.4  Requests for protection and advance notices of reimbursement 

requests.

    (a) In cases where they believe that an extraordinary protective 
need exists, the State or local governments may request that protection 
be provided by the United States Secret Service Uniformed Division; or 
they may give advance notice of their intention to provide, on a 
reimbursable basis, all or part of the protection themselves.
    (1) Requests for protection or advance notices of reimbursement 
requests shall be made to: Assistant Secretary (Enforcement and 
Operations), Department of the Treasury, Washington, DC 20220. Each 
government requesting the protection authorized pursuant to section 202 
of Title 3, U.S. Code, as amended by Pub. L. 94-196, or which intends to 
seek reimbursement pursuant to section 208(a) of Title 3, U.S. Code and 
Sec. Sec. 13.6 and 13.7 of this part, shall submit an application 
describing the extraordinary protective need. Applications made pursuant 
to this section shall be submitted to the Assistant Secretary 14 days 
before the extraordinary protective need arises. In association with a 
visit, the application shall include the name and title of the visiting 
foreign official or dignitary, the country he represents, and the name 
and location of the international organization or mission he will be 
visting. The application shall also include, if available, the temporary 
domicile of the visiting official or dignitary and his schedule, 
including dates and times of arrival and departure from the United 
States. If the extraordinary protective need occurs

[[Page 176]]

at a permanent mission to an international organization of which the 
United States is a member or an observer mission invited to participate 
in the work of such organization, or if another foreign diplomatic 
mission of the country qualifies under Sec. 13.3 (b) or (d), the 
application shall include the name and location of the mission.
    (b) State and local governments shall also indicate on the 
application whether they are requesting the use of the United States 
Secret Service Uniformed Division or whether they are giving advance 
notice of their intention to provide, on a reimbursable basis, all or 
part of the protection themselves. In order to assist the Assistant 
Secretary in determining whether to utilize the United States Secret 
Service Uniformed Division to meet all or part of the extraordinary 
protective need, or to utilize, with their consent, the services, 
personnel, equipment, and facilities of the State or local government, 
or both, the application must include an estimate of the approximate 
number of personnel by grade and rank, the services, equipment, and 
facilities required, along with an estimate of the cost of such 
personnel, services, equipment and facilities. This application must be 
submitted in a format consistent with that illustrated in Appendix I of 
this part.
    (1) Upon receipt of a request for protection pursuant to paragraph 
(a)(1) of this section and for the purposes of reimbursement pursuant to 
Sec. Sec. 13.6 and 13.7, the Assistant Secretary will determine whether 
an extraordinary protective need exists and whether the United States 
Secret Service Uniformed Division will be used for all, part or none of 
the protection. In making determinations, the Assistant Secretary may 
consult with appropriate Federal, State and local government agencies.

[45 FR 30621, May 9, 1980]



Sec. 13.5  Utilization of the services, personnel, equipment, and facilities 

of State and local governments.

    The Assistant Secretary may decide to utilize, on a reimbursable 
basis, the services, personnel, equipment, and facilities of State and 
local governments of the affected metropolitan area desiring to provide 
protection, or he may utilize the United States Secret Service Uniformed 
Division, or both. If the United States Secret Service Uniformed 
Division is utilized to meet all the extraordinary protective need, the 
governments of the affected metropolitan area will not be reimbursed. If 
the United States Secret Service Uniformed Division is utilized to meet 
part of the extraordinary protective needs, the governments of the 
affected metropolitan area will be reimbursed for that qualifying 
portion of the protection which is provided by State and local police 
authorities. If the Assistant Secretary decides to utilize, with their 
consent, the services, personnel, equipment, and facilities of such 
State and local governments to meet the extraordinary protective need, 
he will so notify the government as soon as possible after receipt of a 
request for protection or an advance notice of a reimbursement request 
made pursuant to Sec. 13.4.

[45 FR 30622, May 9, 1980]



Sec. 13.6  Reimbursement of State and local governments.

    (a) State and local governments providing services, personnel, 
equipment, or facilities to the affected metropolitan area pursuant to 
Sec. 13.5 may forward to the Assistant Secretary a bill for 
reimbursement for the personel, equipment, facilities, and services 
utilized in meeting the extraordinary protective need. The bill shall be 
in accordance with the format in Appendix II of this part. The Assistant 
Secretary will reimburse only those costs directly related to the 
extraordinary protective need including personnel and equipment costs 
resulting from assignments made to assist in providing security at an 
otherwise qualified location in connection with the arrival, departure, 
or during the visit of a foreign dignitary. Reimbursable costs will also 
include the costs for establishing both fixed posts at a qualified 
location and protective perimeters outside of a qualified location when 
it is clearly established to the satisfaction of the Assistant Secretary 
that such assignments were necessary to assure the safety of the 
qualified location. Overhead and

[[Page 177]]

administrative costs associated with an extraordinary protective need 
are reimbursable as either a flat 18 percent of the total extraordinary 
protective need costs, or, if such costs can be clearly segregated from 
routine police costs, on a dollar-for-dollar basis. The jurisdiction 
seeking such reimbursement may select either method but may not use 
both. For the purposes of reimbursement the Assistant Secretary will, in 
all cases, determine when the extraordinary protective need began and 
terminated.

[45 FR 30622, May 9, 1980]



Sec. 13.7  Reimbursement when the Assistant Secretary makes no determination 

to utilize State and local government services, personnel, equipment and 

facilities.

    (a) Where events require the State or local governments of the 
affected metropolitan area to provide protection to meet an 
extraordinary protective need otherwise qualifying for reimbursement, 
such reimbursement may be made even if the provisions of Sec. Sec. 13.4 
and 13.5 have not been complied with fully. In such circumstances the 
provisions of Sec. 13.6 shall apply.
    (b) In cases where State or local governments, or both, utilized 
their own services, personnel, equipment, and facilities to provide 
protection for an extraordinary protective need, and no request for 
protective assistance pursuant to Sec. 13.4 was made because the 
extraordinary protective need occurred prior to the promulgation of this 
part but after July 1, 1974, an application by such government to the 
Assistant Secretary for reimbursement otherwise conforming to the 
requirements of this part will be considered.

[41 FR 55179, Dec. 17, 1976, as amended at 45 FR 30622, May 9, 1980]



Sec. 13.8  Protection for motorcades and other places associated with a visit 

qualifying under section 202(7) of Title 3, U.S. Code.

    (a) State and local governments furnishing services, personnel, 
equipment, and facilities to provide protection for motorcades and at 
other places associated with a visit qualifying under section 202(7) of 
Title 3, U.S. Code may forward to the Assistant Secretary a bill for 
reimbursement for the personnel, equipment, facilities, and services 
utilized in providing such protection.
    (b) Requests for payments under this section shall conform to the 
procedures established elsewhere in this part governing reimbursements 
arising out of an extraordinary protective need.

[45 FR 30622, May 9, 1980]



  Sec. Appendix I(F) to Part 13--Estimated Overhead and Administrative 
                                  Costs

Date:___________________________________________________________________

                         Select Only One Method

    ------ 1. Reimbursement for overhead and administrative costs will 
be requested as a flat 18 percent of the total extraordinary protective 
need cost as provided in section 13.6 of these regulations.
    ------ 2. Reimbursement for overhead and administrative costs will 
be requested on a dollar-for-dollar basis. Computation of these costs 
will be made using the below described method:

(Explain in detail how all of these costs can be directly and 
exclusively attributed to the extraordinary protective need.)

[45 FR 30622, May 9, 1980]



    Sec. Appendix II(F) to Part 13--Overhead and Administrative Costs

Date:___________________________________________________________________

                         Select Only One Method

    ------ 1. Reimbursement for overhead and administrative costs is 
requested as a flat 18 percent of the total extraordinary protective 
need costs as provided in section 13.6 of these regulations.
    ------ 2. Reimbursement for overhead and administrative costs is 
requested on a dollar-for-dollar basis. Computation of these costs has 
been made using the below described method:

(Explain and show in detail how all of these costs have been directly 
and exclusively attributed extraordinary protective need costs).

Dated:__________________________________________________________________

[45 FR 30622, May 9, 1980]



       Sec. Appendix I to Part 13--Form of Request for Assistance

    I hereby request assistance from the Department of the Treasury 
pursuant to Section 202 of Title 3, U.S. Code, as amended by Pub. L. 94-
196. This assistance is needed to enable the affected metropolitan area 
of

[[Page 178]]

------------ to meet an extraordinary protective need, which is expected 
to arise on ------------ (date).
    The nature of the extraordinary protective need prompting this 
request is as follows:
    (If in association with a visit, include the name and title of the 
visiting foreign official or dignitary, the country represented and the 
name and location of the international organization involved and/or 
mission to be visited. The temporary domicile of the visiting official 
or dignitary and his schedule, including dates and times of arrival and 
departure from the United States, if available, must also be included. 
If the extraordinary protective need occurs at or, pursuant to Sec. 
13.6 of 31 CFR part 13, in the vicinity of, a permanent mission to an 
international organization of which the United States is a member or at 
an observer mission invited to participate in the work of the 
organization, the application shall include the name and location of the 
mission. If the extraordinary protective need occurs at a foreign 
diplomatic mission, including a consular office, in conjunction with a 
qualifying visit by a foreign official or dignitary of the same country 
as that mission, the application shall include the name and location of 
the mission or office. If, pursuant to Sec. 13.8, the visiting foreign 
official is to travel by motorcade and/or visit locations other than his 
foreign mission or temporary domicile, the application shall include a 
description of the anticipated motorcade routes and all stops on the 
routes as well as the name (or description) and location of any other 
places to be visited.
    The ------------ (Government entity) ------------ (is or is not) --
---------- prepared to provide ------------ (all or a portion of) the 
protection required to meet this need. Attached is an estimate of the 
appropriate number of personnel, by grade and rank, and the specific 
services, equipment and facilities which will be required to meet this 
extraordinary protective need, along with an estimate of the cost of 
such personnel, services, equipment, and facilities.
(Date)__________________________________________________________________
________________________________________________________________________
(State or local government of the affected metropolitan area)
________________________________________________________________________
(Signature)
________________________________________________________________________
(Title)

[45 FR 30622, May 9, 1980]



       Sec. Appendix II to Part 13--Form of Bill for Reimbursement

    I hereby request that ------------ (Governmental entity) be 
reimbursed by the Department of the Treasury pursuant to sections 202 
and 208 of Title 3, U.S. Code, as amended and added, respectively, by 
Public Law 94-196 (89 Stat. 1109) (and/or pursuant to Public Law 96-74) 
for expenses incurred while providing an adequate level of protection 
during the extraordinary protective need arising in association with a 
visit of ------------ (Official or dignitary's name and title) of ------
------ (Country) to participate in the work of ------------ 
(International Organization) or occurring at the -------------- 
(Permanent or observer mission) to ------------ (International 
organization) during the period ------------ (Date) through ------------ 
(Date).
    I certify that the level of protection provided was both reasonable 
and necessary; that the costs herein billed are only those direct costs 
associated with meeting the extraordinary protective need; and that the 
costs herein billed are not costs of an indirect nature such as 
administrative costs, overhead, and depreciation, except as provided in 
Sec. 13.6(a) of 31 CFR 13.
    Access to all records, accounts, receipts, etc., pertaining to the 
costs herein billed will be accorded to representatives of the Assistant 
Secretary (Enforcement and Operations) and the General Accounting Office 
at such reasonable times and places as may be mutually agreed upon by 
said representatives and ------------ (Governmental entity).
Date:___________________________________________________________________
________________________________________________________________________
(Signature)
________________________________________________________________________
(Title)

[45 FR 30623, May 9, 1980]



PART 14_RIGHT TO FINANCIAL PRIVACY ACT--Table of Contents




Sec.
14.1 Definitions.
14.2 Purpose.
14.3 Authorization.
14.4 Contents of request.
14.5 Certification.

    Authority: Sec. 1108, Right to Financial Privacy Act of 1978, 92 
Stat. 3697 et seq., 12 U.S.C. 3401 et seq.; (5 U.S.C. 301); and 
Reorganization Plan No. 26 of 1950.

    Source: 44 FR 16909, Mar. 20, 1979, unless otherwise noted.



Sec. 14.1  Definitions.

    For purposes of this regulation, the term:
    (a) Financial institution means any office of a bank, savings bank, 
card issuer as defined in section 103 of the Consumer Credit Protection 
Act (15 U.S.C. 1602(n)), industrial loan company, trust company, savings 
and loan,

[[Page 179]]

building and loan, or homestead association (including cooperative 
bank), credit union, or consumer financial institution, located in any 
State or territory of the United States, the District of Columbia, 
Puerto Rico, Guam, American Samoa, or the Virgin Islands.
    (b) Financial record means an original of, a copy of, or information 
known to have been derived from, any record held by a financial 
institution pertaining to a customer's relationship with the financial 
institution.
    (c) Person means an individual or a partnership of five or fewer 
individuals.
    (d) Customer means any person or authorized representative of that 
person who utilized or is utilizing any service of a financial 
institution, or for whom a financial institution is acting or has acted 
as a fiduciary, in relation to an account maintained in the person's 
name.
    (e) Law enforcement inquiry means a lawful investigation or official 
proceeding inquiring into a violation of or failure to comply with any 
criminal or civil statute or any regulation, rule, or order issued 
pursuant thereto.
    (f) Departmental unit means those offices, divisions, bureaus, or 
other components of the Department of the treasury authorized to conduct 
law enforcement inquiries.
    (g) Act means the Right to Financial Privacy Act of 1978.



Sec. 14.2  Purpose.

    The purpose of these regulations is to authorize Departmental units 
to request financial records from a financial institution pursuant to 
the formal written request procedure authorized by section 1108 of the 
Act, and to set forth the conditions under which such requests may be 
made.



Sec. 14.3  Authorization.

    Departmental units are hereby authorized to request financial 
records of any customer from a financial institution pursuant to a 
formal written request under the Act only if:
    (a) No administrative summons or subpoena authority reasonably 
appears to be available to the Departmental unit to obtain financial 
records for the purpose for which the records are sought;
    (b) There is reason to believe that the records sought are relevant 
to a legitimate law enforcement inquiry and will further that inquiry;
    (c) The request is issued by a supervisory official of a rank 
designated by the head of the requesting Departmental unit. Officials so 
designated shall not delegate this authority to others;
    (d) The request adheres to the requirements set forth in Sec. 14.4; 
and
    (e) The notice requirements set forth in section 1108(4) of the Act, 
or the requirements pertaining to delay of notice in section 1109 of the 
Act are satisfied, except in situations where no notice is required. 
(e.g., section 1113(g))



Sec. 14.4  Contents of request.

    The formal written request shall be in the form of a letter or 
memorandum to an appropriate official of the financial institution from 
which financial records are requested. The request shall be signed by an 
issuing official of the requesting Department unit. It shall set forth 
that official's name, title, business address and business phone number. 
The request shall also contain the following:
    (a) The identity of the customer or customers to whom the records 
pertain;
    (b) A reasonable description of the records sought;
    (c) Any other information that the issuing official deems 
appropriate, e.g., the date on which the requesting Departmental unit 
expects to present a certificate of compliance with the applicable 
provisions of the Act, the name and title of the individual to whom 
disclosure is to be made, etc.

In cases where customer notice is delayed by a court order, a copy of 
the court order shall be attached to the formal written request.



Sec. 14.5  Certification.

    Prior to obtaining the requested records pursuant to a formal 
written request, an official of a rank designated by the head of the 
requesting Departmental unit shall certify in writing to the financial 
institution

[[Page 180]]

that the Departmental unit has complied with the applicable provisions 
of the Act.



PART 15_POST EMPLOYMENT CONFLICT OF INTEREST--Table of Contents




                      Subpart A_General Provisions

Sec.
15.737-1 Scope.
15.737-2 Definitions.
15.737-3 Director of Practice.
15.737-4 Other discipline.
15.737-5 Records.

 Subpart B_Rules Applicable to Post Employment Practice by Officers and 
                       Employees of the Department

15.737-6 Interpretative standards.

            Subpart C_Administrative Enforcement Proceedings

15.737-7 Authority to prohibit practice.
15.737-8 Special orders.
15.737-9 Receipt of information concerning former Treasury employee.
15.737-10 Conferences.
15.737-11 Institution of proceeding.
15.737-12 Contents of complaint.
15.737-13 Service of complaint and other papers.
15.737-14 Answer.
15.737-15 Reply to answer.
15.737-16 Proof; variance; amendment of pleadings.
15.737-17 Motions and requests.
15.737-18 Representation.
15.737-19 Administrative Law Judge.
15.737-20 Hearings.
15.737-21 Evidence.
15.737-22 Depositions.
15.737-23 Transcript.
15.737-24 Proposed findings and conclusions.
15.737-25 Decision of the Administrative Law Judge.
15.737-26 Appeal to the General Counsel.
15.737-27 Decision of the General Counsel.
15.737-28 Notice of disciplinary action.

                Subpart D_Other Departmental Proceedings

15.737-29 Review by the General Counsel.

    Authority: 92 Stat. 1864 (18 U.S.C. 207), as amended.

    Source: 45 FR 39842, June 12, 1980, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 15.737-1  Scope.

    This part contains rules governing discipline of a former officer or 
employee of the Department of the Treasury because of a post employment 
conflict of interest. Such discipline may include prohibition from 
practice before the Department or a separate statutory agency thereof as 
those terms are defined in this part.



Sec. 15.737-2  Definitions.

    For the purpose of this part--(a) The term Department means the 
Department of the Treasury and includes the separate statutory agencies 
thereof.
    (b) The term Director means the Director of Practice.
    (c) The term General Counsel means the General Counsel of the 
Department.
    (d) The term practice means any informal or formal appearance 
before, or, with the intent to influence, any oral or written 
communication to the Department or, where applicable, to a separate 
statutory agency thereof on a pending matter of business on behalf of 
any other person (except the United States).
    (e) The term separate statutory agency thereof means an agency or 
bureau within the Department designated by rule by the Director, Office 
of Government Ethics, as a separate agency or bureau. The Internal 
Revenue Service, Bureau of Alcohol, Tobacco and Firearms, United States 
Secret Service, Bureau of the Mint, United States Customs Service, 
Bureau of Engraving and Printing, and Comptroller of the Currency were 
so designated effective July 1, 1979.



Sec. 15.737-3  Director of Practice.

    There is, in the Office of the Secretary of the Treasury, the Office 
of Director of Practice. The Director shall institute and provide for 
the conduct of disciplinary proceedings involving former employees of 
the Department as authorized by 18 U.S.C. 207(j), and perform such other 
duties as are necessary or appropriate to carry out his/her functions 
under this part.

[[Page 181]]



Sec. 15.737-4  Other discipline.

    For activity alleged to violate 18 U.S.C. 207 (a), (b) or (c), the 
Director may also bring a disciplinary proceeding pursuant to the 
regulations governing practice before the Bureau of Alcohol, Tobacco and 
Firearms or the Internal Revenue Service as found in 31 CFR part 8 and 
31 CFR part 10, respectively. Such proceeding may be consolidated with 
any proceeding brought pursuant to this part.



Sec. 15.737-5  Records.

    There are made available to public inspection at the Office of 
Director of Practice the roster of all persons prohibited from practice 
before the Department. Other records may be disclosed upon specific 
request, in accordance with appropriate disclosure regulations of the 
Department.



 Subpart B_Rules Applicable to Post Employment Practice by Officers and 
                       Employees of the Department



Sec. 15.737-6  Interpretative standards.

    A determination that a former officer or employee of the Department 
violated 18 U.S.C. 207 (a), (b) or (c) will be made in conformance with 
the standards established in the interpretative regulations promulgated 
by the Office of Government Ethics and published at 5 CFR part 737.



            Subpart C_Administrative Enforcement Proceedings



Sec. 15.737-7  Authority to prohibit practice.

    Pursuant to 18 U.S.C. 207(j), if the General Counsel finds, after 
notice and opportunity for a hearing, that a former officer or employee 
of the Department violated 18 U.S.C. 207 (a), (b) or (c), the General 
Counsel in his/her discretion may prohibit that person from engaging in 
practice before the Department or a separate statutory agency thereof 
for a period not to exceed five years, or may take other appropriate 
disciplinary action.



Sec. 15.737-8  Special orders.

    The General Counsel may issue special orders as he/she may consider 
proper in any case within the purview of this part.



Sec. 15.737-9  Receipt of information concerning former Treasury employee.

    If an officer or employee of the Department has reason to believe 
that a former officer or employee of the Department has violated 18 
U.S.C. 207 (a), (b) or (c), or if any such officer or employee receives 
information to that effect, he/she shall promptly make a written report 
thereof, which report or a copy thereof shall be forwarded to the 
Inspector General, Department of the Treasury. If any other person has 
information of such violations, he/she may make a report thereof to the 
Inspector General or to any officer or employee of the Department. The 
Inspector General shall refer any information he/she deems warranted to 
the Director.



Sec. 15.737-10  Conferences.

    (a) In general. The Director may confer with a former officer or 
employee concerning allegations of misconduct irrespective of whether an 
administrative disciplinary proceeding has been instituted against him/
her. If such conference results in a stipulation in connection with a 
proceeding in which such person is the respondent, the stipulation may 
be entered in the record at the instance of either party to the 
proceeding.
    (b) Voluntary suspension. A former officer or employee, in order to 
avoid the institution or conclusion of a proceeding, may offer his/her 
consent to suspension from practice before the Department or a separate 
statutory agency thereof. The Director in his/her discretion, may 
suspend a former officer or employee in accordance with the consent 
offered.



Sec. 15.737-11  Institution of proceeding.

    (a) Whenever the Director has reason to believe that any former 
officer or employee of the Department has violated 18 U.S.C. 207 (a), 
(b) or (c), he/she may reprimand such person or institute an 
administrative disciplinary proceeding for that person's suspension

[[Page 182]]

from practice before the Department or a separate statutory agency 
thereof. The proceeding shall be instituted by a complaint which names 
the respondent and is signed by the Director and filed in his/her 
office. Except in cases of willfulness, or where time, the nature of the 
proceeding, or the public interest does not permit, a proceeding will 
not be instituted under this section until facts or conduct which may 
warrant such action have been called to the attention of the proposed 
respondent in writing and he/she has been accorded the opportunity to 
provide his/her position on the matter.
    (b) The Director shall coordinate proceedings under this part with 
the Department of Justice in cases where it initiates criminal 
prosecution.



Sec. 15.737-12  Contents of complaint.

    (a) Charges. A complaint shall give a plain and concise description 
of the allegations which constitute the basis for the proceeding. A 
complaint shall be deemed sufficient if it fairly informs the respondent 
of the charges against him/her so that the respondent is able to prepare 
a defense.
    (b) Demand for answer. In the complaint, or in a separate paper 
attached to the complaint, notification shall be given of the place and 
time within which the respondent shall file his/her answer, which time 
shall not be less than 15 days from the date of service of the 
complaint, and notice shall be given that a decision by default may be 
rendered against the respondent in the event he/she fails to file an 
answer as required.



Sec. 15.737-13  Service of complaint and other papers.

    (a) Complaint. The complaint or a copy thereof may be served upon 
the respondent by certified mail, or first-class mail as hereinafter 
provided; by delivering it to the respondent or his/her attorney or 
agent of record either in person or by leaving it at the office or place 
of business of the respondent, attorney or agent; or in any other manner 
which has been agreed to by the respondent. Where the service is by 
certified mail, the return post office receipt duly signed by or on 
behalf of the respondent shall be proof of service. If the certified 
mail is not claimed or accepted by the respondent and is returned 
undelivered, complete service may be made upon the respondent by mailing 
the complaint to him/her by first-class mail, addressed to him/her at 
the last address known to the Director. If service is made upon the 
respondent or his/her attorney or agent of record in person or by 
leaving the complaint at the office or place of business of the 
respondent, attorney or agent, the verified return by the person making 
service, setting forth the manner of service, shall be proof of such 
service.
    (b) Service of papers other than complaint. Any paper other than the 
complaint may be served upon a respondent as provided in paragraph (a) 
of this section or by mailing the paper by first-class mail to the 
respondent at the last address known to the Director, or by mailing the 
paper by first-class mail to the respondent's attorney or agent of 
record. Such mailing shall constitute complete service. Notices may be 
served upon the respondent or his/her attorney or agent of record by 
telegraph.
    (c) Filing of papers. Whenever the filing of a paper is required or 
permitted in connection with a proceeding, and the place of filing is 
not specified by this subpart or by rule or order of the Administrative 
Law Judge, the paper shall be filed with the Director of Practice, 
Department of the Treasury, Washington, DC 20220. All papers shall be 
filed in duplicate.



Sec. 15.737-14  Answer.

    (a) Filing. The respondent's answer shall be filed in writing within 
the time specified in the complaint, unless on application the time is 
extended by the Director or the Administrative Law Judge. The answer 
shall be filed in duplicate with the Director.
    (b) Contents. The answer shall contain a statement of facts which 
constitute the grounds of defense, and it shall specifically admit or 
deny each allegation set forth in the complaint, except that the 
respondent shall not deny a material allegation in the complaint which 
he/she knows to be true, or state that he/she is without sufficient 
information to form a belief when

[[Page 183]]

in fact he/she possesses such information. The respondent may also state 
affirmatively special matters of defense.
    (c) Failure to deny or answer allegations in the complaint. Every 
allegation in the complaint which is not denied in the answer shall be 
deemed to be admitted and may be considered as proved, and no further 
evidence in respect of such allegation need be adduced at a hearing. 
Failure to file an answer within the time prescribed in the notice to 
the respondent, except as the time for answer is extended by the 
Director or the Administrative Law Judge, shall constitute an admission 
of the allegations of the complaint and a waiver of hearing, and the 
Administrative Law Judge may make his/her decision by default without a 
hearing or further procedure.



Sec. 15.737-15  Reply to answer.

    No reply to the respondent's answer shall be required, and new 
matter in the answer shall be deemed to be denied, but the Director may 
file a reply in his/her discretion or at the request of the 
Administrative Law Judge.



Sec. 15.737-16  Proof; variance; amendment of pleadings.

    In the case of a variance between the allegations in a pleading and 
the evidence adduced in support of the pleading, the Administrative Law 
Judge may order or authorize amendment of the pleading to conform to the 
evidence: Provided, That the party who would otherwise be prejudiced by 
the amendment is given reasonable opportunity to meet the allegations of 
the pleading as amended; and the Administrative Law Judge shall make 
findings on any issue presented by the pleadings as so amended.



Sec. 15.737-17  Motions and requests.

    Motions and requests may be filed with the Director or with the 
Administrative Law Judge.



Sec. 15.737-18  Representation.

    A respondent or proposed respondent may appear in person or he/she 
may be represented by counsel or other representative. The Director may 
be represented by an attorney or other employee of the Department.



Sec. 15.737-19  Administrative Law Judge.

    (a) Appointment. An Administrative Law Judge appointed as provided 
by 5 U.S.C. 3105 (1966), shall conduct proceedings upon complaints for 
the administrative disciplinary proceedings under this part.
    (b) Power of Administrative Law Judge. Among other powers, the 
Administrative Law Judge shall have authority, in connection with any 
proceeding assigned or referred to him/her, to do the following:
    (1) Administer oaths and affirmations;
    (2) Make rulings upon motions and requests, which rulings may not be 
appealed from prior to the close of a hearing except, at the discretion 
of the Administrative Law Judge, in extraordinary circumstances;
    (3) Determine the time and place of hearing and regulate its course 
and conduct;
    (4) Adopt rules of procedure and modify the same from time to time 
as occasion requires for the orderly disposition of proceedings;
    (5) Rule upon offers of proof, receive relevant evidence, and 
examine witnesses;
    (6) Take or authorize the taking of depositions;
    (7) Receive and consider oral or written argument on facts or law;
    (8) Hold or provide for the holding of conferences for the 
settlement or simplification of the issues by consent of the parties;
    (9) Assess the responsible party extraordinary costs attributable to 
the location of a hearing;
    (10) Perform such acts and take such measures as are necessary or 
appropriate to the efficient conduct of any proceeding; and
    (11) Make initial decisions.



Sec. 15.737-20  Hearings.

    (a) In general. The Administrative Law Judge shall preside at the 
hearing on a complaint for the suspension of a former officer or 
employee from practice before the Department. Hearings shall be 
stenographically recorded and transcribed and the testimony of witnesses 
shall be taken under oath or affirmation. Hearings will be conducted 
pursuant to 5 U.S.C. 556.

[[Page 184]]

    (b) Public access to hearings. Hearings will be closed unless an 
open hearing is requested by the respondent, except that if classified 
information or protected information of third parties (such as tax 
information) is likely to be adduced at the hearing, it will remain 
closed. A request for an open hearing must be included in the answer to 
be considered.
    (c) Failure to appear. If either party to the proceeding fails to 
appear at the hearing, after due notice thereof has been sent to him/
her, he/she shall be deemed to have waived the right to a hearing and 
the Administrative Law Judge may make a decision against the absent 
party by default.



Sec. 15.737-21  Evidence.

    (a) In general. The rules of evidence prevailing in courts of law 
and equity are not controlling in hearings on complaints for the 
suspension of a former officer or employee from practice before the 
Department. However, the Administrative Law Judge shall exclude evidence 
which is irrelevant, immaterial, or unduly repetitious.
    (b) Depositions. The deposition of any witness taken pursuant to 
Sec. 15.737-22 of this part may be admitted.
    (c) Proof of documents. Official documents, records and papers of 
the Department shall be admissible in evidence without the production of 
an officer or employee to authenticate them. Any such documents, 
records, and papers may be evidenced by a copy attested or identified by 
an officer or employee of the Department.
    (d) Exhibits. If any document, record, or other paper is introduced 
in evidence as an exhibit, the Administrative Law Judge may authorize 
the withdrawal of the exhibit subject to any conditions which he/she 
deems proper.
    (e) Objections. Objections to evidence shall be in short form, 
stating the grounds of objection relied upon, and the record shall not 
include argument thereon, except as ordered by the Administrative Law 
Judge. Rulings on such objections shall be a part of the record. No 
exception to the ruling is necessary to preserve the rights of the 
parties.



Sec. 15.737-22  Depositions.

    Depositions for use at a hearing may, with the consent of the 
parties in writing or the written approval of the Administrative Law 
Judge, be taken by either the Director or the respondent or their duly 
authorized representatives. Depositions may be taken upon oral or 
written interrogatories, upon not less than 10 days' written notice to 
the other party before any officer duly authorized to administer an oath 
for general purposes or before an officer or employee of the Department 
who is authorized to administer an oath. Such notice shall state the 
names of the witnesses and the time and place where the depositions are 
to be taken. The requirement of 10 days' notice may be waived by the 
parties in writing, and depositions may then be taken from the persons 
and at the times and places mutually agreed to by the parties. When a 
deposition is taken upon written interrogatories, any cross-examination 
shall be upon written interrogatories. Copies of such written 
interrogatories shall be served upon the other party with the notice, 
and copies of any written cross-interrogation shall be mailed or 
delivered to the opposing party at least 5 days before the date of 
taking the depositions, unless the parties mutually agree otherwise. A 
party upon whose behalf a deposition is taken must file it with the 
Administrative Law Judge and serve one copy upon the opposing party. 
Expenses in the reporting of depositions shall be borne by the party at 
whose instance the deposition is taken.



Sec. 15.737-23  Transcript.

    In cases where the hearing is stenographically reported by a 
Government contract reporter, copies of the transcript may be obtained 
from the reporter at rates not to exceed the maximum rates fixed by 
contract between the Government and the reporter or from the Department 
at actual cost of duplication. Where the hearing is stenographically 
reported by a regular employee of the Department, a copy thereof will be 
supplied to the respondent either without charge or upon payment of a 
reasonable fee. Copies of exhibits introducted at the hearing or at

[[Page 185]]

the taking of depositions will be supplied to the parties upon the 
payment of a reasonable fee (Sec. 501, Pub. L. 82-137, 65 Stat. 290 (31 
U.S.C. 483a)).



Sec. 15.737-24  Proposed findings and conclusions.

    Except in cases where the respondent has failed to answer the 
complaint or where a party has failed to appear at the hearing, the 
Administrative Law Judge prior to making his/her decision, shall afford 
the parties a reasonable opportunity to submit proposed findings and 
conclusions and supporting reasons therefor.



Sec. 15.737-25  Decision of the Administrative Law Judge.

    As soon as practicable after the conclusion of a hearing and the 
receipt of any proposed findings and conclusions timely submitted by the 
parties, the Administrative Law Judge shall make the initial decision in 
the case. The decision shall include (a) a statement of findings and 
conclusions, as well as the reasons or basis therefor, upon all the 
material issues of fact, law, or discretion presented on the record, and 
(b) an order of suspension from practice before the Department or 
separate statutory agency thereof or other appropriate disciplinary 
action, or an order of dismissal of the complaint. The Administrative 
Law Judge shall file the decision with the Director and shall transmit a 
copy thereof to the respondent or his/her attorney of record. In the 
absence of an appeal to the General Counsel or review of the decision 
upon motion of the General Counsel, the decision of the Administrative 
Law Judge shall without further proceedings become the decision of the 
General Counsel 30 days from the date of the Administrative Law Judge's 
decision.



Sec. 15.737-26  Appeal to the General Counsel.

    Within 30 days from the date of the Administrative Law Judge's 
decision, either party may appeal to the General Counsel. The appeal 
shall be filed with the Director in duplicate and shall include 
exceptions to the decision of the Administrative Law Judge and 
supporting reasons for such exceptions. If an appeal is filed by the 
Director, he/she shall transmit a copy thereof to the respondent. Within 
30 days after receipt of an appeal or copy thereof, the other party may 
file a reply brief in duplicate with the Director. If the reply brief is 
filed by the Director, he/she shall transmit a copy of it to the 
respondent. Upon the filing of an appeal and a reply brief, if any, the 
Director shall transmit the entire record to the General Counsel.



Sec. 15.737-27  Decision of the General Counsel.

    On appeal from or review of the initial decision of the 
Administrative Law Judge, the General Counsel will make the agency 
decision. In making his/her decision, the General Counsel will review 
the record or such portions thereof as may be cited by the parties to 
permit limiting of the issues. A copy of the General Counsel's decision 
shall be transmitted to the respondent by the Director.



Sec. 15.737-28  Notice of disciplinary action.

    (a) Upon the issuance of a final order suspending a former officer 
or employee from practice before the Department or a separate statutory 
agency thereof, the Director shall give notice thereof to appropriate 
officers and employees of the Department. Officers and employees of the 
Department shall refuse to participate in any appearance by such former 
officer or employee or to accept any communication which constitutes the 
prohibited practice before the Department or separate statutory agency 
thereof during the period of suspension.
    (b) The Director shall take other appropriate disciplinary action as 
may be required by the final order.



                Subpart D_Other Departmental Proceedings



Sec. 15.737-29  Review by the General Counsel.

    In my proceeding before the Department, if an initial decision is 
made with respect to the disqualification of a representative or 
attorney for a party on the grounds of 18 U.S.C. 207(a), (b) or (c), 
such decision may be appealed to

[[Page 186]]

the General Counsel, who will make the agency decision on the issue.



PART 16_REGULATIONS IMPLEMENTING THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 

1986--Table of Contents




Sec.
16.1 Basis and purpose.
16.2 Definitions.
16.3 Basis for civil penalties and assessments.
16.4 Investigation.
16.5 Review by the reviewing official.
16.6 Prerequisites for issuing a complaint.
16.7 Complaint.
16.8 Service of complaint.
16.9 Answer.
16.10 Default upon failure to file an answer.
16.11 Referral of complaint and answer to the ALJ.
16.12 Notice of hearing.
16.13 Parties to the hearing.
16.14 Separation of functions.
16.15 Ex parte contacts.
16.16 Disqualification of reviewing official or ALJ.
16.17 Rights of parties.
16.18 Authority of the ALJ.
16.19 Prehearing conferences.
16.20 Disclosure of documents.
16.21 Discovery.
16.22 Exchange of witness lists, statements, and exhibits.
16.23 Subpoenas for attendance at hearing.
16.24 Protective order.
16.25 Fees.
16.26 Form, filing and service of papers.
16.27 Computation of time.
16.28 Motions.
16.29 Sanctions.
16.30 The hearing and burden of proof.
16.31 Determining the amount of penalties and assessments.
16.32 Location of hearing.
16.33 Witnesses.
16.34 Evidence.
16.35 The record.
16.36 Post-hearing briefs.
16.37 Initial decision.
16.38 Reconsideration of initial decision.
16.39 Appeal to authority head.
16.40 Stays ordered by the Department of Justice.
16.41 Stay pending appeal.
16.42 Judicial review.
16.43 Collection of civil penalties and assessments.
16.44 Right to administrative offset.
16.45 Deposit in Treasury of United States.
16.46 Compromise or settlement.
16.47 Limitations.

    Authority: 31 U.S.C. 3801-3812.

    Source: 52 FR 35071, Sept. 17, 1987, unless otherwise noted.



Sec. 16.1  Basis and purpose.

    (a) Basis. This part implements the Program Fraud Civil Remedies Act 
of 1986, Pub. L. 99-509, sections 6101-6104, 100 Stat. 1874 (October 21, 
1986), to be codified at 31 U.S.C. 3801-3812. 31 U.S.C. 3809 requires 
each authority head to promulgate regulations necessary to implement the 
provisions of the statute.
    (b) Purpose. This part
    (1) Establishes administrative procedures for imposing civil 
penalties and assessments against persons who make, submit, or present, 
or cause to be made, submitted, or presented, false, fictitious, or 
fraudulent claims or written statements to authorities or to their 
agents, and
    (2) Specifies the hearing and appeal rights of persons subject to 
allegations of liability for such penalties and assessments.



Sec. 16.2  Definitions.

    ALJ means an Administrative Law Judge in the authority appointed 
pursuant to 5 U.S.C. 3105 or detailed to the authority pursuant to 5 
U.S.C. 3344.
    Authority means the Department of the Treasury.
    Authority head means the Assistant Secretary of the Treasury for 
Management.
    Benefit, when used in the context of false statements made with 
respect to a benefit, means anything of value including but not limited 
to any advantage, preference, privilege, license, permit, favorable 
decision, ruling, status, or loan guarantee. This definition should be 
distinguished from the limitations on coverage of these regulations with 
respect to beneficiaries of specific benefit programs which are found in 
Sec. 16.3(c) of this part.
    Claim means any request, demand, or submission--
    (a) Made to the authority for property, services, or money 
(including money representing grants, loans, insurance, or benefits);
    (b) Made to a recipient of property, services, or money from the 
authority or to a party to a contract with the authority--
    (1) For property or services if the United States--

[[Page 187]]

    (i) Provided such property or services;
    (ii) Provided any portion of the funds for the purchase of such 
property or services; or
    (iii) Will reimburse such recipient or party for the purchase of 
such property or services; or
    (2) For the payment of money (including money representing grants, 
loans, insurance, or benefits) if the United States--
    (i) Provided any portion of the money requested or demanded; or
    (ii) Will reimburse such recipient or party for any portion of the 
money paid on such request or demand; or
    (c) Made to the authority which has the effect of decreasing an 
obligation to pay or account for property, services, or money, except 
that such term does not include any claim made in any return of tax 
imposed by the Internal Revenue Code of 1954.
    Complaint means the administrative complaint served by the reviewing 
official on the defendant under Sec. 16.7 of this part.
    Defendant means any person alleged in a complaint under Sec. 16.7 
to be liable for a civil penalty or assessment under Sec. 16.3.
    Department means the Department of the Treasury.
    Government means the United States Government.
    Individual means a natural person.
    Initial decision means the written decision of the ALJ required by 
Sec. 16.10 or Sec. 16.37, and includes a revised initial decision 
issued following a remand or a motion for reconsideration.
    Investigating official means the Inspector General of the Department 
of the Treasury.
    Knows or has reason to know, means that a person, with respect to a 
claim or statement--
    (a) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (b) Acts in deliberate ignorance of the truth or falsity of the 
claim or statement; or
    (c) Acts in reckless disregard of the truth or falsity of the claim 
or statement.
    Makes, wherever it appears, shall include the terms ``presents,'' 
``submits,'' and ``causes to be made, presented,'' or ``submitted.'' As 
the context requires, making or made, shall likewise include the 
corresponding forms of such terms.
    Person means any individual, partnership, corporation, association, 
private organization, State, political subdivision of a State, 
municipality, county, district, and Indian tribe, and includes the 
plural of that term.
    Presiding officer means an administrative law judge appointed in the 
authority pursuant to 5 U.S.C. 3105 or detailed to the authority 
pursuant to section 3344 of such title.
    Representative means an attorney designated in writing by a 
defendant to appear on his or her behalf in administrative hearings 
before the Department and to represent a defendant in all other legal 
matters regarding a complaint made pursuant to these regulations.
    Reviewing official means the General Counsel, or another individual 
in the Legal Division of the Department designated by the General 
Counsel, who is--
    (a) Serving in a position for which the rate of basic pay is not 
less than the minimum rate of basic pay for grade GS-16; and
    (b) Is not subject to supervision by, or required to report to, the 
investigating official; and
    (c) Is not employed in the organization unit of the authority in 
which the investigating official is employed.
    Statement means any representation, certification, affirmation, 
document, record, or accounting or bookkeeping entry made--
    (a) With respect to a claim or to obtain the approval or payment of 
a claim (including relating to eligibility to make a claim); or
    (b) With respect to (including relating to eligibility for)--
    (1) A contract with, or a bid or proposal for a contract with; or
    (2) A grant, loan, or benefit from, the authority, or any State, 
political subdivision of a State, or other party, if the United States 
Government provides any portion of the money or property under such 
contract or for such grant, loan, or benefit, or if the government will 
reimburse such State, political subdivision, or party of any portion of

[[Page 188]]

the money or property under such contract or for such grant, loan, or 
benefit, except that such term does not include any claim made in any 
return of tax imposed by the Internal Revenue Code of 1954.



Sec. 16.3  Basis for civil penalties and assessments.

    (a) Claims. (1) Except as provided in paragraph (c) of this section, 
any person who makes a claim that the person knows or has reason to 
know--
    (i) Is false, fictitious, or fraudulent;
    (ii) Includes or is supported by any written statement which asserts 
a material fact which is false, fictitious, or fraudulent;
    (iii) Includes or is supported by any written statement that--
    (A) Omits a material fact;
    (B) Is false, fictitious, or fraudulent as a result of such 
omission; and
    (C) Is a statement in which the person making such statement has a 
duty to include such material fact; or
    (iv) Is for payment for the provision of property or services which 
the person has not provided as claimed, shall be subject, in addition to 
any other remedy that may be prescribed by law, to a civil penalty of 
not more than $5,000 for each such claim.
    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim.
    (3) A claim shall be considered made to an authority, recipient, or 
party when such claim is actually made to an agent, fiscal intermediary, 
or other entity, including any State or political subdivision thereof, 
acting for or on behalf of such authority, recipient, or party.
    (4) Each claim for property, services, or money is subject to a 
civil penalty under these regulations regardless of whether such 
property, services, or money is actually delivered or paid.
    (5) If the government has made any payment (including transferred 
property or provided services) on a claim, a person subject to a civil 
penalty under paragraph (a)(1) of this section shall also be subject to 
an assessment of not more than twice the amount of such claim or that 
portion thereof that is determined to be in violation of paragraph 
(a)(1) of this section. Such assessment shall be in lieu of damages 
sustained by the Government because of such claim.
    (b) Statements. (1) Except as provided in paragraph (c) of this 
section, any person who makes a written statement that--
    (i) The person knows or has reason to know--
    (A) Asserts a material fact which is false, fictitious, or 
fraudulent; or
    (B) Is false, fictitious, or fraudulent because it omits a material 
fact that the person making the statement has a duty to include in such 
statement; and
    (ii) Includes or is accompanied by an express certification or 
affirmation of the truthfulness and accuracy of the content of the 
statement,

shall be subject, in addition to any other remedy that may be prescribed 
by law, to a civil penalty of not more than $5,000 for each such 
statement.
    (2) Each written representation, certification, or affirmation 
constitutes a separate statement.
    (3) A statement shall be considered made to an authority when such 
statement is actually made to an agent, fiscal intermediary, or other 
entity, including any State or political subdivision thereof, acting for 
or on behalf of such authority.
    (c)(1) In the case of any claim or statement made by any individual 
relating to any of the benefits listed in paragraph (c)(2) of this 
section, received by such individual, such individual may be held liable 
for penalties and assessments under this section only if such claim or 
statement is made by such individual in making application for such 
benefits with respect to such individual's eligibility to receive such 
benefits.
    (2) For purposes of this paragraph, the term benefits means--
    (i) Benefits under the food stamp program (as defined in section 
3(h) of the Food Stamp Act of 1977);
    (ii) Benefits under Chapters 11, 13, 15, 17, and 21 of Title 38;
    (iii) Benefits under the Black Lung Benefits Act;
    (iv) Any authority or other benefit under the Railroad Retirement 
Act of 1974;

[[Page 189]]

    (v) Benefits under the National School Lunch Act;
    (vi) Benefits under any housing assistance program for lower income 
families or elderly or handicapped persons which is administered by the 
Secretary of Housing and Urban Development or the Secretary of 
Agriculture;
    (vii) Benefits under the special supplemental food program for 
women, infants, and children established under section 17 of the Child 
Nutrition Act of 1966;
    (viii) Benefits under part A of the Energy Conservation in Existing 
Buildings Act of 1976;
    (ix) Benefits under the supplemental security income program under 
title XVI of the Social Security Act;
    (x) Old age, survivors, and disability insurance benefits under 
title II of the Social Security Act;
    (xi) Benefits under title XVIII of the Social Security Act;
    (xii) Aid to families with dependent children under a State plan 
approved under section 402(a) of the Social Security Act;
    (xiii) Medical assistance under a State plan approved under section 
1902(a) of the Social Security Act;
    (xiv) Benefits under title XX of the Social Security Act;
    (xv) Benefits under section 336 of the Older Americans Act; or
    (xvi) Benefits under the Low-Income Home Energy Assistance Act of 
1981, which are intended for the personal use of the individual who 
receives the benefits or for a member of the individual's family.
    (d) No proof of specific intent to defraud is required to establish 
liability under this section.
    (e) In any case in which it is determined that more than one person 
is liable for making a claim or statement under this section, each such 
person may be held liable for a civil penalty under this section.
    (f) In any case in which it is determined that more than one person 
is liable for making a claim under this section, and on which the 
Government has made payment (including transferred property or provided 
services), an assessment may be imposed against any such person or 
jointly and severally against any combination of such persons.



Sec. 16.4  Investigation.

    (a) If an investigating official concludes that a subpoena pursuant 
to the authority conferred by 31 U.S.C. 3804(a) is warranted--
    (1) The subpoena so issued shall notify the person to whom it is 
addressed of the authority under which the subpoena is issued and shall 
identify the information, records, or documents sought;
    (2) The investigating official may designate a person to act on his 
behalf to receive the information, records, or documents sought; and
    (3) The person receiving such subpoena shall be required to tender 
to the investigating official or to the person designated to receive the 
information, records, or documents, a certification that the 
information, records, or documents sought have been produced, or that 
such information, records, or documents are not available and the 
reasons therefor, or that such information, records, or documents, 
suitably identified, have been withheld based upon the assertion of an 
identified legal privilege.
    (b) If the investigating official concludes that an action under the 
Program Fraud Civil Remedies Act may be warranted, the investigating 
official shall report the findings and conclusions of such investigation 
to the reviewing official.
    (c) Nothing in this section shall preclude or limit the 
investigating official's discretion to refer allegations directly to the 
Department of Justice for suit under the False Claims Act, 31 U.S.C. 
3729-3731, or for other civil relief, or to preclude or limit such 
official's discretion to defer or postpone a report or referral to avoid 
interference with an investigation into criminal misconduct or a 
criminal prosecution.
    (d) Nothing in this section modifies any responsibility of the 
investigating official to report violations of criminal law to the 
Attorney General.



Sec. 16.5  Review by the reviewing official.

    (a) If, based on the report of the investigating official under 
Sec. 16.4(b), the reviewing official determines that

[[Page 190]]

there is adequate evidence to believe that a person is liable under 
Sec. 16.3 of this part, the reviewing official shall transmit to the 
Attorney General a written notice of the reviewing official's intention 
to issue a complaint under Sec. 16.7.
    (b) Such notice shall include--
    (1) A statement of the reviewing official's reasons for issuing a 
complaint;
    (2) A statement specifying the evidence that supports the 
allegations of liability;
    (3) A description of the claims or statements upon which the 
allegations of liability are based;
    (4) An estimate of the amount of money or the value, if any, of 
property, services, or other benefits requested or demanded in violation 
of Sec. 16.3 of this part; or, if no monetary value can be put on the 
property, service or benefit, a statement regarding the non-monetary 
consequences to the agency of a false statement.
    (5) A statement of any exculpatory or mitigating circumstances that 
may relate to the claims or statements known by the reviewing official 
or the investigating official; and
    (6) A statement that there is a reasonable prospect of collecting an 
appropriate amount of penalties and assessments. Such a statement may be 
based upon information then known or an absence of any information 
indicating that the person may be unable to pay such an amount.



Sec. 16.6  Prerequisites for issuing a complaint.

    (a) The reviewing official may issue a complaint under Sec. 16.7 
only if--
    (1) The Department of Justice approves the issuance of a complaint 
in a written statement described in 31 U.S.C. 3803(b)(l), and
    (2) In the case of allegations of liability under Sec. 16.3(a) with 
respect to a claim, the reviewing official determines that, with respect 
to such claim or a group of related claims submitted at the same time 
such claim is submitted (as defined in paragraph (b) of this section), 
the amount of money or the value of property or services demanded or 
requested in violation of Sec. 16.3(a) does not exceed $150,000.
    (b) For the purposes of this section, a related group of claims 
submitted at the same time shall include only those claims arising from 
the same transaction (e.g., grant, loan, application, or contract) that 
are submitted simultaneously as part of a single request, demand, or 
submission.
    (c) Nothing in this section shall be construed to limit the 
reviewing official's authority to join in a single complaint against a 
person, claims that are unrelated or were not submitted simultaneously, 
regardless of the amount of money or the value of property or services 
demanded or requested, as long as the total amount for each claim does 
not exceed $150,000.



Sec. 16.7  Complaint.

    (a) On or after the date the Attorney General or his designee 
approves the issuance of a complaint in accordance with 31 U.S.C. 
3803(b)(1), the reviewing official may serve a complaint on the 
defendant, as provided in Sec. 16.8.
    (b) The complaint shall state--
    (1) The allegations of liability against the defendant, including 
the statutory basis for liability, an identification of the claims or 
statements that are the basis for the alleged liability, and the reasons 
why liability allegedly arises from such claims or statements;
    (2) The maximum amount of penalties and assessments for which the 
defendant may be held liable;
    (3) Instructions for filing an answer to request a hearing, 
including a specific statement of the defendant's right to request a 
hearing by filing an answer and to be represented by an attorney;
    (4) That the defendant has a right to review and obtain certain 
information pursuant to Section 16.20 herein; and
    (5) That failure to file an answer within 30 days of service of the 
complaint will result in the imposition of the maximum amount of 
penalties and assessments without right to appeal.
    (c) At the same time the reviewing official serves the complaint on 
the defendant(s), he or she shall serve the defendant with a copy of 
these regulations.

[[Page 191]]



Sec. 16.8  Service of complaint.

    (a) Service of a complaint must be made by a certified or registered 
mail or by delivery in any manner authorized by Rule 4(d) of the Federal 
Rules of Civil Procedure.
    (b) Proof of service, stating the name and address of the person on 
whom the complaint was served, and the manner and date of service, may 
be made by--
    (1) Affidavit of the individual making service;
    (2) An acknowledged United States Postal Service return receipt 
card; or
    (3) Written acknowledgement of the defendant or his representative.



Sec. 16.9  Answer.

    (a) The defendant may request a hearing by filing an answer with the 
reviewing official within 30 days of service of the complaint. An answer 
shall be deemed to be a request for hearing.
    (b) In the answer, the defendant--
    (1) Shall admit or deny each of the allegations of liability made in 
the complaint;
    (2) Shall state any defense on which the defendant intends to rely;
    (3) May state any reasons why the defendant contends that the 
penalties and assessments should be less than the statutory maximum; and
    (4) Shall state whether the defendant has authorized an attorney to 
act as defendant's representative, and shall state the name, address, 
and telephone number of the representative.



Sec. 16.10  Default upon failure to file an answer.

    (a) If the defendant does not file an answer within the time 
prescribed in Sec. 16.9(a), the reviewing official may refer the 
complaint to the ALJ for initial decision.
    (b) Upon the referral of the complaint, the ALJ shall promptly serve 
on defendant in the manner prescribed in Sec. 16.8, a notice that an 
initial decision will be issued under this section.
    (c) If the defendant fails to file a timely answer, the ALJ shall 
assume the facts alleged in the complaint to be true and, if such facts 
eatablish liability under Sec. 16.3, the ALJ shall issue an initial 
decision imposing the maximum amount of penalties and assessments 
allowed under the statute.
    (d) Except as otherwise provided in this section, by failing to file 
a timely answer, the defendant waives any right to further review of the 
penalties and assessments imposed under paragraph (c) of this section, 
and the initial decision shall become final and binding upon the parties 
30 days after it is issued.
    (e) If, before such an initial decision becomes final, the defendant 
files a motion with the ALJ, and serves a copy on the agency, seeking to 
reopen on the grounds that extraordinary circumstances prevented the 
defendant from filing a timely answer, the initial decision shall be 
stayed pending the ALJ's decision on the motion. The ALJ shall permit 
the agency a reasonable amount of time, not less than 15 calendar days, 
to respond to the defendant's motion.
    (f) If, on such motion, the defendant can demonstrate extraordinary 
circumstances excusing the failure to file a timely answer, the ALJ 
shall withdraw the initial decision, if such a decision has been issued 
pursuant to paragraph (c) of this section, and shall grant the defendant 
an opportunity to answer the complaint.
    (g) A decision of the ALJ denying a defendant's motion under 
paragraph (e) of this section is not subject to reconsideration under 
Sec. 16.38.
    (h) The defendant may appeal to the authority head the decision 
denying a motion to reopen by filing a notice of appeal with the 
authority head within 15 days after the ALJ denies the motion. The 
timely filing of a notice of appeal shall stay the initial decision 
until the authority head decides the issue.
    (i) If the defendant files a timely notice of appeal with the 
authority head, the ALJ shall forward the record of the proceeding to 
the authority head.
    (j) The authority head shall decide expeditiously, and based solely 
on the record before the ALJ, whether extraordinary circumstances excuse 
the defendant's failure to file a timely answer.
    (k) If the authority head decides that extraordinary circumstances 
excuse the defendant's failure to file a timely

[[Page 192]]

answer, the authority head shall remand the case to the ALJ with 
instructions to grant the defendant an opportunity to file an answer.
    (l) If the authority head decides that the defendant's failure to 
file a timely answer is not excused, the authority head shall reinstate 
the initial decision of the ALJ, which shall become final and binding 
upon the parties 30 days after the authority head issues such decision.



Sec. 16.11  Referral of complaint and answer to the ALJ.

    Upon receipt of an answer, the reviewing official shall file the 
complaint and answer with the ALJ.



Sec. 16.12  Notice of hearing.

    (a) When the ALJ receives the complaint and answer, the ALJ shall 
promptly serve a notice of hearing upon the defendant and the agency 
representative in the manner prescribed by Sec. 16.8.
    (b) Such notice shall include--
    (1) The tentative time and place, and the nature of the hearing;
    (2) The legal authority and jurisdiction under which the hearing is 
to be held;
    (3) The matters of fact and law to be asserted;
    (4) A description of the procedures for the conduct of the hearing;
    (5) The names, addresses, and telephone numbers of the 
representatives of the Government and of the defendant, if any; and
    (6) Such other matters as the ALJ deems appropriate.



Sec. 16.13  Parties to the hearing.

    (a) The parties to the hearing shall be the defendant and the 
authority.
    (b) Pursuant to 31 U.S.C. 3730(c)(5), a private plaintiff under the 
False Claims Act may participate in these proceedings to the extent 
authorized by the provisions of that Act.



Sec. 16.14  Separation of functions.

    (a) The investigating official, the reviewing official, and any 
employee or agent of the authority who takes part in investigating, 
preparing, or presenting a particular case may not, in such case or a 
factually related case--
    (1) Participate in the hearing as the ALJ;
    (2) Participate or advise in the initial decision or the review of 
the initial decision by the authority head, except as a witness or a 
representative in public proceedings; or
    (3) Make the collection of penalties and assessments under 31 U.S.C. 
3806.
    (b) The ALJ shall not be responsible to, or subject to the 
supervision or direction of the investigating official or the reviewing 
official.
    (c) Except as provided in paragraph (a) of this section, the 
representative for the Government may be an attorney employed anywhere 
in the Legal Division of the Department, or an attorney employed in the 
offices of either the investigating official or the reviewing official; 
however the representative of the Government may not participate or 
advise in the review of the initial decision by the authority head.



Sec. 16.15  Ex parte contacts.

    No party or person (except employees of the ALJ's office) shall 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec. 16.16  Disqualification of reviewing official or ALJ.

    (a) A reviewing official or ALJ in a particular case may disqualify 
himself or herself at any time.
    (b) A party may file with the ALJ a motion for disqualification of a 
reviewing official or an ALJ. Such motion shall be accompanied by an 
affidavit alleging personal bias or other reason for disqualification.
    (c) Such motion and affidavit shall be filed promptly upon the 
party's discovery of reasons requiring disqualification, or such 
objections shall be deemed waived.
    (d) Such affidavit shall state specific facts that support the 
party's assertion that personal bias or other reason for 
disqualification exists and the time

[[Page 193]]

and circumstances of the party's discovery of such facts. It shall be 
accompanied by a certificate of the representative of record that it is 
made in good faith.
    (e) Upon the filing of such a motion and affidavit, the ALJ shall 
proceed no further in the case until he or she resolves the matter of 
disqualification in accordance with paragrpah (f) of this section.
    (f)(1) If the ALJ determines that a reviewing official is 
disqualified, the ALJ shall dismiss the complaint without prejudice.
    (2) If the ALJ disqualifies himself or herself, the agency shall 
seek to have the case promptly reassigned to another ALJ.
    (3) If the ALJ denies a motion to disqualify, the authority head may 
determine the matter only as part of his or her review of the initial 
decision upon appeal, if any.



Sec. 16.17  Rights of parties.

    Except as otherwise limited by this part, all parties may--
    (a) Be accompanied, represented, and advised by an attorney;
    (b) Participate in any conference held by the ALJ;
    (c) Conduct discovery;
    (d) Agree to stipulations of fact or law, which shall be made part 
of the record;
    (e) Present evidence relevant to the issues at the hearing;
    (f) Present and cross-examine witnesses;
    (g) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (h) Submit written beliefs and proposed findings of fact and 
conclusions of law after the hearing.



Sec. 16.18  Authority of the ALJ.

    (a) The ALJ shall conduct a fair and impartial hearing, avoid delay, 
maintain order, and assure that a record of the proceeding is made.
    (b) The ALJ has the authority to--
    (1) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of discovery;
    (8) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (9) Examine witnesses;
    (10) Receive, rule on, exclude, or limit evidence;
    (11) Upon motion of a party, take official notice of facts;
    (12) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact;
    (13) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (14) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under this part.
    (c) The ALJ does not have the authority to make any determinations 
regarding the validity of Federal statutes or regulations, or 
Departmental orders, Directives, or other published rules.



Sec. 16.19  Prehearing conferences.

    (a) The ALJ may schedule prehearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ shall schedule at least 
one prehearing conference at a reasonable time in advance of the 
hearing.
    (c) The ALJ may use prehearing conferences to discuss the following:
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement;
    (3) Stipulations, admissions of fact or the content and authenticity 
of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;

[[Page 194]]

    (5) Whether a party chooses to waive appearance at an oral hearing 
and to submit only documentary evidence (subject to the objection of 
other parties) and written argument;
    (6) Limitation of the number of witnesses;
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits;
    (8) Discovery;
    (9) The time and place for the hearing; and
    (10) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.
    (d) The ALJ may issue an order containing all matters agreed upon by 
the parties or ordered by the ALJ at a prehearing conference.



Sec. 16.20  Disclosure of documents.

    (a) Upon written request to the reviewing official, the defendant 
may review any relevant and material documents, transcripts, records, 
and other material that relate to the allegations set out in the 
complaint and upon which the findings and conclusions of the 
investigating official under Sec. 16.4(b) are based unless such 
documents are subject to a privilege under Federal law. The Department 
shall schedule such review at a time and place convenient to it. Upon 
payment of fees for duplication, the defendant may obtain copies of such 
documents.
    (b) Upon written request to the reviewing official, the defendant 
also may obtian a copy of all exculpatory information in the possession 
of the reviewing official or investigating official relating to the 
allegations in the complaint, even if it is contained in a document that 
would otherwise be privileged. If the document would otherwise be 
privileged, only that portion containing exculpatory information must be 
disclosed.
    (c) The notice sent to the Attorney General from the reviewing 
official as described in Sec. 16.5 is not discoverable under any 
circumstances.
    (d) The defendant may file a motion to compel disclosure of the 
documents subject to the provisions of this section. Such a motion may 
only be filed with the ALJ following the filing of an answer pursuant to 
Sec. 16.9.



Sec. 16.21  Discovery.

    (a) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying;
    (2) Requests for admissions of the authenticity of any relevant 
document or of the truth of any relevant fact;
    (3) Written interrogatories; and
    (4) Depositions.
    (b) For the purposes of this section and Sec. Sec. 16.22 and 16.23, 
the term ``documents'' includes information, documents, reports, 
answers, records, accounts, papers, and other data, either paper or 
electronic, and other documentary evidence. Nothing contained herein 
shall be interpreted to require the creation of a document.
    (c) Unless mutually agreed to by the parties, discovery is available 
only as ordered by the ALJ. The ALJ shall regulate the timing of 
discovery.
    (d) Motions for discovery. (1) A party seeking discovery may file a 
motion with the ALJ if it is not made available by another party on an 
informal basis. Such a motion shall be accompanied by a copy of the 
requested discovery, or in the case of depositions, a summary of the 
scope of the proposed deposition, and a description of the efforts which 
have been made by the party to obtain discovery.
    (2) Within ten days of service, a party may file an opposition to 
the motion and/or a motion for protective order as provided in Sec. 
16.24.
    (3) The ALJ may grant a motion for discovery only if he or she finds 
that the discovery sought--
    (i) Is necessary for the expeditious, fair, and reasonable 
consideration of the issues;
    (ii) Is not unduly costly or burdensome;
    (iii) Will not unduly delay the proceeding; and
    (iv) Does not seek privileged information.
    (4) The burden of showing that discovery should be allowed is on the 
party seeking discovery.
    (5) The ALJ may grant discovery subject to a protective order under 
Sec. 16.24.
    (e) Depositions. (1) If a motion for deposition is granted, the ALJ 
shall issue a subpoena for the deponent, which may require the deponent 
to produce

[[Page 195]]

documents. The subpoena shall specify the time and place at which the 
deposition will be held.
    (2) The party seeking to depose shall serve the subpoena in the 
manner prescribed in Sec. 16.8.
    (3) The deponent may file with the ALJ a motion to quash the 
subpoena or a motion for a protective order within ten days of service.
    (4) The party seeking to depose shall provide for the taking of a 
verbatim transcript of the deposition, which it shall make available to 
all other parties for inspection and copying.
    (f) Each party shall bear its own costs of discovery.



Sec. 16.22  Exchange of witness lists, statements, and exhibits.

    (a) At least 15 days before the hearing or at such other time as may 
be ordered by the ALJ, the parties shall exchange witness lists, copies 
of prior statements of proposed witnesses, and copies of proposed 
hearing exhibits, including copies of any written statements that the 
party intends to offer in lieu of live testimony in accordance with 
Sec. 16.33(b). At the time the above documents are exchanged, any party 
that intends to rely on the transcript of deposition testimony in lieu 
of live testimony at the hearing, if permitted by the ALJ, shall provide 
each party with a copy of the specific pages of the transcript it 
intends to introduce into evidence.
    (b) If a party objects, the ALJ shall not admit into evidence the 
testimony of any witness whose name does not appear on the witness list 
or any exhibit not provided to the opposing party as provided above 
unless the ALJ finds good cause and that there is no prejudice to the 
objecting party.
    (c) Unless another party objects within the time set by the ALJ, 
documents exchanged in accordance with paragraph (a) of this section, 
shall be deemed to be authentic for the purpose of admissibility at the 
hearing.



Sec. 16.23  Subpoenas for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
individual at the hearing may request that the ALJ issue a subpoena.
    (b) A subpoena requiring the attendance and testimony of an 
individual may also require the individual to produce documents at the 
hearing.
    (c) A party seeking a subpoena shall file a written request therefor 
not less than 15 days before the date fixed for the hearing unless 
otherwise allowed by the ALJ for good cause shown. Such request shall 
specify any documents to be produced and shall designate the witnesses 
and describe the address and location thereof with sufficient 
particularity to permit such witnesses to be found.
    (d) The subpoena shall specify the time and place at which the 
witness is to appear and any documents the witness is to bring with him 
or her.
    (e) The party seeking the subpoena shall serve it in the manner 
prescribed in Sec. 16.8. A subpoena on a party or upon an individual 
under the control of a party may be served by first class mail.
    (f) A party or the individual to whom the subpoena is directed may 
file with the ALJ a motion to quash the subpoena within ten days after 
service or on or before the time specified in the subpoena for 
compliance if it is less than ten days after service.



Sec. 16.24  Protective order.

    (a) A party or a prospective witness or deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may make any order which 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, including one or 
more of the following:
    (1) That the discovery not be had;
    (2) That the discovery may be had only on specified terms and 
conditions, including a designation of the time or place;
    (3) That the discovery may be had only through a method of discovery 
other than that requested;
    (4) That certain matters not be inquired into, or that the scope of 
discovery be limited to certain matters;

[[Page 196]]

    (5) That discovery be conducted with no one present except persons 
designated by the ALJ;
    (6) That the contents of discovery or evidence be sealed;
    (7) That a deposition after being sealed be opened only by order of 
the ALJ;
    (8) That a trade secret or other confidential research, development, 
commercial information, or facts pertaining to any criminal 
investigation, proceeding, or other administrative investigation not be 
disclosed or be disclosed only in a designated way; or
    (9) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as directed by the 
ALJ.



Sec. 16.25  Fees.

    The party requesting a subpoena shall pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage shall accompany the subpoena when served, 
except that when a subpoena is issued on behalf of the authority, a 
check for witness fees and mileage need not accompany the subpoena.



Sec. 16.26  Form, filing and service of papers.

    (a) Form. (1) Documents filed with the ALJ shall include an original 
and two copies.
    (2) Every pleading and paper filed in the proceeding shall contain a 
caption setting forth the title of the action, the case number assigned 
by the ALJ, and a designation of the paper (e.g., motion to quash 
subpoena).
    (3) Every pleading and paper shall be signed by, and shall contain 
the address and telephone number of the party or the person on whose 
behalf the paper was filed, or his or her representative.
    (4) Papers are considered filed when they are mailed. Date of 
mailing may be etablished by a certificate from the party or its 
representative or by proof that the document was sent by certified or 
registered mail.
    (b) Service. A party filing a document with the ALJ shall, at the 
time of filing, serve a copy of such document on every other party. 
Service upon any party of any document other than the complaint or 
notice of hearing shall be made by delivering or mailing a copy to the 
party's last known address. When a party is represented by an attorney, 
service shall be made upon such representative in lieu of the actual 
party.
    (c) Proof of service. A certificate of the individual serving the 
document by personal delivery or by mail, setting forth the manner of 
service, shall be proof of service.



Sec. 16.27  Computation of time.

    (a) In computing any period of time under this part or in an order 
issued thereunder, the time begins with the day following the act, 
event, or default, and includes the last day of the period, unless it is 
a Saturday, Sunday, or legal holiday observed by the Federal Government, 
in which event it includes the next business day.
    (b) When the period of time allowed is less than seven days, 
intermediate Saturdays, Sundays, and legal holidays observed by the 
Federal Government shall be excluded from the computation. When the 
period of time allowed is more than seven days, all intervening calendar 
days are included in the computation.
    (c) Where a document has been served or issued by mail, an 
additional five days will be added to the time permitted for any 
response.



Sec. 16.28  Motions.

    (a) Any application to the ALJ for an order or ruling shall be by 
motion. Motions shall state the relief sought, the authority relied 
upon, and the facts alleged, and shall be filed with the ALJ and served 
on all other parties.
    (b) Except for motions made during a prehearing conference or at the 
hearing, all motions shall be in writing. The ALJ may require that oral 
motions be reduced to writing.
    (c) Within 15 days after a written motion is served, or such other 
time as may be fixed by the ALJ, any party may file a response to such 
motion.
    (d) The ALJ may not grant a written motion before the time for 
filing responses thereto has expired, except

[[Page 197]]

upon consent of the parties or following a hearing on the motion, but 
may overrule or deny such motion without awaiting a response.
    (e) The ALJ shall make a reasonable effort to dispose of all 
outstanding motions prior to the beginning of the hearing.



Sec. 16.29  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative for--
    (1) Failing to comply with an order, rule, or procedure governing 
the proceeding;
    (2) Failing to prosecute or defend an action; or
    (3) Engaging in other misconduct that interferes with the speedy, 
orderly, or fair conduct of the hearing.
    (b) Any such sanction, including but not limited to those listed in 
paragraphs (c), (d), and (e) of this section, shall reasonably relate to 
the nature of the failure or misconduct.
    (c) When a party fails to comply with an order, including an order 
for taking a deposition, the production of evidence within the party's 
control, or a request for admission, the ALJ may--
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, deem each matter of which 
an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with such order from 
introducing evidence concerning, or otherwise relying upon testimony 
relating to the information sought; and
    (4) Strike any part of the pleadings or other submissions of the 
party failing to comply with such request.
    (d) If a party fails to prosecute or defend an action under this 
part commenced by service of a notice of hearing, the ALJ may dismiss 
the action or may issue an initial decision imposing penalties and 
assessments.
    (e) The ALJ may refuse to consider any motion, request, response, 
brief or other document which is not filed in a timely fashion.



Sec. 16.30  The hearing and burden of proof.

    (a) The ALJ shall conduct a hearing on the record in order to 
determine whether the defendant is liable for a civil penalty or 
assessment under Sec. 16.3 and, if so, the appropriate amount of any 
such civil penalty or assessment considering any aggravating or 
mitigating factors.
    (b) The authority shall have the burden of proving defendant's 
liability and any aggravating factors by a preponderance of the 
evidence.
    (c) The defendant shall have the burden of proving any affirmative 
defenses and any mitigating factors by a preponderance of the evidence.
    (d) The hearing shall be open to the public unless otherwise ordered 
by the ALJ for good cause shown.



Sec. 16.31  Determining the amount of penalties and assessments.

    (a) In determining an appropriate amount of civil penalties and 
assessements, the ALJ and upon appeal, the authority head, should 
evaluate any circumstances that mitigate or aggravate the violation and 
should articulate in their opinions the reasons that support the 
penalties and assessments they impose. Because of the intangible costs 
of fraud, the expense of investigating such conduct, and the need to 
deter others who might be similarly tempted, double damages and a 
significant civil penalty ordinarily should be imposed.
    (b) Although not exhaustive, the following factors are among those 
that may influence the ALJ and the authority head in determining the 
amount of penalties and assessments to impose with respect to the 
misconduct (i.e., the false, fictitious, or fraudulent claims or 
statements) charged in the complaint:
    (1) The number of false, fictitious, or fraudulent claims or 
statements;
    (2) The time period over which such claims or statements were made;
    (3) The degree of the defendant's culpability with respect to the 
misconduct;
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed;

[[Page 198]]

    (5) The value of the Government's actual loss as a result of the 
misconduct, including foreseeable consequential damages and the costs of 
investigation;
    (6) The relationship of the amount imposed as civil penalties to the 
amount of the Government's loss;
    (7) The potential or actual impact of the misconduct upon national 
defense, public health or safety, or public confidence in the management 
of Government programs and operations;
    (8) Whether the defendant has engaged in a pattern of the same or 
similar misconduct;
    (9) Whether the defendant attempted to conceal the misconduct;
    (10) The degree to which the defendant has involved others in the 
misconduct or in concealing it;
    (11) Where the misconduct of employees or agents is imputed to the 
defendant, the extent to which the defendant's practices fostered or 
attempted to preclude such misconduct;
    (12) Whether the defendant cooperated in or obstructed an 
investigation of the misconduct;
    (13) Whether the defendant assisted in identifying and prosecuting 
other wrongdoers;
    (14) The complexity of the program or transaction, and the degree of 
the defendant's sophistication with respect to it, including the extent 
of the defendant's prior participation in the program or in similar 
transactions;
    (15) Whether the defendant has been found, in any criminal, civil, 
or administrative proceeding to have engaged in similar misconduct or to 
have dealt dishonestly with the Government of the United States or of a 
State, directly or indirectly; and
    (16) The need to deter the defendant and others from engaging in the 
same or similar misconduct.
    (c) Nothing in this section shall be construed to limit the ALJ or 
the authority head from considering any other factors that in any given 
case may mitigate or aggravate the offense for which penalties and 
assessments are imposed.



Sec. 16.32  Location of hearing.

    (a) The hearing may be held--
    (1) In any judicial district of the United States in which the 
defendant resides or transacts business;
    (2) In any judicial district of the United States in which the claim 
or statement in issue was made; or
    (3) In such other place as may be agreed upon by the defendant and 
the ALJ.
    (b) Each party shall have the opportunity to present argument with 
respect to the location of the hearing.
    (c) The hearing shall be held at the place and at the time ordered 
by the ALJ.



Sec. 16.33  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing shall be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. Any such written statement 
must be provided to all other parties along with the last known address 
of such witness, in a manner which allows sufficient time for other 
parties to subpoena such witness for cross-examination at the hearing. 
Prior written statements of witnesses proposed to testify at the hearing 
and deposition transcripts shall be exchanged as provided in Sec. 
16.22(a).
    (c) The ALJ shall exercise reasonable control over the mode and 
order of interrogating witnesses and presenting evidence so as to--
    (1) Make the interrogation and presentation effective for the 
ascertainment of the truth,
    (2) Avoid needless consumption of time, and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The ALJ shall permit the parties to conduct such cross 
examination as may be required for a full and true disclosure of the 
facts.
    (e) At the discretion of the ALJ, a witness may be cross-examined on 
matters relevant to the proceeding without regard to the scope of his or 
her direct examination. To the extent permited

[[Page 199]]

by the ALJ, cross-examination on matters outside the scope of direct 
examination shall be conducted in the manner of direct examination and 
may proceed by leading questions only if the witness is a hostile 
witness, an adverse party, or a witness identified with an adverse 
party.
    (f) Upon motion of any party, the ALJ shall order witnesses excluded 
so that they cannot hear the testimony of other witnesses. This rule 
does not authorize exclusion of--
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of the party designated by the party's representative; or
    (3) An individual whose presence is shown by a party to be essential 
to the presentation of its case, including an individual employed by the 
Government engaged in assisting the representative for the Government.



Sec. 16.34  Evidence.

    (a) The ALJ shall determine the admissibility of evidence.
    (b) Except as provided herein, the ALJ shall not be bound by the 
Federal Rules of Evidence. However, the ALJ may apply the Federal Rules 
of Evidence where appropriate, e.g., to exclude unreliable evidence.
    (c) The ALJ shall exclude irrelevant, immaterial, or incompetent 
evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence may be excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement shall be 
inadmissible to the extent provided in Rule 408 of the Federal Rules of 
Evidence.
    (g) The ALJ shall permit the parties to introduce rebuttal witnesses 
and evidence.
    (h) All documents and other evidence offered or taken for the record 
shall be open to examination by all parties, unless otherwise ordered by 
the ALJ pursuant to Sec. 16.24.



Sec. 16.35  The record.

    (a) The hearing will be recorded and transcribed. Transcripts may be 
obtained following the hearing from the ALJ at a cost not to exceed the 
actual cost of duplication.
    (b) The transcript of testimony, exhibits and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for the decision by the ALJ and the 
authority head.
    (c) The record may be inspected and copied (upon payment of a 
reasonable fee) by anyone, unless otherwise ordered by the ALJ pursuant 
to Sec. 16.24.



Sec. 16.36  Post-hearing briefs.

    The ALJ may require the parties to file post-hearing briefs. The ALJ 
shall fix the time for filing such briefs, not to exceed 60 days from 
the date the parties receive the transcript of the hearing or, if 
applicable, the stipulated record. Such briefs may be accompanied by 
proposed findings of fact and conclusions of law. The ALJ may permit the 
parties to file reply briefs.



Sec. 16.37  Initial decision.

    (a) The ALJ shall issue an initial decision, based solely on the 
record, which shall contain findings of fact, conclusion of law, and the 
amount of any penalties and assessments imposed.
    (b) The findings of fact shall include a finding on each of the 
following issues:
    (1) Whether the claims or statements identified in the complaint, or 
any portions thereof, violate Sec. 16.3;
    (2) If the person is liable for penalties of assessments, the 
appropriate amount of any such penalties or assessments considering any 
mitigating or aggravating factors that he or she finds in the case, such 
as those described in Sec. 16.31.
    (c) The ALJ shall promptly serve the initial decision on all parties 
within 90 days after the time for submission of post-hearing briefs and 
reply briefs (if permitted) has expired. The ALJ shall at the same time 
serve all defendants with a statement describing the right of any 
defendant determined to be liable for a civil penalty or assessment to 
file a motion for reconsideration with

[[Page 200]]

the ALJ or a notice of appeal with the authority head. If the ALJ fails 
to meet the deadline contained in this paragraph, he or she shall notify 
the parties of the reason for the delay and shall set a new deadline.
    (d) Unless the initial decision of the ALJ is timely appealed to the 
authority head, or a motion for reconsideration of the initial decision 
is timely filed, the initial decision shall constitute the final 
decision of the authority head and shall be final and binding on the 
parties 30 days after it is issued by the ALJ.



Sec. 16.38  Reconsideration of initial decision.

    (a) Except as provided in paragraph (d) of this section, any party 
may file a motion for reconsideration of the initial decision within 20 
days of receipt of the initial decision. If service was made by mail, 
receipt will be presumed to be five days from the date of mailing in the 
absence of contrary proof.
    (b) Every such motion must set forth the matters claimed to have 
been erroneously decided and the nature of the alleged errors. Such 
motion shall be accompanied by a supporting brief.
    (c) Responses to such motions shall be allowed only upon request of 
the ALJ.
    (d) No party may file a motion for reconsideration of an initial 
decision that has been revised in response to a previous motion for 
reconsideration.
    (e) The ALJ may dispose of a motion for reconsideration by denying 
it or by issuing a revised initial decision.
    (f) When a motion for reconsideration is made, the time periods for 
appeal to the authority head contained in Sec. 16.38, and for finality 
of the initial decision in Sec. 16.36(d), shall begin on the date the 
ALJ issues the denial of the motion for reconsideration or a revised 
initial decision, as appropriate.



Sec. 16.39  Appeal to authority head.

    (a) Any defendant who has filed a timely answer and who is 
determined in an initial decision to be liable for a civil penalty or 
assessment may appeal such decision to the authority head by filing a 
notice of appeal with the authority head in accordance with this 
section.
    (b)(1) No notice of appeal may be filed until the time period for 
filing a motion for reconsideration under Sec. 16.38 has expired.
    (2) If a motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ denies the motion or 
issues a revised initial decision, whichever applies.
    (3) If no motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ issues the initial 
decision.
    (4) The authority head may extend the initial 30 days period for an 
additional 30 days if the defendant files with the authority head a 
request for extension within the initial 30 days period and shows good 
cause.
    (c) If the defendant files a timely notice of appeal with the 
authority head, the ALJ shall forward the notice of appeal and record of 
the proceeding to the authority head.
    (d) A notice of appeal shall be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions.
    (e) The representative for the agency may file a brief in opposition 
to exceptions within 30 days of receiving the notice of appeal and 
accompanying brief.
    (f) There is no right to appear personally before the authority 
head.
    (g) There is right to appeal any interlocutory ruling by the ALJ.
    (h) In reviewing the initial decision, the authority head shall not 
consider any objection that was not raised before the ALJ unless a 
demonstration is made of extraordinary circumstances causing the failure 
to raise the objection.
    (i) If any party demonstrates to the satisfaction of the authority 
head, prior to the issuance of the authority head's decision that 
additional evidence not presented at such hearing is material and that 
there were reasonable grounds for the failure to present such evidence 
at the hearing, the authority head shall remand the matter to the ALJ 
for consideration of such additional evidence.
    (j) The authority head may affirm, reduce, reverse, compromise, 
remand, or settle any penalty or assessment,

[[Page 201]]

determined by the ALJ in any initial decision.
    (k) The authority head shall promptly serve each party to the appeal 
to the ALJ with a copy of the decision of the authority head. At the 
same time the authority head shall serve the defendant with a statement 
describing the defendant's right to seek judicial review.
    (l) Unless a petition for judicial review is filed as provided in 31 
U.S.C. 3805 after a defendant has exhausted all administrative remedies 
under this part and within 60 days after the date on which the authority 
head serves the defendant with a copy of the authority head's decision, 
a determination that a defendant is liable under Sec. 16.3 is final and 
is not subject to judicial review.



Sec. 16.40  Stays ordered by the Department of Justice.

    If at any time the Attorney General or an Assistant Attorney General 
designated by the Attorney General transmits to the authority head a 
written finding that continuation of the administrative process 
described in this part with respect to a claim or statement may 
adversely affect any pending or potential criminal or civil action 
related to such claim or statement, the authority head shall stay the 
process immediately. In such a case, the authority head may order the 
process resumed only upon receipt of the written authorization of the 
Attorney General.



Sec. 16.41  Stay pending appeal.

    (a) An initial decision is stayed automatically pending disposition 
of a motion for reconsideration or of an appeal to the authority head.
    (b) No administrative stay is available following a final decision 
of the authority head.



Sec. 16.42  Judicial review.

    Section 3805 of title 31, United States Code, authorizes judicial 
review by an appropriate United States District Court of a final 
decision of the authority head imposing penalties or assessments under 
this part and specifies the procedures for such review.



Sec. 16.43  Collection of civil penalties and assessments.

    Sections 3806 and 3808(b) of title 31, United States Code, authorize 
actions for collection of civil penalties and assessments imposed under 
this part and specify the procedures for such actions.



Sec. 16.44  Right to administrative offset.

    The amount of any penalty or assessment which has become final, or 
for which a judgment has been entered under Sec. 16.42 or Sec. 16.43, 
or any amount agreed upon in a compromise or settlement under Sec. 
16.46, may be collected by administrative offset under 31 U.S.C. 3716, 
except that an administrative offset may not be made under this 
subsection against a refund of an overpayment of Federal taxes, then or 
later owing by the United States to the defendant.



Sec. 16.45  Deposit in Treasury of United States.

    All amounts collected pursuant to this part shall be deposited as 
miscellaneous receipts in the Treasury of the United States, except as 
provided in 31 U.S.C. 3806(g).



Sec. 16.46  Compromise or settlement.

    (a) Parties may make offers of compromise or settlement at any time.
    (b) The reviewing official has the exclusive authority to compromise 
or settle a case under this part at any time after the date on which the 
reviewing official is permitted to issue a complaint and before the date 
on which the ALJ issues an initial decision.
    (c) The authority head has exclusive authority to compromise or 
settle a case under this part at any time after the date on which the 
ALJ issues an initial decision, except during the pendency of any review 
under Sec. 16.42 or during the pendency of any action to collect 
penalties and assessments under Sec. 16.43.
    (d) The Attorney General has exclusive authority to compromise or 
settle a case under this part during the pendency of any review under 
Sec. 16.42 or of any action to recover penalties and assessments under 
31 U.S.C. 3806.
    (e) The investigating official may recommend settlement terms to the 
reviewing official, the authority head, or

[[Page 202]]

the Attorney General, as appropriate. The reviewing official may 
recommend settlement terms to the authority head, or the Attorney 
General, as appropriate.
    (f) Any compromise or settlement must be in writing and signed by 
all parties and their representatives.



Sec. 16.47  Limitations.

    (a) The notice of hearing with respect to a claim or statement must 
be served in the manner specified in Sec. 16.8 within 6 years after the 
date on which such claim or statement is made.
    (b) If the defendant fails to file a timely answer, service of a 
notice under Sec. 16.10(b) shall be deemed a notice of hearing for 
purposes of this section.
    (c) The time limits of this statute of limitations may be extended 
by agreement of the parties.



PART 17_ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS 

OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF THE TREASURY--Table of Contents




Sec.
17.101 Purpose.
17.102 Application.
17.103 Definitions.
17.104-17.109 [Reserved]
17.110 Self-evaluation.
17.111 Notice.
17.112-17.129 [Reserved]
17.130 General prohibitions against discrimination.
17.131-17.139 [Reserved]
17.140 Employment.
17.141-17.148 [Reserved]
17.149 Program accessibility: Discrimination prohibited.
17.150 Program accessibility: Existing facilities.
17.151 Program accessibility: New construction and alterations.
17.152-17.159 [Reserved]
17.160 Communications.
17.161-17.169 [Reserved]
17.170 Compliance procedures.
17.171-17.999 [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 56 FR 40788, Aug. 16, 1991, unless otherwise noted.



Sec. 17.101  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 (``section 504'') to prohibit discrimination on the basis of 
handicap in programs or activities conducted by Executive agencies or 
the United States Postal Service.



Sec. 17.102  Application.

    This part applies to all programs or activities conducted by the 
agency, except for programs or activities conducted outside the United 
States that do not involve individuals with handicaps in the United 
States.



Sec. 17.103  Definitions.

    For purposes of this part, the term--
    (a) Agency means the Department of the Treasury.
    (b) Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    (c) Auxiliary aids means services or devices that enable persons 
with impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunications 
devices for deaf persons (TDD's), interpreters, notetakers, written 
materials and other similar services and devices.
    (d) Complete complaint means a written statement that contains the 
complainant's name and address, and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes of individuals with 
handicaps shall also identify (where

[[Page 203]]

possible) the alleged victims of discrimination.
    (e) Facility means all or any portion of a building, structure, 
equipment, road, walk, parking lot, rolling stock, or other conveyance, 
or other real or personal property.
    (f) Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more of the 
individual's major life activities, has a record of such an impairment, 
or is regarded as having such an impairment. As used in this definition, 
the phrase: (1) Physical or mental impairment includes: (i) Any 
physiological disorder or condition, cosmetic disfigurement, or 
anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs, cardiovascular; reproductive, digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or (ii) any 
mental or psychological disorder such as mental retardation, organic 
brain syndrome, emotional or mental illness, and specific learning 
disabilities. The term physical or mental impairment includes, but is 
not limited to, such diseases and conditions as orthopedic, visual, 
speech and hearing impairments, cerebral palsy, epilepsy, muscular 
dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental 
retardation, emotional illness, drug addiction and alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more of the individual's major life 
activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    (g) Qualified individual with handicaps means--(1) With respect to 
an agency program or activity under which a person is required to 
perform services or to achieve a level of accomplishment, an individual 
with handicaps who meets the essential eligibility requirements and who 
can achieve the purpose of the program or activity without modifications 
in the program or activity that the agency can demonstrate would result 
in a fundamental alteration in the nature of the program; and
    (2) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (3) For purposes of employment, ``qualified handicapped person'' is 
defined in 29 CFR 1613.702(f), which is made applicable to this part by 
Sec. 17.140.
    (h) Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended. As used in 
this part, section 504 applies only to programs or activities conducted 
by Executive agencies and not to federally assisted programs.



Sec. Sec. 17.104-17.109  [Reserved]



Sec. 17.110  Self-evaluation.

    (a) The agency shall, by two years after the effective date of this 
part, evaluate its current policies and practices, and the effects 
thereof, to determine if they meet the requirements of this part. To the 
extent modification of any such policy and practice is required, the 
agency shall proceed to make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-evaluation 
process.
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:

[[Page 204]]

    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made; and
    (3) A list of participants in the self-evaluation process.



Sec. 17.111  Notice.

    The agency shall make available to all Treasury employees, and to 
all interested persons, as appropriate, information regarding the 
provisions of this part and its applicability to the programs or 
activities conducted by the agency, and make such information available 
to them in such a manner as is necessary to apprise them of the 
protections against discrimination assured them by section 504 and this 
part.



Sec. Sec. 17.112-17.129  [Reserved]



Sec. 17.130  General prohibitions against discrimination.

    (a) No qualified individual with handicaps in the United States, 
shall, by reason of his or her handicap, be excluded from the 
participation in, be denied the benefits of, or otherwise be subjected 
to discrimination under any program or activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits or services that 
are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) For purposes of this part, aids, benefits, and services, to be 
equally effective, are not required to produce the identical result or 
level of achievement for individuals with handicaps and for 
nonhandicapped persons, but must afford individuals with handicaps equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement in the most integrated setting 
appropriate to the individual's needs.
    (3) Even if the agency is permitted, under paragraph (b)(1)(iv) of 
this section, to operate a separate or different program for individuals 
with handicaps or for any class of individuals with handicaps, the 
agency must permit any qualified individual with handicaps who wishes to 
participate in the program that is not separate or different to do so.
    (4) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (5) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.

[[Page 205]]

    (6) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (7) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with handicaps 
to discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified individuals with handicaps to 
discrimination on the basis of handicap. However, the programs or 
activities of entities that are licensed or certified by the agency are 
not, themselves, covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Sec. Sec. 17.131-17.139  [Reserved]



Sec. 17.140  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the Department. The definitions, requirements 
and procedures of section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791), as established by the Equal Employment Opportunity 
Commission in 29 CFR part 1613, shall apply to employment of federally 
conducted programs or activities.



Sec. Sec. 17.141-17.148  [Reserved]



Sec. 17.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 17.150, no qualified 
individual with handicaps shall, because the agency's facilities are 
inaccessible to or unusable by individuals with handicaps, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 17.150  Program accessibility; Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not require the agency--
    (1) To make structural alterations in each of its existing 
facilities in order to make them accessible to and usable by individuals 
with handicaps where other methods are effective in achieving compliance 
with this section; or
    (2) To take any action that it can demonstrate would result in a 
fundamental alteration in the nature of a program or activity or in 
undue financial and administrative burdens. In those circumstances where 
agency personnel believe that the proposed action would fundamentally 
alter the program or activity or would result in undue financial and 
administrative burdens, the agency has the burden of proving that 
compliance with the Sec. 17.150(a) would result in such alteration or 
burdens. The decision that compliance would result in such alteration or 
burdens must be made by the agency head or his or her designee after 
considering all agency resources available for use in the funding and 
operation of the conducted program or activity and must be accompanied 
by a written statement of the reasons for reaching that conclusion. If 
an action would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that individuals with 
handicaps receive the benefits and services of the program or activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of

[[Page 206]]

aides to beneficiaries, home visits, delivery of services at alternate 
accessible sites, alteration of existing facilities and construction of 
new facilities, use of accessible rolling stock, or any other methods 
that result in making its programs or activities readily accessible to 
and usable by individuals with handicaps. The agency, in making 
alterations to existing buildings, shall meet accessibility requirements 
to the extent compelled by the Architectural Barriers Act of 1968, as 
amended (42 U.S.C. 4151-4157), and any regulations implementing it. In 
choosing among available methods for meeting the requirements of this 
section, the agency shall give priority to those methods that offer 
programs and activities to qualified individuals with handicaps in the 
most integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section within sixty (60) days of the 
effective date of this part except that where structural changes in 
facilities are undertaken, such changes in facilities are undertaken, 
such changes shall be made within three years of the effective date of 
this part, but in any event as expeditiously as possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop within six months of the effective date of this 
part, a transition plan setting forth the steps necessary to complete 
such changes. The agency shall provide an opportunity to interested 
persons, including individuals with handicaps or organizations 
representing individuals with handicaps, to participate in the 
development of the transition plan by submitting comments (both 
telephonic and written). A copy of the transition plan shall be made 
available for public inspection. The plan shall at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the physical accessibility of its programs or activities to 
individuals with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 17.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 through 101-19.607 apply to buildings covered by 
this section.



Sec. Sec. 17.152-17.159  [Reserved]



Sec. 17.160  Communications.

    (a) The agency shall take appropriate steps to effectively 
communicate with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal nature 
to applicants or participants in programs.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, the agency shall use telecommunication devices for deaf 
persons (TDD's) or equally effective telecommunication systems to 
communicate with persons with impaired hearing.

[[Page 207]]

    (b) The agency shall make available to interested persons, including 
persons with impaired vision or hearing, information as to the existence 
and location of accessible services, activities, and facilities.
    (c) The agency shall post notices at a primary entrance to each of 
its inaccessible facilities, directing users to an accessible facility, 
or to a location at which they can obtain information about accessible 
facilities. The international symbol for accessibility shall be used at 
each primary entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens.
    In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 17.160 would result 
in such alteration or burdens. The decision that compliance would result 
in such alteration or burdens must be made by the agency head or his or 
her designee after considering all resources available for use in the 
funding and operation of the conducted program or activity and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with this section would 
result in such an alteration or such burdens, the agency shall take any 
other action that would not result in such an alteration or such burdens 
but would nevertheless ensure that, to the maxium extent possible, 
individuals with handicaps receive the benefits and services of the 
program or activity.



Sec. Sec. 17.161-17.169  [Reserved]



Sec. 17.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs and activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) All other complaints alleging violations of section 504 may be 
sent to the Director, Office of Equal Opportunity Program, Department of 
the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. The 
Deputy Assistant Secretary for Departmental Finance and Management shall 
be responsible for coordinating implementation of this section.
    (d)(1) Any person who believes that he or she has been subjected to 
discrimination prohibited by this part may by him or herself or by his 
or her authorized representative file a complaint. Any person who 
believes that any specific class of persons has been subjected to 
discrimination prohibited by this part and who is a member of that class 
or the authorized representative of a member of that class may file a 
complaint.
    (2) The agency shall accept and investigate all complete complaints 
over which it has jurisdiction.
    (3) All complete complaints must be filed within 180 days of the 
alleged act of discrimination. The agency may extend this time period 
for good cause.
    (e) If the agency receive a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), is not readily accessible to 
and usable by individuals with handicaps.
    (g)(1) Within 180 days of the receipt of a complete complaint over 
which it has jurisdiction, the agency shall notify the complainant of 
the results of the investigation in a letter containing--
    (i) Findings of fact and conclusions of law;
    (ii) A description of a remedy for each violation found; and

[[Page 208]]

    (iii) A notice of the right to appeal.
    (2) Agency employees are required to cooperate in the investigation 
and attempted resolution of complaints. Employees who are required to 
participate in any investigation under this section shall do so as part 
of their official duties and during the course of regular duty hours.
    (3) If a complaint is resolved informally, the terms of the 
agreement shall be reduced to writing and made part of the complaint 
file, with a copy of the agreement provided to the complainant. The 
written agreement shall describe the subject matter of the complaint and 
any corrective action to which the parties have agreed.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 60 days of receipt from 
the agency of the letter required by Sec. 17.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the Director, 
Human Resources Directorate, or his or her designee, who will issue the 
final agency decision which may include appropriate corrective action to 
be taken by the agency.
    (j) The agency shall notify the complainant of the results of the 
appeal within 30 days of the receipt of the appeal. If the agency 
determines that it needs additional information from the complainant, it 
shall have 30 days from the date it received the additional information 
to make its determination on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended for an individual case when the Assistant Secretary for 
Departmental Finance and Management determines that there is good cause, 
based on the particular circumstances of that case, for the extension.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies or may contract with a 
nongovernment investigator to perform the investigation, but the 
authority for making the final determination may not be delegated to 
another agency.



Sec. Sec. 17.171-17.999  [Reserved]



PART 18_OFFICIALS DESIGNATED TO PERFORM THE FUNCTIONS AND DUTIES OF CERTAIN 

OFFICES IN CASE OF ABSENCE, DISABILITY, OR VACANCY--Table of Contents




Sec.
18.1 Designation of First Assistants.
18.2 Exceptions.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321.

    Source: 64 FR 62112, Nov. 16, 1999, unless otherwise noted.



Sec. 18.1  Designation of First Assistants.

    Except as provided in Sec. 18.2, every office within the Department 
of the Treasury (including its bureaus) to which appointment is required 
to be made by the President with the advice and consent of the Senate 
(``PAS Office'') may have a First Assistant within the meaning of 5 
U.S.C. 3345-3349d.
    (a) Where there is a position of principal deputy to the PAS Office, 
the principal deputy shall be the First Assistant.
    (b) Where there is only one deputy position to the PAS Office, the 
official in that position shall be the First Assistant.
    (c) Where neither paragraph (a) nor (b) of this section is 
applicable to the PAS Office, the Secretary of the Treasury may 
designate in writing the First Assistant.



Sec. 18.2  Exceptions.

    (a) Section 18.1 shall not apply:
    (1) When a statute which meets the requirements of 5 U.S.C. 3347(a) 
prescribes another means for authorizing an officer or employee to 
perform the functions and duties of a PAS Office in the Department 
temporarily in an acting capacity; and
    (2) To the office of a member of the Internal Revenue Service 
Oversight Board.
    (b) The Inspector General of the Department of the Treasury shall 
determine any arrangements for the temporary performance of the 
functions and duties of the Inspector General of the Department of the 
Treasury when that office is vacant.

[[Page 209]]

    (c) The Treasury Inspector General for Tax Administration shall 
determine any arrangements for the temporary performance of the 
functions and duties of the Treasury Inspector General for Tax 
Administration when that office is vacant.



PART 19_GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)--Table of 

Contents




Sec.
19.25 How is this part organized?
19.50 How is this part written?
19.75 Do terms in this part have special meanings?

                            Subpart A_General

19.100 What does this part do?
19.105 Does this part apply to me?
19.110 What is the purpose of the nonprocurement debarment and 
          suspension system?
19.115 How does an exclusion restrict a person's involvement in covered 
          transactions?
19.120 May we grant an exception to let an excluded person participate 
          in a covered transaction?
19.125 Does an exclusion under the nonprocurement system affect a 
          person's eligibility for Federal procurement contracts?
19.130 Does exclusion under the Federal procurement system affect a 
          person's eligibility to participate in nonprocurement 
          transactions?
19.135 May the Department of the Treasury exclude a person who is not 
          currently participating in a nonprocurement transaction?
19.140 How do I know if a person is excluded?
19.145 Does this part address persons who are disqualified, as well as 
          those who are excluded from nonprocurement transactions?

                     Subpart B_Covered Transactions

19.200 What is a covered transaction?
19.205 Why is it important to know if a particular transaction is a 
          covered transaction?
19.210 Which nonprocurement transactions are covered transactions?
19.215 Which nonprocurement transactions are not covered transactions?
19.220 Are any procurement contracts included as covered transactions?
19.225 How do I know if a transaction in which I may participate is a 
          covered transaction?

    Subpart C_Responsibilities of Participants Regarding Transactions

                    Doing Business With Other Persons

19.300 What must I do before I enter into a covered transaction with 
          another person at the next lower tier?
19.305 May I enter into a covered transaction with an excluded or 
          disqualified person?
19.310 What must I do if a Federal agency excludes a person with whom I 
          am already doing business in a covered transaction?
19.315 May I use the services of an excluded person as a principal under 
          a covered transaction?
19.320 Must I verify that principals of my covered transactions are 
          eligible to participate?
19.325 What happens if I do business with an excluded person in a 
          covered transaction?
19.330 What requirements must I pass down to persons at lower tiers with 
          whom I intend to do business?

            Disclosing Information--Primary Tier Participants

19.335 What information must I provide before entering into a covered 
          transaction with the Department of the Treasury?
19.340 If I disclose unfavorable information required under Sec. 
          19.335, will I be prevented from participating in the 
          transaction?
19.345 What happens if I fail to disclose the information required under 
          Sec. 19.335?
19.350 What must I do if I learn of the information required under Sec. 
          19.335 after entering into a covered transaction with the 
          Department of the Treasury?

             Disclosing Information--Lower Tier Participants

19.355 What Information must I provide to a higher tier participant 
          before entering into a covered transaction with that 
          participant?
19.360 What happens if I fail to disclose the information required under 
          Sec. 19.355?
19.365 What must I do if I learn of information required under Sec. 
          19.355 after entering into a covered transaction with a higher 
          tier participant?

   Subpart D_Responsibilities of Department of the Treasury Officials 
                         Regarding Transactions

19.400 May I enter into a transaction with an excluded or disqualified 
          person?
19.405 May I enter into a covered transaction with a participant if a 
          principal of the transaction is excluded?

[[Page 210]]

19.410 May I approve a participant's use of the services of an excluded 
          person?
19.415 What must I do if a Federal agency excludes the participant or a 
          principal after I enter into a covered transaction?
19.420 May I approve a transaction with an excluded or disqualified 
          person at a lower tier?
19.425 When do I check to see if a person is excluded or disqualified?
19.430 How do I check to see if a person is excluded or disqualified?
19.435 What must I require of a primary tier participant?
19.440 What method do I use to communicate those requirements to 
          participants?
19.445 What action may I take if a primary tier participant knowingly 
          does business with an excluded or disqualified person?
19.450 What action may I take if a primary tier participant fails to 
          disclose the information required under Sec. 19.335?
19.455 What may I do if a lower tier participant fails to disclose the 
          information required under Sec. 19.355 to the next higher 
          tier?

                 Subpart E_Excluded Parties List System

19.500 What is the purpose of the Excluded Parties List System (EPLS)?
19.505 Who uses the EPLS?
19.510 Who maintains the EPLS?
19.515 What specific information is in the EPLS?
19.520 Who places the information into the EPLS?
19.525 Whom do I ask if I have questions about a person in the EPLS?
19.530 Where can I find the EPLS?

   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions

19.600 How do suspension and debarment actions start?
19.605 How does suspension differ from debarment?
19.610 What procedures does the Department of the Treasury use in 
          suspension and debarment actions?
19.615 How does the Department of the Treasury notify a person of a 
          suspension and debarment action?
19.620 Do Federal agencies coordinate suspension and debarment actions?
19.625 What is the scope of a suspension or debarment action?
19.630 May the Department of the Treasury impute the conduct of one 
          person to another?
19.635 May the Department of the Treasury settle a debarment or 
          suspension action?
19.640 May a settlement include a voluntary exclusion?
19.645 Do other Federal agencies know if the Department of the Treasury 
          agrees to a voluntary exclusion?

                          Subpart G_Suspension

19.700 When may the suspending official issue a suspension?
19.705 What does the suspending official consider in issuing a 
          suspension?
19.710 When does a suspension take effect?
19.715 What notice does the suspending official give me if I am 
          suspended?
19.720 How may I contest a suspension?
19.725 How much time do I have to contest a suspension?
19.730 What information must I provide to the suspending official if I 
          contest a suspension?
19.735 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the suspension is based?
19.740 Are suspension proceedings formal?
19.745 How is fact-finding conducted?
19.750 What does the suspending official consider in deciding whether to 
          continue or terminate my suspension?
19.755 When will I know whether the suspension is continued or 
          terminated?
19.760 How long may my suspension last?

                           Subpart H_Debarment

19.800 What are the causes for debarment?
19.805 What notice does the debarring official give me if I am proposed 
          for debarment?
19.810 When does a debarment take effect?
19.815 How may I contest a proposed debarment?
19.820 How much time do I have to contest a proposed debarment?
19.825 What information must I provide to the debarring official if I 
          contest a proposed debarment?
19.830 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the proposed debarment is based?
19.835 Are debarment proceedings formal?
19.840 How is fact-finding conducted?
19.845 What does the debarring official consider in deciding whether to 
          debar me?
19.850 What is the standard of proof in a debarment action?
19.855 Who has the burden of proof in a debarment action?
19.860 What factors may influence the debarring official's decision?
19.865 How long may my debarment last?
19.870 When do I know if the debarring official debars me?
19.875 May I ask the debarring official to reconsider a decision to 
          debar me?
19.880 What factors may influence the debarring official during 
          reconsideration?
19.885 May the debarring official extend a debarment?

[[Page 211]]

                          Subpart I_Definitions

19.900 Adequate evidence.
19.905 Affiliate.
19.910 Agency.
19.915 Agent or representative.
19.920 Civil judgment.
19.925 Conviction.
19.930 Debarment.
19.935 Debarring official.
19.940 Disqualified.
19.945 Excluded or exclusion.
19.950 Excluded Parties List System.
19.955 Indictment.
19.960 Ineligible or ineligibility.
19.965 Legal proceedings.
19.970 Nonprocurement transaction.
19.975 Notice.
19.980 Participant.
19.985 Person.
19.990 Preponderance of the evidence.
19.995 Principal.
19.1000 Respondent.
19.1005 State.
19.1010 Suspending official.
19.1015 Suspension.
19.1020 Voluntary exclusion or voluntarily excluded.

Subpart J [Reserved]

Appendix to Part 19--Covered Transactions

    Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C. 
6101 note); E.O. 11738 (3 CFR, 1973 Comp., p. 799); E.O. 12549 (3 CFR, 
1986 Comp., p. 189); E.O. 12689 (3 CFR, 1989 Comp., p. 235).

    Source: 68 FR 66544, 66605, 66607, Nov. 26, 2003, unless otherwise 
noted.



Sec. 19.25  How is this part organized?

    (a) This part is subdivided into ten subparts. Each subpart contains 
information related to a broad topic or specific audience with special 
responsibilities, as shown in the following table:

------------------------------------------------------------------------
       In subpart . . .        You will find provisions related to . . .
------------------------------------------------------------------------
A............................  general information about this rule.
B............................  the types of Department of the Treasury
                                transactions that are covered by the
                                Governmentwide nonprocurement suspension
                                and debarment system.
C............................  the responsibilities of persons who
                                participate in covered transactions.
D............................  the responsibilities of Department of the
                                Treasury officials who are authorized to
                                enter into covered transactions.
E............................  the responsibilities of Federal agencies
                                for the Excluded Parties List System
                                (Disseminated by the General Services
                                Administration).
F............................  the general principles governing
                                suspension, debarment, voluntary
                                exclusion and settlement.
G............................  suspension actions.
H............................  debarment actions.
I............................  definitions of terms used in this part.
J............................  [Reserved]
------------------------------------------------------------------------

    (b) The following table shows which subparts may be of special 
interest to you, depending on who you are:

------------------------------------------------------------------------
             If you are . . .                   See subpart(s) . . .
------------------------------------------------------------------------
(1) a participant or principal in a         A, B, C, and I.
 nonprocurement transaction.
(2) a respondent in a suspension action...  A, B, F, G and I.
(3) a respondent in a debarment action....  A, B, F, H and I.
(4) a suspending official.................  A, B, D, E, F, G and I.
(5) a debarring official..................  A, B, D, E, F, H and I.
(6) a (n) Department of the Treasury        A, B, D, E and I.
 official authorized to enter into a
 covered transaction.
(7) Reserved..............................  J.
------------------------------------------------------------------------



Sec. 19.50  How is this part written?

    (a) This part uses a ``plain language'' format to make it easier for 
the general public and business community to use. The section headings 
and text, often in the form of questions and answers, must be read 
together.
    (b) Pronouns used within this part, such as ``I'' and ``you,'' 
change from subpart to subpart depending on the audience being 
addressed. The pronoun ``we'' always is the Department of the Treasury.
    (c) The ``Covered Transactions'' diagram in the appendix to this 
part shows the levels or ``tiers'' at which the Department of the 
Treasury enforces an exclusion under this part.



Sec. 19.75  Do terms in this part have special meanings?

    This part uses terms throughout the text that have special meaning. 
Those terms are defined in Subpart I of this part. For example, three 
important terms are--

[[Page 212]]

    (a) Exclusion or excluded, which refers only to discretionary 
actions taken by a suspending or debarring official under this part or 
the Federal Acquisition Regulation (48 CFR part 9, subpart 9.4);
    (b) Disqualification or disqualified, which refers to prohibitions 
under specific statutes, executive orders (other than Executive Order 
12549 and Executive Order 12689), or other authorities. 
Disqualifications frequently are not subject to the discretion of an 
agency official, may have a different scope than exclusions, or have 
special conditions that apply to the disqualification; and
    (c) Ineligibility or ineligible, which generally refers to a person 
who is either excluded or disqualified.



                            Subpart A_General



Sec. 19.100  What does this part do?

    This part adopts a governmentwide system of debarment and suspension 
for Department of the Treasury nonprocurement activities. It also 
provides for reciprocal exclusion of persons who have been excluded 
under the Federal Acquisition Regulation, and provides for the 
consolidated listing of all persons who are excluded, or disqualified by 
statute, executive order, or other legal authority. This part satisfies 
the requirements in section 3 of Executive Order 12549, ``Debarment and 
Suspension'' (3 CFR 1986 Comp., p. 189), Executive Order 12689, 
``Debarment and Suspension'' (3 CFR 1989 Comp., p. 235) and 31 U.S.C. 
6101 note (Section 2455, Public Law 103-355, 108 Stat. 3327).



Sec. 19.105  Does this part apply to me?

    Portions of this part (see table at Sec. 19.25(b)) apply to you if 
you are a(n)--
    (a) Person who has been, is, or may reasonably be expected to be, a 
participant or principal in a covered transaction;
    (b) Respondent (a person against whom the Department of the Treasury 
has initiated a debarment or suspension action);
    (c) Department of the Treasury debarring or suspending official; or
    (d) Department of the Treasury official who is authorized to enter 
into covered transactions with non-Federal parties.



Sec. 19.110  What is the purpose of the nonprocurement debarment and 

suspension system?

    (a) To protect the public interest, the Federal Government ensures 
the integrity of Federal programs by conducting business only with 
responsible persons.
    (b) A Federal agency uses the nonprocurement debarment and 
suspension system to exclude from Federal programs persons who are not 
presently responsible.
    (c) An exclusion is a serious action that a Federal agency may take 
only to protect the public interest. A Federal agency may not exclude a 
person or commodity for the purposes of punishment.



Sec. 19.115  How does an exclusion restrict a person's involvement in covered 

transactions?

    With the exceptions stated in Sec. Sec. 19.120, 19.315, and 19.420, 
a person who is excluded by the Department of the Treasury or any other 
Federal agency may not:
    (a) Be a participant in a(n) Department of the Treasury transaction 
that is a covered transaction under subpart B of this part;
    (b) Be a participant in a transaction of any other Federal agency 
that is a covered transaction under that agency's regulation for 
debarment and suspension; or
    (c) Act as a principal of a person participating in one of those 
covered transactions.



Sec. 19.120  May we grant an exception to let an excluded person participate 

in a covered transaction?

    (a) The Secretary of the Treasury may grant an exception permitting 
an excluded person to participate in a particular covered transaction. 
If the Secretary of the Treasury grants an exception, the exception must 
be in writing and state the reason(s) for deviating from the 
governmentwide policy in Executive Order 12549.
    (b) An exception granted by one agency for an excluded person does 
not extend to the covered transactions of another agency.

[[Page 213]]



Sec. 19.125  Does an exclusion under the nonprocurement system affect a 

person's eligibility for Federal procurement contracts?

    If any Federal agency excludes a person under its nonprocurement 
common rule on or after August 25, 1995, the excluded person is also 
ineligible to participate in Federal procurement transactions under the 
FAR. Therefore, an exclusion under this part has reciprocal effect in 
Federal procurement transactions.



Sec. 19.130  Does exclusion under the Federal procurement system affect a 

person's eligibility to participate in nonprocurement transactions?

    If any Federal agency excludes a person under the FAR on or after 
August 25, 1995, the excluded person is also ineligible to participate 
in nonprocurement covered transactions under this part. Therefore, an 
exclusion under the FAR has reciprocal effect in Federal nonprocurement 
transactions.



Sec. 19.135  May the Department of the Treasury exclude a person who is not 

currently participating in a nonprocurement transaction?

    Given a cause that justifies an exclusion under this part, we may 
exclude any person who has been involved, is currently involved, or may 
reasonably be expected to be involved in a covered transaction.



Sec. 19.140  How do I know if a person is excluded?

    Check the Excluded Parties List System (EPLS) to determine whether a 
person is excluded. The General Services Administration (GSA) maintains 
the EPLS and makes it available, as detailed in subpart E of this part. 
When a Federal agency takes an action to exclude a person under the 
nonprocurement or procurement debarment and suspension system, the 
agency enters the information about the excluded person into the EPLS.



Sec. 19.145  Does this part address persons who are disqualified, as well as 

those who are excluded from nonprocurement transactions?

    Except if provided for in Subpart J of this part, this part--
    (a) Addresses disqualified persons only to--
    (1) Provide for their inclusion in the EPLS; and
    (2) State responsibilities of Federal agencies and participants to 
check for disqualified persons before entering into covered 
transactions.
    (b) Does not specify the--
    (1) Department of the Treasury transactions for which a disqualified 
person is ineligible. Those transactions vary on a case-by-case basis, 
because they depend on the language of the specific statute, Executive 
order, or regulation that caused the disqualification;
    (2) Entities to which the disqualification applies; or
    (3) Process that the agency uses to disqualify a person. Unlike 
exclusion, disqualification is frequently not a discretionary action 
that a Federal agency takes.



                     Subpart B_Covered Transactions



Sec. 19.200  What is a covered transaction?

    A covered transaction is a nonprocurement or procurement transaction 
that is subject to the prohibitions of this part. It may be a 
transaction at--
    (a) The primary tier, between a Federal agency and a person (see 
appendix to this part); or
    (b) A lower tier, between a participant in a covered transaction and 
another person.



Sec. 19.205  Why is it important if a particular transaction is a covered 

transaction?

    The importance of a covered transaction depends upon who you are.
    (a) As a participant in the transaction, you have the 
responsibilities laid out in Subpart C of this part. Those include 
responsibilities to the person or Federal agency at the next higher tier 
from whom you received the transaction, if any. They also include 
responsibilities if you subsequently enter into other covered 
transactions with persons at the next lower tier.
    (b) As a Federal official who enters into a primary tier 
transaction, you have the responsibilities laid out in subpart D of this 
part.

[[Page 214]]

    (c) As an excluded person, you may not be a participant or principal 
in the transaction unless--
    (1) The person who entered into the transaction with you allows you 
to continue your involvement in a transaction that predates your 
exclusion, as permitted under Sec. 19.310 or Sec. 19.415; or
    (2) A(n) Department of the Treasury official obtains an exception 
from the Secretary of the Treasury to allow you to be involved in the 
transaction, as permitted under Sec. 19.120.



Sec. 19.210  Which nonprocurement transactions are covered transactions?

    All nonprocurement transactions, as defined in Sec. 19.970, are 
covered transactions unless listed in Sec. 19.215. (See appendix to 
this part.)



Sec. 19.215  Which nonprocurement transactions are not covered transactions?

    The following types of nonprocurement transactions are not covered 
transactions:
    (a) A direct award to--
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization;
    (3) An entity owned (in whole or in part) or controlled by a foreign 
government; or
    (4) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.
    (b) A benefit to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted). For example, if 
a person receives social security benefits under the Supplemental 
Security Income provisions of the Social Security Act, 42 U.S.C. 1301 et 
seq., those benefits are not covered transactions and, therefore, are 
not affected if the person is excluded.
    (c) Federal employment.
    (d) A transaction that the Department of the Treasury needs to 
respond to a national or agency-recognized emergency or disaster.
    (e) A permit, license, certificate, or similar instrument issued as 
a means to regulate public health, safety, or the environment, unless 
the Department of the Treasury specifically designates it to be a 
covered transaction.
    (f) An incidental benefit that results from ordinary governmental 
operations.
    (g) Any other transaction if the application of an exclusion to the 
transaction is prohibited by law.



Sec. 19.220  Are any procurement contracts included as covered transactions?

    (a) Covered transactions under this part--
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions (see appendix to 
this part).
    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec. 19.210, and the amount of the 
contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of a(n) Department of the 
Treasury official. In that case, the contract, regardless of the amount, 
always is a covered transaction, and it does not matter who awarded it. 
For example, it could be a subcontract awarded by a contractor at a tier 
below a nonprocurement transaction, as shown in the appendix to this 
part.
    (3) The contract is for federally-required audit services.



Sec. 19.225  How do I know if a transaction in which I may participate is a 

covered transaction?

    As a participant in a transaction, you will know that it is a 
covered transaction because the agency regulations governing the 
transaction, the appropriate agency official, or participant at the next 
higher tier who enters into the transaction with you, will tell you that 
you must comply with applicable portions of this part.

[[Page 215]]



    Subpart C_Responsibilities of Participants Regarding Transactions

                    Doing Business With Other Persons



Sec. 19.300  What must I do before I enter into a covered transaction with 

another person at the next lower tier?

    When you enter into a covered transaction with another person at the 
next lower tier, you must verify that the person with whom you intend to 
do business is not excluded or disqualified. You do this by:
    (a) Checking the EPLS; or
    (b) Collecting a certification from that person if allowed by this 
rule; or
    (c) Adding a clause or condition to the covered transaction with 
that person.



Sec. 19.305  May I enter into a covered transaction with an excluded or 

disqualified person?

    (a) You as a participant may not enter into a covered transaction 
with an excluded person, unless the Department of the Treasury grants an 
exception under Sec. 19.120.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you have obtained an 
exception under the disqualifying statute, Executive order, or 
regulation.



Sec. 19.310  What must I do if a Federal agency excludes a person with whom I 

am already doing business in a covered transaction?

    (a) You as a participant may continue covered transactions with an 
excluded person if the transactions were in existence when the agency 
excluded the person. However, you are not required to continue the 
transactions, and you may consider termination. You should make a 
decision about whether to terminate and the type of termination action, 
if any, only after a thorough review to ensure that the action is proper 
and appropriate.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, unless the Department of 
the Treasury grants an exception under Sec. 19.120.



Sec. 19.315  May I use the services of an excluded person as a principal under 

a covered transaction?

    (a) You as a participant may continue to use the services of an 
excluded person as a principal under a covered transaction if you were 
using the services of that person in the transaction before the person 
was excluded. However, you are not required to continue using that 
person's services as a principal. You should make a decision about 
whether to discontinue that person's services only after a thorough 
review to ensure that the action is proper and appropriate.
    (b) You may not begin to use the services of an excluded person as a 
principal under a covered transaction unless the Department of the 
Treasury grants an exception under Sec. 19.120.



Sec. 19.320  Must I verify that principals of my covered transactions are 

eligible to participate?

    Yes, you as a participant are responsible for determining whether 
any of your principals of your covered transactions is excluded or 
disqualified from participating in the transaction. You may decide the 
method and frequency by which you do so. You may, but you are not 
required to, check the EPLS.



Sec. 19.325  What happens if I do business with an excluded person in a 

covered transaction?

    If as a participant you knowingly do business with an excluded 
person, we may disallow costs, annul or terminate the transaction, issue 
a stop work order, debar or suspend you, or take other remedies as 
appropriate.



Sec. 19.330  What requirements must I pass down to persons at lower tiers with 

whom I intend to do business?

    Before entering into a covered transaction with a participant at the 
next lower tier, you must require that participant to--
    (a) Comply with this subpart as a condition of participation in the 
transaction. You may do so using any method(s), unless Sec. 19.440 
requires you to use specific methods.
    (b) Pass the requirement to comply with this subpart to each person 
with whom the participant enters into a

[[Page 216]]

covered transaction at the next lower tier.

            Disclosing Information--Primary Tier Participants



Sec. 19.335  What information must I provide before entering into a covered 

transaction with the Department of the Treasury?

    Before you enter into a covered transaction at the primary tier, you 
as the participant must notify the Department of the Treasury office 
that is entering into the transaction with you, if you know that you or 
any of the principals for that covered transaction:
    (a) Are presently excluded or disqualified;
    (b) Have been convicted within the preceding three years of any of 
the offenses listed in Sec. 19.800(a) or had a civil judgment rendered 
against you for one of those offenses within that time period;
    (c) Are presently indicted for or otherwise criminally or civilly 
charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses listed in Sec. 19.800(a); or
    (d) Have had one or more public transactions (Federal, State, or 
local) terminated within the preceding three years for cause or default.



Sec. 19.340  If I disclose unfavorable information required under Sec. 19.335, 

will I be prevented from participating in the transaction?

    As a primary tier participant, your disclosure of unfavorable 
information about yourself or a principal under Sec. 19.335 will not 
necessarily cause us to deny your participation in the covered 
transaction. We will consider the information when we determine whether 
to enter into the covered transaction. We also will consider any 
additional information or explanation that you elect to submit with the 
disclosed information.



Sec. 19.345  What happens if I fail to disclose information required under 

Sec. 19.335?

    If we later determine that you failed to disclose information under 
Sec. 19.335 that you knew at the time you entered into the covered 
transaction, we may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.



Sec. 19.350  What must I do if I learn of information required under Sec. 

19.335 after entering into a covered transaction with the Department of the 

Treasury?

    At any time after you enter into a covered transaction, you must 
give immediate written notice to the Department of the Treasury office 
with which you entered into the transaction if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec. 
19.335; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec. 19.335.

             Disclosing Information--Lower Tier Participants



Sec. 19.355  What information must I provide to a higher tier participant 

before entering into a covered transaction with that participant?

    Before you enter into a covered transaction with a person at the 
next higher tier, you as a lower tier participant must notify that 
person if you know that you or any of the principals are presently 
excluded or disqualified.



Sec. 19.360  What happens if I fail to disclose the information required under 

Sec. 19.355?

    If we later determine that you failed to tell the person at the 
higher tier that you were excluded or disqualified at the time you 
entered into the covered transaction with that person, we may pursue any 
available remedies, including suspension and debarment.



Sec. 19.365  What must I do if I learn of information required under Sec. 

19.355 after entering into a covered transaction with a higher tier 

participant?

    At any time after you enter into a lower tier covered transaction 
with a

[[Page 217]]

person at a higher tier, you must provide immediate written notice to 
that person if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec. 
19.355; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec. 19.355.



   Subpart D_Responsibilities of Department of the Treasury Officials 
                         Regarding Transactions



Sec. 19.400  May I enter into a transaction with an excluded or disqualified 

person?

    (a) You as an agency official may not enter into a covered 
transaction with an excluded person unless you obtain an exception under 
Sec. 19.120.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you obtain a waiver or 
exception under the statute, Executive order, or regulation that is the 
basis for the person's disqualification.



Sec. 19.405  May I enter into a covered transaction with a participant if a 

principal of the transaction is excluded?

    As an agency official, you may not enter into a covered transaction 
with a participant if you know that a principal of the transaction is 
excluded, unless you obtain an exception under Sec. 19.120.



Sec. 19.410  May I approve a participant's use of the services of an excluded 

person?

    After entering into a covered transaction with a participant, you as 
an agency official may not approve a participant's use of an excluded 
person as a principal under that transaction, unless you obtain an 
exception under Sec. 19.120.



Sec. 19.415  What must I do if a Federal agency excludes the participant or a 

principal after I enter into a covered transaction?

    (a) You as an agency official may continue covered transactions with 
an excluded person, or under which an excluded person is a principal, if 
the transactions were in existence when the person was excluded. You are 
not required to continue the transactions, however, and you may consider 
termination. You should make a decision about whether to terminate and 
the type of termination action, if any, only after a thorough review to 
ensure that the action is proper.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, or under which an 
excluded person is a principal, unless you obtain an exception under 
Sec. 19.120.



Sec. 19.420  May I approve a transaction with an excluded or disqualified 

person at a lower tier?

    If a transaction at a lower tier is subject to your approval, you as 
an agency official may not approve--
    (a) A covered transaction with a person who is currently excluded, 
unless you obtain an exception under Sec. 19.120; or
    (b) A transaction with a person who is disqualified from that 
transaction, unless you obtain a waiver or exception under the statute, 
Executive order, or regulation that is the basis for the person's 
disqualification.



Sec. 19.425  When do I check to see if a person is excluded or disqualified?

    As an agency official, you must check to see if a person is excluded 
or disqualified before you--
    (a) Enter into a primary tier covered transaction;
    (b) Approve a principal in a primary tier covered transaction;
    (c) Approve a lower tier participant if agency approval of the lower 
tier participant is required; or
    (d) Approve a principal in connection with a lower tier transaction 
if agency approval of the principal is required.



Sec. 19.430  How do I check to see if a person is excluded or disqualified?

    You check to see if a person is excluded or disqualified in two 
ways:
    (a) You as an agency official must check the EPLS when you take any 
action listed in Sec. 19.425.
    (b) You must review information that a participant gives you, as 
required by

[[Page 218]]

Sec. 19.335, about its status or the status of the principals of a 
transaction.



Sec. 19.435  What must I require of a primary tier participant?

    You as an agency official must require each participant in a primary 
tier covered transaction to--
    (a) Comply with subpart C of this part as a condition of 
participation in the transaction; and
    (b) Communicate the requirement to comply with Subpart C of this 
part to persons at the next lower tier with whom the primary tier 
participant enters into covered transactions.



Sec. 19.440  What method do I use to communicate those requirements to 

participants?

    To communicate the requirements, you must include a term or 
condition in the transaction requiring the participants' compliance with 
subpart C of this part and requiring them to include a similar term or 
condition in lower-tier covered transactions.

[68 FR 66607, Nov. 26, 2003]



Sec. 19.445  What action may I take if a primary tier participant knowingly 

does business with an excluded or disqualified person?

    If a participant knowingly does business with an excluded or 
disqualified person, you as an agency official may refer the matter for 
suspension and debarment consideration. You may also disallow costs, 
annul or terminate the transaction, issue a stop work order, or take any 
other appropriate remedy.



Sec. 19.450  What action may I take if a primary tier participant fails to 

disclose the information required under Sec. 19.335?

    If you as an agency official determine that a participant failed to 
disclose information, as required by Sec. 19.335, at the time it 
entered into a covered transaction with you, you may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.



Sec. 19.455  What may I do if a lower tier participant fails to disclose the 

information required under Sec. 19.355 to the next higher tier?

    If you as an agency official determine that a lower tier participant 
failed to disclose information, as required by Sec. 19.355, at the time 
it entered into a covered transaction with a participant at the next 
higher tier, you may pursue any remedies available to you, including the 
initiation of a suspension or debarment action.



                 Subpart E_Excluded Parties List System



Sec. 19.500  What is the purpose of the Excluded Parties List System (EPLS)?

    The EPLS is a widely available source of the most current 
information about persons who are excluded or disqualified from covered 
transactions.



Sec. 19.505  Who uses the EPLS?

    (a) Federal agency officials use the EPLS to determine whether to 
enter into a transaction with a person, as required under Sec. 19.430.
    (b) Participants also may, but are not required to, use the EPLS to 
determine if--
    (1) Principals of their transactions are excluded or disqualified, 
as required under Sec. 19.320; or
    (2) Persons with whom they are entering into covered transactions at 
the next lower tier are excluded or disqualified.
    (c) The EPLS is available to the general public.



Sec. 19.510  Who maintains the EPLS?

    In accordance with the OMB guidelines, the General Services 
Administration (GSA) maintains the EPLS. When a Federal agency takes an 
action to exclude a person under the nonprocurement or procurement 
debarment and suspension system, the agency enters the information about 
the excluded person into the EPLS.



Sec. 19.515  What specific information is in the EPLS?

    (a) At a minimum, the EPLS indicates--

[[Page 219]]

    (1) The full name (where available) and address of each excluded or 
disqualified person, in alphabetical order, with cross references if 
more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for the action;
    (6) The agency and name and telephone number of the agency point of 
contact for the action; and
    (7) The Dun and Bradstreet Number (DUNS), or other similar code 
approved by the GSA, of the excluded or disqualified person, if 
available.
    (b)(1) The database for the EPLS includes a field for the Taxpayer 
Identification Number (TIN) (the social security number (SSN) for an 
individual) of an excluded or disqualified person.
    (2) Agencies disclose the SSN of an individual to verify the 
identity of an individual, only if permitted under the Privacy Act of 
1974 and, if appropriate, the Computer Matching and Privacy Protection 
Act of 1988, as codified in 5 U.S.C. 552(a).



Sec. 19.520  Who places the information into the EPLS?

    Federal officials who take actions to exclude persons under this 
part or officials who are responsible for identifying disqualified 
persons must enter the following information about those persons into 
the EPLS:
    (a) Information required by Sec. 19.515(a);
    (b) The Taxpayer Identification Number (TIN) of the excluded or 
disqualified person, including the social security number (SSN) for an 
individual, if the number is available and may be disclosed under law;
    (c) Information about an excluded or disqualified person, generally 
within five working days, after--
    (1) Taking an exclusion action;
    (2) Modifying or rescinding an exclusion action;
    (3) Finding that a person is disqualified; or
    (4) Finding that there has been a change in the status of a person 
who is listed as disqualified.



Sec. 19.525  Whom do I ask if I have questions about a person in the EPLS?

    If you have questions about a person in the EPLS, ask the point of 
contact for the Federal agency that placed the person's name into the 
EPLS. You may find the agency point of contact from the EPLS.



Sec. 19.530  Where can I find the EPLS?

    (a) You may access the EPLS through the Internet, currently at 
http://epls.arnet.gov.
    (b) As of November 26, 2003, you may also subscribe to a printed 
version. However, we anticipate discontinuing the printed version. Until 
it is discontinued, you may obtain the printed version by purchasing a 
yearly subscription from the Superintendent of Documents, U.S. 
Government Printing Office, Washington, DC 20402, or by calling the 
Government Printing Office Inquiry and Order Desk at (202) 783-3238.



   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions



Sec. 19.600  How do suspension and debarment actions start?

    When we receive information from any source concerning a cause for 
suspension or debarment, we will promptly report and investigate it. We 
refer the question of whether to suspend or debar you to our suspending 
or debarring official for consideration, if appropriate.



Sec. 19.605  How does suspension differ from debarment?

    Suspension differs from debarment in that--

------------------------------------------------------------------------
      A suspending official . . .           A debarring official . . .
------------------------------------------------------------------------
(a) Imposes suspension as a temporary    Imposes debarment for a
 status of ineligibility for              specified period as a final
 procurement and nonprocurement           determination that a person is
 transactions, pending completion of an   not presently responsible.
 investigation or legal proceedings.

[[Page 220]]

 
(b) Must--.............................  Must conclude, based on a
(1) Have adequate evidence that there     preponderance of the evidence,
 may be a cause for debarment of a        that the person has engaged in
 person; and.                             conduct that warrants
(2) Conclude that immediate action is     debarment.
 necessary to protect the Federal
 interest.
(c) Usually imposes the suspension       Imposes debarment after giving
 first, and then promptly notifies the    the respondent notice of the
 suspended person, giving the person an   action and an opportunity to
 opportunity to contest the suspension    contest the proposed
 and have it lifted.                      debarment.
------------------------------------------------------------------------



Sec. 19.610  What procedures does the Department of the Treasury use in 

suspension and debarment actions?

    In deciding whether to suspend or debar you, we handle the actions 
as informally as practicable, consistent with principles of fundamental 
fairness.
    (a) For suspension actions, we use the procedures in this subpart 
and subpart G of this part.
    (b) For debarment actions, we use the procedures in this subpart and 
subpart H of this part.



Sec. 19.615  How does the Department of the Treasury notify a person of a 

suspension or debarment action?

    (a) The suspending or debarring official sends a written notice to 
the last known street address, facsimile number, or e-mail address of--
    (1) You or your identified counsel; or
    (2) Your agent for service of process, or any of your partners, 
officers, directors, owners, or joint venturers.
    (b) The notice is effective if sent to any of these persons.



Sec. 19.620  Do Federal agencies coordinate suspension and debarment actions?

    Yes, when more than one Federal agency has an interest in a 
suspension or debarment, the agencies may consider designating one 
agency as the lead agency for making the decision. Agencies are 
encouraged to establish methods and procedures for coordinating their 
suspension and debarment actions.



Sec. 19.625  What is the scope of a suspension or debarment?

    If you are suspended or debarred, the suspension or debarment is 
effective as follows:
    (a) Your suspension or debarment constitutes suspension or debarment 
of all of your divisions and other organizational elements from all 
covered transactions, unless the suspension or debarment decision is 
limited--
    (1) By its terms to one or more specifically identified individuals, 
divisions, or other organizational elements; or
    (2) To specific types of transactions.
    (b) Any affiliate of a participant may be included in a suspension 
or debarment action if the suspending or debarring official--
    (1) Officially names the affiliate in the notice; and
    (2) Gives the affiliate an opportunity to contest the action.



Sec. 19.630  May the Department of the Treasury impute conduct of one person 

to another?

    For purposes of actions taken under this rule, we may impute conduct 
as follows:
    (a) Conduct imputed from an individual to an organization. We may 
impute the fraudulent, criminal, or other improper conduct of any 
officer, director, shareholder, partner, employee, or other individual 
associated with an organization, to that organization when the improper 
conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the organization's 
knowledge, approval or acquiescence. The organization's acceptance of 
the benefits derived from the conduct is evidence of knowledge, approval 
or acquiescence.
    (b) Conduct imputed from an organization to an individual, or 
between individuals. We may impute the fraudulent, criminal, or other 
improper conduct of any organization to an individual, or from one 
individual to another individual, if the individual to whom the improper 
conduct is imputed either participated in, had knowledge of, or

[[Page 221]]

reason to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
We may impute the fraudulent, criminal, or other improper conduct of one 
organization to another organization when the improper conduct occurred 
in connection with a partnership, joint venture, joint application, 
association or similar arrangement, or when the organization to whom the 
improper conduct is imputed has the power to direct, manage, control or 
influence the activities of the organization responsible for the 
improper conduct. Acceptance of the benefits derived from the conduct is 
evidence of knowledge, approval or acquiescence.



Sec. 19.635  May the Department of the Treasury settle a debarment or 

suspension action?

    Yes, we may settle a debarment or suspension action at any time if 
it is in the best interest of the Federal Government.



Sec. 19.640  May a settlement include a voluntary exclusion?

    Yes, if we enter into a settlement with you in which you agree to be 
excluded, it is called a voluntary exclusion and has governmentwide 
effect.



Sec. 19.645  Do other Federal agencies know if the Department of the Treasury 

agrees to a voluntary exclusion?

    (a) Yes, we enter information regarding a voluntary exclusion into 
the EPLS.
    (b) Also, any agency or person may contact us to find out the 
details of a voluntary exclusion.



                          Subpart G_Suspension



Sec. 19.700  When may the suspending official issue a suspension?

    Suspension is a serious action. Using the procedures of this subpart 
and subpart F of this part, the suspending official may impose 
suspension only when that official determines that--
    (a) There exists an indictment for, or other adequate evidence to 
suspect, an offense listed under Sec. 19.800(a), or
    (b) There exists adequate evidence to suspect any other cause for 
debarment listed under Sec. 19.800(b) through (d); and
    (c) Immediate action is necessary to protect the public interest.



Sec. 19.705  What does the suspending official consider in issuing a 

suspension?

    (a) In determining the adequacy of the evidence to support the 
suspension, the suspending official considers how much information is 
available, how credible it is given the circumstances, whether or not 
important allegations are corroborated, and what inferences can 
reasonably be drawn as a result. During this assessment, the suspending 
official may examine the basic documents, including grants, cooperative 
agreements, loan authorizations, contracts, and other relevant 
documents.
    (b) An indictment, conviction, civil judgment, or other official 
findings by Federal, State, or local bodies that determine factual and/
or legal matters, constitutes adequate evidence for purposes of 
suspension actions.
    (c) In deciding whether immediate action is needed to protect the 
public interest, the suspending official has wide discretion. For 
example, the suspending official may infer the necessity for immediate 
action to protect the public interest either from the nature of the 
circumstances giving rise to a cause for suspension or from potential 
business relationships or involvement with a program of the Federal 
Government.



Sec. 19.710  When does a suspension take effect?

    A suspension is effective when the suspending official signs the 
decision to suspend.



Sec. 19.715  What notice does the suspending official give me if I am 

suspended?

    After deciding to suspend you, the suspending official promptly 
sends you a Notice of Suspension advising you--
    (a) That you have been suspended;
    (b) That your suspension is based on--
    (1) An indictment;
    (2) A conviction;
    (3) Other adequate evidence that you have committed irregularities 
which

[[Page 222]]

seriously reflect on the propriety of further Federal Government 
dealings with you; or
    (4) Conduct of another person that has been imputed to you, or your 
affiliation with a suspended or debarred person;
    (c) Of any other irregularities in terms sufficient to put you on 
notice without disclosing the Federal Government's evidence;
    (d) Of the cause(s) upon which we relied under Sec. 19.700 for 
imposing suspension;
    (e) That your suspension is for a temporary period pending the 
completion of an investigation or resulting legal or debarment 
proceedings;
    (f) Of the applicable provisions of this subpart, Subpart F of this 
part, and any other Department of the Treasury procedures governing 
suspension decision making; and
    (g) Of the governmentwide effect of your suspension from procurement 
and nonprocurement programs and activities.



Sec. 19.720  How may I contest a suspension?

    If you as a respondent wish to contest a suspension, you or your 
representative must provide the suspending official with information in 
opposition to the suspension. You may do this orally or in writing, but 
any information provided orally that you consider important must also be 
submitted in writing for the official record.



Sec. 19.725  How much time do I have to contest a suspension?

    (a) As a respondent you or your representative must either send, or 
make rrangements to appear and present, the information and argument to 
the suspending official within 30 days after you receive the Notice of 
Suspension.
    (b) We consider the notice to be received by you--
    (1) When delivered, if we mail the notice to the last known street 
address, or five days after we send it if the letter is undeliverable;
    (2) When sent, if we send the notice by facsimile or five days after 
we send it if the facsimile is undeliverable; or
    (3) When delivered, if we send the notice by e-mail or five days 
after we send it if the e-mail is undeliverable.



Sec. 19.730  What information must I provide to the suspending official if I 

contest a suspension?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the suspending official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Suspension. A general denial is insufficient to raise a 
genuine dispute over facts material to the suspension;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing E.O. 12549 and all similar actions taken by Federal, state, 
or local agencies, including administrative agreements that affect only 
those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Suspension that grew out of facts relevant to the cause(s) stated in the 
notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the Department of the Treasury may seek further criminal, 
civil or administrative action against you, as appropriate.



Sec. 19.735  Under what conditions do I get an additional opportunity to 

challenge the facts on which the suspension is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the suspending official determines that--
    (1) Your suspension is based upon an indictment, conviction, civil 
judgment, or other finding by a Federal, State, or local body for which 
an opportunity to contest the facts was provided;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Suspension;
    (3) The issues raised in your presentation in opposition to the 
suspension are not factual in nature, or are not material to the 
suspending official's initial decision to suspend, or the official's 
decision whether to continue the suspension; or

[[Page 223]]

    (4) On the basis of advice from the Department of Justice, an office 
of the United States Attorney, a State attorney general's office, or a 
State or local prosecutor's office, that substantial interests of the 
government in pending or contemplated legal proceedings based on the 
same facts as the suspension would be prejudiced by conducting fact-
finding.
    (b) You will have an opportunity to challenge the facts if the 
suspending official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the suspension.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the suspending official or designee must conduct 
additional proceedings to resolve those facts.



Sec. 19.740  Are suspension proceedings formal?

    (a) Suspension proceedings are conducted in a fair and informal 
manner. The suspending official may use flexible procedures to allow you 
to present matters in opposition. In so doing, the suspending official 
is not required to follow formal rules of evidence or procedure in 
creating an official record upon which the official will base a final 
suspension decision.
    (b) You as a respondent or your representative must submit any 
documentary evidence you want the suspending official to consider.



Sec. 19.745  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the Department of the Treasury agree to 
waive it in advance. If you want a copy of the transcribed record, you 
may purchase it.



Sec. 19.750  What does the suspending official consider in deciding whether to 

continue or terminate my suspension?

    (a) The suspending official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the suspending official's initial 
decision to suspend you;
    (2) Any further information and argument presented in support of, or 
opposition to, the suspension; and
    (3) Any transcribed record of fact-finding proceedings.
    (b) The suspending official may refer disputed material facts to 
another official for findings of fact. The suspending official may 
reject any resulting findings, in whole or in part, only after 
specifically determining them to be arbitrary, capricious, or clearly 
erroneous.



Sec. 19.755  When will I know whether the suspension is continued or 

terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of closing 
the official record. The official record closes upon the suspending 
official's receipt of final submissions, information and findings of 
fact, if any. The suspending official may extend that period for good 
cause.



Sec. 19.760  How long may my suspension last?

    (a) If legal or debarment proceedings are initiated at the time of, 
or during your suspension, the suspension may continue until the 
conclusion of those proceedings. However, if proceedings are not 
initiated, a suspension may not exceed 12 months.
    (b) The suspending official may extend the 12 month limit under 
paragraph (a) of this section for an additional 6 months if an office of 
a U.S. Assistant Attorney General, U.S. Attorney, or other responsible 
prosecuting official requests an extension in writing. In no event may a 
suspension exceed 18 months without initiating proceedings under 
paragraph (a) of this section.

[[Page 224]]

    (c) The suspending official must notify the appropriate officials 
under paragraph (b) of this section of an impending termination of a 
suspension at least 30 days before the 12 month period expires to allow 
the officials an opportunity to request an extension.



                           Subpart H_Debarment



Sec. 19.800  What are the causes for debarment?

    We may debar a person for--
    (a) Conviction of or civil judgment for--
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, receiving stolen property, making false claims, or obstruction 
of justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects your 
present responsibility;
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as--
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction;
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, or a procurement debarment by any Federal agency taken 
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
    (2) Knowingly doing business with an ineligible person, except as 
permitted under Sec. 19.120;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec. 19.640 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of the provisions of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701); or
    (d) Any other cause of so serious or compelling a nature that it 
affects your present responsibility.



Sec. 19.805  What notice does the debarring official give me if I am proposed 

for debarment?

    After consideration of the causes in Sec. 19.800 of this subpart, 
if the debarring official proposes to debar you, the official sends you 
a Notice of Proposed Debarment, pursuant to Sec. 19.615, advising you--
    (a) That the debarring official is considering debarring you;
    (b) Of the reasons for proposing to debar you in terms sufficient to 
put you on notice of the conduct or transactions upon which the proposed 
debarment is based;
    (c) Of the cause(s) under Sec. 19.800 upon which the debarring 
official relied for proposing your debarment;
    (d) Of the applicable provisions of this subpart, Subpart F of this 
part, and any other Department of the Treasury procedures governing 
debarment; and
    (e) Of the governmentwide effect of a debarment from procurement and 
nonprocurement programs and activities.



Sec. 19.810  When does a debarment take effect?

    A debarment is not effective until the debarring official issues a 
decision. The debarring official does not issue a

[[Page 225]]

decision until the respondent has had an opportunity to contest the 
proposed debarment.



Sec. 19.815  How may I contest a proposed debarment?

    If you as a respondent wish to contest a proposed debarment, you or 
your representative must provide the debarring official with information 
in opposition to the proposed debarment. You may do this orally or in 
writing, but any information provided orally that you consider important 
must also be submitted in writing for the official record.



Sec. 19.820  How much time do I have to contest a proposed debarment?

    (a) As a respondent you or your representative must either send, or 
make arrangements to appear and present, the information and argument to 
the debarring official within 30 days after you receive the Notice of 
Proposed Debarment.
    (b) We consider the Notice of Proposed Debarment to be received by 
you--
    (1) When delivered, if we mail the notice to the last known street 
address, or five days after we send it if the letter is undeliverable;
    (2) When sent, if we send the notice by facsimile or five days after 
we send it if the facsimile is undeliverable; or
    (3) When delivered, if we send the notice by e-mail or five days 
after we send it if the e-mail is undeliverable.



Sec. 19.825  What information must I provide to the debarring official if I 

contest a proposed debarment?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the debarring official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Proposed Debarment. Include any information about any of the 
factors listed in Sec. 19.860. A general denial is insufficient to 
raise a genuine dispute over facts material to the debarment;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing E.O. 12549 and all similar actions taken by Federal, State, 
or local agencies, including administrative agreements that affect only 
those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Proposed Debarment that grew out of facts relevant to the cause(s) 
stated in the notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the Department of the Treasury may seek further criminal, 
civil or administrative action against you, as appropriate.



Sec. 19.830  Under what conditions do I get an additional opportunity to 

challenge the facts on which a proposed debarment is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the debarring official determines that--
    (1) Your debarment is based upon a conviction or civil judgment;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Proposed Debarment; or
    (3) The issues raised in your presentation in opposition to the 
proposed debarment are not factual in nature, or are not material to the 
debarring official's decision whether to debar.
    (b) You will have an additional opportunity to challenge the facts 
if the debarring official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the proposed debarment.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the debarring official or designee must conduct 
additional proceedings to resolve those facts.



Sec. 19.835  Are debarment proceedings formal?

    (a) Debarment proceedings are conducted in a fair and informal 
manner. The debarring official may use flexible procedures to allow you 
as a respondent to present matters in opposition. In so doing, the 
debarring official is not

[[Page 226]]

required to follow formal rules of evidence or procedure in creating an 
official record upon which the official will base the decision whether 
to debar.
    (b) You or your representative must submit any documentary evidence 
you want the debarring official to consider.



Sec. 19.840  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the Department of the Treasury agree to 
waive it in advance. If you want a copy of the transcribed record, you 
may purchase it.



Sec. 19.845  What does the debarring official consider in deciding whether to 

debar me?

    (a) The debarring official may debar you for any of the causes in 
Sec. 19.800. However, the official need not debar you even if a cause 
for debarment exists. The official may consider the seriousness of your 
acts or omissions and the mitigating or aggravating factors set forth at 
Sec. 19.860.
    (b) The debarring official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the debarring official's proposed 
debarment;
    (2) Any further information and argument presented in support of, or 
in opposition to, the proposed debarment; and
    (3) Any transcribed record of fact-finding proceedings.
    (c) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any resultant findings, in whole or in part, only after specifically 
determining them to be arbitrary, capricious, or clearly erroneous.



Sec. 19.850  What is the standard of proof in a debarment action?

    (a) In any debarment action, we must establish the cause for 
debarment by a preponderance of the evidence.
    (b) If the proposed debarment is based upon a conviction or civil 
judgment, the standard of proof is met.



Sec. 19.855  Who has the burden of proof in a debarment action?

    (a) We have the burden to prove that a cause for debarment exists.
    (b) Once a cause for debarment is established, you as a respondent 
have the burden of demonstrating to the satisfaction of the debarring 
official that you are presently responsible and that debarment is not 
necessary.



Sec. 19.860  What factors may influence the debarring official's decision?

    This section lists the mitigating and aggravating factors that the 
debarring official may consider in determining whether to debar you and 
the length of your debarment period. The debarring official may consider 
other factors if appropriate in light of the circumstances of a 
particular case. The existence or nonexistence of any factor, such as 
one of those set forth in this section, is not necessarily determinative 
of your present responsibility. In making a debarment decision, the 
debarring official may consider the following factors:
    (a) The actual or potential harm or impact that results or may 
result from the wrongdoing.
    (b) The frequency of incidents and/or duration of the wrongdoing.
    (c) Whether there is a pattern or prior history of wrongdoing. For 
example, if you have been found by another Federal agency or a State 
agency to have engaged in wrongdoing similar to that found in the 
debarment action, the existence of this fact may be used by the 
debarring official in determining that you have a pattern or prior 
history of wrongdoing.
    (d) Whether you are or have been excluded or disqualified by an 
agency of the Federal Government or have not been allowed to participate 
in State or local contracts or assistance agreements on a basis of 
conduct similar to

[[Page 227]]

one or more of the causes for debarment specified in this part.
    (e) Whether you have entered into an administrative agreement with a 
Federal agency or a State or local government that is not governmentwide 
but is based on conduct similar to one or more of the causes for 
debarment specified in this part.
    (f) Whether and to what extent you planned, initiated, or carried 
out the wrongdoing.
    (g) Whether you have accepted responsibility for the wrongdoing and 
recognize the seriousness of the misconduct that led to the cause for 
debarment.
    (h) Whether you have paid or agreed to pay all criminal, civil and 
administrative liabilities for the improper activity, including any 
investigative or administrative costs incurred by the government, and 
have made or agreed to make full restitution.
    (i) Whether you have cooperated fully with the government agencies 
during the investigation and any court or administrative action. In 
determining the extent of cooperation, the debarring official may 
consider when the cooperation began and whether you disclosed all 
pertinent information known to you.
    (j) Whether the wrongdoing was pervasive within your organization.
    (k) The kind of positions held by the individuals involved in the 
wrongdoing.
    (l) Whether your organization took appropriate corrective action or 
remedial measures, such as establishing ethics training and implementing 
programs to prevent recurrence.
    (m) Whether your principals tolerated the offense.
    (n) Whether you brought the activity cited as a basis for the 
debarment to the attention of the appropriate government agency in a 
timely manner.
    (o) Whether you have fully investigated the circumstances 
surrounding the cause for debarment and, if so, made the result of the 
investigation available to the debarring official.
    (p) Whether you had effective standards of conduct and internal 
control systems in place at the time the questioned conduct occurred.
    (q) Whether you have taken appropriate disciplinary action against 
the individuals responsible for the activity which constitutes the cause 
for debarment.
    (r) Whether you have had adequate time to eliminate the 
circumstances within your organization that led to the cause for the 
debarment.
    (s) Other factors that are appropriate to the circumstances of a 
particular case.



Sec. 19.865  How long may my debarment last?

    (a) If the debarring official decides to debar you, your period of 
debarment will be based on the seriousness of the cause(s) upon which 
your debarment is based. Generally, debarment should not exceed three 
years. However, if circumstances warrant, the debarring official may 
impose a longer period of debarment.
    (b) In determining the period of debarment, the debarring official 
may consider the factors in Sec. 19.860. If a suspension has preceded 
your debarment, the debarring official must consider the time you were 
suspended.
    (c) If the debarment is for a violation of the provisions of the 
Drug-Free Workplace Act of 1988, your period of debarment may not exceed 
five years.



Sec. 19.870  When do I know if the debarring official debars me?

    (a) The debarring official must make a written decision whether to 
debar within 45 days of closing the official record. The official record 
closes upon the debarring official's receipt of final submissions, 
information and findings of fact, if any. The debarring official may 
extend that period for good cause.
    (b) The debarring official sends you written notice, pursuant to 
Sec. 19.615 that the official decided, either--
    (1) Not to debar you; or
    (2) To debar you. In this event, the notice:
    (i) Refers to the Notice of Proposed Debarment;
    (ii) Specifies the reasons for your debarment;
    (iii) States the period of your debarment, including the effective 
dates; and
    (iv) Advises you that your debarment is effective for covered 
transactions and contracts that are subject to the

[[Page 228]]

Federal Acquisition Regulation (48 CFR chapter 1), throughout the 
executive branch of the Federal Government unless an agency head or an 
authorized designee grants an exception.



Sec. 19.875  May I ask the debarring official to reconsider a decision to 

debar me?

    Yes, as a debarred person you may ask the debarring official to 
reconsider the debarment decision or to reduce the time period or scope 
of the debarment. However, you must put your request in writing and 
support it with documentation.



Sec. 19.880  What factors may influence the debarring official during 

reconsideration?

    The debarring official may reduce or terminate your debarment based 
on--
    (a) Newly discovered material evidence;
    (b) A reversal of the conviction or civil judgment upon which your 
debarment was based;
    (c) A bona fide change in ownership or management;
    (d) Elimination of other causes for which the debarment was imposed; 
or
    (e) Other reasons the debarring official finds appropriate.



Sec. 19.885  May the debarring official extend a debarment?

    (a) Yes, the debarring official may extend a debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest.
    (b) However, the debarring official may not extend a debarment 
solely on the basis of the facts and circumstances upon which the 
initial debarment action was based.
    (c) If the debarring official decides that a debarment for an 
additional period is necessary, the debarring official must follow the 
applicable procedures in this subpart, and subpart F of this part, to 
extend the debarment.



                          Subpart I_Definitions



Sec. 19.900  Adequate evidence.

    Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.



Sec. 19.905  Affiliate.

    Persons are affiliates of each other if, directly or indirectly, 
either one controls or has the power to control the other or a third 
person controls or has the power to control both. The ways we use to 
determine control include, but are not limited to--
    (a) Interlocking management or ownership;
    (b) Identity of interests among family members;
    (c) Shared facilities and equipment;
    (d) Common use of employees; or
    (e) A business entity which has been organized following the 
exclusion of a person which has the same or similar management, 
ownership, or principal employees as the excluded person.



Sec. 19.910  Agency.

    Agency means any United States executive department, military 
department, defense agency, or any other agency of the executive branch. 
Other agencies of the Federal government are not considered ``agencies'' 
for the purposes of this part unless they issue regulations adopting the 
governmentwide Debarment and Suspension system under Executive orders 
12549 and 12689.



Sec. 19.915  Agent or representative.

    Agent or representative means any person who acts on behalf of, or 
who is authorized to commit, a participant in a covered transaction.



Sec. 19.920  Civil judgment.

    Civil judgment means the disposition of a civil action by any court 
of competent jurisdiction, whether by verdict, decision, settlement, 
stipulation, other disposition which creates a civil liability for the 
complained of wrongful acts, or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-3812).



Sec. 19.925  Conviction.

    Conviction means--
    (a) A judgment or any other determination of guilt of a criminal 
offense by any court of competent jurisdiction,

[[Page 229]]

whether entered upon a verdict or plea, including a plea of nolo 
contendere; or
    (b) Any other resolution that is the functional equivalent of a 
judgment, including probation before judgment and deferred prosecution. 
A disposition without the participation of the court is the functional 
equivalent of a judgment only if it includes an admission of guilt.



Sec. 19.930  Debarment.

    Debarment means an action taken by a debarring official under 
subpart H of this part to exclude a person from participating in covered 
transactions and transactions covered under the Federal Acquisition 
Regulation (48 CFR chapter 1). A person so excluded is debarred.



Sec. 19.935  Debarring official.

    (a) Debarring official means an agency official who is authorized to 
impose debarment. A debarring official is either--
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) [Reserved]



Sec. 19.940  Disqualified.

    Disqualified means that a person is prohibited from participating in 
specified Federal procurement or nonprocurement transactions as required 
under a statute, Executive order (other than Executive Orders 12549 and 
12689) or other authority. Examples of disqualifications include persons 
prohibited under--
    (a) The Davis-Bacon Act (40 U.S.C. 276(a));
    (b) The equal employment opportunity acts and Executive orders; or
    (c) The Clean Air Act (42 U.S.C. 7606), Clean Water Act (33 U.S.C. 
1368) and Executive Order 11738 (3 CFR, 1973 Comp., p. 799).



Sec. 19.945  Excluded or exclusion.

    Excluded or exclusion means--
    (a) That a person or commodity is prohibited from being a 
participant in covered transactions, whether the person has been 
suspended; debarred; proposed for debarment under 48 CFR part 9, subpart 
9.4; voluntarily excluded; or
    (b) The act of excluding a person.



Sec. 19.950  Excluded Parties List System

    Excluded Parties List System (EPLS) means the list maintained and 
disseminated by the General Services Administration (GSA) containing the 
names and other information about persons who are ineligible. The EPLS 
system includes the printed version entitled, ``List of Parties Excluded 
or Disqualified from Federal Procurement and Nonprocurement Programs,'' 
so long as published.



Sec. 19.955  Indictment.

    Indictment means an indictment for a criminal offense. A 
presentment, information, or other filing by a competent authority 
charging a criminal offense shall be given the same effect as an 
indictment.



Sec. 19.960  Ineligible or ineligibility.

    Ineligible or ineligibility means that a person or commodity is 
prohibited from covered transactions because of an exclusion or 
disqualification.



Sec. 19.965  Legal proceedings.

    Legal proceedings means any criminal proceeding or any civil 
judicial proceeding, including a proceeding under the Program Fraud 
Civil Remedies Act (31 U.S.C. 3801-3812), to which the Federal 
Government or a State or local government or quasi-governmental 
authority is a party. The term also includes appeals from those 
proceedings.



Sec. 19.970  Nonprocurement transaction.

    (a) Nonprocurement transaction means any transaction, regardless of 
type (except procurement contracts), including, but not limited to the 
following:
    (1) Grants.
    (2) Cooperative agreements.
    (3) Scholarships.
    (4) Fellowships.
    (5) Contracts of assistance.
    (6) Loans.
    (7) Loan guarantees.
    (8) Subsidies.
    (9) Insurances.
    (10) Payments for specified uses.
    (11) Donation agreements.
    (b) A nonprocurement transaction at any tier does not require the 
transfer of Federal funds.

[[Page 230]]



Sec. 19.975  Notice.

    Notice means a written communication served in person, sent by 
certified mail or its equivalent, or sent electronically by e-mail or 
facsimile. (See Sec. 19. 615.)



Sec. 19.980  Participant.

    Participant means any person who submits a proposal for or who 
enters into a covered transaction, including an agent or representative 
of a participant.



Sec. 19.985  Person.

    Person means any individual, corporation, partnership, association, 
unit of government, or legal entity, however organized.



Sec. 19.990  Preponderance of the evidence.

    Preponderance of the evidence means proof by information that, 
compared with information opposing it, leads to the conclusion that the 
fact at issue is more probably true than not.



Sec. 19.995  Principal.

    Principal means--
    (a) An officer, director, owner, partner, principal investigator, or 
other person within a participant with management or supervisory 
responsibilities related to a covered transaction; or
    (b) A consultant or other person, whether or not employed by the 
participant or paid with Federal funds, who--
    (1) Is in a position to handle Federal funds;
    (2) Is in a position to influence or control the use of those funds; 
or,
    (3) Occupies a technical or professional position capable of 
substantially influencing the development or outcome of an activity 
required to perform the covered transaction.



Sec. 19.1000  Respondent.

    Respondent means a person against whom an agency has initiated a 
debarment or suspension action.



Sec. 19.1005  State.

    (a) State means--
    (1) Any of the states of the United States;
    (2) The District of Columbia;
    (3) The Commonwealth of Puerto Rico;
    (4) Any territory or possession of the United States; or
    (5) Any agency or instrumentality of a state.
    (b) For purposes of this part, State does not include institutions 
of higher education, hospitals, or units of local government.



Sec. 19.1010  Suspending official.

    (a) Suspending official means an agency official who is authorized 
to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) [Reserved]



Sec. 19.1015  Suspension.

    Suspension is an action taken by a suspending official under subpart 
G of this part that immediately prohibits a person from participating in 
covered transactions and transactions covered under the Federal 
Acquisition Regulation (48 CFR chapter 1) for a temporary period, 
pending completion of an agency investigation and any judicial or 
administrative proceedings that may ensue. A person so excluded is 
suspended.



Sec. 19.1020  Voluntary exclusion or voluntarily excluded.

    (a) Voluntary exclusion means a person's agreement to be excluded 
under the terms of a settlement between the person and one or more 
agencies. Voluntary exclusion must have governmentwide effect.
    (b) Voluntarily excluded means the status of a person who has agreed 
to a voluntary exclusion.

Subpart J [Reserved]

[[Page 231]]



             Sec. Appendix to Part 19--Covered Transactions

[GRAPHIC] [TIFF OMITTED] TR26NO03.000



PART 20_GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL 

ASSISTANCE)--Table of Contents




                     Subpart A_Purpose and Coverage

Sec.
20.100 What does this part do?
20.105 Does this part apply to me?
20.110 Are any of my Federal assistance awards exempt from this part?
20.115 Does this part affect the Federal contracts that I receive?

      Subpart B_Requirements for Recipients Other Than Individuals

20.200 What must I do to comply with this part?
20.205 What must I include in my drug-free workplace statement?
20.210 To whom must I distribute my drug-free workplace statement?
20.215 What must I include in my drug-free awareness program?
20.220 By when must I publish my drug-free workplace statement and 
          establish my drug-free awareness program?
20.225 What actions must I take concerning employees who are convicted 
          of drug violations in the workplace?
20.230 How and when must I identify workplaces?

        Subpart C_Requirements for Recipients Who Are Individuals

20.300 What must I do to comply with this part if I am an individual 
          recipient?
20.301 [Reserved]

[[Page 232]]

   Subpart D_Responsibilities of Department of the Treasury Awarding 
                                Officials

20.400 What are my responsibilities as an Department of the Treasury 
          awarding official?

           Subpart E_Violations of This Part and Consequences

20.500 How are violations of this part determined for recipients other 
          than individuals?
20.505 How are violations of this part determined for recipients who are 
          individuals?
20.510 What actions will the Federal Government take against a recipient 
          determined to have violated this part?
20.515 Are there any exceptions to those actions?

                          Subpart F_Definitions

20.605 Award.
20.610 Controlled substance.
20.615 Conviction.
20.620 Cooperative agreement.
20.625 Criminal drug statute.
20.630 Debarment.
20.635 Drug-free workplace.
20.640 Employee.
20.645 Federal agency or agency.
20.650 Grant.
20.655 Individual.
20.660 Recipient.
20.665 State.
20.670 Suspension.

    Authority: 41 U.S.C. 701, et seq.

    Source: 68 FR 66557, 66607, Nov. 26, 2003, unless otherwise noted.



                     Subpart A_Purpose and Coverage



Sec. 20.100  What does this part do?

    This part carries out the portion of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701 et seq., as amended) that applies to grants. It also 
applies the provisions of the Act to cooperative agreements and other 
financial assistance awards, as a matter of Federal Government policy.



Sec. 20.105  Does this part apply to me?

    (a) Portions of this part apply to you if you are either--
    (1) A recipient of an assistance award from the Department of the 
Treasury; or
    (2) A(n) Department of the Treasury awarding official. (See 
definitions of award and recipient in Sec. Sec. 20.605 and 20.660, 
respectively.)
    (b) The following table shows the subparts that apply to you:

------------------------------------------------------------------------
            If you are . . .                    see subparts . . .
------------------------------------------------------------------------
(1) A recipient who is not an            A, B and E.
 individual.
(2) A recipient who is an individual...  A, C and E.
(3) A(n) Department of the Treasury      A, D and E.
 awarding official.
------------------------------------------------------------------------



Sec. 20.110  Are any of my Federal assistance awards exempt from this part?

    This part does not apply to any award that the Secretary of the 
Treasury determines that the application of this part would be 
inconsistent with the international obligations of the United States or 
the laws or regulations of a foreign government.



Sec. 20.115  Does this part affect the Federal contracts that I receive?

    It will affect future contract awards indirectly if you are debarred 
or suspended for a violation of the requirements of this part, as 
described in Sec. 20. 510(c). However, this part does not apply 
directly to procurement contracts. The portion of the Drug-Free 
Workplace Act of 1988 that applies to Federal procurement contracts is 
carried out through the Federal Acquisition Regulation in chapter 1 of 
Title 48 of the Code of Federal Regulations (the drug-free workplace 
coverage currently is in 48 CFR part 23, subpart 23.5).



      Subpart B_Requirements for Recipients Other Than Individuals



Sec. 20.200  What must I do to comply with this part?

    There are two general requirements if you are a recipient other than 
an individual.
    (a) First, you must make a good faith effort, on a continuing basis, 
to maintain a drug-free workplace. You must agree to do so as a 
condition for receiving any award covered by this part.

[[Page 233]]

The specific measures that you must take in this regard are described in 
more detail in subsequent sections of this subpart. Briefly, those 
measures are to--
    (1) Publish a drug-free workplace statement and establish a drug-
free awareness program for your employees (see Sec. Sec. 20.205 through 
20.220); and
    (2) Take actions concerning employees who are convicted of violating 
drug statutes in the workplace (see Sec. 20.225).
    (b) Second, you must identify all known workplaces under your 
Federal awards (see Sec. 20.230).



Sec. 20.205  What must I include in my drug-free workplace statement?

    You must publish a statement that--
    (a) Tells your employees that the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance 
is prohibited in your workplace;
    (b) Specifies the actions that you will take against employees for 
violating that prohibition; and
    (c) Lets each employee know that, as a condition of employment under 
any award, he or she:
    (1) Will abide by the terms of the statement; and
    (2) Must notify you in writing if he or she is convicted for a 
violation of a criminal drug statute occurring in the workplace and must 
do so no more than five calendar days after the conviction.



Sec. 20.210  To whom must I distribute my drug-free workplace statement?

    You must require that a copy of the statement described in Sec. 
20.205 be given to each employee who will be engaged in the performance 
of any Federal award.



Sec. 20.215  What must I include in my drug-free awareness program?

    You must establish an ongoing drug-free awareness program to inform 
employees about--
    (a) The dangers of drug abuse in the workplace;
    (b) Your policy of maintaining a drug-free workplace;
    (c) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (d) The penalties that you may impose upon them for drug abuse 
violations occurring in the workplace.



Sec. 20.220  By when must I publish my drug-free workplace statement and 

establish my drug-free awareness program?

    If you are a new recipient that does not already have a policy 
statement as described in Sec. 20.205 and an ongoing awareness program 
as described in Sec. 20.215, you must publish the statement and 
establish the program by the time given in the following table:

------------------------------------------------------------------------
                If . . .                          then you . . .
------------------------------------------------------------------------
(a) The performance period of the award  must have the policy statement
 is less than 30 days.                    and program in place as soon
                                          as possible, but before the
                                          date on which performance is
                                          expected to be completed.
(b) The performance period of the award  must have the policy statement
 is 30 days or more.                      and program in place within 30
                                          days after award.
(c) You believe there are extraordinary  may ask the Department of the
 circumstances that will require more     Treasury awarding official to
 than 30 days for you to publish the      give you more time to do so.
 policy statement and establish the       The amount of additional time,
 awareness program.                       if any, to be given is at the
                                          discretion of the awarding
                                          official.
------------------------------------------------------------------------



Sec. 20.225  What actions must I take concerning employees who are convicted 

of drug violations in the workplace?

    There are two actions you must take if an employee is convicted of a 
drug violation in the workplace:
    (a) First, you must notify Federal agencies if an employee who is 
engaged in the performance of an award informs you about a conviction, 
as required by Sec. 20.205(c)(2), or you otherwise learn of the 
conviction. Your notification to the Federal agencies must--
    (1) Be in writing;
    (2) Include the employee's position title;
    (3) Include the identification number(s) of each affected award;

[[Page 234]]

    (4) Be sent within ten calendar days after you learn of the 
conviction; and
    (5) Be sent to every Federal agency on whose award the convicted 
employee was working. It must be sent to every awarding official or his 
or her official designee, unless the Federal agency has specified a 
central point for the receipt of the notices.
    (b) Second, within 30 calendar days of learning about an employee's 
conviction, you must either--
    (1) Take appropriate personnel action against the employee, up to 
and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
    (2) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for these purposes 
by a Federal, State or local health, law enforcement, or other 
appropriate agency.



Sec. 20.230  How and when must I identify workplaces?

    (a) You must identify all known workplaces under each Department of 
the Treasury award. A failure to do so is a violation of your drug-free 
workplace requirements. You may identify the workplaces--
    (1) To the Department of the Treasury official that is making the 
award, either at the time of application or upon award; or
    (2) In documents that you keep on file in your offices during the 
performance of the award, in which case you must make the information 
available for inspection upon request by Department of the Treasury 
officials or their designated representatives.
    (b) Your workplace identification for an award must include the 
actual address of buildings (or parts of buildings) or other sites where 
work under the award takes place. Categorical descriptions may be used 
(e.g., all vehicles of a mass transit authority or State highway 
department while in operation, State employees in each local 
unemployment office, performers in concert halls or radio studios).
    (c) If you identified workplaces to the Department of the Treasury 
awarding official at the time of application or award, as described in 
paragraph (a)(1) of this section, and any workplace that you identified 
changes during the performance of the award, you must inform the 
Department of the Treasury awarding official.



        Subpart C_Requirements for Recipients Who Are Individuals



Sec. 20.300  What must I do to comply with this part if I am an individual 

recipient?

    As a condition of receiving a(n) Department of the Treasury award, 
if you are an individual recipient, you must agree that--
    (a) You will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity related to the award; and
    (b) If you are convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any award activity, you will 
report the conviction:
    (1) In writing.
    (2) Within 10 calendar days of the conviction.
    (3) To the Department of the Treasury awarding official or other 
designee for each award that you currently have, unless Sec. 20.301 or 
the award document designates a central point for the receipt of the 
notices. When notice is made to a central point, it must include the 
identification number(s) of each affected award.



Sec. 20.301  [Reserved]



   Subpart D_Responsibilities of Department of the Treasury Awarding 
                                Officials



Sec. 20.400  What are my responsibilities as a(n) Department of the Treasury 

awarding official?

    As a(n) Department of the Treasury awarding official, you must 
obtain each recipient's agreement, as a condition of the award, to 
comply with the requirements in--
    (a) Subpart B of this part, if the recipient is not an individual; 
or
    (b) Subpart C of this part, if the recipient is an individual.

[[Page 235]]



           Subpart E_Violations of this Part and Consequences



Sec. 20.500  How are violations of this part determined for recipients other 

than individuals?

    A recipient other than an individual is in violation of the 
requirements of this part if the Secretary of the Treasury determines, 
in writing, that--
    (a) The recipient has violated the requirements of subpart B of this 
part; or
    (b) The number of convictions of the recipient's employees for 
violating criminal drug statutes in the workplace is large enough to 
indicate that the recipient has failed to make a good faith effort to 
provide a drug-free workplace.



Sec. 20.505  How are violations of this part determined for recipients who are 

individuals?

    An individual recipient is in violation of the requirements of this 
part if the Secretary of the Treasury determines, in writing, that--
    (a) The recipient has violated the requirements of subpart C of this 
part; or
    (b) The recipient is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any award activity.



Sec. 20.510  What actions will the Federal Government take against a recipient 

determined to have violated this part?

    If a recipient is determined to have violated this part, as 
described in Sec. 20.500 or Sec. 20.505, the Department of the 
Treasury may take one or more of the following actions--
    (a) Suspension of payments under the award;
    (b) Suspension or termination of the award; and
    (c) Suspension or debarment of the recipient under 22 CFR Part 19, 
for a period not to exceed five years.



Sec. 20.515  Are there any exceptions to those actions?

    The Secretary of the Treasury may waive with respect to a particular 
award, in writing, a suspension of payments under an award, suspension 
or termination of an award, or suspension or debarment of a recipient if 
the Secretary of the Treasury determines that such a waiver would be in 
the public interest. This exception authority cannot be delegated to any 
other official.



                          Subpart F_Definitions



Sec. 20.605  Award.

    Award means an award of financial assistance by the Department of 
the Treasury or other Federal agency directly to a recipient.
    (a) The term award includes:
    (1) A Federal grant or cooperative agreement, in the form of money 
or property in lieu of money.
    (2) [Reserved]
    (b) The term award does not include:
    (1) Technical assistance that provides services instead of money.
    (2) Loans.
    (3) Loan guarantees.
    (4) Interest subsidies.
    (5) Insurance.
    (6) Direct appropriations.
    (7) Veterans' benefits to individuals (i.e., any benefit to 
veterans, their families, or survivors by virtue of the service of a 
veteran in the Armed Forces of the United States).



Sec. 20.610  Controlled substance.

    Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15.



Sec. 20.615  Conviction.

    Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes.



Sec. 20.620  Cooperative agreement.

    Cooperative agreement means an award of financial assistance that, 
consistent with 31 U.S.C. 6305, is used to enter into the same kind of 
relationship as a grant (see definition of grant in Sec. 20.650), 
except that substantial involvement is expected between the Federal 
agency and the recipient when carrying out the activity contemplated

[[Page 236]]

by the award. The term does not include cooperative research and 
development agreements as defined in 15 U.S.C. 3710a.



Sec. 20.625  Criminal drug statute.

    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance.



Sec. 20.630  Debarment.

    Debarment means an action taken by a Federal agency to prohibit a 
recipient from participating in Federal Government procurement contracts 
and covered nonprocurement transactions. A recipient so prohibited is 
debarred, in accordance with the Federal Acquisition Regulation for 
procurement contracts (48 CFR part 9, subpart 9.4) and the common rule, 
Government-wide Debarment and Suspension (Nonprocurement), that 
implements Executive Order 12549 and Executive Order 12689.



Sec. 20.635  Drug-free workplace.

    Drug-free workplace means a site for the performance of work done in 
connection with a specific award at which employees of the recipient are 
prohibited from engaging in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance.



Sec. 20.640  Employee.

    (a) Employee means the employee of a recipient directly engaged in 
the performance of work under the award, including--
    (1) All direct charge employees;
    (2) All indirect charge employees, unless their impact or 
involvement in the performance of work under the award is insignificant 
to the performance of the award; and
    (3) Temporary personnel and consultants who are directly engaged in 
the performance of work under the award and who are on the recipient's 
payroll.
    (b) This definition does not include workers not on the payroll of 
the recipient (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the payroll; 
or employees of subrecipients or subcontractors in covered workplaces).



Sec. 20.645  Federal agency or agency.

    Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency.



Sec. 20.650  Grant.

    Grant means an award of financial assistance that, consistent with 
31 U.S.C. 6304, is used to enter into a relationship--
    (a) The principal purpose of which is to transfer a thing of value 
to the recipient to carry out a public purpose of support or stimulation 
authorized by a law of the United States, rather than to acquire 
property or services for the Federal Government's direct benefit or use; 
and
    (b) In which substantial involvement is not expected between the 
Federal agency and the recipient when carrying out the activity 
contemplated by the award.



Sec. 20.655  Individual.

    Individual means a natural person.



Sec. 20.660  Recipient.

    Recipient means any individual, corporation, partnership, 
association, unit of government (except a Federal agency) or legal 
entity, however organized, that receives an award directly from a 
Federal agency.



Sec. 20.665  State.

    State means any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.



Sec. 20.670  Suspension.

    Suspension means an action taken by a Federal agency that 
immediately prohibits a recipient from participating in Federal 
Government procurement contracts and covered nonprocurement transactions 
for a temporary period, pending completion of

[[Page 237]]

an investigation and any judicial or administrative proceedings that may 
ensue. A recipient so prohibited is suspended, in accordance with the 
Federal Acquisition Regulation for procurement contracts (48 CFR part 9, 
subpart 9.4) and the common rule, Government-wide Debarment and 
Suspension (Nonprocurement), that implements Executive Order 12549 and 
Executive Order 12689. Suspension of a recipient is a distinct and 
separate action from suspension of an award or suspension of payments 
under an award.



PART 21_NEW RESTRICTIONS ON LOBBYING--Table of Contents




                            Subpart A_General

Sec.
21.100 Conditions on use of funds.
21.105 Definitions.
21.110 Certification and disclosure.

                  Subpart B_Activities by Own Employees

21.200 Agency and legislative liaison.
21.205 Professional and technical services.
21.210 Reporting.

            Subpart C_Activities by Other Than Own Employees

21.300 Professional and technical services.

                   Subpart D_Penalties and Enforcement

21.400 Penalties.
21.405 Penalty procedures.
21.410 Enforcement.

                          Subpart E_Exemptions

21.500 Secretary of Defense.

                        Subpart F_Agency Reports

21.600 Semi-annual compilation.
21.605 Inspector General report.

Appendix A to Part 21--Certification Regarding Lobbying
Appendix B to Part 21--Disclosure Form to Report Lobbying

    Authority: Sec. 319, Pub. L. 101-121 (31 U.S.C. 1352); 31 U.S.C. 
321.

    Source: 55 FR 6737, 6751, Feb. 26, 1990, unless otherwise noted.

    Cross reference: See also Office of Management and Budget notice 
published at 54 FR 52306, December 20, 1989.



                            Subpart A_General



Sec. 21.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in Appendix A, that the person has not 
made, and will not make, any payment prohibited by paragraph (a) of this 
section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in Appendix B, if such person has 
made or has agreed to make any payment using nonappropriated funds (to 
include profits from any covered Federal action), which would be 
prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in Appendix A, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with

[[Page 238]]

that agency a disclosure form, set forth in Appendix B, if that person 
has made or has agreed to make any payment to influence or attempt to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with that loan insurance or guarantee.



Sec. 21.105  Definitions.

    For purposes of this part:
    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance, interest subsidies, insurance, or direct 
United States cash assistance to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions 
of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term

[[Page 239]]

excludes an Indian tribe, tribal organization, or any other Indian 
organization with respect to expenditures specifically permitted by 
other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer or employee for 
work that is not furnished to, not funded by, or not furnished in 
cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to perfessional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a State, and a multi-
State, regional, or interstate entity having governmental duties and 
powers.



Sec. 21.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000, unless such person 
previously filed a certification, and a disclosure form, if required, 
under paragraph (a) of this section.
    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraph (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraph (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;

[[Page 240]]

    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement, shall file a certification, and a 
disclosure form, if required, to the next tier above.
    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraph 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.
    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.



                  Subpart B_Activities by Own Employees



Sec. 21.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in Sec. 
21.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement if 
the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Pub. L. 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.

[[Page 241]]



Sec. 21.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 
21.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement or 
an extension, continuation, renewal, amendment, or modification of a 
Federal contract, grant, loan, or cooperative agreement if payment is 
for professional or technical services rendered directly in the 
preparation, submission, or negotiation of any bid, proposal, or 
application for that Federal contract, grant, loan, or cooperative 
agreement or for meeting requirements imposed by or pursuant to law as a 
condition for receiving that Federal contract, grant, loan, or 
cooperative agreement.
    (b) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting of a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec. 21.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C_Activities by Other Than Own Employees



Sec. 21.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 
21.100 (a), does not apply in the case of any reasonable payment to a 
person, other than an officer or employee of a person requesting or 
receiving a covered Federal action, if the payment is for professional 
or technical services rendered directly in the preparation, submission, 
or negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec. 21.110 (a) and (b) regarding 
filing a disclosure form by each person, if required, shall not apply 
with respect to professional or technical services rendered directly in 
the preparation, submission, or negotiation of any commitment providing 
for the United States to insure or guarantee a loan.

[[Page 242]]

    (c) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting or a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.



                   Subpart D_Penalties and Enforcement



Sec. 21.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
Appendix B) to be filed or amended if required herein, shall be subject 
to a civil penalty of not less than $10,000 and not more than $100,000 
for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraphs (a) or (b) of this section 
shall be subject to a civil penalty of $10,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $10,000 and $100,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of such civil 
penalty.

[[Page 243]]



Sec. 21.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, insofar as these provisions are not inconsistent with the 
requirements herein.



Sec. 21.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E_Exemptions



Sec. 21.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F_Agency Reports



Sec. 21.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see Appendix B) and, on May 31 and November 30 of each year, 
submit to the Secretary of the Senate and the Clerk of the House of 
Representatives a report containing a compilation of the information 
contained in the disclosure reports received during the six-month period 
ending on March 31 or September 30, respectively, of that year.
    (b) The report, including the compilation, shall be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives, and the Committees on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information shall not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget (OMB), are required to provide machine-readable compilations to 
the Secretary of the Senate and the Clerk of the House of 
Representatives no later than with the compilations due on May 31, 1991. 
OMB shall provide detailed specifications in a memorandum to these 
agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec. 21.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of this section, of each agency shall prepare and submit 
to Congress each year, commencing with submission of the President's 
Budget in 1991, an evaluation of the compliance of that agency with, and 
the effectiveness of, the requirements herein. The evaluation may 
include any recommended changes that

[[Page 244]]

may be necessary to strengthen or improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.
    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.



      Sec. Appendix A to Part 21--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form-LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form-LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

[[Page 245]]



     Sec. Appendix B to Part 21--Disclosure Form To Report Lobbying

[GRAPHIC] [TIFF OMITTED] TC21OC91.002


[[Page 246]]


[GRAPHIC] [TIFF OMITTED] TC21OC91.003


[[Page 247]]


[GRAPHIC] [TIFF OMITTED] TC21OC91.004


[[Page 248]]





PART 25_PREPAYMENT OF FOREIGN MILITARY SALES LOANS MADE BY THE DEFENSE 

SECURITY ASSISTANCE AGENCY AND FOREIGN MILITARY SALES LOANS MADE BY THE 

FEDERAL FINANCING BANK AND GUARANTEED BY THE DEFENSE SECURITY ASSISTANCE 

AGENCY--Table of Contents




                            Subpart A_General

Sec.
25.100 Definitions.
25.101 OMB control number.

                 Subpart B_Qualifications for Prepayment

25.200 General rules.

                          Subpart C_Procedures

25.300 Application procedure.
25.301 Approval procedure.
25.302 Application withdrawal; effect of approval.
25.303 Closing procedure.

                     Subpart D_Form of Private Loan

25.400 Loan provisions.
25.401 Fees.
25.402 Transferability.
25.403 Registration.
25.404 Non-separability.
25.405 Form of guaranty.
25.406 Savings clause.

    Authority: Title III, Pub. L. 100-202; 31 U.S.C. 321.

    Source: 53 FR 25426, July 6, 1988, unless otherwise noted.



                            Subpart A_General



Sec. 25.100  Definitions.

    In this part, unless the context indicates otherwise:
    (a) Act means the provisions entitled ``Foreign Military Sales Debt 
Reform,'' of Title III, entitled ``Military Assistance,'' of an act 
entitled ``Foreign Operations, Export Financing and Related Programs 
Appropriations Act, 1988'' (Pub. L. 100-202), enacted December 22, 1987.
    (b) AECA means the Arms Export Control Act, as amended (22 U.S.C. 
2751 et seq.).
    (c) Borrower means the obligor on an FMS Advance.
    (d) Closing date means:
    (1) With respect to the prepayment of the amounts permitted by this 
part to be prepaid of FMS Loans held by DSAA, the date designated by the 
mutual agreement of both the Borrower and DSAA on which the Guaranty 
will be attached to the Private Loan Note or the Private Loan Portion 
Notes, as the case may be, the Private Loan will be funded, and the 
Total Permitted Prepayment Amount, or the portion thereof which the 
Borrower has selected to prepay, will be prepaid; and
    (2) With respect to the prepayment of the amounts permitted by this 
part to be prepaid of FMS Loans held by the FFB and guaranteed by DSAA, 
the date designated by the mutual agreement of the Borrower, the FFB, 
and DSAA on which the Guaranty will be attached to the Private Loan Note 
or the Private Loan Portion Notes, as the case may be, the Private Loan 
will be funded, and the Total Permitted Prepayment Amount, or Portion 
thereof which the Borrower has selected to prepay, will be prepaid.
    (e) Derivative means any right, interest, instrument or security 
issued or traded on the credit of the Private Loan or any Private Loan 
Portion, including but not limited to:
    (1) Any participation share of, or undivided ownership or other 
equity interest in, the Private Loan or any Private Loan Portion;
    (2) Any note, bond or other debt instrument or obligation which is 
collateralized or otherwise secured by a pledge of, or secruity interest 
in, the Private Loan or any Private Loan Portion; or
    (3) Any such interest in such an interest or any such instrument 
secured by such an instrument.
    (f) DSAA means the Defense Security Assistance Agency, an agency 
within the Department of Defense.
    (g) Eligible FMS advance means any FMS Advance which:
    (1) Was outstanding on December 22, 1987;
    (2) Has principal amounts becoming due and payable after September 
30, 1989; and
    (3) Bears interest at a rate equal to or greater than 10 percentum 
per annum.


[[Page 249]]



Eligible FMS Advance may include FMS Advances meeting the criteria of 
Eligible FMS Advance which are made on account of FMS Loans even when 
such FMS Loans do not, in themselves, meet the criteria of Eligible FMS 
Loan.
    (h) Eligible FMS loan means any FMS Loan which:
    (1) Was outstanding on December 22, 1987;
    (2) Has principal amounts becoming due and payable after September 
30, 1989; and
    (3) Bears interest pursuant to the terms of the loan agreement 
relating thereto at a consolidated rate equal to or greater than 10 
percentum per annum.

Eligible FMS Loans may include FMS Advances which are made on account of 
FMS Loans meeting the criteria of Eligible FMS Loan even when such FMS 
Advances do not, in themselves, meet the criteria of Eligible FMS 
Advance.
    (i) Eligible private lender means either:
    (1) Any of the following entities:
    (i) Any banking, savings, or lending institution, or any subsidiary 
or affiliate thereof, chartered or otherwise lawfully organized under 
the laws of any State, the District of Columbia, the United States or 
any territory or possession of the United States, including, but not 
limited to, any bank, trust company, industrial bank, investment banking 
company, savings association, savings and loan association, building and 
loan association, savings bank, credit union, or finance company, which 
is doing business in the United States;
    (ii) Any broker or dealer registered with the Securities and 
Exchange Commission pursuant to the Securities Exchange Act of 1934;
    (iii) Any company lawfully organized as an insurance company, and 
which is subject to supervision by the insurance commissioner or a 
similar official or agency of a State; or
    (iv) Any United States pension fund; or
    (2) Any trust or other special purpose financing entity which is 
funded initially by an entity or entities of the type described in 
paragraph (i)(1) of this section.
    (j) FFB means the Federal Financing Bank, and instrumentality and 
wholly-owned corporation of the United States.
    (k) FMS means Foreign Military Sales.
    (l) FMA advance means:
    (1) A disbursement of funds made pursuant to a loan agreement 
between the Borrower and DSAA, which loan agreement provides for making 
of an FMS Loan; or
    (2) A disbursement of funds made pursuant to a loan agreement 
between the Borrower and the FFB, which loan agreement provides for the 
making of an FMS Loan.
    (m) FMS loan means either:
    (1) A loan made directly by the Secretary of Defense pursuant to 
section 23 of AECA; or
    (2) A loan made by the FFB and guaranteed by the Secretary of 
Defense pursuant to section 24 of AECA; and ``FMS Loans'' mean the 
aggregate of such loans made to or for the account of a Borrower.
    (n) Guaranteed-amount debt derivative means any note, bond or other 
debt instrument or obligation which is collateralized or otherwise 
secured by a pledge of, or security interest in, the Private Loan Note 
or any Private Loan Portion Note or any Derivative, as the case may be, 
which has an exclusive or preferred claim to the Guaranteed Loan Amount 
or the respective Guaranteed Loan Portion Amount or the respective 
Guaranteed-Amount Equivalent, as the case may be.
    (o) Guaranteed-amount equity derivative means any participation 
share of, or undivided ownership or other equity interest in, the 
Private Loan or any Private Loan Portion or any Derivative, as the case 
may be, which has an exclusive or preferred claim to the Guaranteed Loan 
Amount or the respective Guaranteed Loan Portion Amount or the 
respective Guaranteed-Amount Equivalent, as the case may be.
    (p) Guaranteed-amount equivalent means:
    (1) With respect to any Derivative which is equal in principal 
amount to the Private Loan or any Private Loan Portion, that amount of 
payment on account of such Derivative which is

[[Page 250]]

equal to the Guaranteed Loan Amount or the respective Guaranteed Loan 
Portion Amount, as the case may be; or
    (2) With respect to any Derivatives which in the aggregate are equal 
in principal amount to the Private Loan or any Private Loan Portion, 
that amount of payment on account of such derivatives which is equal to 
the Guaranteed Loan Amount or the respective Guaranteed Loan Portion 
Amount, as the case may be.
    (q) Guaranteed loan amount means that amount of payment on account 
of the Private Loan which is guaranteed under the terms of the Guaranty.
    (r) Guaranteed loan portion amount means that amount of payment on 
account of any Private Loan Portion which is guaranteed under the terms 
of the Guaranty.
    (s) Guaranty means either a new guaranty of the United States issued 
by DSAA or an existing guaranty of the United States transferred by 
DSAA, in the form of guaranty set forth in Sec. 25.405, which guaranty 
will be attached to a Private Loan Note or Private Loan Portion Note.
    (t) Interest rate difference means the difference between:
    (1) The cost of funds to the Borrower for the Private Loan 
(expressed in terms of the true rate of interest applicable to the 
Private Loan) if paragraph (a) of Sec. 25.404 applies to the Private 
Loan; and
    (2) The cost of funds to the Borrower for the Private Loan 
(expressed in terms of the true rate of interest applicable to the 
Private Loan) if paragraph (a) of Sec. 25.404 does not apply to the 
Private Loan.
    (u) Non-registered obligation means a bearer obligation which does 
not comply with all of the registration requirements of the Internal 
Revenue Code.
    (v) Permitted arrears prepayment amount means the sum of all 
arrears, if any, on all FMS Loans, which arrears are outstanding on the 
Closing Date.
    (w) Permitted guaranty holder means:
    (1) An individual domiciled in the United States;
    (2) A corporation incorporated, chartered or otherwise organized in 
the United States; or
    (3) A partnership or other juridical entity doing business in the 
United States.
    (x) Permitted P&I prepayment amount means, with respect to each 
Eligible FMS Loan or Eligible FMS Advance, as the case may be, the sum 
of:
    (1) All principal amounts which become due and payable after 
September 30, 1989, on the respective Eligible FMS Loan or Eligible FMS 
Advance; and
    (2) All unpaid interest, if any, on the respective Eligible FMS Loan 
or Eligible FMS Advance accrued as of the Closing Date.
    (y) Private loan means, collectively, the loan or loans that is or 
are obtained by the Borrower from an Eligible Private Lender to prepay 
the Total Permitted Prepayment Amount, or the portion thereof which the 
Borrower has selected to prepay.
    (z) Private loan note means, collectively, the note or notes 
executed and delivered by the Borrower to evidence the Private Loan.
    (aa) Private loan portion means any portion of the Private Loan.
    (bb) Private loan portion note means any note executed and delivered 
by the Borrower to evidence a Private Loan Portion.
    (cc) Total permitted prepayment amount means the sum of:
    (1) The aggregate of the respective Permitted P&I Prepayment amount 
for all Eligible FMS Loans and all Eligible FMS Advances on account of 
FMS Loans which FMS Loans do not, in themselves, meet the criteria of 
Eligible FMS Loans; and
    (2) The Permitted Arrears Prepayment Amount.
    (dd) Unguaranteed-amount equivalent means all amounts of payment on 
account of any Derivative other than the respective Guaranteed-Amount 
Equivalent.
    (ee) Unguaranteed loan amount means all amounts of payment on 
account of the Private Loan other than the Guaranteed Amount.
    (ff) Unguaranteed loan portion amount means all amounts of payment 
on account of any Private Loan Portion other than the respective 
Guaranteed Loan Portion Amount.

[[Page 251]]



Sec. 25.101  OMB control number.

    The reporting requirements in this part have been approved under the 
Office of Management and Budget control number 1505-0109.



                 Subpart B_Qualifications for Prepayment



Sec. 25.200  General rules.

    (a) To qualify for a loan prepayment at par pursuant to subsection 
(a) of the Act, a Borrower must have an Eligible FMS Loan or an Eligible 
FMS Advance.
    (b) A Borrower may prepay the Total Permitted Prepayment Amount in 
portions using more than one closing; however, all prepayments of the 
Total Permitted Prepayment Amount must have a Closing Date that is not 
later than September 30, 1991.
    (c) A Borrower may prepay all or a portion of the Total Permitted 
Prepayment Amount; however, if a Borrower selects to prepay any 
Permitted P&I Prepayment Amount of an FMS Advance, the Borrower must 
prepay the entire Permitted P&I Prepayment Amount of such FMS Advance.
    (d) If the payment billings of an FMS Loan have been consolidated in 
accordance with the terms of the respective loan agreement, and if any 
principal payments have been made on account of the FMS Loan, then the 
outstanding principal balances of any Eligible FMS Advances shall be 
determined in accordance with the principal of ``first disbursed, first 
repaid,'' that is, advances on account of the FMS Loan shall be deemed 
to have been repaid in the chronological order in which they were 
disbursed.



                          Subpart C_Procedures



Sec. 25.300  Application procedure.

    (a) Each Borrower that wishes to prepay at par the Total Permitted 
Prepayment Amount, or any portion thereof, must submit a written 
prepayment application. To be considered complete, a prepayment 
application must contain the following information and materials:
    (1) Part I of the prepayment application shall be the identification 
of each Eligible FMS Loan or Eligible FMS Advance, as the case may be, 
with respect to which the Borrower has selected to prepay the amount 
thereof permitted by this part to be prepaid, setting forth with respect 
to each such Eligible FMS Loan or Eligible FMS Advance:
    (i) The date on which the Eligible FMS Advance was made or the date 
on which the Eligible FMS Loan was signed;
    (ii) The original amount of the Eligible FMS Loan or Eligible FMS 
Advance;
    (iii) The principal and interest payment schedule of the Eligible 
FMS Loan or Eligible FMS Advance; and
    (iv) The maturity of the Eligible FMS Loan or Eligible FMS Advance.
    (2) Part II of the prepayment application shall be the Borrower's 
estimate of the Permitted Arrears Prepayment Amount calculated as of the 
date of the application;
    (3) Part III of the prepayment application shall be a description of 
each Private Loan, 90 percent of which the Borrower seeks to have 
guaranteed, setting forth with respect to each Private Loan:
    (i) The total amount of the Private Loan,
    (ii) The proposed principal and interest payment schedule of the 
Private Loan,
    (iii) The proposed maturity of the Private Loan, and
    (iv) The identity of each Eligible FMS Loan or Eligible FMS Advance 
with respect to which amount thereof permitted by this part to be 
prepaid is to be prepaid with the proceeds of the Private Loan;
    (4) Part IV of the prepayment application shall be all material 
transaction documents, in substantially final form, relating to the 
prepayment of the Total Permitted Prepayment Amount, or the portion 
thereof which the Borrower has selected to prepay, with the proceeds of 
the Private Loan; and
    (5) Part V of the prepayment application shall be the name, address, 
and telephone number of the Borrower's contact person with whom the FFB 
or DSAA will communicate to arrange for prepayment and closing.
    (b) Each prepayment application shall be submitted in triplicate to

[[Page 252]]

DSAA at the following address: Defense Security Assistance Agency, The 
Pentagon, Washington, DC 20301-2800, Attention: Deputy Comptroller.
    (c) A Borrower wishing to obtain preliminary, nonbinding review of a 
plan to prepay at par the Total Permitted Prepayment Amount, or any 
portion thereof, may, at the Borrower's option, prior to submitting a 
prepayment application in accordance with paragraph (a) of this section, 
submit to DSAA, at the address set forth in paragraph (b) of this 
section, a written plan of prepayment. To qualify for review, a plan of 
prepayment must include a detailed description of the proposed financing 
structure clearly addressing the terms and conditions of the proposed 
Private Loan. DSAA will review each plan of prepayment submitted by 
Borrowers and may engage in informal, non-binding discussions with each 
Borrower that submitted a plan of prepayment to assist such Borrower in 
preparing a prepayment application.



Sec. 25.301  Approval procedure.

    (a) Distribution, Review, and Processing by DSAA. (1) Upon receipt 
of three copies of a completed prepayment application from a Borrower, 
DSAA will promptly deliver one copy of Parts I and II of the prepayment 
application to the State Department and one copy of Parts I, II, and V 
of the prepayment application to the Treasury Department.
    (2) DSAA will review each completed prepayment application to ensure 
that the Private Loan complies with the requirements of this part, 
including without limitation the requirements of Sec. 25.400. DSAA will 
also review each completed prepayment application to ensure that the 
provisions of subsection (d) of the Act (Purposes and Reports) are 
considered. DSAA will process each completed prepayment application 
within 16 days after receipt by DSAA of the respective completed 
application from a Borrower.
    (3) After DSAA has processed a completed prepayment application, 
DSAA will either:
    (i) Return the application to the Borrower; or
    (ii) Deliver to the State Department written evidence of the 
approval of the prepayment application by DSAA.
    (b) Review and Processing by the State Department. (1) The State 
Department will review Parts I and II of each prepayment application 
received by the State Department from DSAA to ensure that the provisions 
of subsection (d) of the Act (Purposes and Reports) are considered. The 
State Department will process Parts I and II of each prepayment 
application within 7 days after receipt by the State Department of 
written evidence of the approval of the prepayment application by DSAA.
    (2) After the State Department has processed Parts I and II of a 
prepayment application, the State Department will either:
    (i) Return the parts of the application to DSAA for return to the 
Borrower; or
    (ii) Deliver to the Treasury Department written evidence of the 
approvals of the prepayment application by DSAA and the State 
Department.
    (c) Processing by the Treasury Department--(1) FMS Loans held by 
DSAA. (i) The Treasury Department will process Parts I and II of each 
prepayment application regarding an Eligible FMS Loan made by DSAA or an 
Eligible FMS Advance on account of an FMS Loan made by DSAA, as the case 
may be, within 7 days after receipt by the Treasury Department of 
written evidence of the approvals of the prepayment application by DSAA 
and the State Department;
    (ii) After the Treasury Department has processed Parts I and II of a 
prepayment application, the Treasury Department will return the parts of 
the application to DSAA, and thereupon DSAA will commence the Closing 
Procedures described in Sec. 25.303(a) with respect to the application.
    (2) FMS Loans held by the FFB. (i) The Treasury Department will 
process Parts I and II of each prepayment application regarding an 
Eligible FMS Loan made by the FFB and guaranteed by DSAA or an Eligible 
FMS Advance on account of an FMS Loan made by the FFB and guaranteed by 
DSAA, as the case may be, within 7 days after receipt by the Treasury 
Department from the State Department of written evidence of the 
approvals of the prepayment application by DSAA and the State 
Department; and

[[Page 253]]

    (ii) After the Treasury Department has processed Parts I and II of a 
prepayment application, the Treasury Department will commence the 
Closing Procedures described in Sec. 25.303(b) with respect to the 
application.



Sec. 25.302  Application withdrawal; effect of approval.

    A Borrower that submits a prepayment application may withdraw the 
prepayment application at any time prior to its approval. Even after a 
Borrower's prepayment application has been approved, the Borrower is not 
obligated to prepay its Eligible FMS Loans or Eligible FMS Advances.



Sec. 25.303  Closing procedure.

    (a) FMS loans held by DSAA. (1) After the Treasury has processed 
Parts I and II of a prepayment application regarding an Eligible FMS 
Loan made by DSAA or an Eligible FMS Advance on account of an FMS Loan 
made by DSAA, as the case may be, DSAA will communicate with the 
Borrower's contact person identified in Part V of the prepayment 
application to establish a Closing Date mutually agreeable to the 
Borrower and DSAA. DSAA will inform the Borrower of the final amount of 
the Total Permitted Prepayment Amount, or the portion thereof which the 
Borrower has selected to prepay, as of the Closing Date established. The 
determination by DSAA of the final amount of the Total Permitted 
Prepayment Amount, or the portion thereof which the Borrower has 
selected to prepay, shall be conclusive.
    (2) On the Closing Date, the Guaranty will be attached to the 
Private Loan Note or the Private Loan Portion Notes, as the case may be, 
the Private Loan shall be funded, and the Total Permitted Prepayment 
Amount, or the portion thereof which the Borrower has selected to 
prepay, will be prepaid.
    (3) The attachment of the Guaranty to the Private Loan Note or the 
Private Loan Portion Notes, as the case may be, will take place at such 
location as may be designated by the mutual agreement of the Borrower 
and DSAA.
    (4) Prior to 1:00 p.m. prevailing local time in New York, New York, 
on the Closing Date, immediately available funds in amounts sufficient 
to prepay the Total Permitted Prepayment Amount, or the portion thereof 
which the Borrower has selected to prepay, shall be transferred by 
electronic funds transfer to DSAA at the Treasury Department account at 
the Federal Reserve Bank of New York. The funds transfer message must 
include the following credit information:

United States Treasury, New York, New York, 021030004, TREAS NYC/ 
(5037).
For credit to the Defense Security Assistance Agency, The Pentagon, 
Washington, DC 20301-2800.


This information must be exactly in this form (including spacing between 
words and numbers) to insure timely receipt by the DSAA. Checks, drafts, 
and other orders for payment will not be accepted.
    (b) FMS Loans held by the FFB. (1) After the Treasury Department has 
processed Parts I and II of a prepayment application regarding an 
Eligible FMS Loan made by the FFB and guaranteed by DSAA or an Eligible 
FMS Advance on account of an FMS Loan made by the FFB and guaranteed by 
DSAA, as the case may be, the FFB will communicate with the Borrower's 
contact person identified in Part V of the prepayment application to 
establish a Closing Date mutually agreeable to the Borrower, the FFB, 
and DSAA. The FFB will inform the Borrower of the final amount of the 
Total Permitted Prepayment Amount, or the portion thereof which the 
Borrower has selected to prepay, as of the Closing Date established. The 
determination by the FFB of the final amount of the Total Permitted 
Prepayment Amount, or the portion thereof which the Borrower has 
selected to prepay, shall be conclusive.
    (2) On the Closing Date, the Guaranty will be attached to the 
Private Loan Note or the Private Loan Portion Notes, as the case may be, 
the Private Loan will be funded, and the Total Permitted Prepayment 
Amount, or the portion thereof which the Borrower has selected to 
prepay, will be prepaid.
    (3) The attachment of the Guaranty to the Private Loan Note or the 
Private Loan Portion Notes, as the case

[[Page 254]]

may be, will take place at such location as may be designated by the 
mutual agreement of the Borrower and DSAA.
    (4) Prior to 1:00 p.m. prevailing local time in New York, New York, 
on the Closing Date, immediately available funds in amounts sufficient 
to prepay at par the Permitted Prepayment Amount, or the portion thereof 
which the Borrower has selected to prepay, shall be transferred by 
electronic funds transfer to the Treasury Department account at the 
Federal Reserve Bank of New York. The funds transfer message must 
include the following credit information:

United States Treasury, New York, New York, 021030004, TREAS NYC/ 
(20180006).
For credit to the Federal Financing Bank, Room 143, Liberty Center 
Building, 401 14th Street SW., Washington, DC 20227.


This information must be exactly in this form (including spacing between 
words and numbers) to insure timely receipt by the FFB. Checks, drafts, 
and others for payment will not be accepted.
    (c) Changes in the closing date. If a Borrower does not prepay the 
Total Permitted Prepayment Amount or the portion thereof which the 
Borrower has selected to prepay, on the mutually agreed upon Closing 
Date, the Borrower may prepay the Total Permitted Prepayment Amount, or 
the portion thereof which the Borrower has selected to prepay, on a new 
Closing Date, provided that the new Closing Date is mutually agreeable 
to all interested parties, and provided, further, that the Borrower 
prepays such amount in accordance with the approved prepayment 
application, adjusted for changes in accrued interest.



                     Subpart D_Form of Private Loan



Sec. 25.400  Loan provisions.

    (a) Subject to the provisions of paragraph (b) of this section, the 
principal and interest payment schedule and maturity of the Private Loan 
must be the same as the payment schedules and maturities of the Eligible 
FMS Loans or Eligible FMS Advances, as the case may be, which the 
Borrower has selected to prepay with the proceeds of the Private Loan.
    (b) Notwithstanding the preceding paragraph, an Eligible Private 
Lender that proposes to make a Private Loan, the proceeds of which will 
be used to prepay Eligible FMS Loans or Eligible FMS Advances, as the 
case may be, having differing payment structures and maturities, may:
    (1) Consolidate the differing payment structures of the Eligible FMS 
Loans or the Eligible FMS Advances, as the case may be, into a single 
payment structure which complies with the following criteria:
    (i) The Private Loan shall have one set of semi-annual payment 
dates;
    (ii) Interest on and principal of the Private Loan shall be payable 
semi-annually; and
    (iii) The amount of principal to be paid each year on account of the 
Private Loan shall be equal (rounded to the nearest $1,000.00 if 
desired, except for the final payment) to the aggregate amount of 
principal that is scheduled to be paid in such year on account of the 
respective Eligible FMS Loans or Eligible FMS Advances; or
    (2) Consolidate the differing payment structures and maturities of 
the Eligible FMS Loans or the Eligible FMS Advances, as the case may be, 
into a single payment structure and maturity complying with the 
following criteria:
    (i) The final maturity date of the Private Loan shall be the 
approximate weighted average of the final maturity dates of the Eligible 
FMS Loans or the Eligible FMS Advances with respect to which the 
Borrower has selected to prepay amounts thereof permitted by this part 
to be prepaid;
    (ii) The initial principal payment date of the Private Loan shall 
occur no later than the earliest scheduled principal payment date of the 
Eligible FMS Loans or the Eligible FMS Advances with respect to which 
the Borrower has selected to prepay amounts thereof permitted by this 
part to be prepaid;
    (iii) The Private Loan shall have one set of semi-annual payment 
dates;
    (iv) Interest on the Private Loan shall be payable semi-annually; 
and
    (v) The principal of the Private Loan shall be payable in equal 
installments

[[Page 255]]

(rounded to the nearest $1,000.00 if desired, except for the final 
payment) and shall be payable either semi-annually or annually.



Sec. 25.401  Fees.

    The interest rate on the Private Loan may include compensation for 
costs at prevailing market rates with the agreement of the Borrower and 
the Eligible Private Lender selected by the Borrower.



Sec. 25.402  Transferability.

    Each Private Loan Note, with the Guaranty attached, shall be fully 
and freely transferable to any Permitted Guaranty Holder.



Sec. 25.403  Registration.

    The Guaranty shall cease to be effective with respect to the Private 
Loan or any Private Loan Portion or any Derivative to the extent that 
the Private Loan or the respective Private Loan Portion or the 
respective Derivative, as the case may be, is used to provide 
significant support for a Non-Registered Obligation.



Sec. 25.404  Non-separability.

    (a) The Guaranty shall cease to be effective with respect to any 
Guaranteed Loan Amount or any Guaranteed Loan Portion Amount or any 
Guaranteed-Amount Equivalent to the extent that:
    (1) The Guaranteed Amount or the respective Guaranteed Loan Portion 
Amount or the respective Guaranteed-Amount Equivalent, as the case may 
be, is separated at any time from the Unguaranteed Loan Amount or the 
respective Unguaranteed Loan Portion Amount or the respective 
Unguaranteed-Amount Equivalent, as the case may be, in any way, directly 
or through the issuance of any Guaranteed-Amount Equity Derivative or 
any Guaranteed-Amount Debt Derivative; or
    (2) Any holder of the Private Loan Note or any Private Loan Portion 
Note or any Derivative, as the case may be, having a claim to payments 
on the Private Loan receives more than 90 percent of any payment due to 
such holder from payments made under the Guaranty at any time during the 
term of the Private Loan.
    (b) Notwithstanding the preceding paragraph, if any Guaranteed-
Amount Debt Derivative is issued, the Guaranty shall not cease to be 
effective with respect to any Guaranteed Loan Amount or any Guaranteed 
Loan Portion Amount or any Guaranteed-Amount Equivalent, as the case may 
be, if both of the circumstances described in paragraphs (b)(1) and 
(b)(2) of this section.
    (1) A Borrower shall have delivered to the Secretary of the treasury 
evidence, in form and substance satisfactory to the Secretary of the 
Treasury, that the Interest Rate Difference will be substantial.
    (i) To be considered, the evidence must meet the following 
requirements:
    (A) The Borrower must show that the Interest Rate Difference is 
directly attributable to paragraph (a) of this section being applied to 
the Private Loan, that is, that the Interest Rate Difference will exist 
even when all other financing terms of the Private Loan, including any 
collateralization of the Unguaranteed Loan Amount or the respective 
Unguaranteed Loan Portion Amount or the respective Unguaranteed-Amount 
Equivalent, as the case may be, are identical;
    (B) When calculating the Interest Rate Difference, the Borrower must 
assume that the Unguaranteed Loan Amount or the respective Unguaranteed 
Loan Portion Amount or the respective Unguaranteed-Amount Equivalent, as 
the case may be, will be collateralized by securities backed by the full 
faith and credit of the United States, unless the Borrower is legally 
prohibited from so collateralizing the Unguaranteed Loan Amount or the 
respective Unguaranteed Loan Portion Amount or the respective 
Unguaranteed-Amount Equivalent, as the case may be, or the Borrower has 
demonstrated to the satisfaction of the Secretary of the Treasury that 
the Borrower is unable to so collateralize the Unguaranteed Loan Amount 
or the respective Unguaranteed Loan Portion Amount or the respective 
Unguaranteed-Amount Equivalent;
    (C) If the Borrower is legally prohibited from collateralizing the 
Unguaranteed Loan Amount or the respective Loan Guaranteed Portion

[[Page 256]]

Amount or the respective Unguaranteed-Amount Equivalent, as the case may 
be, with securities backed by the full faith and credit of the United 
States or has demonstrated to the satisfaction of the Secretary of the 
Treasury that the Borrower is unable to so collateralize the 
Unguaranteed Loan Amount or the respective Unguaranteed Loan Portion 
Amount or the respective Unguaranteed-Amount Equivalent, as the case may 
be, then the Borrower may calculate the Interest Rate Difference using 
whatever collateralization assumptions the Borrower elects;
    (D) If the Borrower delivers evidence to the Secretary of the 
Treasury respecting the Interest Rate Difference, which evidence assumes 
either that the Unguaranteed Loan Amount or the respective Unguaranteed 
Loan Portion Amount or the respective Unguaranteed-Amount Equivalent, as 
the case may be, will not be collateralized at all or that the 
Unguaranteed Loan Amount or the respective Unguaranteed Loan Portion 
Amount or the respective Unguaranteed-Amount Equivalent, as the case may 
be, will be collateralized, but not by securities backed by the full 
faith and credit of the United States, then the Borrower must also 
deliver to the Secretary of the Treasury the written agreement of the 
Borrower, which agreement shall be in form and substance satisfactory to 
the Secretary of the Treasury, that the Borrower will not collateralize 
the Unguaranteed Loan Amount or the respective Unguaranteed Loan Portion 
Amount or the respective Unguaranteed-Amount Equivalent, as the case may 
be, at any time during the term of the Private Loan in any way different 
from the assumptions used in calculating the Interest Rate Difference; 
and
    (E) The Borrower must deliver to the Secretary of the Treasury the 
evidence pertaining to the Interest Rate Difference at the time that the 
Borrower submits to DSAA its plan for prepayment, if any, if no plan of 
prepayment is submitted, then no later than 10 days prior to the time 
that the Borrower submits to DSAA its prepayment application.
    (ii) If the Secretary of the Treasury determines that the evidence 
submitted by the Borrower pertaining to the Interest Rate Difference is 
satisfactory in form and in substance, and that the Interest Rate 
Difference is substantial, a modified version of the Guaranty (deleting 
therefrom the provision that the Guaranty shall cease to be effective if 
any Guaranteed-Amount Debt Derivative is issued) will be attached to the 
Private Loan Note or the Private Loan Portion Notes, as the case may be.
    (2) The Secretary of the Treasury shall have determined, in the sole 
discretion of the Secretary of the Treasury, that the respective 
Borrower's loan prepayment at par pursuant to subsection (a) of the Act 
through the issuance of any Guaranteed-Amount Debt Derivative is 
necessary to achieve the international economic policy interests of the 
United States.



Sec. 25.405  Form of guaranty.

    (a) The Guaranty that will be attached to the Private Loan Note on 
the Closing Date shall be in the following form (except that the 
bracketed words shall be deleted if the conditions specified in Sec. 
25.404(b) shall have occurred):

    For Value Received, the Defense Security Assistance Agency of the 
Department of Defense (``DSAA''), hereby guarantees to (Name of Lender) 
(``Lender''), incorporated under the laws of (U.S. State or other U.S. 
jurisdiction) or if not so incorporated or organized, then the principal 
place of doing business is (U.S. location, address, and zip code), under 
the authority of Section 24 of the Arms Export Control Act, as amended 
(``Act''), the due and punctual payment of ninety percent (90%) of 
amounts due: (1) on the promissory note (``Note'') in the principal 
amount of up to $------ dated ------ issued to the Lender by the 
Government of (Name of Borrower) (``Borrower'') pursuant to the Loan 
Agreement between the Lender and the Borrower dated the ----th day of --
---- (``Agreement''); and (2) the Lender from the Borrower pursuant to 
the Agreement.
    This Guaranty is a guaranty of payment covering all political and 
credit risks of nonpayment, including any nonpayment arising out of any 
claim which the Borrower may now or hereafter have against any person, 
corporation, or other entity (including without limitation, the United 
States, the Lender, and any supplier of defense items) in connection 
with any transaction, for any reason whatsoever. This Guaranty shall 
inure to the

[[Page 257]]

benefit of and shall be enforceable by the Lender and any Permitted 
Guaranty Holder (as hereinafter defined). This Guaranty shall not be 
impaired by any law, regulation or decree of the Borrower now or 
hereafter in effect which might in any manner change any of the terms of 
the Note or Agreement. The obligation of DSAA hereunder shall be binding 
irrespective of the irregularity, invalidity or unenforceability under 
any laws, regulations or decrees of the Borrower of the Note, the 
Agreement or other instruments related thereto.
    DSAA hereby waives diligence, demand, protest, presentment and any 
requirement that the Lender exhaust any right or power to take any 
action against the Borrower and any notice of any kind whatsoever other 
than the demand for payment required to be given to DSAA hereunder in 
the event of default on a payment due under the Note.
    In the event of failure of the Borrower to make payment, when and as 
due, of any installment of principal or interest under the Note, the 
DSAA shall make payment immediately to the Lender upon demand to the 
DSAA after the Borrower's failure to pay has continued for 10 calendar 
days. The amount payable under this Guaranty shall be ninety percent 
(90%) of the amount of the overdue installment of principal and 
interest, plus ninety percent (90%) of any and all late charges and 
interest thereon as provided in the Agreement. Upon payment by DSAA to 
the Lender, the Lender will assign to DSAA, without recourse or 
warranty, ninety percent (90%) of all of its rights in the Note and the 
Agreement with respect to such payment.
    In the event of a default under the Agreement or the Note by the 
Borrower and so long as this Guaranty is in effect and the DSAA is not 
in default hereunder:
    (i) The Lender or other Permitted Guaranty Holder shall not 
accelerate or reschedule payment of the principal or interest on the 
Note or any other note of the Borrower guaranteed by DSAA except with 
the written approval of DSAA; and
    (ii) The Lender or other Permitted Guaranty Holder shall, if so 
directed by DSAA, invoke the default provisions of the Agreement.
    Subject to the limitations set forth below, the Lender's rights 
under this Guaranty may be assigned to any ``Permitted Guaranty 
Holder,'' that is: (1) An individual domiciled in the United States; (2) 
a corporation incorporated, chartered or otherwise organized in the 
United States; or (3) a partnership or other juridical entity doing 
business in the United States. In the event of such assignment DSAA 
shall be promptly notified. The Lender will not agree to any material 
amendment of the Agreement or Note or consent to any material deviation 
from the provisions thereof without the prior written consent of DSAA.
    Permitted Guaranty Holders shall be severally bound by, and shall be 
severally entitled to, the rights and obligations of the Lender under 
the Note, the Agreement, and this Guaranty. The Lender shall maintain a 
current, accurate written record of the names, addresses, amount of 
financial interest in the Note and Agreement, and date of acquisition of 
such interest of each Permitted Guaranty Holder and shall furnish DSAA a 
copy of such record on its demand without charge. No assignment by the 
Lender or by any Permitted Guaranty Holder shall be effective for 
purposes of this Guaranty unless and until so recorded by the Lender.
    The total amount of this Guaranty shall not at any time exceed 
ninety percent (90%) of the outstanding principal, unpaid accrued 
interest and arrearages, if any, under the Agreement and the Note, 
including any portion of the Note, or any derivative of the Note or any 
portion of the Note.
    This Guaranty shall cease to be effective with respect to the 
guaranteed amount of the total amount of the Note (the ``Guaranteed Loan 
Amount'') or with respect to the guaranteed amount of any portion of the 
Note (the ``Guaranteed Loan Portion Amount'') [or with respect to the 
amount of any derivative or derivatives of the Note or any portion of 
the Note equal, or in the aggregate equal, in principal amount to the 
total amount of the Note or such portion of the Note, as the case may 
be, which amount of such derivative or derivatives is equal to the 
respective Guaranteed Loan Amount or Guaranteed Loan Portion Amount, as 
the case may be (the ``Guaranteed-Amount Equivalent'')] to the extent 
that (1) the Guaranteed Loan Amount or the respective Guaranteed Loan 
Portion Amount [or the respective Guaranteed-Amount Equivalent], as the 
case may be, is at any time separated from the unguaranteed amount of 
the total amount of the Note or the unguaranteed amount of the 
respective portion of the Note [or the amount of such derivative or 
derivatives of the Note which is not the amount which is equal to the 
Guaranteed Loan Amount or Guaranteed Loan Portion Amount, as the case 
may be], in any way, (a) directly, or (b) through the issuance of 
participation shares of, or undivided ownership or other equity 
interests in, the Note, or any portion of the Note, or any derivative of 
the Note or any portion of the Note, which have an exclusive or 
preferred claim to the Guaranteed Loan Amount or the respective 
Guaranteed Loan Portion Amount [or the respective Guaranteed-Amount 
Equivalent], as the case may be [or (c) through the issuance of

[[Page 258]]

notes, bonds or other debt instruments or obligations which are 
collateralized or otherwise secured by a pledge of, or security interest 
in, the Note, or any portion of the Note or any derivative of the Note 
or any portion of the Note, which has an exclusive or preferred claim to 
the Guaranteed Loan Amount or the respective Guaranteed Loan Portion 
Amount or the respective Guaranteed-Amount Equivalent, as the case may 
be]; or (2) any holder of the Note, or any portion of the Note, or any 
derivative of the Note or any portion of the Note, as the case may be, 
having claim to payment made on the Note, receives more than ninety 
percent of any payment due to such holder from payments made under this 
Guaranty at any time during the term of the Note or the Agreement.
    This Guaranty is fully and freely transferable to any Permitted 
Guaranty Holder, except that it shall cease to be effective with respect 
to the Agreement or the Note, or any portion of the Note, or any 
derivative of the Note or any portion of the Note, to the extent that 
the Agreement or the Note, or the respective portion of the Note, or the 
respective derivative of the Note or any portion of the Note, as the 
case may be, is used to provide significant support for any non-
registered obligation.
    The full faith and credit of the United States is pledged to the 
performance of this Guaranty. No claim which the United States may now 
or hereafter have against the Lender or any Permitted Guaranty Holder 
for any reason whatsoever shall affect in any way the right of the 
Lender or any Permitted Guaranty Holder to receive full and prompt 
payment of any amount otherwise due under this Guaranty. The United 
States represents and warrants that (a) it has full power, authority and 
legal right to execute, deliver and perform this Guaranty, (b) this 
Guaranty has been executed in accordance with and pursuant to the terms 
and provisions of section 24 of the Act, the provisions of the Foreign 
Operations, Export Financing, and Related Programs Appropriations Act, 
1988, under the hearing ``Foreign Military Sales Debt Reform,'' and 
title 31, part 25, of the Code of Federal Regulations, (c) this Guaranty 
has been duly executed and delivered by a duly authorized representative 
of DSAA, and (d) this Guaranty constitutes the valid and legally binding 
obligations of the United States, enforceable in accordance with the 
terms hereof.
    Any notice, demand, or other communication hereunder shall be deemed 
to have been given if in writing and actually delivered to the 
Comptroller, DSAA, the Pentagon, Washington, DC 20301-2800, or the 
successor, or such other place as may be designated in writing by the 
Comptroller, DSAA or the successor thereof.
    By acceptance of the Note, the Lender agrees to the terms and 
conditions of this Guaranty.

Dated:__________________________________________________________________

By:_____________________________________________________________________
    Director, DSAA.

    (b) The obligations of DSAA under the Guaranty are expressly limited 
to those obligations contained in the form of Guaranty set forth in 
paragraph (a) of this section. Any provisions of any agreement relating 
to the Private Loan purporting to create obligations on the part of DSAA 
which are inconsistent with the terms of the Guaranty or any other 
provision of this part be unenforceable against DSAA.



Sec. 25.406  Savings clause.

    Nothing in this rule is intended to authorize any person or entity 
to engage in any activity not otherwise authorized or permitted for such 
person or entity under any applicable laws of the United States, any 
territory or possession of the United States, any State, or the District 
of Columbia.



PART 26_ENVIRONMENTAL REVIEW OF ACTIONS BY MULTILATERAL DEVELOPMENT BANDS (MDBs)--Table of Contents




Sec.
26.1 Purpose.
26.2 Availability of project listings.
26.3 Availability of Environmental Impact Assessment Summaries (EIA 
          Summaries) and Environmental Impact Assessments (EIAs).
26.4 Comments on MDB projects.
26.5 Upgrades and additional environmental information.

    Authority: 22 U.S.C. 262m-7, 31 U.S.C. 321.

    Source: 57 FR 24545, June 10, 1992, unless otherwise noted.



Sec. 26.1  Purpose.

    This part prescribes procedures for the environmental review of, and 
comment by Federal agencies and the public on, proposed projects of 
multilateral development banks (MDBs).



Sec. 26.2  Availability of project listings.

    (a) The Office of Multilateral Development Banks of the Department 
of the Treasury (hereinafter ``MDB Office'') will ensure that the 
Environmental Protection Agency (EPA), the

[[Page 259]]

Council on Environmental Quality (CEQ), the Department of State, the 
Agency for International Development (AID), the National Oceanic and 
Atmospheric Administration (NOAA), and the Bank Information Center (BIC) 
(which is a private, nongovernmental organization located in Washington, 
DC), receive copies from each multilateral development bank (MDB) of 
project listings describing future MDB projects and assigning 
environmental categories based on the environmental impact of each 
project. If an MDB has not provided a project listing to one of these 
entities, these entities may obtain the project listing by contacting 
the MDB Office, 1500 Pennsylvania Avenue NW., Washington, DC 20220, 
(202) 622-0765.
    (b)(1) Members of the public may obtain copies of project listings 
from the BIC, 2025 Eye Street NW., suite 522, Washington, DC 20006 
((202) 466-8191, not a toll-free call).
    (2) If a copy is not available from the BIC, members of the public 
may arrange to review and/or copy a project listing by contacting the 
MDB Office which will make a copy available at the Department of the 
Treasury Library, 1500 Pennsylvania Avenue NW., Washington, DC ((202) 
622-0990, not a toll-free call). Members of the public are advised that 
they must make an appointment with the Treasury Library before they 
visit and that a charge (currently 15 cents per page) is imposed for the 
use of the library photocopier.



Sec. 26.3  Availability of Environmental Impact Assessment Summaries (EIA 

Summaries) and Environmental Impact Assessments (EIAs).

    (a) EIA summaries. (1) The MDB Office will provide for the 
distribution of EIA Summaries to the entities identified in section 
26.2(a).
    (2) (i) Members of the public may obtain copies of EIA Summaries 
from the BIC, 2025 Eye Street, NW., suite 522, Washington, DC 20006 
((202) 466-8191, not a toll-free call).
    (ii) If a copy of an EIA Summary is not available from the BIC, 
members of the public may arrange to review and/or copy an EIA Summary 
by contacting the MDB Office at (202) 622-0765 (not a toll-free call), 
which will make a copy available at the Department of the Treasury 
Library, 1500 Pennsylvania Avenue NW., Washingon, DC. Members of the 
public are advised that they must make an appointment with the Treasury 
Library (202) 622-0990) before they visit, and that a charge (currently 
15 cents per page) is imposed for the use of the library photocopier. To 
the extent possible, EIA Summaries will be available for review and 
copying at least 120 days before scheduled consideration of a project by 
the MDB Executive Directors.
    (b) EIAs--(1) The African Development Bank, the European Bank for 
Reconstruction and Development, and the Asian Development Bank. 
Arrangements to review an EIA may be made by contacting the MDB Office 
((202) 622-0765 (not a toll-free call)), which will obtain a copy of the 
EIA through the Office of the United States Executive Director of the 
appropriate MDB and make it available for review and copying in the 
Department of the Treasury Library. Members of the public are advised 
that they must make an appointment with the Treasury Library, ((202) 
622-0900 (not a toll-free call), before they visit, and that a charge 
(currently 15 cents per page) is imposed for the use of the library 
photocopier.
    (2) The International Bank for Reconstruction and Development, the 
International Development Association, and the Inter-American 
Development Bank. (i) Members of the public may review EIAs at the 
public reading room of the concerned MDB.
    (ii) If a particular MDB does not have a public reading room, 
members of the public may arrange to review and/or copy an EIA by 
contacting the MDB Office ((202) 622-0765 (not a toll-free call)), which 
will obtain a copy through the Office of the United States Executive 
Director of the concerned MDB and make it available in the Department of 
the Treasury Library, 1500 Pennsylvania Avenue NW., Washington, DC. 
Members of the public are advised that they must make an appointment 
with the Treasury Library ((202) 622-0990 not a toll-free call) before 
they visit, and that a charge (currently 15 cents per page) is imposed 
for the use of the library photocopier.

[[Page 260]]



Sec. 26.4  Comments on MDB projects.

    (a) Public comments--(1) Written comments (i) A member of the public 
wishing to provide written comments on a MDB project must provide 2 
copies of the comments to the Office of Multilateral Development Banks, 
U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW., room 
5400, Washington, DC 20220. Written comments should be submitted not 
later than two weeks after the member of the public has access to the 
particular document on which it wishes to offer comments--either the 
project listing, the EIA Summary, or the EIA for a particular project. 
Written public comments will be provided by the MDB Office to the U.S. 
Government agencies participating in meetings of the Working Group for 
Multilateral Assistance (WGMA), which meetings are described in Sec. 
26.4(c). The WGMA is an intergovernmental subcommittee of the 
Development Coordination Committee whose functions are set forth in the 
Presidential announcement of May 19, 1978, Vol. 14, No. 20, p. 932 of 
the Weekly Compilation of Presidential Documents. The WGMA meets to 
discuss the U.S. position on upcoming MDB projects.
    (ii) All written comments will be available for inspection and 
copying in their entirety in the Department of the Treasury Library, 
1500 Pennsylvania Avenue NW., Washington, DC ((202) 622-0990). Members 
of the public are advised that they must make an appointment with the 
Treasury Library before they visit, and that a charge (currently 15 
cents per page) is imposed for the use of the library photocopier.
    (2) Oral comments. Oral comments from a member of the public may be 
made in periodic meetings convened by the BIC. Information concerning 
these meetings may be obtained by contacting the BIC or the MDB Office. 
The MDB Office will summarize and present such comments in the WGMA 
meetings described in Sec. 26.4(c).
    (b) U.S. agency comments. Comments from U.S. agencies shall be 
provided through the WGMA.
    (c) Consideration of comments. The WGMA will consider all comments 
made by the public and U.S. agencies. The WGMA may review a project up 
to three times. The first review will consider whether the project has 
been assigned the appropriate environmental category by the MDB. This 
review will take place as far in advance as possible of Board 
consideration of the project. The second review will consider the EIA 
Summary or the EIA (or information discussed in Sec. 26.5(b)(1)), and 
comments received from the public on such documentation. The third WGMA 
review, which will take place shortly before Board consideration of the 
project, will consider the position of the U.S. Government on the 
project.



Sec. 26.5  Upgrades and additional environmental information.

    (a) Environmental category upgrades. If the WGMA and the Department 
of the Treasury determine that a project would have a significant impact 
on the human environment, but that the level of environmental analysis 
planned by the MDB is insufficient, the Department of the Treasury will 
instruct the United States Executive Director of the concerned MDB to 
request that the MDB upgrade the project to an environmental category 
requiring additional environmental analysis. Members of the public may 
call the MDB Office to inquire about upgrade requests for specific 
projects.
    (b) Additional environmental information. (1) If the WGMA and the 
Department of the Treasury determine on the basis of the first WGMA 
review that:
    (i) A MDB project would have a significant impact on the human 
environment, and
    (ii) The MDB appears to have made an appropriate decision that such 
project merits environmental analysis, but less than a full-fledged 
environmental impact assessment as defined by that MDB's own procedures, 
the Department of the Treasury will obtain, through the United States 
Executive Director of the concerned MDB, such environmental information 
from the MDB (e.g., environmental chapters from project feasibility 
studies or environmental data sheets) which contains this environmental 
analysis. The MDB Office will provide this environmental information to 
the entities described in Sec. 26.2(a).

[[Page 261]]

    (2) If such environmental information is insufficient to provide an 
adequate basis for analyzing the environmental impact of the proposed 
project and alternatives to the proposed project, the Department of the 
Treasury will instruct the United States Executive Director of the 
concerned MDB not to vote in favor of the project.



PART 27_CIVIL PENALTY ASSESSMENT FOR MISUSE OF DEPARTMENT OF THE TREASURY 

NAMES, SYMBOLS, ETC.--Table of Contents




Sec.
27.1 Purpose.
27.2 Definitions.
27.3 Assessment of civil penalties.
27.4 Factors to be considered.
27.5 Initial Notice of Assessment.
27.6 Written response.
27.7 Final Notice of Assessment.
27.8 Judicial review.

    Authority: 31 U.S.C. 321, 333.

    Source: 62 FR 42213, Aug. 6, 1997, unless otherwise noted.



Sec. 27.1  Purpose.

    (a) The regulations in this part implement the provisions of 31 
U.S.C. 333(c), which authorizes the Secretary of the Treasury to assess 
a civil penalty against any person who has misused the words, titles, 
abbreviations, initials, symbols, emblems, seals, or badges of the 
Department of the Treasury or any subdivision thereof in violation of 31 
U.S.C. 333(a), in accordance with that section and this part.
    (b) The regulations in this part do not apply to the extent that the 
Secretary or his/her designee has specifically authorized the person to 
manufacture, produce, sell, possess, or use the words, titles, 
abbreviations, initials, symbols, emblems, seals, or badges by written 
contract, agreement, or letter.



Sec. 27.2  Definitions.

    (a) The term ``assessing official'' means:
    (1) The head of a bureau or other subdivision of the Department of 
the Treasury who has been delegated the authority to assess civil 
penalties under 31 U.S.C. 333(c); or
    (2) An officer or employee of a bureau or subdivision at the grade 
of GS-15 or above to whom such authority has been redelegated by the 
head of such bureau or subdivision.
    (b) The term ``broadcast'' or ``telecast'' mean widespread 
dissemination by electronic transmission or method, whether audio and/or 
visual.
    (c) The term ``civil penalty'' means:
    (1) A civil monetary penalty; and
    (2) Any other civil or equitable remedy deemed necessary to rectify 
the potential for a continued misuse or harm from an activity found to 
have been in violation of 31 U.S.C. 333 or this part.
    (d) The term ``date of offense'' means the later of--
    (1) The date that the misuse occurred;
    (2) The date that the misuse had the effect of conveying the false 
impression that the activity was associated with or approved, endorsed, 
sponsored or authorized by the Department or any of its subdivisions or 
officers or employees; or
    (3) If the violation is a continuing one, the date on which the 
misuse of the words, titles, abbreviations, initials, symbols, emblems, 
seals, or badges protected by this part last occurred.
    (e) The term ``days'' means calendar days, unless otherwise stated.
    (f) The term ``person'' means an individual, partnership, 
association, corporation, company, business, firm, manufacturer, or any 
other organization or institution.



Sec. 27.3  Assessment of civil penalties.

    (a) General Rule. An assessing official may impose a civil penalty 
on any person--
    (1) Who uses in connection with, or as a part of, any advertisement, 
solicitation, business activity, or product, whether alone or with other 
words, letters, symbols, or emblems;
    (i) The words ``Department of the Treasury,'' ``United States Secret 
Service,'' ``United States Customs Service,'' ``Internal Revenue 
Service,'' ``Bureau of Alcohol, Tobacco and Firearms,'' ``Bureau of the 
Public Debt,'' ``Bureau of Engraving and Printing,'' ``Comptroller of 
the Currency,'' ``Federal Law

[[Page 262]]

Enforcement Training Center,'' ``Financial Crimes Enforcement Network,'' 
``United States Mint,'' or the name of any service, bureau, office, or 
other subdivision of the Department of the Treasury;
    (ii) The titles ``Secretary of the Treasury,'' ``Treasurer of the 
United States,'' ``Director of the Secret Service,'' ``Commissioner of 
Customs,'' ``Commissioner of Internal Revenue,'' ``Director, Bureau of 
Alcohol, Tobacco and Firearms,'' ``Commissioner of the Public Debt,'' 
``Director of the Bureau of Engraving and Printing,'' ``Comptroller of 
the Currency,'' ``Director of the Federal Law Enforcement Training 
Center,'' ``Director of the Financial Crimes Enforcement Network,'' 
``Director of the United States Mint,'' or the title of any other 
officer or employee of the Department of the Treasury or subdivision 
thereof;
    (iii) The abbreviations or initials of any entity or title referred 
to in paragraph (a)(1)(i) or (a)(1)(ii) of this section, including but 
not limited to ``USSS,'' ``USCS,'' ``IRS,'' ``ATF,'' or ``BATF,'' 
``BPD,'' ``FLETC,'' ``FINCEN'' or ``FinCEN,''and ``SBMO'';
    (iv) The words ``United States Savings Bond,'' including any 
variation thereof, or the name of any other security, obligation, or 
financial instrument issued by the Department of the Treasury or any 
subdivision thereof;
    (v) Any symbol, emblem, seal, or badge of an entity referred to in 
paragraph (a)(1)(i) of this section (including the design of any 
envelope, stationery, or identification card used by such an entity); or
    (vi) Any colorable imitation of any such words, titles, 
abbreviations, initials, symbol, emblem, seal, or badge; and
    (2) Where such use is in a manner that could reasonably be 
interpreted or construed as conveying the false impression that such 
advertisement, solicitation, business activity, or product is in any 
manner approved, endorsed, sponsored, or authorized by, or associated 
with the Department of the Treasury or any entity referred to in 
paragraph (a)(1)(i) of this section, or any officer, or employee 
thereof.
    (b) Disclaimers. Any determination of whether a person has violated 
the provisions of paragraph (a) of this section shall be made without 
regard to any use of a disclaimer of affiliation with the United States 
Government or any particular agency or instrumentality thereof.
    (c) Civil Penalty. An assessing official may impose a civil penalty 
on any person who violates the provisions of paragraph (a) of this 
section. The amount of a civil monetary penalty shall not exceed $5,000 
for each and every use of any material in violation of paragraph (a), 
except that such penalty shall not exceed $25,000 for each and every use 
if such use is in a broadcast or telecast.
    (d) Time Limitations. (1) Civil penalties imposed under this part 
must be assessed before the end of the three year period beginning on 
the date of offense charged.
    (2) An assessing official may commence a civil action to recover or 
enforce any civil penalty imposed in a Final Notice of Assessment issued 
pursuant to Sec. 27.7 at any time before the end of the two year period 
beginning on the date of the Final Notice of Assessment. If judicial 
review of the Final Notice of Assessment is sought, the two year period 
begins to run from the date that a final and unappealable court order is 
issued.
    (e) Criminal Proceeding. No civil penalty may be imposed under this 
part with respect to any violation of paragraph (a) of this section 
after a criminal proceeding on the same violation has been commenced by 
indictment or information under 31 U.S.C. 333(d).



Sec. 27.4  Factors to be considered.

    The assessing official will consider relevant factors when 
determining whether to assess or impose a civil penalty under this part, 
and the amount of a civil monetary penalty. Those factors may include, 
but are not limited to, the following:
    (a) The scope of the misuse;
    (b) The purpose and/or nature of the misuse;
    (c) The extent of the harm caused by the misuse;
    (d) The circumstances of the misuse; and
    (e) The benefit intended to be derived from the misuse.

[[Page 263]]



Sec. 27.5  Initial Notice of Assessment.

    The assessing official shall serve an Initial Notice of Assessment 
by United States mail or other means upon any person believed to be in 
violation of Sec. 27.3 and otherwise subject to a civil penalty. The 
notice shall provide the name and telephone number of an agency officer 
or employee who can provide information concerning the notice and the 
provisions of this part, and shall include the following:
    (a) A specific reference to the provisions of Sec. 27.3 violated;
    (b) A concise statement of the facts that support the conclusion 
that such a violation occurred;
    (c) The amount of the penalty proposed, and/or any other proposed 
civil or equitable remedy;
    (d) A notice informing the person alleged to be in violation of 
Sec. 27.3 that he/she:
    (1) May, within 30 days of the date of the notice, pay the proposed 
civil monetary penalty and consent to each proposed civil or equitable 
remedy, thereby waiving the right to make a written response under Sec. 
27.6 and to seek judicial review under Sec. 27.8:
    (i) By electronic funds transfer (EFT) in accordance with 
instructions provided in the notice, or
    (ii) By means other than EFT only with the written approval of the 
assessing official;
    (2) May make a written response within 30 days of the date of the 
notice asserting, as appropriate:
    (i) Why a civil monetary penalty and/or other civil or equitable 
remedy should not be imposed;
    (ii) Why a civil monetary penalty should be in a lesser amount than 
proposed; and
    (iii) Why the terms of a proposed civil or equitable remedy should 
be modified;
    (3) May be represented by an attorney or other representative, 
provided that a designation of representative signed by the person 
alleged to be in violation is received by the assessing official; and
    (4) May request, within 20 days of the date of the notice, a copy of 
or opportunity to review any documents and/or other evidence compiled 
and relied on by the agency in determining to issue the notice (the 
assessing official reserves the right to assert privileges available 
under law and may decline to disclose certain documents and/or other 
evidence); and
    (e) The Initial Notice of Assessment shall also inform the person 
that:
    (1) If no written response is received within the time allowed in 
Sec. 27.6(b), a Final Notice of Assessment may be issued without a 
presentation by the person;
    (2) If a written response has been made and it is deemed necessary, 
the assessing official may request, orally or in writing, additional 
information from the respondent;
    (3) A Final Notice of Assessment may be issued in accordance with 
Sec. 27.7 requiring that the civil monetary penalty be paid and 
compliance with the terms of any other civil or equitable remedy;
    (4) A Final Notice of Assessment is subject to judicial review in 
accordance with 5 U.S.C. 701 et seq.; and
    (5) All submissions sent in response to the Initial
    Notice of Assessment must be transmitted to the address specified in 
the notice and include the name, address, and telephone number of the 
respondent.



Sec. 27.6  Written response.

    (a)(1) A person served with an Initial Notice of Assessment may make 
a written response explaining why the civil penalty should not be 
imposed, explaining why a civil monetary penalty should be in a lesser 
amount than proposed and/or explaining why the terms of a proposed civil 
or equitable remedy should be modified. The written response must 
provide:
    (i) A reference to and specifically identify the Initial Notice of 
Assessment involved;
    (ii) The full name of the person charged;
    (iii) If not a natural person, the name and title of the head of the 
organization charged; and
    (iv) If a representative of the person charged is filing the written 
response, a copy of the duly executed designation as representative.
    (2) The written response must admit or deny each violation of Sec. 
27.3 charged

[[Page 264]]

in the Initial Notice of Assessment. Any charge not specifically denied 
will be presumed to be admitted. Where a charge is denied, the 
respondent shall specifically set forth the legal or factual basis upon 
which the charge is denied. If the basis of the written response is that 
the person charged is not the person responsible for the misuse(s) 
charged, the written response must set forth sufficient information to 
allow the agency to determine the truth of such an assertion. The 
written response should include any and all documents and/or other 
information that the respondent believes should be a part of the 
administrative record on the matter.
    (b) Time. (1) Except as provided in paragraph (b)(2) of this 
section, any written response made under this paragraph must be received 
not later than 30 days after the date of the Initial Notice of 
Assessment.
    (2) If a request for documents or other evidence is made pursuant to 
Sec. 27.5(d)(4), the written response must be received not later than 
20 days after the date of the Department's response to the request.
    (3)(i) In computing the number of days allowed for filing a written 
response under this paragraph, the first day counted is the day after 
the date of the Initial Notice of Assessment. If the last date on which 
the response is required to be filed by this paragraph is a Saturday, 
Sunday or Federal holiday, the response will be due on the next weekday 
after that date.
    (ii) If a response is transmitted by United States mail, it will be 
deemed timely filed if postmarked on or before the due date.
    (4) The assessing official may extend the period for making a 
written response under paragraphs (b)(1) and (b)(2) for good cause 
shown. Generally, failure to obtain representation in a timely manner 
will not be considered good cause.
    (c) Filing. A written response will be considered filed on the date 
received at the address specified in the Initial Notice of Assessment. 
The response may be sent by personal delivery, United States mail or 
commercial delivery. At the discretion of the assessing official, filing 
may be accomplished by facsimile or any other method deemed appropriate.
    (d) The assessing official will fully consider the facts and 
arguments submitted by the respondent in the written response and any 
other documents filed pursuant to this paragraph in determining whether 
to issue a Final Notice of Assessment under Sec. 27.7, the appropriate 
amount of the civil monetary penalty imposed and the terms of any other 
appropriate civil or equitable remedy.



Sec. 27.7  Final Notice of Assessment.

    (a) In making a final determination whether to impose a penalty, the 
assessing official shall take into consideration all available 
information in the administrative record on the matter, including all 
information provided in or with a written response timely filed by the 
respondent and any additional information provided pursuant to Sec. 
27.5(e)(2). The assessing official will determine whether:
    (1) The facts warrant a conclusion that no violation has occurred; 
or
    (2) The facts warrant a conclusion that one or more violations have 
occurred; and
    (3) The facts and violations found justify the conclusion that a 
civil penalty should be imposed.
    (b) If the assessing official determines that no violation has 
occurred, the official shall promptly send a letter indicating that 
determination to the person served with an Initial Notice of Assessment 
and to any designated representative of such person.
    (c)(1) If it has been determined that a violation has occurred, the 
assessing official shall issue a Final Notice of Assessment to the 
person served with an Initial Notice of Assessment and to any designated 
representative of such person.
    (2) The assessing official may, in his/her discretion:
    (i) Impose a civil monetary penalty and/or any civil or equitable 
remedy deemed necessary to rectify the potential for a continued misuse 
or harm from the violation(s);
    (ii) Not impose a civil monetary penalty and/or civil or equitable 
remedy; or

[[Page 265]]

    (iii) Impose a civil monetary penalty and/or civil or equitable 
remedy and condition payment of the civil monetary penalty on the 
violator's future compliance with 31 U.S.C. 333, this part and any civil 
or equitable remedy contained in the Final Notice of Assessment. If a 
civil monetary penalty is imposed, the assessing official shall 
determine the appropriate amount of the penalty in accordance with 31 
U.S.C. 333(c)(2).
    (3) The Final Notice of Assessment shall:
    (i) Include:
    (A) A specific reference to the provisions of Sec. 27.3 found to 
have been violated;
    (B) A concise statement of the facts warranting a conclusion that a 
violations has occurred;
    (C) An analysis of how the facts and violation(s) justify the 
conclusion that a civil monetary penalty and/or civil or equitable 
remedy should be imposed; and
    (D) The amount of each civil monetary penalty imposed, a statement 
as to how the amount of each penalty was determined, and the terms of 
any civil or equitable remedy deemed necessary to rectify the potential 
for a continued misuse or harm from the violation(s); and
    (ii) Inform the person that:
    (A) Payment of a civil monetary penalty imposed by the Final Notice 
of Assessment must be made within 30 days of the date of the notice, and 
that any civil or equitable remedy imposed must be complied with as 
provided in the Final Notice of Assessment;
    (B) Payment of a civil monetary penalty imposed by the Final Notice 
of Assessment shall be by EFT in accordance with instructions provided 
in the notice, unless the assessing official has given written approval 
to have payment made by other means;
    (C) payment of a civil monetary penalty imposed by the Final Notice 
of Assessment constitutes consent by the person to comply with the terms 
of any civil or equitable remedy contained in the notice;
    (D) If payment of a civil monetary penalty imposed by the Final 
Notice of Assessment has been waived on the condition that the person 
comply with the terms of any civil or equitable remedy contained in the 
notice or comply in the future with 31 U.S.C. 333 and this part, failure 
by the person to so comply will make the civil monetary penalty payable 
on demand;
    (E) If a civil monetary penalty is not paid within 30 days of the 
date of the Final Notice of Assessment (or on demand under paragraph 
(C)(3)(ii)(D) of this sectiion), or if a civil or equitable remedy is 
not complied with in accordance with the terms of the notice, a civil 
action to collect the penalty or enforce compliance may be commenced at 
any time within two years of the date of the Final Notice of Assessment; 
and
    (F) Any civil monetary penalty and civil or equitable remedy imposed 
by the Final Notice of Assessment may be subject to judicial review in 
accordance with 5 U.S.C. 701 et seq.

[62 FR 42213, Aug. 6, 1997; 62 FR 44036, Aug. 18, 1997]



Sec. 27.8  Judicial review.

    A final Notice of Assessment issued under this party may be subject 
to judicial review pursuant to 5 U.S.C. 701 et seq.



PART 28_NONDISCRIMINATION ON THE BASIS OF SEX IN EDUCATION PROGRAMS OR 

ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                         Subpart A_Introduction

Sec.
28.100 Purpose and effective date.
28.105 Definitions.
28.110 Remedial and affirmative action and self-evaluation.
28.115 Assurance required.
28.120 Transfers of property.
28.125 Effect of other requirements.
28.130 Effect of employment opportunities.
28.135 Designation of responsible employee and adoption of grievance 
          procedures.
28.140 Dissemination of policy.

                           Subpart B_Coverage

28.200 Application.
28.205 Educational institutions and other entities controlled by 
          religious organizations.
28.210 Military and merchant marine educational institutions.

[[Page 266]]

28.215 Membership practices of certain organizations.
28.220 Admissions.
28.225 Educational institutions eligible to submit transition plans.
28.230 Transition plans.
28.235 Statutory amendments.

     Subpart C_Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited

28.300 Admission.
28.305 Preference in admission.
28.310 Recruitment.

 Subpart D_Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited

28.400 Education programs or activities.
28.405 Housing.
28.410 Comparable facilities.
28.415 Access to course offerings.
28.420 Access to schools operated by LEAs.
28.425 Counseling and use of appraisal and counseling materials.
28.430 Financial assistance.
28.435 Employment assistance to students.
28.440 Health and insurance benefits and services.
28.445 Marital or parental status.
28.450 Athletics.
28.455 Textbooks and curricular material.

Subpart E_Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited

28.500 Employment.
28.505 Employment criteria.
28.510 Recruitment.
28.515 Compensation.
28.520 Job classification and structure.
28.525 Fringe benefits.
28.530 Marital or parental status.
28.535 Effect of state or local law or other requirements.
28.540 Advertising.
28.545 Pre-employment inquiries.
28.550 Sex as a bona fide occupational qualification.

                          Subpart F_Procedures

28.600 Notice of covered programs.
28.605 Compliance information.
28.610 Conduct of investigations.
28.615 Procedure for effecting compliance.
28.620 Hearings.
28.625 Decisions and notices.
28.630 Judicial review.
28.635 Forms and instructions; coordination.

    Authority: 20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 1688.

    Source: 65 FR 52865, 52881, Aug. 30, 2000, unless otherwise noted.



                         Subpart A_Introduction



Sec. 28.100  Purpose and effective date.

    The purpose of these Title IX regulations is to effectuate Title IX 
of the Education Amendments of 1972, as amended (except sections 904 and 
906 of those Amendments) (20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 
1688), which is designed to eliminate (with certain exceptions) 
discrimination on the basis of sex in any education program or activity 
receiving Federal financial assistance, whether or not such program or 
activity is offered or sponsored by an educational institution as 
defined in these Title IX regulations. The effective date of these Title 
IX regulations shall be September 29, 2000.



Sec. 28.105  Definitions.

    As used in these Title IX regulations, the term:
    Administratively separate unit means a school, department, or 
college of an educational institution (other than a local educational 
agency) admission to which is independent of admission to any other 
component of such institution.
    Admission means selection for part-time, full-time, special, 
associate, transfer, exchange, or any other enrollment, membership, or 
matriculation in or at an education program or activity operated by a 
recipient.
    Applicant means one who submits an application, request, or plan 
required to be approved by an official of the Federal agency that awards 
Federal financial assistance, or by a recipient, as a condition to 
becoming a recipient.
    Department means Department of the Treasury.
    Designated agency official means Assistant Secretary for Management 
and Chief Financial Officer.
    Educational institution means a local educational agency (LEA) as 
defined by 20 U.S.C. 8801(18), a preschool, a private elementary or 
secondary school, or an applicant or recipient that is an institution of 
graduate higher education, an institution of undergraduate higher 
education, an institution of professional education, or an institution 
of

[[Page 267]]

vocational education, as defined in this section.
    Federal financial assistance means any of the following, when 
authorized or extended under a law administered by the Federal agency 
that awards such assistance:
    (1) A grant or loan of Federal financial assistance, including funds 
made available for:
    (i) The acquisition, construction, renovation, restoration, or 
repair of a building or facility or any portion thereof; and
    (ii) Scholarships, loans, grants, wages, or other funds extended to 
any entity for payment to or on behalf of students admitted to that 
entity, or extended directly to such students for payment to that 
entity.
    (2) A grant of Federal real or personal property or any interest 
therein, including surplus property, and the proceeds of the sale or 
transfer of such property, if the Federal share of the fair market value 
of the property is not, upon such sale or transfer, properly accounted 
for to the Federal Government.
    (3) Provision of the services of Federal personnel.
    (4) Sale or lease of Federal property or any interest therein at 
nominal consideration, or at consideration reduced for the purpose of 
assisting the recipient or in recognition of public interest to be 
served thereby, or permission to use Federal property or any interest 
therein without consideration.
    (5) Any other contract, agreement, or arrangement that has as one of 
its purposes the provision of assistance to any education program or 
activity, except a contract of insurance or guaranty.
    Institution of graduate higher education means an institution that:
    (1) Offers academic study beyond the bachelor of arts or bachelor of 
science degree, whether or not leading to a certificate of any higher 
degree in the liberal arts and sciences;
    (2) Awards any degree in a professional field beyond the first 
professional degree (regardless of whether the first professional degree 
in such field is awarded by an institution of undergraduate higher 
education or professional education); or
    (3) Awards no degree and offers no further academic study, but 
operates ordinarily for the purpose of facilitating research by persons 
who have received the highest graduate degree in any field of study.
    Institution of professional education means an institution (except 
any institution of undergraduate higher education) that offers a program 
of academic study that leads to a first professional degree in a field 
for which there is a national specialized accrediting agency recognized 
by the Secretary of Education.
    Institution of undergraduate higher education means:
    (1) An institution offering at least two but less than four years of 
college-level study beyond the high school level, leading to a diploma 
or an associate degree, or wholly or principally creditable toward a 
baccalaureate degree; or
    (2) An institution offering academic study leading to a 
baccalaureate degree; or
    (3) An agency or body that certifies credentials or offers degrees, 
but that may or may not offer academic study.
    Institution of vocational education means a school or institution 
(except an institution of professional or graduate or undergraduate 
higher education) that has as its primary purpose preparation of 
students to pursue a technical, skilled, or semiskilled occupation or 
trade, or to pursue study in a technical field, whether or not the 
school or institution offers certificates, diplomas, or degrees and 
whether or not it offers full-time study.
    Recipient means any State or political subdivision thereof, or any 
instrumentality of a State or political subdivision thereof, any public 
or private agency, institution, or organization, or other entity, or any 
person, to whom Federal financial assistance is extended directly or 
through another recipient and that operates an education program or 
activity that receives such assistance, including any subunit, 
successor, assignee, or transferee thereof.
    Reviewing authority means that component of the Department delegated 
authority to review the decisions of hearing officers in cases arising 
under these Title IX regulations.

[[Page 268]]

    Secretary means Secretary of the Treasury.
    Student means a person who has gained admission.
    Title IX means Title IX of the Education Amendments of 1972, Public 
Law 92-318, 86 Stat. 235, 373 (codified as amended at 20 U.S.C. 1681-
1688) (except sections 904 and 906 thereof), as amended by section 3 of 
Public Law 93-568, 88 Stat. 1855, by section 412 of the Education 
Amendments of 1976, Public Law 94-482, 90 Stat. 2234, and by Section 3 
of Public Law 100-259, 102 Stat. 28, 28-29 (20 U.S.C. 1681, 1682, 1683, 
1685, 1686, 1687, 1688).
    Title IX regulations means the provisions set forth at Sec. Sec. 
28.100 through 28.635.
    Transition plan means a plan subject to the approval of the 
Secretary of Education pursuant to section 901(a)(2) of the Education 
Amendments of 1972, 20 U.S.C. 1681(a)(2), under which an educational 
institution operates in making the transition from being an educational 
institution that admits only students of one sex to being one that 
admits students of both sexes without discrimination.

[65 FR 52865, 52881, 52882, Aug. 30, 2000]



Sec. 28.110  Remedial and affirmative action and self-evaluation.

    (a) Remedial action. If the designated agency official finds that a 
recipient has discriminated against persons on the basis of sex in an 
education program or activity, such recipient shall take such remedial 
action as the designated agency official deems necessary to overcome the 
effects of such discrimination.
    (b) Affirmative action. In the absence of a finding of 
discrimination on the basis of sex in an education program or activity, 
a recipient may take affirmative action consistent with law to overcome 
the effects of conditions that resulted in limited participation therein 
by persons of a particular sex. Nothing in these Title IX regulations 
shall be interpreted to alter any affirmative action obligations that a 
recipient may have under Executive Order 11246, 3 CFR, 1964-1965 Comp., 
p. 339; as amended by Executive Order 11375, 3 CFR, 1966-1970 Comp., p. 
684; as amended by Executive Order 11478, 3 CFR, 1966-1970 Comp., p. 
803; as amended by Executive Order 12086, 3 CFR, 1978 Comp., p. 230; as 
amended by Executive Order 12107, 3 CFR, 1978 Comp., p. 264.
    (c) Self-evaluation. Each recipient education institution shall, 
within one year of September 29, 2000:
    (1) Evaluate, in terms of the requirements of these Title IX 
regulations, its current policies and practices and the effects thereof 
concerning admission of students, treatment of students, and employment 
of both academic and non-academic personnel working in connection with 
the recipient's education program or activity;
    (2) Modify any of these policies and practices that do not or may 
not meet the requirements of these Title IX regulations; and
    (3) Take appropriate remedial steps to eliminate the effects of any 
discrimination that resulted or may have resulted from adherence to 
these policies and practices.
    (d) Availability of self-evaluation and related materials. 
Recipients shall maintain on file for at least three years following 
completion of the evaluation required under paragraph (c) of this 
section, and shall provide to the designated agency official upon 
request, a description of any modifications made pursuant to paragraph 
(c)(2) of this section and of any remedial steps taken pursuant to 
paragraph (c)(3) of this section.



Sec. 28.115  Assurance required.

    (a) General. Either at the application stage or the award stage, 
Federal agencies must ensure that applications for Federal financial 
assistance or awards of Federal financial assistance contain, be 
accompanied by, or be covered by a specifically identified assurance 
from the applicant or recipient, satisfactory to the designated agency 
official, that each education program or activity operated by the 
applicant or recipient and to which these Title IX regulations apply 
will be operated in compliance with these Title IX regulations. An 
assurance of compliance with these Title IX regulations shall not be 
satisfactory to the designated agency official if the applicant or 
recipient to whom such assurance applies fails to commit itself to take 
whatever remedial action is

[[Page 269]]

necessary in accordance with Sec. 28.110(a) to eliminate existing 
discrimination on the basis of sex or to eliminate the effects of past 
discrimination whether occurring prior to or subsequent to the 
submission to the designated agency official of such assurance.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended to provide real property or structures thereon, such 
assurance shall obligate the recipient or, in the case of a subsequent 
transfer, the transferee, for the period during which the real property 
or structures are used to provide an education program or activity.
    (2) In the case of Federal financial assistance extended to provide 
personal property, such assurance shall obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases such assurance shall obligate the recipient 
for the period during which Federal financial assistance is extended.
    (c) Form. (1) The assurances required by paragraph (a) of this 
section, which may be included as part of a document that addresses 
other assurances or obligations, shall include that the applicant or 
recipient will comply with all applicable Federal statutes relating to 
nondiscrimination. These include but are not limited to: Title IX of the 
Education Amendments of 1972, as amended (20 U.S.C. 1681-1683, 1685-
1688).
    (2) The designated agency official will specify the extent to which 
such assurances will be required of the applicant's or recipient's 
subgrantees, contractors, subcontractors, transferees, or successors in 
interest.



Sec. 28.120  Transfers of property.

    If a recipient sells or otherwise transfers property financed in 
whole or in part with Federal financial assistance to a transferee that 
operates any education program or activity, and the Federal share of the 
fair market value of the property is not upon such sale or transfer 
properly accounted for to the Federal Government, both the transferor 
and the transferee shall be deemed to be recipients, subject to the 
provisions of Sec. Sec. 28.205 through 28.235(a).



Sec. 28.125  Effect of other requirements.

    (a) Effect of other Federal provisions. The obligations imposed by 
these Title IX regulations are independent of, and do not alter, 
obligations not to discriminate on the basis of sex imposed by Executive 
Order 11246, 3 CFR, 1964-1965 Comp., p. 339; as amended by Executive 
Order 11375, 3 CFR, 1966-1970 Comp., p. 684; as amended by Executive 
Order 11478, 3 CFR, 1966-1970 Comp., p. 803; as amended by Executive 
Order 12087, 3 CFR, 1978 Comp., p. 230; as amended by Executive Order 
12107, 3 CFR, 1978 Comp., p. 264; sections 704 and 855 of the Public 
Health Service Act (42 U.S.C. 295m, 298b-2); Title VII of the Civil 
Rights Act of 1964 (42 U.S.C. 2000e et seq.); the Equal Pay Act of 1963 
(29 U.S.C. 206); and any other Act of Congress or Federal regulation.
    (b) Effect of State or local law or other requirements. The 
obligation to comply with these Title IX regulations is not obviated or 
alleviated by any State or local law or other requirement that would 
render any applicant or student ineligible, or limit the eligibility of 
any applicant or student, on the basis of sex, to practice any 
occupation or profession.
    (c) Effect of rules or regulations of private organizations. The 
obligation to comply with these Title IX regulations is not obviated or 
alleviated by any rule or regulation of any organization, club, athletic 
or other league, or association that would render any applicant or 
student ineligible to participate or limit the eligibility or 
participation of any applicant or student, on the basis of sex, in any 
education program or activity operated by a recipient and that receives 
Federal financial assistance.



Sec. 28.130  Effect of employment opportunities.

    The obligation to comply with these Title IX regulations is not 
obviated or alleviated because employment opportunities in any 
occupation or profession are or may be more limited for members of one 
sex than for members of the other sex.

[[Page 270]]



Sec. 28.135  Designation of responsible employee and adoption of grievance 

procedures.

    (a) Designation of responsible employee. Each recipient shall 
designate at least one employee to coordinate its efforts to comply with 
and carry out its responsibilities under these Title IX regulations, 
including any investigation of any complaint communicated to such 
recipient alleging its noncompliance with these Title IX regulations or 
alleging any actions that would be prohibited by these Title IX 
regulations. The recipient shall notify all its students and employees 
of the name, office address, and telephone number of the employee or 
employees appointed pursuant to this paragraph.
    (b) Complaint procedure of recipient. A recipient shall adopt and 
publish grievance procedures providing for prompt and equitable 
resolution of student and employee complaints alleging any action that 
would be prohibited by these Title IX regulations.



Sec. 28.140  Dissemination of policy.

    (a) Notification of policy. (1) Each recipient shall implement 
specific and continuing steps to notify applicants for admission and 
employment, students and parents of elementary and secondary school 
students, employees, sources of referral of applicants for admission and 
employment, and all unions or professional organizations holding 
collective bargaining or professional agreements with the recipient, 
that it does not discriminate on the basis of sex in the educational 
programs or activities that it operates, and that it is required by 
Title IX and these Title IX regulations not to discriminate in such a 
manner. Such notification shall contain such information, and be made in 
such manner, as the designated agency official finds necessary to 
apprise such persons of the protections against discrimination assured 
them by Title IX and these Title IX regulations, but shall state at 
least that the requirement not to discriminate in education programs or 
activities extends to employment therein, and to admission thereto 
unless Sec. Sec. 28.300 through 28.310 do not apply to the recipient, 
and that inquiries concerning the application of Title IX and these 
Title IX regulations to such recipient may be referred to the employee 
designated pursuant to Sec. 28.135, or to the designated agency 
official.
    (2) Each recipient shall make the initial notification required by 
paragraph (a)(1) of this section within 90 days of September 29, 2000 or 
of the date these Title IX regulations first apply to such recipient, 
whichever comes later, which notification shall include publication in:
    (i) Newspapers and magazines operated by such recipient or by 
student, alumnae, or alumni groups for or in connection with such 
recipient; and
    (ii) Memoranda or other written communications distributed to every 
student and employee of such recipient.
    (b) Publications. (1) Each recipient shall prominently include a 
statement of the policy described in paragraph (a) of this section in 
each announcement, bulletin, catalog, or application form that it makes 
available to any person of a type, described in paragraph (a) of this 
section, or which is otherwise used in connection with the recruitment 
of students or employees.
    (2) A recipient shall not use or distribute a publication of the 
type described in paragraph (b)(1) of this section that suggests, by 
text or illustration, that such recipient treats applicants, students, 
or employees differently on the basis of sex except as such treatment is 
permitted by these Title IX regulations.
    (c) Distribution. Each recipient shall distribute without 
discrimination on the basis of sex each publication described in 
paragraph (b)(1) of this section, and shall apprise each of its 
admission and employment recruitment representatives of the policy of 
nondiscrimination described in paragraph (a) of this section, and shall 
require such representatives to adhere to such policy.



                           Subpart B_Coverage



Sec. 28.200  Application.

    Except as provided in Sec. Sec. 28.205 through 28.235(a), these 
Title IX regulations apply to every recipient and to each education 
program or activity operated by such recipient that receives Federal 
financial assistance.

[[Page 271]]



Sec. 28.205  Educational institutions and other entities controlled by 

religious organizations.

    (a) Exemption. These Title IX regulations do not apply to any 
operation of an educational institution or other entity that is 
controlled by a religious organization to the extent that application of 
these Title IX regulations would not be consistent with the religious 
tenets of such organization.
    (b) Exemption claims. An educational institution or other entity 
that wishes to claim the exemption set forth in paragraph (a) of this 
section shall do so by submitting in writing to the designated agency 
official a statement by the highest-ranking official of the institution, 
identifying the provisions of these Title IX regulations that conflict 
with a specific tenet of the religious organization.



Sec. 28.210  Military and merchant marine educational institutions.

    These Title IX regulations do not apply to an educational 
institution whose primary purpose is the training of individuals for a 
military service of the United States or for the merchant marine.



Sec. 28.215  Membership practices of certain organizations.

    (a) Social fraternities and sororities. These Title IX regulations 
do not apply to the membership practices of social fraternities and 
sororities that are exempt from taxation under section 501(a) of the 
Internal Revenue Code of 1954, 26 U.S.C. 501(a), the active membership 
of which consists primarily of students in attendance at institutions of 
higher education.
    (b) YMCA, YWCA, Girl Scouts, Boy Scouts, and Camp Fire Girls. These 
Title IX regulations do not apply to the membership practices of the 
Young Men's Christian Association (YMCA), the Young Women's Christian 
Association (YWCA), the Girl Scouts, the Boy Scouts, and Camp Fire 
Girls.
    (c) Voluntary youth service organizations. These Title IX 
regulations do not apply to the membership practices of a voluntary 
youth service organization that is exempt from taxation under section 
501(a) of the Internal Revenue Code of 1954, 26 U.S.C. 501(a), and the 
membership of which has been traditionally limited to members of one sex 
and principally to persons of less than nineteen years of age.



Sec. 28.220  Admissions.

    (a) Admissions to educational institutions prior to June 24, 1973, 
are not covered by these Title IX regulations.
    (b) Administratively separate units. For the purposes only of this 
section, Sec. Sec. 28.225 and 28.230, and Sec. Sec. 28.300 through 
28.310, each administratively separate unit shall be deemed to be an 
educational institution.
    (c) Application of Sec. Sec. 28.300 through .310. Except as 
provided in paragraphs (d) and (e) of this section, Sec. Sec. 28.300 
through 28.310 apply to each recipient. A recipient to which Sec. Sec. 
28.300 through 28.310 apply shall not discriminate on the basis of sex 
in admission or recruitment in violation of Sec. Sec. 28.300 through 
28.310.
    (d) Educational institutions. Except as provided in paragraph (e) of 
this section as to recipients that are educational institutions, 
Sec. Sec. 28.300 through 28.310 apply only to institutions of 
vocational education, professional education, graduate higher education, 
and public institutions of undergraduate higher education.
    (e) Public institutions of undergraduate higher education. 
Sec. Sec. 28.300 through 28.310 do not apply to any public institution 
of undergraduate higher education that traditionally and continually 
from its establishment has had a policy of admitting students of only 
one sex.



Sec. 28.225  Educational institutions eligible to submit transition plans.

    (a) Application. This section applies to each educational 
institution to which Sec. Sec. 28.300 through 28.310 apply that:
    (1) Admitted students of only one sex as regular students as of June 
23, 1972; or
    (2) Admitted students of only one sex as regular students as of June 
23, 1965, but thereafter admitted, as regular students, students of the 
sex not admitted prior to June 23, 1965.
    (b) Provision for transition plans. An educational institution to 
which this section applies shall not discriminate

[[Page 272]]

on the basis of sex in admission or recruitment in violation of 
Sec. Sec. 28.300 through 28.310.



Sec. 28.230  Transition plans.

    (a) Submission of plans. An institution to which Sec. 28.225 
applies and that is composed of more than one administratively separate 
unit may submit either a single transition plan applicable to all such 
units, or a separate transition plan applicable to each such unit.
    (b) Content of plans. In order to be approved by the Secretary of 
Education, a transition plan shall:
    (1) State the name, address, and Federal Interagency Committee on 
Education Code of the educational institution submitting such plan, the 
administratively separate units to which the plan is applicable, and the 
name, address, and telephone number of the person to whom questions 
concerning the plan may be addressed. The person who submits the plan 
shall be the chief administrator or president of the institution, or 
another individual legally authorized to bind the institution to all 
actions set forth in the plan.
    (2) State whether the educational institution or administratively 
separate unit admits students of both sexes as regular students and, if 
so, when it began to do so.
    (3) Identify and describe with respect to the educational 
institution or administratively separate unit any obstacles to admitting 
students without discrimination on the basis of sex.
    (4) Describe in detail the steps necessary to eliminate as soon as 
practicable each obstacle so identified and indicate the schedule for 
taking these steps and the individual directly responsible for their 
implementation.
    (5) Include estimates of the number of students, by sex, expected to 
apply for, be admitted to, and enter each class during the period 
covered by the plan.
    (c) Nondiscrimination. No policy or practice of a recipient to which 
Sec. 28.225 applies shall result in treatment of applicants to or 
students of such recipient in violation of Sec. Sec. 28.300 through 
28.310 unless such treatment is necessitated by an obstacle identified 
in paragraph (b)(3) of this section and a schedule for eliminating that 
obstacle has been provided as required by paragraph (b)(4) of this 
section.
    (d) Effects of past exclusion. To overcome the effects of past 
exclusion of students on the basis of sex, each educational institution 
to which Sec. 28.225 applies shall include in its transition plan, and 
shall implement, specific steps designed to encourage individuals of the 
previously excluded sex to apply for admission to such institution. Such 
steps shall include instituting recruitment programs that emphasize the 
institution's commitment to enrolling students of the sex previously 
excluded.



Sec. 28.235  Statutory amendments.

    (a) This section, which applies to all provisions of these Title IX 
regulations, addresses statutory amendments to Title IX.
    (b) These Title IX regulations shall not apply to or preclude:
    (1) Any program or activity of the American Legion undertaken in 
connection with the organization or operation of any Boys State 
conference, Boys Nation conference, Girls State conference, or Girls 
Nation conference;
    (2) Any program or activity of a secondary school or educational 
institution specifically for:
    (i) The promotion of any Boys State conference, Boys Nation 
conference, Girls State conference, or Girls Nation conference; or
    (ii) The selection of students to attend any such conference;
    (3) Father-son or mother-daughter activities at an educational 
institution or in an education program or activity, but if such 
activities are provided for students of one sex, opportunities for 
reasonably comparable activities shall be provided to students of the 
other sex;
    (4) Any scholarship or other financial assistance awarded by an 
institution of higher education to an individual because such individual 
has received such award in a single-sex pageant based upon a combination 
of factors related to the individual's personal appearance, poise, and 
talent. The pageant, however, must comply with other nondiscrimination 
provisions of Federal law.

[[Page 273]]

    (c) Program or activity or program means:
    (1) All of the operations of any entity described in paragraphs 
(c)(1)(i) through (iv) of this section, any part of which is extended 
Federal financial assistance:
    (i)(A) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (B) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (ii)(A) A college, university, or other postsecondary institution, 
or a public system of higher education; or
    (B) A local educational agency (as defined in section 8801 of title 
20), system of vocational education, or other school system;
    (iii)(A) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (1) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (2) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (B) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (iv) Any other entity that is established by two or more of the 
entities described in paragraphs (c)(1)(i), (ii), or (iii) of this 
section.
    (2)(i) Program or activity does not include any operation of an 
entity that is controlled by a religious organization if the application 
of 20 U.S.C. 1681 to such operation would not be consistent with the 
religious tenets of such organization.
    (ii) For example, all of the operations of a college, university, or 
other postsecondary institution, including but not limited to 
traditional educational operations, faculty and student housing, campus 
shuttle bus service, campus restaurants, the bookstore, and other 
commercial activities are part of a ``program or activity'' subject to 
these Title IX regulations if the college, university, or other 
institution receives Federal financial assistance.
    (d)(1) Nothing in these Title IX regulations shall be construed to 
require or prohibit any person, or public or private entity, to provide 
or pay for any benefit or service, including the use of facilities, 
related to an abortion. Medical procedures, benefits, services, and the 
use of facilities, necessary to save the life of a pregnant woman or to 
address complications related to an abortion are not subject to this 
section.
    (2) Nothing in this section shall be construed to permit a penalty 
to be imposed on any person or individual because such person or 
individual is seeking or has received any benefit or service related to 
a legal abortion. Accordingly, subject to paragraph (d)(1) of this 
section, no person shall be excluded from participation in, be denied 
the benefits of, or be subjected to discrimination under any academic, 
extracurricular, research, occupational training, employment, or other 
educational program or activity operated by a recipient that receives 
Federal financial assistance because such individual has sought or 
received, or is seeking, a legal abortion, or any benefit or service 
related to a legal abortion.



     Subpart C_Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited



Sec. 28.300  Admission.

    (a) General. No person shall, on the basis of sex, be denied 
admission, or be subjected to discrimination in admission, by any 
recipient to which Sec. Sec. 28.300 through Sec. Sec. 28.310 apply, 
except as provided in Sec. Sec. 28.225 and Sec. Sec. 28.230.
    (b) Specific prohibitions. (1) In determining whether a person 
satisfies any policy or criterion for admission, or in making any offer 
of admission, a recipient to which Sec. Sec. 28.300 through 28.310 
apply shall not:
    (i) Give preference to one person over another on the basis of sex, 
by ranking

[[Page 274]]

applicants separately on such basis, or otherwise;
    (ii) Apply numerical limitations upon the number or proportion of 
persons of either sex who may be admitted; or
    (iii) Otherwise treat one individual differently from another on the 
basis of sex.
    (2) A recipient shall not administer or operate any test or other 
criterion for admission that has a disproportionately adverse effect on 
persons on the basis of sex unless the use of such test or criterion is 
shown to predict validly success in the education program or activity in 
question and alternative tests or criteria that do not have such a 
disproportionately adverse effect are shown to be unavailable.
    (c) Prohibitions relating to marital or parental status. In 
determining whether a person satisfies any policy or criterion for 
admission, or in making any offer of admission, a recipient to which 
Sec. Sec. 28.300 through 28.310 apply:
    (1) Shall not apply any rule concerning the actual or potential 
parental, family, or marital status of a student or applicant that 
treats persons differently on the basis of sex;
    (2) Shall not discriminate against or exclude any person on the 
basis of pregnancy, childbirth, termination of pregnancy, or recovery 
therefrom, or establish or follow any rule or practice that so 
discriminates or excludes;
    (3) Subject to Sec. 28.235(d), shall treat disabilities related to 
pregnancy, childbirth, termination of pregnancy, or recovery therefrom 
in the same manner and under the same policies as any other temporary 
disability or physical condition; and
    (4) Shall not make pre-admission inquiry as to the marital status of 
an applicant for admission, including whether such applicant is ``Miss'' 
or ``Mrs.'' A recipient may make pre-admission inquiry as to the sex of 
an applicant for admission, but only if such inquiry is made equally of 
such applicants of both sexes and if the results of such inquiry are not 
used in connection with discrimination prohibited by these Title IX 
regulations.



Sec. 28.305  Preference in admission.

    A recipient to which Sec. Sec. 28.300 through 28.310 apply shall 
not give preference to applicants for admission, on the basis of 
attendance at any educational institution or other school or entity that 
admits as students only or predominantly members of one sex, if the 
giving of such preference has the effect of discriminating on the basis 
of sex in violation of Sec. Sec. 28.300 through 28.310.



Sec. 28.310  Recruitment.

    (a) Nondiscriminatory recruitment. A recipient to which Sec. Sec. 
28.300 through 28.310 apply shall not discriminate on the basis of sex 
in the recruitment and admission of students. A recipient may be 
required to undertake additional recruitment efforts for one sex as 
remedial action pursuant to Sec. 28.110(a), and may choose to undertake 
such efforts as affirmative action pursuant to Sec. 28.110(b).
    (b) Recruitment at certain institutions. A recipient to which 
Sec. Sec. 28.300 through 28.310 apply shall not recruit primarily or 
exclusively at educational institutions, schools, or entities that admit 
as students only or predominantly members of one sex, if such actions 
have the effect of discriminating on the basis of sex in violation of 
Sec. Sec. 28.300 through 28.310.



 Subpart D_Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited



Sec. 28.400  Education programs or activities.

    (a) General. Except as provided elsewhere in these Title IX 
regulations, no person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, or be subjected to 
discrimination under any academic, extracurricular, research, 
occupational training, or other education program or activity operated 
by a recipient that receives Federal financial assistance. Sections 
28.400 through 28.455 do not apply to actions of a recipient in 
connection with admission of its students to an education program or 
activity of a recipient to which Sec. Sec. 28.300 through 28.310 do not 
apply, or an entity, not a recipient, to which Sec. Sec. 28.300 through 
28.310 would not apply if the entity were a recipient.

[[Page 275]]

    (b) Specific prohibitions. Except as provided in Sec. Sec. 28.400 
through 28.455, in providing any aid, benefit, or service to a student, 
a recipient shall not, on the basis of sex:
    (1) Treat one person differently from another in determining whether 
such person satisfies any requirement or condition for the provision of 
such aid, benefit, or service;
    (2) Provide different aid, benefits, or services or provide aid, 
benefits, or services in a different manner;
    (3) Deny any person any such aid, benefit, or service;
    (4) Subject any person to separate or different rules of behavior, 
sanctions, or other treatment;
    (5) Apply any rule concerning the domicile or residence of a student 
or applicant, including eligibility for in-state fees and tuition;
    (6) Aid or perpetuate discrimination against any person by providing 
significant assistance to any agency, organization, or person that 
discriminates on the basis of sex in providing any aid, benefit, or 
service to students or employees;
    (7) Otherwise limit any person in the enjoyment of any right, 
privilege, advantage, or opportunity.
    (c) Assistance administered by a recipient educational institution 
to study at a foreign institution. A recipient educational institution 
may administer or assist in the administration of scholarships, 
fellowships, or other awards established by foreign or domestic wills, 
trusts, or similar legal instruments, or by acts of foreign governments 
and restricted to members of one sex, that are designed to provide 
opportunities to study abroad, and that are awarded to students who are 
already matriculating at or who are graduates of the recipient 
institution; Provided, that a recipient educational institution that 
administers or assists in the administration of such scholarships, 
fellowships, or other awards that are restricted to members of one sex 
provides, or otherwise makes available, reasonable opportunities for 
similar studies for members of the other sex. Such opportunities may be 
derived from either domestic or foreign sources.
    (d) Aids, benefits or services not provided by recipient. (1) This 
paragraph (d) applies to any recipient that requires participation by 
any applicant, student, or employee in any education program or activity 
not operated wholly by such recipient, or that facilitates, permits, or 
considers such participation as part of or equivalent to an education 
program or activity operated by such recipient, including participation 
in educational consortia and cooperative employment and student-teaching 
assignments.
    (2) Such recipient:
    (i) Shall develop and implement a procedure designed to assure 
itself that the operator or sponsor of such other education program or 
activity takes no action affecting any applicant, student, or employee 
of such recipient that these Title IX regulations would prohibit such 
recipient from taking; and
    (ii) Shall not facilitate, require, permit, or consider such 
participation if such action occurs.



Sec. 28.405  Housing.

    (a) Generally. A recipient shall not, on the basis of sex, apply 
different rules or regulations, impose different fees or requirements, 
or offer different services or benefits related to housing, except as 
provided in this section (including housing provided only to married 
students).
    (b) Housing provided by recipient. (1) A recipient may provide 
separate housing on the basis of sex.
    (2) Housing provided by a recipient to students of one sex, when 
compared to that provided to students of the other sex, shall be as a 
whole:
    (i) Proportionate in quantity to the number of students of that sex 
applying for such housing; and
    (ii) Comparable in quality and cost to the student.
    (c) Other housing. (1) A recipient shall not, on the basis of sex, 
administer different policies or practices concerning occupancy by its 
students of housing other than that provided by such recipient.
    (2)(i) A recipient which, through solicitation, listing, approval of 
housing, or otherwise, assists any agency, organization, or person in 
making housing available to any of its students, shall

[[Page 276]]

take such reasonable action as may be necessary to assure itself that 
such housing as is provided to students of one sex, when compared to 
that provided to students of the other sex, is as a whole:
    (A) Proportionate in quantity; and
    (B) Comparable in quality and cost to the student.
    (ii) A recipient may render such assistance to any agency, 
organization, or person that provides all or part of such housing to 
students of only one sex.



Sec. 28.410  Comparable facilities.

    A recipient may provide separate toilet, locker room, and shower 
facilities on the basis of sex, but such facilities provided for 
students of one sex shall be comparable to such facilities provided for 
students of the other sex.



Sec. 28.415  Access to course offerings.

    (a) A recipient shall not provide any course or otherwise carry out 
any of its education program or activity separately on the basis of sex, 
or require or refuse participation therein by any of its students on 
such basis, including health, physical education, industrial, business, 
vocational, technical, home economics, music, and adult education 
courses.
    (b)(1) With respect to classes and activities in physical education 
at the elementary school level, the recipient shall comply fully with 
this section as expeditiously as possible but in no event later than one 
year from September 29, 2000. With respect to physical education classes 
and activities at the secondary and post-secondary levels, the recipient 
shall comply fully with this section as expeditiously as possible but in 
no event later than three years from September 29, 2000.
    (2) This section does not prohibit grouping of students in physical 
education classes and activities by ability as assessed by objective 
standards of individual performance developed and applied without regard 
to sex.
    (3) This section does not prohibit separation of students by sex 
within physical education classes or activities during participation in 
wrestling, boxing, rugby, ice hockey, football, basketball, and other 
sports the purpose or major activity of which involves bodily contact.
    (4) Where use of a single standard of measuring skill or progress in 
a physical education class has an adverse effect on members of one sex, 
the recipient shall use appropriate standards that do not have such 
effect.
    (5) Portions of classes in elementary and secondary schools, or 
portions of education programs or activities, that deal exclusively with 
human sexuality may be conducted in separate sessions for boys and 
girls.
    (6) Recipients may make requirements based on vocal range or quality 
that may result in a chorus or choruses of one or predominantly one sex.



Sec. 28.420  Access to schools operated by LEAs.

    A recipient that is a local educational agency shall not, on the 
basis of sex, exclude any person from admission to:
    (a) Any institution of vocational education operated by such 
recipient; or
    (b) Any other school or educational unit operated by such recipient, 
unless such recipient otherwise makes available to such person, pursuant 
to the same policies and criteria of admission, courses, services, and 
facilities comparable to each course, service, and facility offered in 
or through such schools.



Sec. 28.425  Counseling and use of appraisal and counseling materials.

    (a) Counseling. A recipient shall not discriminate against any 
person on the basis of sex in the counseling or guidance of students or 
applicants for admission.
    (b) Use of appraisal and counseling materials. A recipient that uses 
testing or other materials for appraising or counseling students shall 
not use different materials for students on the basis of their sex or 
use materials that permit or require different treatment of students on 
such basis unless such different materials cover the same occupations 
and interest areas and the use of such different materials is shown to 
be essential to eliminate sex bias. Recipients shall develop and use 
internal procedures for ensuring that such materials do not discriminate 
on the basis

[[Page 277]]

of sex. Where the use of a counseling test or other instrument results 
in a substantially disproportionate number of members of one sex in any 
particular course of study or classification, the recipient shall take 
such action as is necessary to assure itself that such disproportion is 
not the result of discrimination in the instrument or its application.
    (c) Disproportion in classes. Where a recipient finds that a 
particular class contains a substantially disproportionate number of 
individuals of one sex, the recipient shall take such action as is 
necessary to assure itself that such disproportion is not the result of 
discrimination on the basis of sex in counseling or appraisal materials 
or by counselors.



Sec. 28.430  Financial assistance.

    (a) General. Except as provided in paragraphs (b) and (c) of this 
section, in providing financial assistance to any of its students, a 
recipient shall not:
    (1) On the basis of sex, provide different amounts or types of such 
assistance, limit eligibility for such assistance that is of any 
particular type or source, apply different criteria, or otherwise 
discriminate;
    (2) Through solicitation, listing, approval, provision of 
facilities, or other services, assist any foundation, trust, agency, 
organization, or person that provides assistance to any of such 
recipient's students in a manner that discriminates on the basis of sex; 
or
    (3) Apply any rule or assist in application of any rule concerning 
eligibility for such assistance that treats persons of one sex 
differently from persons of the other sex with regard to marital or 
parental status.
    (b) Financial aid established by certain legal instruments. (1) A 
recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established pursuant to domestic or foreign wills, trusts, bequests, or 
similar legal instruments or by acts of a foreign government that 
require that awards be made to members of a particular sex specified 
therein; Provided, that the overall effect of the award of such sex-
restricted scholarships, fellowships, and other forms of financial 
assistance does not discriminate on the basis of sex.
    (2) To ensure nondiscriminatory awards of assistance as required in 
paragraph (b)(1) of this section, recipients shall develop and use 
procedures under which:
    (i) Students are selected for award of financial assistance on the 
basis of nondiscriminatory criteria and not on the basis of availability 
of funds restricted to members of a particular sex;
    (ii) An appropriate sex-restricted scholarship, fellowship, or other 
form of financial assistance is allocated to each student selected under 
paragraph (b)(2)(i) of this section; and
    (iii) No student is denied the award for which he or she was 
selected under paragraph (b)(2)(i) of this section because of the 
absence of a scholarship, fellowship, or other form of financial 
assistance designated for a member of that student's sex.
    (c) Athletic scholarships. (1) To the extent that a recipient awards 
athletic scholarships or grants-in-aid, it must provide reasonable 
opportunities for such awards for members of each sex in proportion to 
the number of students of each sex participating in interscholastic or 
intercollegiate athletics.
    (2) A recipient may provide separate athletic scholarships or 
grants-in-aid for members of each sex as part of separate athletic teams 
for members of each sex to the extent consistent with this paragraph (c) 
and Sec. 28.450.



Sec. 28.435  Employment assistance to students.

    (a) Assistance by recipient in making available outside employment. 
A recipient that assists any agency, organization, or person in making 
employment available to any of its students:
    (1) Shall assure itself that such employment is made available 
without discrimination on the basis of sex; and
    (2) Shall not render such services to any agency, organization, or 
person that discriminates on the basis of sex in its employment 
practices.
    (b) Employment of students by recipients. A recipient that employs 
any of its students shall not do so in a manner that violates Sec. Sec. 
28.500 through 28.550.

[[Page 278]]



Sec. 28.440  Health and insurance benefits and services.

    Subject to Sec. 28.235(d), in providing a medical, hospital, 
accident, or life insurance benefit, service, policy, or plan to any of 
its students, a recipient shall not discriminate on the basis of sex, or 
provide such benefit, service, policy, or plan in a manner that would 
violate Sec. Sec. 28.500 through 28.550 if it were provided to 
employees of the recipient. This section shall not prohibit a recipient 
from providing any benefit or service that may be used by a different 
proportion of students of one sex than of the other, including family 
planning services. However, any recipient that provides full coverage 
health service shall provide gynecological care.



Sec. 28.445  Marital or parental status.

    (a) Status generally. A recipient shall not apply any rule 
concerning a student's actual or potential parental, family, or marital 
status that treats students differently on the basis of sex.
    (b) Pregnancy and related conditions. (1) A recipient shall not 
discriminate against any student, or exclude any student from its 
education program or activity, including any class or extracurricular 
activity, on the basis of such student's pregnancy, childbirth, false 
pregnancy, termination of pregnancy, or recovery therefrom, unless the 
student requests voluntarily to participate in a separate portion of the 
program or activity of the recipient.
    (2) A recipient may require such a student to obtain the 
certification of a physician that the student is physically and 
emotionally able to continue participation as long as such a 
certification is required of all students for other physical or 
emotional conditions requiring the attention of a physician.
    (3) A recipient that operates a portion of its education program or 
activity separately for pregnant students, admittance to which is 
completely voluntary on the part of the student as provided in paragraph 
(b)(1) of this section, shall ensure that the separate portion is 
comparable to that offered to non-pregnant students.
    (4) Subject to Sec. 28.235(d), a recipient shall treat pregnancy, 
childbirth, false pregnancy, termination of pregnancy and recovery 
therefrom in the same manner and under the same policies as any other 
temporary disability with respect to any medical or hospital benefit, 
service, plan, or policy that such recipient administers, operates, 
offers, or participates in with respect to students admitted to the 
recipient's educational program or activity.
    (5) In the case of a recipient that does not maintain a leave policy 
for its students, or in the case of a student who does not otherwise 
qualify for leave under such a policy, a recipient shall treat 
pregnancy, childbirth, false pregnancy, termination of pregnancy, and 
recovery therefrom as a justification for a leave of absence for as long 
a period of time as is deemed medically necessary by the student's 
physician, at the conclusion of which the student shall be reinstated to 
the status that she held when the leave began.



Sec. 28.450  Athletics.

    (a) General. No person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, be treated differently from 
another person, or otherwise be discriminated against in any 
interscholastic, intercollegiate, club, or intramural athletics offered 
by a recipient, and no recipient shall provide any such athletics 
separately on such basis.
    (b) Separate teams. Notwithstanding the requirements of paragraph 
(a) of this section, a recipient may operate or sponsor separate teams 
for members of each sex where selection for such teams is based upon 
competitive skill or the activity involved is a contact sport. However, 
where a recipient operates or sponsors a team in a particular sport for 
members of one sex but operates or sponsors no such team for members of 
the other sex, and athletic opportunities for members of that sex have 
previously been limited, members of the excluded sex must be allowed to 
try out for the team offered unless the sport involved is a contact 
sport. For the purposes of these Title IX regulations, contact sports 
include boxing, wrestling, rugby, ice hockey, football, basketball, and 
other sports the purpose or major activity of which involves bodily 
contact.

[[Page 279]]

    (c) Equal opportunity. (1) A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics shall 
provide equal athletic opportunity for members of both sexes. In 
determining whether equal opportunities are available, the designated 
agency official will consider, among other factors:
    (i) Whether the selection of sports and levels of competition 
effectively accommodate the interests and abilities of members of both 
sexes;
    (ii) The provision of equipment and supplies;
    (iii) Scheduling of games and practice time;
    (iv) Travel and per diem allowance;
    (v) Opportunity to receive coaching and academic tutoring;
    (vi) Assignment and compensation of coaches and tutors;
    (vii) Provision of locker rooms, practice, and competitive 
facilities;
    (viii) Provision of medical and training facilities and services;
    (ix) Provision of housing and dining facilities and services;
    (x) Publicity.
    (2) For purposes of paragraph (c)(1) of this section, unequal 
aggregate expenditures for members of each sex or unequal expenditures 
for male and female teams if a recipient operates or sponsors separate 
teams will not constitute noncompliance with this section, but the 
designated agency official may consider the failure to provide necessary 
funds for teams for one sex in assessing equality of opportunity for 
members of each sex.
    (d) Adjustment period. A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics at the 
elementary school level shall comply fully with this section as 
expeditiously as possible but in no event later than one year from 
September 29, 2000. A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics at the 
secondary or postsecondary school level shall comply fully with this 
section as expeditiously as possible but in no event later than three 
years from September 29, 2000.



Sec. 28.455  Textbooks and curricular material.

    Nothing in these Title IX regulations shall be interpreted as 
requiring or prohibiting or abridging in any way the use of particular 
textbooks or curricular materials.



Subpart E_Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited



Sec. 28.500  Employment.

    (a) General. (1) No person shall, on the basis of sex, be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination in employment, or recruitment, consideration, or 
selection therefor, whether full-time or part-time, under any education 
program or activity operated by a recipient that receives Federal 
financial assistance.
    (2) A recipient shall make all employment decisions in any education 
program or activity operated by such recipient in a nondiscriminatory 
manner and shall not limit, segregate, or classify applicants or 
employees in any way that could adversely affect any applicant's or 
employee's employment opportunities or status because of sex.
    (3) A recipient shall not enter into any contractual or other 
relationship which directly or indirectly has the effect of subjecting 
employees or students to discrimination prohibited by Sec. Sec. 28.500 
through 28.550, including relationships with employment and referral 
agencies, with labor unions, and with organizations providing or 
administering fringe benefits to employees of the recipient.
    (4) A recipient shall not grant preferences to applicants for 
employment on the basis of attendance at any educational institution or 
entity that admits as students only or predominantly members of one sex, 
if the giving of such preferences has the effect of discriminating on 
the basis of sex in violation of these Title IX regulations.
    (b) Application. The provisions of Sec. Sec. 28.500 through 28.550 
apply to:
    (1) Recruitment, advertising, and the process of application for 
employment;

[[Page 280]]

    (2) Hiring, upgrading, promotion, consideration for and award of 
tenure, demotion, transfer, layoff, termination, application of nepotism 
policies, right of return from layoff, and rehiring;
    (3) Rates of pay or any other form of compensation, and changes in 
compensation;
    (4) Job assignments, classifications, and structure, including 
position descriptions, lines of progression, and seniority lists;
    (5) The terms of any collective bargaining agreement;
    (6) Granting and return from leaves of absence, leave for pregnancy, 
childbirth, false pregnancy, termination of pregnancy, leave for persons 
of either sex to care for children or dependents, or any other leave;
    (7) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (8) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, selection for tuition assistance, selection for sabbaticals 
and leaves of absence to pursue training;
    (9) Employer-sponsored activities, including social or recreational 
programs; and
    (10) Any other term, condition, or privilege of employment.



Sec. 28.505  Employment criteria.

    A recipient shall not administer or operate any test or other 
criterion for any employment opportunity that has a disproportionately 
adverse effect on persons on the basis of sex unless:
    (a) Use of such test or other criterion is shown to predict validly 
successful performance in the position in question; and
    (b) Alternative tests or criteria for such purpose, which do not 
have such disproportionately adverse effect, are shown to be 
unavailable.



Sec. 28.510  Recruitment.

    (a) Nondiscriminatory recruitment and hiring. A recipient shall not 
discriminate on the basis of sex in the recruitment and hiring of 
employees. Where a recipient has been found to be presently 
discriminating on the basis of sex in the recruitment or hiring of 
employees, or has been found to have so discriminated in the past, the 
recipient shall recruit members of the sex so discriminated against so 
as to overcome the effects of such past or present discrimination.
    (b) Recruitment patterns. A recipient shall not recruit primarily or 
exclusively at entities that furnish as applicants only or predominantly 
members of one sex if such actions have the effect of discriminating on 
the basis of sex in violation of Sec. Sec. 28.500 through 28.550.



Sec. 28.515  Compensation.

    A recipient shall not make or enforce any policy or practice that, 
on the basis of sex:
    (a) Makes distinctions in rates of pay or other compensation;
    (b) Results in the payment of wages to employees of one sex at a 
rate less than that paid to employees of the opposite sex for equal work 
on jobs the performance of which requires equal skill, effort, and 
responsibility, and that are performed under similar working conditions.



Sec. 28.520  Job classification and structure.

    A recipient shall not:
    (a) Classify a job as being for males or for females;
    (b) Maintain or establish separate lines of progression, seniority 
lists, career ladders, or tenure systems based on sex; or
    (c) Maintain or establish separate lines of progression, seniority 
systems, career ladders, or tenure systems for similar jobs, position 
descriptions, or job requirements that classify persons on the basis of 
sex, unless sex is a bona fide occupational qualification for the 
positions in question as set forth in Sec. 28.550.



Sec. 28.525  Fringe benefits.

    (a) ``Fringe benefits'' defined. For purposes of these Title IX 
regulations, fringe benefits means: Any medical, hospital, accident, 
life insurance, or retirement benefit, service, policy or plan, any 
profit-sharing or bonus plan, leave, and any other benefit or service

[[Page 281]]

of employment not subject to the provision of Sec. 28.515.
    (b) Prohibitions. A recipient shall not:
    (1) Discriminate on the basis of sex with regard to making fringe 
benefits available to employees or make fringe benefits available to 
spouses, families, or dependents of employees differently upon the basis 
of the employee's sex;
    (2) Administer, operate, offer, or participate in a fringe benefit 
plan that does not provide for equal periodic benefits for members of 
each sex and for equal contributions to the plan by such recipient for 
members of each sex; or
    (3) Administer, operate, offer, or participate in a pension or 
retirement plan that establishes different optional or compulsory 
retirement ages based on sex or that otherwise discriminates in benefits 
on the basis of sex.



Sec. 28.530  Marital or parental status.

    (a) General. A recipient shall not apply any policy or take any 
employment action:
    (1) Concerning the potential marital, parental, or family status of 
an employee or applicant for employment that treats persons differently 
on the basis of sex; or
    (2) Which is based upon whether an employee or applicant for 
employment is the head of household or principal wage earner in such 
employee's or applicant's family unit.
    (b) Pregnancy. A recipient shall not discriminate against or exclude 
from employment any employee or applicant for employment on the basis of 
pregnancy, childbirth, false pregnancy, termination of pregnancy, or 
recovery therefrom.
    (c) Pregnancy as a temporary disability. Subject to Sec. 28.235(d), 
a recipient shall treat pregnancy, childbirth, false pregnancy, 
termination of pregnancy, recovery therefrom, and any temporary 
disability resulting therefrom as any other temporary disability for all 
job-related purposes, including commencement, duration, and extensions 
of leave, payment of disability income, accrual of seniority and any 
other benefit or service, and reinstatement, and under any fringe 
benefit offered to employees by virtue of employment.
    (d) Pregnancy leave. In the case of a recipient that does not 
maintain a leave policy for its employees, or in the case of an employee 
with insufficient leave or accrued employment time to qualify for leave 
under such a policy, a recipient shall treat pregnancy, childbirth, 
false pregnancy, termination of pregnancy, and recovery therefrom as a 
justification for a leave of absence without pay for a reasonable period 
of time, at the conclusion of which the employee shall be reinstated to 
the status that she held when the leave began or to a comparable 
position, without decrease in rate of compensation or loss of 
promotional opportunities, or any other right or privilege of 
employment.



Sec. 28.535  Effect of state or local law or other requirements.

    (a) Prohibitory requirements. The obligation to comply with 
Sec. Sec. 28.500 through 28.550 is not obviated or alleviated by the 
existence of any State or local law or other requirement that imposes 
prohibitions or limits upon employment of members of one sex that are 
not imposed upon members of the other sex.
    (b) Benefits. A recipient that provides any compensation, service, 
or benefit to members of one sex pursuant to a State or local law or 
other requirement shall provide the same compensation, service, or 
benefit to members of the other sex.



Sec. 28.540  Advertising.

    A recipient shall not in any advertising related to employment 
indicate preference, limitation, specification, or discrimination based 
on sex unless sex is a bona fide occupational qualification for the 
particular job in question.



Sec. 28.545  Pre-employment inquiries.

    (a) Marital status. A recipient shall not make pre-employment 
inquiry as to the marital status of an applicant for employment, 
including whether such applicant is ``Miss'' or ``Mrs.''
    (b) Sex. A recipient may make pre-employment inquiry as to the sex 
of an applicant for employment, but only if such inquiry is made equally 
of such applicants of both sexes and if the results of such inquiry are 
not used in connection with discrimination prohibited by these Title IX 
regulations.

[[Page 282]]



Sec. 28.550  Sex as a bona fide occupational qualification.

    A recipient may take action otherwise prohibited by Sec. Sec. 
28.500 through 28.550 provided it is shown that sex is a bona fide 
occupational qualification for that action, such that consideration of 
sex with regard to such action is essential to successful operation of 
the employment function concerned. A recipient shall not take action 
pursuant to this section that is based upon alleged comparative 
employment characteristics or stereotyped characterizations of one or 
the other sex, or upon preference based on sex of the recipient, 
employees, students, or other persons, but nothing contained in this 
section shall prevent a recipient from considering an employee's sex in 
relation to employment in a locker room or toilet facility used only by 
members of one sex.



                          Subpart F_Procedures



Sec. 28.600  Notice of covered programs.

    Within 60 days of September 29, 2000, each Federal agency that 
awards Federal financial assistance shall publish in the Federal 
Register a notice of the programs covered by these Title IX regulations. 
Each such Federal agency shall periodically republish the notice of 
covered programs to reflect changes in covered programs. Copies of this 
notice also shall be made available upon request to the Federal agency's 
office that enforces Title IX.



Sec. 28.605  Compliance information.

    (a) Cooperation and assistance. The designated agency official shall 
to the fullest extent practicable seek the cooperation of recipients in 
obtaining compliance with these Title IX regulations and shall provide 
assistance and guidance to recipients to help them comply voluntarily 
with these Title IX regulations.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to the designated agency official (or designee) timely, complete, 
and accurate compliance reports at such times, and in such form and 
containing such information, as the designated agency official (or 
designee) may determine to be necessary to enable the official to 
ascertain whether the recipient has complied or is complying with these 
Title IX regulations. In the case of any program under which a primary 
recipient extends Federal financial assistance to any other recipient, 
such other recipient shall also submit such compliance reports to the 
primary recipient as may be necessary to enable the primary recipient to 
carry out its obligations under these Title IX regulations.
    (c) Access to sources of information. Each recipient shall permit 
access by the designated agency official (or designee) during normal 
business hours to such of its books, records, accounts, and other 
sources of information, and its facilities as may be pertinent to 
ascertain compliance with these Title IX regulations. Where any 
information required of a recipient is in the exclusive possession of 
any other agency, institution or person and this agency, institution or 
person shall fail or refuse to furnish this information the recipient 
shall so certify in its report and shall set forth what efforts it has 
made to obtain the information. Asserted considerations of privacy or 
confidentiality may not operate to bar the Department from evaluating or 
seeking to enforce compliance with these Title IX regulations. 
Information of a confidential nature obtained in connection with 
compliance evaluation or enforcement shall not be disclosed except where 
necessary in formal enforcement proceedings or where otherwise required 
by law.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of these 
Title IX regulations and their applicability to the program for which 
the recipient receives Federal financial assistance, and make such 
information available to them in such manner, as the designated agency 
official finds necessary to apprise such persons of the protections 
against discrimination assured them by Title IX and these Title IX 
regulations.

[65 FR 52882, Aug. 30, 2000]

[[Page 283]]



Sec. 28.610  Conduct of investigations.

    (a) Periodic compliance reviews. The designated agency official (or 
designee) shall from time to time review the practices of recipients to 
determine whether they are complying with these Title IX regulations.
    (b) Complaints. Any person who believes himself or herself or any 
specific class of individuals to be subjected to discrimination 
prohibited by these Title IX regulations may by himself or herself or by 
a representative file with the designated agency official (or designee) 
a written complaint. A complaint must be filed not later than 180 days 
from the date of the alleged discrimination, unless the time for filing 
is extended by the designated agency official (or designee).
    (c) Investigations. The designated agency official (or designee) 
will make a prompt investigation whenever a compliance review, report, 
complaint, or any other information indicates a possible failure to 
comply with these Title IX regulations. The investigation should 
include, where appropriate, a review of the pertinent practices and 
policies of the recipient, the circumstances under which the possible 
noncompliance with these Title IX regulations occurred, and other 
factors relevant to a determination as to whether the recipient has 
failed to comply with these Title IX regulations.
    (d) Resolution of matters. (1) If an investigation pursuant to 
paragraph (c) of this section indicates a failure to comply with these 
Title IX regulations, the designated agency official (or designee) will 
so inform the recipient and the matter will be resolved by informal 
means whenever possible. If it has been determined that the matter 
cannot be resolved by informal means, action will be taken as provided 
for in Sec. 28.615.
    (2) If an investigation does not warrant action pursuant to 
paragraph (d)(1) of this section the designated agency official (or 
designee) will so inform the recipient and the complainant, if any, in 
writing.
    (e) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any individual for the purpose of interfering with any right or 
privilege secured by Title IX or these Title IX regulations, or because 
he or she has made a complaint, testified, assisted, or participated in 
any manner in an investigation, proceeding or hearing under these Title 
IX regulations. The identity of complainants shall be kept confidential 
except to the extent necessary to carry out the purposes of these Title 
IX regulations, including the conduct of any investigation, hearing, or 
judicial proceeding arising under these Title IX regulations.

[65 FR 52882, Aug. 30, 2000]



Sec. 28.615  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with these Title IX regulations, and if the noncompliance or 
threatened noncompliance cannot be corrected by informal means, 
compliance with these Title IX regulations may be effected by the 
suspension or termination of or refusal to grant or to continue Federal 
financial assistance or by any other means authorized by law. Such other 
means may include, but are not limited to:
    (1) A reference to the Department of Justice with a recommendation 
that appropriate proceedings be brought to enforce any rights of the 
United States under any law of the United States, or any assurance or 
other contractual undertaking; and
    (2) Any applicable proceeding under State or local law.
    (b) Noncompliance with Sec. 28.115. If an applicant fails or 
refuses to furnish an assurance or otherwise fails or refuses to comply 
with a requirement imposed by or pursuant to Sec. 28.115, Federal 
financial assistance may be refused in accordance with the procedures of 
paragraph (c) of this section. The Department shall not be required to 
provide assistance in such a case during the pendency of the 
administrative proceedings under paragraph (c) of this section except 
that the Department shall continue assistance during the pendency of 
such proceedings where such assistance is due and payable pursuant to an 
application therefor approved prior to September 29, 2000.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance.

[[Page 284]]

(1) No order suspending, terminating or refusing to grant or continue 
Federal financial assistance shall become effective until:
    (i) The designated agency official has advised the applicant or 
recipient of its failure to comply and has determined that compliance 
cannot be secured by voluntary means;
    (ii) There has been an express finding on the record, after 
opportunity for hearing, of a failure by the applicant or recipient to 
comply with a requirement imposed by or pursuant to these Title IX 
regulations; and
    (iii) The expiration of 30 days after the Secretary has filed with 
the committee of the House, and the committee of the Senate having 
legislative jurisdiction over the program involved, a full written 
report of the circumstances and the grounds for such action.
    (2) Any action to suspend or terminate or to refuse to grant or to 
continue Federal financial assistance shall be limited to the particular 
political entity, or part thereof, or other applicant or recipient as to 
whom such a finding has been made and shall be limited in its effect to 
the particular program, or part thereof, in which such noncompliance has 
been so found.
    (d) Other means authorized by law. (1) No action to effect 
compliance by any other means authorized by law shall be taken until:
    (i) The designated agency official has determined that compliance 
cannot be secured by voluntary means;
    (ii) The recipient has been notified of its failure to comply and of 
the action to be taken to effect compliance; and
    (iii) The expiration of at least 10 days from the mailing of such 
notice to the recipient.
    (2) During this period of at least 10 days additional efforts shall 
be made to persuade the recipient to comply with these Title IX 
regulations and to take such corrective action as may be appropriate.

[65 FR 52883, Aug. 30, 2000]



Sec. 28.620  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 28.615(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action, and 
either:
    (1) Fix a date not less than 20 days after the date of such notice 
within which the applicant or recipient may request of the designated 
agency official that the matter be scheduled for hearing; or
    (2) Advise the applicant or recipient that the matter in question 
has been set down for hearing at a stated place and time. The time and 
place so fixed shall be reasonable and shall be subject to change for 
cause. The complainant, if any, shall be advised of the time and place 
of the hearing. An applicant or recipient may waive a hearing and submit 
written information and argument for the record. The failure of an 
applicant or recipient to request a hearing for which a date has been 
set shall be deemed to be a waiver of the right to a hearing under 20 
U.S.C. 1682 and Sec. 28.615(c) and consent to the making of a decision 
on the basis of such information as may be filed as the record.
    (b) Time and place of hearing. Hearings shall be held at the offices 
of the Department in Washington, DC, at a time fixed by the designated 
agency official unless the official determines that the convenience of 
the applicant or recipient or of the Department requires that another 
place be selected. Hearings shall be held before a hearing officer 
designated in accordance with 5 U.S.C. 556(b).
    (c) Right to counsel. In all proceedings under this section, the 
applicant or recipient and the Department shall have the right to be 
represented by counsel.
    (d) Procedures, evidence, and record. (1) The hearing, decision, and 
any administrative review thereof shall be conducted in conformity with 
5 U.S.C. 554-557 (sections 5-8 of the Administrative Procedure Act), and 
in accordance with such rules of procedure as are proper (and not 
inconsistent with this section) relating to the conduct of the hearing, 
giving of notices subsequent to those provided for in paragraph (a) of 
this

[[Page 285]]

section, taking of testimony, exhibits, arguments and briefs, requests 
for findings, and other related matters. Both the Department and the 
applicant or recipient shall be entitled to introduce all relevant 
evidence on the issues as stated in the notice for hearing or as 
determined by the hearing officer at the outset of or during the 
hearing. Any person (other than a Government employee considered to be 
on official business) who, having been invited or requested to appear 
and testify as a witness on the Government's behalf, attends at a time 
and place scheduled for a hearing provided for by these Title IX 
regulations, may be reimbursed for his or her travel and actual expenses 
of attendance in an amount not to exceed the amount payable under the 
standardized travel regulations to a Government employee traveling on 
official business.
    (2) Technical rules of evidence shall not apply to hearings 
conducted pursuant to these Title IX regulations, but rules or 
principles designed to assure production of the most credible evidence 
available and to subject testimony to test by cross-examination shall be 
applied where reasonably necessary by the hearing officer. The hearing 
officer may exclude irrelevant, immaterial, or unduly repetitious 
evidence. All documents and other evidence offered or taken for the 
record shall be open to examination by the parties and opportunity shall 
be given to refute facts and arguments advanced on either side of the 
issues. A transcript shall be made of the oral evidence except to the 
extent the substance thereof is stipulated for the record. All decisions 
shall be based upon the hearing record and written findings shall be 
made.
    (e) Consolidated or Joint Hearings. In cases in which the same or 
related facts are asserted to constitute noncompliance with these Title 
IX regulations with respect to two or more programs to which these Title 
IX regulations apply, or noncompliance with these Title IX regulations 
and the regulations of one or more other Federal departments or agencies 
issued under Title IX, the designated agency official may, by agreement 
with such other departments or agencies where applicable, provide for 
the conduct of consolidated or joint hearings, and for the application 
to such hearings of rules of procedures not inconsistent with these 
Title IX regulations. Final decisions in such cases, insofar as these 
Title IX regulations are concerned, shall be made in accordance with 
Sec. 28.625.

[65 FR 52883, Aug. 30, 2000]



Sec. 28.625  Decisions and notices.

    (a) Decisions by hearing officers. After a hearing is held by a 
hearing officer such hearing officer shall either make an initial 
decision, if so authorized, or certify the entire record including 
recommended findings and proposed decision to the reviewing authority 
for a final decision, and a copy of such initial decision or 
certification shall be mailed to the applicant or recipient and to the 
complainant, if any. Where the initial decision referred to in this 
paragraph or in paragraph (c) of this section is made by the hearing 
officer, the applicant or recipient or the counsel for the Department 
may, within the period provided for in the rules of procedure issued by 
the designated agency official, file with the reviewing authority 
exceptions to the initial decision, with the reasons therefor. Upon the 
filing of such exceptions the reviewing authority shall review the 
initial decision and issue its own decision thereof including the 
reasons therefor. In the absence of exceptions the initial decision 
shall constitute the final decision, subject to the provisions of 
paragraph (e) of this section.
    (b) Decisions on record or review by the reviewing authority. 
Whenever a record is certified to the reviewing authority for decision 
or it reviews the decision of a hearing officer pursuant to paragraph 
(a) or (c) of this section, the applicant or recipient shall be given 
reasonable opportunity to file with it briefs or other written 
statements of its contentions, and a copy of the final decision of the 
reviewing authority shall be given in writing to the applicant or 
recipient and to the complainant, if any.
    (c) Decisions on record where a hearing is waived. Whenever a 
hearing is waived pursuant to Sec. 28.620, the reviewing authority 
shall make its final decision on the record or refer the matter to a

[[Page 286]]

hearing officer for an initial decision to be made on the record. A copy 
of such decision shall be given in writing to the applicant or 
recipient, and to the complainant, if any.
    (d) Rulings required. Each decision of a hearing officer or 
reviewing authority shall set forth a ruling on each finding, 
conclusion, or exception presented, and shall identify the requirement 
or requirements imposed by or pursuant to these Title IX regulations 
with which it is found that the applicant or recipient has failed to 
comply.
    (e) Review in certain cases by the Secretary of the Treasury. If the 
Secretary has not personally made the final decision referred to in 
paragraph (a), (b), or (c) of this section, a recipient or applicant or 
the counsel for the Department may request the Secretary to review a 
decision of the reviewing authority in accordance with rules of 
procedure issued by the designated agency official. Such review is not a 
matter of right and shall be granted only where the Secretary determines 
there are special and important reasons therefor. The Secretary may 
grant or deny such request, in whole or in part. The Secretary also may 
review such a decision upon his own motion in accordance with rules of 
procedure issued by the designated agency official. In the absence of a 
review under this paragraph (e), a final decision referred to in 
paragraph (a), (b), or (c) of this section shall become the final 
decision of the Department when the Secretary transmits it as such to 
congressional committees with the report required under 20 U.S.C. 1682. 
Failure of an applicant or recipient to file an exception with the 
reviewing authority or to request review under this paragraph (e) shall 
not be deemed a failure to exhaust administrative remedies for the 
purpose of obtaining judicial review.
    (f) Content of orders. The final decision may provide for suspension 
or termination of, or refusal to grant or continue Federal financial 
assistance, in whole or in part, to which these Title IX regulations 
apply, and may contain such terms, conditions, and other provisions as 
are consistent with and will effectuate the purposes of Title IX and 
these Title IX regulations, including provisions designed to assure that 
no Federal financial assistance to which these Title IX regulations 
apply will thereafter be extended under such law or laws to the 
applicant or recipient determined by such decision to be in default in 
its performance of an assurance given by it pursuant to these Title IX 
regulations, or to have otherwise failed to comply with these Title IX 
regulations unless and until it corrects its noncompliance and satisfies 
the designated agency official that it will fully comply with these 
Title IX regulations.
    (g) Post-termination proceedings. (1) An applicant or recipient 
adversely affected by an order issued under paragraph (f) of this 
section shall be restored to full eligibility to receive Federal 
financial assistance if it satisfies the terms and conditions of that 
order for such eligibility or if it brings itself into compliance with 
these Title IX regulations and provides reasonable assurance that it 
will fully comply with these Title IX regulations. An elementary or 
secondary school or school system that is unable to file an assurance of 
compliance shall be restored to full eligibility to receive Federal 
financial assistance if it files a court order or a plan for 
desegregation that meets the applicable requirements and provides 
reasonable assurance that it will comply with the court order or plan.
    (2) Any applicant or recipient adversely affected by an order 
entered pursuant to paragraph (f) of this section may at any time 
request the designated agency official to restore fully its eligibility 
to receive Federal financial assistance. Any such request shall be 
supported by information showing that the applicant or recipient has met 
the requirements of paragraph (g)(1) of this section. If the designated 
agency official determines that those requirements have been satisfied, 
the official shall restore such eligibility.
    (3) If the designated agency official denies any such request, the 
applicant or recipient may submit a request for a hearing in writing, 
specifying why it believes such official to have been in error. It shall 
thereupon be given an expeditious hearing, with a decision on the 
record, in accordance with rules of procedure issued by the designated

[[Page 287]]

agency official. The applicant or recipient will be restored to such 
eligibility if it proves at such hearing that it satisfied the 
requirements of paragraph (g)(1) of this section. While proceedings 
under this paragraph (g) are pending, the sanctions imposed by the order 
issued under paragraph (f) of this section shall remain in effect.

[65 FR 52884, Aug. 30, 2000]



Sec. 28.630  Judicial review.

    Action taken pursuant to 20 U.S.C. 1682 is subject to judicial 
review as provided in 20 U.S.C. 1683.

[65 FR 52885, Aug. 30, 2000]



Sec. 28.635  Forms and instructions; coordination.

    (a) Forms and instructions. The designated agency official shall 
issue and promptly make available to interested persons forms and 
detailed instructions and procedures for effectuating these Title IX 
regulations.
    (b) Supervision and coordination. The designated agency official may 
from time to time assign to officials of the Department, or to officials 
of other departments or agencies of the Government with the consent of 
such departments or agencies, responsibilities in connection with the 
effectuation of the purposes of Title IX and these Title IX regulations 
(other than responsibility for review as provided in Sec. 28.625(e)), 
including the achievements of effective coordination and maximum 
uniformity within the Department and within the Executive Branch of the 
Government in the application of Title IX and these Title IX regulations 
to similar programs and in similar situations. Any action taken, 
determination made, or requirement imposed by an official of another 
department or agency acting pursuant to an assignment of responsibility 
under this section shall have the same effect as though such action had 
been taken by the designated official of this Department.

[65 FR 52885, Aug. 30, 2000]



PART 29_FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT 

PROGRAMS--Table of Contents




                      Subpart A_General Provisions

Sec.
29.101 Purpose and scope.
29.102 Related regulations.
29.103 Definitions.
29.104 Schedule for Federal Benefit Payments.
29.105 Computation of time.
29.106 Representative payees.

           Subpart B_Coordination With the District Government

29.201 Purpose and scope.
29.202 Definitions. [Reserved]
29.203 Service of Process.

Appendix A to Subpart B of Part 29--Addresses for Service of Process 
          Under Sec. 29.203

                        Subpart C_Split Benefits

29.301 Purpose and scope.
29.302 Definitions.

 General Principles for Determining Service Credit To Calculate Federal 
                            Benefit Payments

29.311 Credit only for service performed on or before June 30, 1997.
29.312 All requirements for credit must be satisfied by June 30, 1997.
29.313 Federal Benefit Payments are computed based on retirement 
          eligibility as of the separation date and service creditable 
          as of June 30, 1997.

                  Service Performed After June 30, 1997

29.321 General principle.
29.322 Disability benefits.

     All Requirements for Credit Must be Satisfied by June 30, 1997

29.331 General principle.
29.332 Unused sick leave.
29.333 Military service.
29.334 Deposit service.
29.335 Refunded service.

          Calculation of the Amount of Federal Benefit Payments

29.341 General principle.
29.342 Computed annuity exceeds the statutory maximum.
29.343 Disability benefits.
29.344 Survivor benefits.
29.345 Cost-of-living adjustments.
29.346 Reduction for survivor benefits.

[[Page 288]]


Appendix A to Subpart C of Part 29--Examples

                 Subpart D_Claims and Appeals Procedures

29.401 Purpose.
29.402 Definitions.
29.403 Applications filed with the Benefits Administrator.
29.404 Initial benefit determinations and reconsideration by the 
          Benefits Administrator.
29.405 Appeals to the Department.
29.406 Judicial review.
29.407 Competing claimants.

           Subpart E_Debt Collection and Waivers of Collection

29.501 Purpose; incorporation by reference; scope.
29.502 Definitions.
29.503 Prohibition against collection of debts.
29.504 Status of debts.
29.505 Compromise of claims; termination and suspension of collection 
          actions.
29.506 Recovery of other debts owed to the United States.

                       Collection of Overpayments

29.511 Demand letters.
29.512 Reconsideration by the Benefits Administrator.
29.513 Appeals to the Department.
29.514 Requests for waiver and/or compromise.
29.515 Judicial review.
29.516 Collection of overpayments.
29.517 Collection by offset.
29.518 Reporting delinquent debts to credit bureaus.
29.519 Referral to a collection agency.
29.520 Referral for litigation.

                  Standards for Waiver of Overpayments

29.521 Conditions for waiver and other adjustments.
29.522 Fault.
29.523 Equity and good conscience.
29.524 Financial hardship.
29.525 Ordinary and necessary living expenses.
29.526 Waiver precluded.

    Authority: Subtitle A, Subchapter B of Chapter 4 of Subtitle C, and 
Chapter 3 of Subtitle H, of Pub. L. 105-33, 111 Stat. 712-731, 756-759, 
and 786-787; as amended.

    Source: 65 FR 77501, Dec. 12, 2000, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 29.101  Purpose and scope.

    (a) This part contains the Department's regulations implementing 
Subtitle A, Subchapter B of Chapter 4 of Subtitle C, and Chapter 3 of 
Subtitle H, of Title XI of the Balanced Budget Act of 1997, Public Law 
105-33, 111 Stat. 251, 712-731, 756-759, enacted August 5, 1997, as 
amended.
    (b) This subpart contains general information to assist in the use 
of this part including--
    (1) Information about related regulations (Sec. 29.102),
    (2) Definitions of terms used in more than one subpart of this part 
(Sec. 29.103), and
    (3) The Department's general rules and procedures, applicable to the 
retirement plans for District of Columbia teachers, police and fire 
fighters, and judges that concern the administration of Federal Benefit 
Payments (Sec. Sec. 29.104-29.106).
    (c) This part applies to Federal Benefit Payments.
    (d) This part does not apply to the program of annuities, other 
retirement benefits, or medical benefits for members and officers, 
retired members and officers, and survivors thereof, of the United 
States Park Police force, the United States Secret Service, or the 
United States Secret Service Uniformed Division.
    (e) This part does not apply to the District of Columbia replacement 
plan, which covers payments based on service accrued after June 30, 
1997, pursuant to section 11042 of the Act.

[65 FR 77501, Dec. 12, 2000, as amended at 70 FR 60004, Oct. 14, 2005]



Sec. 29.102  Related regulations.

    (a) This part contains the following subparts:
    (1) General Provisions (Subpart A);
    (2) Coordination with the District Government (Subpart B);
    (3) Split Benefits (Subpart C); \1\
---------------------------------------------------------------------------

    \1\ The effective date for section 29.102(a)(3) and Subpart C, 
originally scheduled for March 31, 2001, has been postponed 
indefinitely.
---------------------------------------------------------------------------

    (4) Claims and Appeals Procedures (Subpart D); and

[[Page 289]]

    (5) Debt Collection and Waivers of Collection (Subpart E).
    (b) Part 581 of Title 5, Code of Federal Regulations, contains 
information about garnishment of certain Federal payments to enforce 
awards of alimony or child support.
    (c) Part 831 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Civil Service Retirement System.
    (d) Part 870 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Federal Employees Group Life 
Insurance Program.
    (e) Part 890 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Federal Employees Health Benefits 
Program.
    (f) Parts 835 and 845 and subparts M, N, and R of part 831 of title 
5, Code of Federal Regulations, contain information about debt 
collection and waiver of collection under the Civil Service Retirement 
System and the Federal Employees Retirement System.

[65 FR 77501, Dec. 12, 2000, as amended at 65 FR 80753, Dec. 22, 2000; 
66 FR 36705, July 13, 2001]



Sec. 29.103  Definitions.

    (a) In this part--
    Act means Subtitle A, Subchapter B of Chapter 4 of Subtitle C, and 
Chapter 3 of Subtitle H, of Title XI of the Balanced Budget Act of 1997, 
Public Law 105-33, 111 Stat. 251, 712-731, 756-759, as amended.
    Benefits Administrator means:
    (1) For the Teachers Plan and the Police and Firefighters Plan under 
section 11041(a) of the Act:
    (i) During the interim benefits administration period, the District 
of Columbia government; or
    (ii) After the end of the interim benefits administration period:
    (A) The Trustee selected by the Department under sections 11035(a) 
or 11085(a) of the Act;
    (B) The Department, if a determination is made under sections 
11035(d) or 11085(d) of the Act that, in the interest of economy and 
efficiency, the function of the Trustee shall be performed by the 
Department rather than the Trustee; or
    (C) Any other agent of the Department designated to make initial 
benefit determinations and/or to recover or recoup or waive recovery or 
recoupment of overpayments of Federal Benefit Payments, or to recover or 
recoup debts owed to the Federal Government by annuitants; or
    (2) For the Judges Plan under section 11252(b) of the Act:
    (i) During the interim benefits administration period, the District 
of Columbia government; or
    (ii) After the end of the interim benefits administration period for 
the Judges Plan:
    (A) The Trustee selected by the Department under section 11251(a) of 
the Act;
    (B) The Department, if a determination is made under section 
11251(a) of the Act that, in the interest of economy and efficiency, the 
function of the Trustee shall be performed by the Department rather than 
the Trustee; or
    (C) Any other agent of the Department designated to make initial 
benefit determinations and/or to recover or recoup or waive recovery or 
recoupment of overpayments of Federal Benefit Payments, or to recover or 
recoup debts owed to the Federal Government by annuitants.
    District government means the government of the District of 
Columbia.
    Department means the United States Department of the Treasury.
    Federal Benefit Payment means a payment for which the Department is 
responsible under the Act, to which an individual is entitled under the 
Judges Plan, the Police and Firefighters Plan, or the Teachers Plan, in 
such amount and under such terms and conditions as may apply under such 
plans, including payments made under these plans before, on, or after 
the October 1, 1997, effective date of the Act. Service after June 30, 
1997, shall not be credited for purposes of determining the amount of 
any Federal Benefit Payment under the Teachers Plan and the Police and 
Firefighters Plan.
    Freeze date means June 30, 1997.
    Judges Plan means the retirement program (under subchapter III of 
chapter 15 of title 11 of the D.C. Code) for judges of the District of 
Columbia Court of Appeals or Superior Court or with judicial service 
with the former

[[Page 290]]

Juvenile Court of the District of Columbia, District of Columbia Tax 
Court, police court, municipal court, Municipal Court of Appeals, or 
District of Columbia Court of General Sessions.
    OPM means the United States Office of Personnel Management.
    Police and Firefighters Plan means any of the retirement programs 
(under chapter 6 of title 4 of the D.C. Code) for members of the 
Metropolitan Police Force and Fire Department in effect on June 29, 
1997.
    Reconsideration means the process of reexamining an individual's 
entitlement to benefits or liability for a debt to determine whether--
    (1) The law and regulations were properly applied; and/or
    (2) The mathematical computation of the benefit or liability is 
correct.
    Retirement Funds means the District of Columbia Teachers, Police 
Officers, and Firefighters Federal Pension Fund established under 
section 11081 of the Act, the District of Columbia Judicial Retirement 
and Survivors Annuity Fund established under section 11252 of the Act, 
and their predecessor funds.
    Secretary means the Secretary of the United States Department of the 
Treasury or his or her designee.
    Teachers Plan means any of the retirement programs for teachers 
(under chapter 12 of title 31 of the D.C. Code) in effect on June 29, 
1997.
    (b) In this subpart--
    Legal process means--
    (1) Any document that qualifies as legal process as defined in Sec. 
581.103 of Title 5, Code of Federal Regulations; or
    (2) Any court order that Federal or District of Columbia law permits 
to cause all or any portion of a payment under the Judges Plan, the 
Police and Firefighters Plan, or the Teachers Plan to be made to a 
former spouse under chapter 30 of title 1 of the D.C. Code (1997).
    Representative payee means a fiduciary to whom a payment under the 
Judges Plan, the Police and Firefighters Plan, or the Teachers Plan is 
made for the benefit of a plan participant or a survivor.

[65 FR 77501, Dec. 12, 2000, as amended at 66 FR 36705, July 13, 2001; 
70 FR 60004, Oct. 14, 2005]



Sec. 29.104  Schedule for Federal Benefit Payments.

    Federal Benefit Payments are payable on the first business day of 
the month following the month in which the benefit accrues. (See Sec. 
29.105(b).)



Sec. 29.105  Computation of time.

    (a) For filing documents. In computing the number of days allowed 
for filing a document, the first day counted is the day after the action 
or event from which the period begins to run. If the date that 
ordinarily would be the last day for filing falls on a Saturday, a 
Sunday, a Federal holiday, or a District holiday, the period runs until 
the end of the next day that is not a Saturday, a Sunday, or a Federal 
or a District holiday.
    (b) For benefit accrual. (1) Annuity accrues on a daily basis; one-
thirtieth of the monthly rate constitutes the daily rate.
    (2) Annuity does not accrue on the 31st day of any month except that 
annuity accrues on the 31st day of the initial month if the employee's 
annuity commences on the 31st day of a 31-day month.
    (3) For accrual purposes the last day of a 28-day month counts as 3 
days and the last day of a 29-day month counts as 2 days.
    (c) For counting unused sick leave. (1) For annuity computation 
purposes--
    (i) The service of a participant under the Police and Firefighters 
Plan who retires on an immediate annuity is increased by the number of 
days of unused sick leave to the participant's credit under a formal 
leave system; and
    (ii) The service of a participant under the Teachers Plan who 
retires on an immediate annuity or dies leaving a survivor entitled to 
an annuity is increased by the number of days of unused sick leave to 
the participant's credit under a formal leave system.
    (2) In general, 8 hours of unused sick leave increases total service 
by 1 day. In cases where more or less than 8 hours of sick leave would 
be charged for a day's absence, total service is increased by the number 
of days in the period between the date of separation and the date that 
the unused sick leave would have expired had the employee used it 
(except that holidays falling

[[Page 291]]

within the period are treated as work days, and no additional leave 
credit is earned for that period).
    (3) If an employee's tour of duty changes from part time to full 
time or full time to part time within 180 days before retirement, the 
credit for unused sick leave is computed as though no change had 
occurred.
    (d) For counting leave without pay (LWOP) that is creditable 
service. (1) Under the Police and Firefighters Plan, credit is allowed 
for no more than 6 months of LWOP in each calendar year.
    (2)(i) Under the Teachers Plan, credit is allowed for no more than 6 
months of LWOP in each fiscal year.
    (ii)(A) For years prior to fiscal year 1976, each fiscal year 
started on July 1 and ended on the following June 30.
    (B) Fiscal year 1976 started on July 1, 1975, and ended on September 
30, 1976.
    (C) For years starting in fiscal year 1977, each fiscal year starts 
on October 1 and ends on the following September 30.



Sec. 29.106  Representative payees.

    For Federal Benefit Payments, representative payees will be 
authorized to the same extent and under the same circumstances as each 
plan permits for non-Federal Benefit Payments under the plan. (See e.g., 
section 4-629(b) of the D.C. Code (1997) (applicable to the Police and 
Firefighters Plan).)



           Subpart B_Coordination With the District Government



Sec. 29.201  Purpose and scope.

    This subpart contains information concerning the relationship 
between the Department and the District government in the administration 
of the Act and the functions of each in the administration of that Act.

[70 FR 60005, Oct. 14, 2005]



Sec. 29.202  Definitions. [Reserved]



Sec. 29.203  Service of Process.

    To affect Federal Benefit Payments--
    (a) Service must be made upon the Department at the address provided 
in appendix A to this subpart for--
    (1) Legal process under section 659 of title 42, United States Code, 
and part 581 of Title 5, Code of Federal Regulations, or
    (2) Any request for or notice of appointment of a custodian, 
guardian, or other fiduciary to receive Federal Benefit Payments as 
representative payees under Sec. 29.106;
    (b) All other process regarding Federal Benefit Payments (including 
requests for judicial review under Sec. 29.406) must be served upon the 
United States in accordance with applicable law.
    (c) All other process regarding Federal Benefit Payments must be 
served upon the United States in accordance with applicable law.



  Sec. Appendix A to Subpart B of Part 29--Addresses for Service Under 
                              Sec. 29.203

    1. The mailing address for delivery of documents described in Sec. 
29.203(a) by the United States Postal Service is: Office of DC Pensions, 
Department of the Treasury, Metropolitan Square Building, Room 6250, 
1500 Pennsylvania Avenue, NW., Washington, DC 20220.
    2. The address for delivery of documents described in Sec. 
29.203(a) by process servers, express carriers, or other forms of 
handcarried delivery is: Office of DC Pensions, Department of the 
Treasury, Metropolitan Square Building, Room 6250, 655 15th Street (F 
Street side), NW., Washington, DC.

[65 FR 77501, Dec. 12, 2000, as amended at 65 FR 80753, Dec. 22, 2000]



                        Subpart C_Split Benefits

    Source: 65 FR 77501, Dec. 12, 2001, unless otherwise noted.



Sec. 29.301  Purpose and scope.

    (a) The purpose of this subpart is to addresses the legal and policy 
issues that affect the calculation of the Federal and District of 
Columbia portions of benefits under subtitle A of Title XI of the 
Balanced Budget Act of 1977, Public Law 105-33, 111 Stat. 251, 712-731, 
enacted August 5, 1997, as amended.
    (1) This subpart states general principles for the calculation of 
Federal Benefit Payments in cases in which the Department and the 
District government are both responsible for paying a portion of an 
employee's total retirement benefits under the Police and Firefighters 
Plan or the Teachers Plan.
    (2) This subpart provides illustrative examples of sample 
computations to

[[Page 292]]

show the application of the general principles to specific problems.
    (b)(1) This subpart applies only to benefits under the Police and 
Firefighters Plan or the Teachers Plan for individuals who have 
performed service creditable under these programs on or before June 30, 
1997.
    (2) This subpart addresses only those issues that affect the split 
of fiscal responsibility for retirement benefits (that is, the 
calculation of Federal Benefit Payments).
    (3) Issues relating to determination and review of eligibility and 
payments, and financial management, are beyond the scope of this 
subpart.
    (c) This subpart does not apply to benefit calculations under the 
Judges Plan.



Sec. 29.302  Definitions.

    In this subpart (including appendix A of this subpart)--
    Deferred retirement means retirement under section 4-623 of the D.C. 
Code (1997) (under the Police and Firefighters Plan) or section 31-
1231(a) of the D.C. Code (1997) (under the Teachers Plan).
    Deferred retirement age means the age at which a deferred annuity 
begins to accrue, that is, age 55 under the Police and Firefighters Plan 
and age 62 under the Teachers Plan.
    Department service or departmental service means any period of 
employment in a position covered by the Police and Firefighters Plan or 
Teachers Plan. Department service or departmental service may include 
certain periods of military service that interrupt a period of 
employment under the Police and Firefighters Plan or the Teachers Plan.
    Disability retirement means retirement under section 4-615 or 
section 4-616 of the D.C. Code (1997) (under the Police and Firefighters 
Plan) or section 31-1225 of the D.C. Code (1997) (under the Teachers 
Plan), regardless of whether the disability was incurred in the line of 
duty.
    Enter on duty means commencement of employment in a position covered 
by the Police and Firefighters Plan or the Teachers Plan.
    Excess leave without pay or excess LWOP means a period of time in a 
non-pay status that in any year is greater than the amount creditable as 
service under Sec. 29.105(d).
    Hire date means the date the employee entered on duty.
    Military service means--
    (1) For the Police and Firefighters Plan, military service as 
defined in section 4-607 of the D.C. Code (1997) that is creditable as 
other service under section 4-602 or section 4-610 of the D.C. Code 
(1997); and
    (2) For the Teachers Plan, military service as described in section 
31-1230(a)(4) of the D.C. Code (1997).
    Optional retirement means regular longevity retirement under section 
4-618 of the D.C. Code (1997) (under the Police and Firefighters Plan) 
or section 31-1224(a) of the D.C. Code (1997) (under the Teachers Plan).
    Other service means any period of creditable service other than 
departmental service or unused sick leave. Other service includes 
service that becomes creditable upon payment of a deposit, such as 
service in another school system under the Teachers Plan (under section 
31-1208 of the D.C. Code (1997)); and service that is creditable without 
payment of a deposit, such as military service occurring prior to 
employment under the Police and Firefighters Plan.
    Pre-80 hire means an individual whose annuity is computed using the 
formula under the Police and Firefighters Plan applicable to individuals 
hired before February 15, 1980.
    Pre-96 hire means an individual whose annuity is computed using the 
formula under the Teachers Plan applicable to individuals hired before 
November 10, 1996.
    Sick leave means unused sick leave, which is creditable in a 
retirement computation, as calculated under Sec. 29.105(c).

 General Principles for Determining Service Credit To Calculate Federal 
                            Benefit Payments



Sec. 29.311  Credit only for service performed on or before June 30, 1997.

    Only service performed on or before June 30, 1997, is credited 
toward Federal Benefit Payments.

[[Page 293]]



Sec. 29.312  All requirements for credit must be satisfied by June 30, 1997.

    Service is counted toward Federal Benefit Payments only if all 
requirements for the service to be creditable are satisfied as of June 
30, 1997.



Sec. 29.313  Federal Benefit Payments are computed based on retirement 

eligibility as of the separation date and service creditable as of June 30, 

1997.

    Except as otherwise provided in this subpart, the amount of Federal 
Benefit Payments is computed based on retirement eligibility as of the 
separation date and service creditable as of June 30, 1997.

                  Service Performed After June 30, 1997



Sec. 29.321  General principle.

    Any service performed after June 30, 1997, may never be credited 
toward Federal Benefit Payments.



Sec. 29.322  Disability benefits.

    If an employee separates for disability retirement after June 30, 
1997, and, on the date of separation, the employee--
    (a) Satisfies the age and service requirements for optional 
retirement, the Federal Benefit Payment commences immediately, that is, 
the Federal Benefit Payment is calculated as though the employee retired 
under optional retirement rules using only service through June 30, 1997 
(See examples 7A and 7B of appendix A of this subpart); or
    (b) Does not satisfy the age and service requirements for optional 
retirement, the Federal Benefit Payment begins when the disability 
retiree reaches deferred retirement age. (See Sec. 29.343.)

     All Requirements for Credit Must Be Satisfied by June 30, 1997



Sec. 29.331  General principle.

    To determine whether service is creditable for the computation of 
Federal Benefit Payments under this subpart, the controlling factor is 
whether all requirements for the service to be creditable under the 
Police and Firefighters Plan or the Teachers Plan were satisfied as of 
June 30, 1997.



Sec. 29.332  Unused sick leave.

    (a) For employees separated for retirement as of June 30, 1997, 
Federal Benefit Payments include credit for any unused sick leave that 
is creditable under the applicable plan.
    (b) For employees separated for retirement after June 30, 1997, no 
unused sick leave is creditable toward Federal Benefit Payments.



Sec. 29.333  Military service.

    (a) For employees who entered on duty on or before June 30, 1997, 
and whose military service was performed prior to that date, credit for 
military service is included in Federal Benefit Payments under the terms 
and conditions applicable to each plan.
    (b) For employees who enter on duty after June 30, 1997, military 
service is not creditable toward Federal Benefit Payments, even if 
performed as of June 30, 1997.
    (c) For employees who entered on duty on or before June 30, 1997, 
but who perform military service after that date, the credit for 
military service is not included in Federal Benefit Payments.



Sec. 29.334  Deposit service.

    (a) Teachers Plan. (1) Periods of civilian service that were not 
subject to retirement deductions at the time they were performed are 
creditable for Federal Benefit Payments under the Teachers Plan if the 
deposit for the service was paid in full to the Teachers Plan as of June 
30, 1997.
    (2) No credit is allowed for Federal Benefit Payments under the 
Teachers Plan for any period of civilian service that was not subject to 
retirement deductions at the time it was performed if the deposit for 
the service was not paid in full as of June 30, 1997.
    (b) Police and Firefighters Plan. No credit is allowed for Federal 
Benefit Payments under the Police and Firefighters Plan for any period 
of civilian service that was not subject to retirement deductions at the 
time that the service was performed. (See definition of ``governmental 
service'' at D.C. Code section 4-607(15) (1997).)

[[Page 294]]



Sec. 29.335  Refunded service.

    (a) Periods of civilian service that were subject to retirement 
deductions but for which the deductions were refunded to the employee 
are creditable for Federal Benefit Payments if the redeposit for the 
service was paid in full to the District government as of June 30, 1997.
    (b) No credit is allowed for Federal Benefit Payments for any period 
of civilian service that was subject to retirement deductions but for 
which the deductions were refunded to the employee if the redeposit for 
the service was not paid in full to the District government as of June 
30, 1997.

          Calculation of the Amount of Federal Benefit Payments



Sec. 29.341  General principle.

    Except for disability retirements after June 30, 1997, and certain 
death benefits based on deaths after June 30, 1997, in which the 
calculation is not based upon length of service (see Sec. 29.344); for 
cases in which some service is creditable on or before June 30, 1997, 
and some service is creditable after June 30, 1997, Federal Benefit 
Payments are computed under the rules of the applicable plan as though--
    (a) The employee were eligible to retire effective July 1, 1997, 
under the same conditions as the actual retirement (that is, using the 
annuity computation formula that applies under the plan in effect on 
June 29, 1997, and the actual retirement age, including any applicable 
age reduction, based on the age at actual retirement);
    (b) The service that became creditable after June 30, 1997, did not 
exist; and
    (c) The average salary is the average salary at separation.

    Note to Sec. 29.341: See examples 7B, 9, and 13 of appendix A of 
this subpart.



Sec. 29.342  Computed annuity exceeds the statutory maximum.

    (a) In cases in which the total computed annuity exceeds the 
statutory maximum:
    (1) Federal Benefit Payments may equal total benefits even if the 
employee had service after June 30, 1997.
    (2) If the employee had sufficient service as of June 30, 1997, to 
qualify for the maximum annuity under the plan, the Federal Benefit 
Payment is the maximum annuity under the plan. This will be the entire 
benefit except for any amount in excess of the normal maximum due to 
unused sick leave, which is the responsibility of the District. (See 
example 3, of appendix A of this subpart.)
    (b) If the employee did not perform sufficient service as of June 
30, 1997, to reach the statutory maximum benefit, but has sufficient 
service at actual retirement to exceed the statutory maximum, the 
Federal Benefit Payment is the amount earned through June 30, 1997. The 
non-Federal-Benefit-Payment portion of the total benefit consists of 
only the amount by which the total benefit payable exceeds the Federal 
Benefit Payment.



Sec. 29.343  Disability benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to disability benefits prior to optional retirement age.
    (b) In cases involving disability benefits prior to optional 
retirement age, no Federal Benefit Payment is payable until the retiree 
reaches the age of eligibility to receive a deferred annuity (age 55 
under the Police and Firefighters Plan and age 62 under the Teachers 
Plan). When the age for deferred annuity is reached, the Federal Benefit 
Payment is paid using creditable service accrued as of June 30, 1997, 
and average salary (computed under the rules for the applicable plan) as 
of the date of separation. (See examples 6 and 7 of appendix A of this 
subpart.)



Sec. 29.344  Survivor benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to death benefits that are not determined by length of 
service.

[[Page 295]]

    (b) In cases in which the amount of death benefits is not determined 
by length of service, the amount of Federal Benefit Payments is 
calculated by multiplying the amount of the total benefit payable by the 
number of full months of service through June 30, 1997, and then 
dividing by the number of months of total service at retirement (for 
elected survivor benefits) or death (for guaranteed-minimum death-in-
service survivor benefits). (See example 13 of appendix A of this 
subpart.)



Sec. 29.345  Cost-of-living adjustments.

    Cost-of-living increases are applied directly to Federal Benefit 
Payments, rather than computed on the total benefit and then prorated. 
(See example 14 of appendix A of this subpart.)



Sec. 29.346  Reduction for survivor benefits.

    (a) If a retiree designates a base for a survivor annuity that is 
greater than or equal to the unreduced Federal Benefit Payment, the 
applicable plan's annuity reduction formula is applied to the unreduced 
Federal Benefit Payment to determine the reduced Federal Benefit 
Payment. (See example 10 of appendix A of this subpart.)
    (b) If a retiree designates a base for a survivor annuity that is 
less than the amount of the Federal Benefit Payment, the entire survivor 
reduction applies to the Federal Benefit Payment to determine the 
reduced Federal Benefit Payment.



            Sec. Appendix A to Subpart C of Part 29--Examples

    This appendix contains sample calculations of Federal Benefit 
Payments in a variety of situations.

                      Optional Retirement Examples

                     Example 1: No Unused Sick Leave

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in October 1997. At 
retirement, he is age 51 with 20 years and 3 days of departmental 
service plus 3 years, 4 months, and 21 days of military service that 
preceded the departmental service. The Federal Benefit Payment begins at 
retirement. It is based on the 19 years, 8 months, and 22 days of 
departmental service and 3 years, 4 months, and 21 days of military 
service performed as of June 30, 1997. Thus, the Federal Benefit Payment 
is based on 23 years and 1 month of service, all at the 2.5 percent 
accrual rate. The total annuity is based on 23 years and 4 months of 
service, all at the 2.5 percent accrual rate.

                       Example 1A--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/09/77
Separation date: 10/11/97
Department service: 20/00/03
Other service: 03/04/21
Sick leave:
.025 service: 23.333333
.03 service:
Average salary: $45,680.80
Total: $26,647.12
Total/month: $2,221.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 9/10/46
Hire date: 10/09/77
Freeze date: 06/30/97
Department service: 19/08/22
Other service: 03/04/21
Sick leave:
.025 service: 23.083333
.03 service:
Average salary: $45,680.80
Total: $26,361.61
Total/month: $2,197.00
------------------------------------------------------------------------

    B. In this example, the individual covered by the Police and 
Firefighters Plan was hired earlier than in example 1A and thus 
performed more service as of both June 30, 1997, and retirement in 
October 1997. At retirement, he is age 51 with 21 years, 11 months and 
29 days of departmental service plus 3 years, 4 months, and 21 days of 
military service that preceded the departmental service. The Federal 
Benefit Payment begins at retirement. It is based on the 21 years, 8 
months, and 18 days of departmental service and 3 years, 4 months, and 
21 days of military service performed as of June 30, 1997. Thus, the 
Federal Benefit Payment is based on 25 years and 1 month of service, 1 
year and 8 months at the 3.0 percent accrual rate and 23 years and 5 
months at the 2.5 percent accrual rate (including 1 month consisting of 
18 days of departmental service and 21 days of other service). The total 
annuity is based on 25 years and 4 months of service, 1 year and 11 
months at the 3.0 percent accrual rate and 23 years and 5 months at the 
2.5 percent accrual rate (including 1 month consisting of 29 days of 
departmental service and 21 days of other service).

                       Example 1B--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/10/46

[[Page 296]]

 
Hire date: 10/13/75
Separation date: 10/11/97
Department service: 21/11/29
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.916667
Average salary: $45,680.80
Total: $29,368.96
Total/month $2,447.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Freeze date: 06/30/97
Department service: 21/08/18
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.666667
Average salary: $45,680.80
Total: $29,026.36
Total/month: $2,419.00
------------------------------------------------------------------------

                   Example 2: Unused Sick Leave Credit

    In this example, an individual covered by the Police and 
Firefighters Plan and hired before 1980 retires in March 1998. At 
retirement, she is age 48 with 24 years, 8 months, and 6 days of 
departmental service plus 6 months and 4 days of other service (deposit 
paid before June 30, 1997) and 11 months and 11 days of unused sick 
leave. For a police officer (or a non-firefighting division firefighter) 
such an amount of sick leave would be 1968 hours (246 days, based on a 
260-day year, times 8 hours per day). For a firefighting division 
firefighter, such an amount would be 2069 hours (341 days divided by 360 
days per year times 2184 hours per year). The Federal Benefit Payment 
begins at retirement. It is based on the 23 years, 11 months, and 23 
days of departmental service performed as of June 30, 1997, and 6 months 
and 4 days of other service. Thus, the Federal Benefit Payment is based 
on 20 years departmental and 6 months of other service at the 2.5 
percent accrual rate and 3 years and 11 months of service at the 3.0 
percent accrual rate. The total annuity is based on 20 years and 6 
months of service at the 2.5 percent accrual rate and 5 years and 7 
months of service at the 3 percent accrual rate.

                       Example 2--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Separation date: 03/13/98
Department service: 24/08/06
Other service: 00/06/04
Sick leave: 00/11/11
.025 service: 20.5
.03 service: 5.583333
Average salary: $61,264.24
Total: $41,659.68
Total/month: $3,472.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Freeze date: 06/30/97
Department service: 23/11/23
Other service: 00/06/04
Sick leave:
.025 service: 20.5
.03 service: 3.916667
Average salary: $61,264.24
Total: $38,596.47
Total/month: $3,216.00
------------------------------------------------------------------------

         Example 3: Calculated Benefit Exceeds Statutory Maximum

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in March 1998. At 
retirement, he is age 55 with 32 years and 17 days of departmental 
service. The Federal Benefit Payment begins at retirement. It is based 
on the 31 years, 3 months, and 17 days of departmental service performed 
as of June 30, 1997. Thus, the Federal Benefit Payment is based on 20 
years of service at the 2.5 percent accrual rate and 11 years and 3 
months of service at the 3.0 percent accrual rate. However, the annuity 
is limited to 80 percent of the basic salary at time of retirement. 
(This limitation does not apply to the unused sick leave credit.) The 
annuity computed as of June 30, 1997, equals the full benefit payable; 
therefore, the Federal Benefit Payment is the total benefit.

                       Example 3A--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total: $64,782.34
Total/month: $5,399.00
Maximum: $61,744.00
 $5,145.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42

[[Page 297]]

 
Hire date: 03/14/66
Freeze date: 03/30/97
Department service: 31/03/17
Other service:
Sick leave:
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
 $5,145.00
------------------------------------------------------------------------

    B. In this example, the individual in example 3A also has 6 months 
of unused sick leave at retirement. The sick leave credit is not subject 
to the 80% limitation and does not become creditable service until the 
date of separation. For a police officer (or a non-firefighting division 
firefighter) such an amount of sick leave would be 1040 hours (130 days, 
based on a 260-day year, times 8 hours per day). For a firefighting 
division firefighter, such an amount would be 1092 hours (180 days 
divided by 360 days per year times 2184 hours per year). Six months of 
unused sick leave increases the annual total benefit by 1.5 percent of 
the average salary, or in the example by $94 per month. The District is 
responsible for the portion of the annuity attributable to the unused 
sick leave because it became creditable at retirement, that is, after 
June 30, 1997.

                       Example 3B--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total wo/sl credit: $64,782.34
Total/month: $5,399.00
Max wo/sl credit: $61,744.00
Max w/sl credit: $62,873.92
Monthly benefit: $5,239.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Freeze date: 06/30/97
Department service: 31/03/17
Other service:
Sick leave: none
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
Monthly benefit: $5,145.00
------------------------------------------------------------------------

                   Example 4: Excess Leave Without Pay

    In this example, an individual covered by the Teachers Plan hired 
before 1996 retires in February 1998. At retirement, she is age 64 with 
27 years of departmental service and 6 years, 7 months, and 28 days of 
other service (creditable before June 30, 1997). However, only 6 months 
of leave in a fiscal year without pay may be credited toward retirement 
under the Teachers Plan. She had 3 months and 18 days of excess leave 
without pay as of June 30, 1997. Since the excess leave without pay 
occurred before June 30, 1997, the time attributable to the excess leave 
without pay is subtracted from the service used in both the Federal 
Benefit Payment and the total benefit computations. The Federal Benefit 
Payment begins at retirement. It is based on the 32 years and 8 months 
of service (32 years, 11 months, and 28 days minus 3 months and 18 days 
and the partial month dropped); 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate, and 
22 years and 8 months of service at the 2 percent accrual rate. The 
total annuity is based on 33 years and 4 months of service (33 years, 7 
months and 28 days minus 3 months and 18 days and the partial month 
dropped) 5 years of service at the 1.5 percent accrual rate, 5 years of 
service at the 1.75 percent accrual rate and 23 years and 4 months of 
service at the 2 percent accrual rate.

    Note: For the Teachers Plan, section 1230(a) of title 31 of the DC 
Code (1997) allows for 6 months leave without pay in any fiscal year. 
For the Police and Firefighters Plan, section 610(d) of title 4 of the 
DC Code (1997) allows for 6 months leave without pay in any calendar 
year.

                      Example 4--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Separation date: 02/28/98
Department service: 27/00/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $53,121.00
Total: $33,421.98

[[Page 298]]

 
Total/month: $2,785.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Freeze date: 06/30/97
Department service: 26/04/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 22.666667
Average salary: $53,121.00
Total: $32,713.66
Total/month: $2,726.00
------------------------------------------------------------------------

                   Example 5: Service Credit Deposits

    A. An individual covered by the Teachers Plan hired before 1996 
retires in October 1997. At retirement, he is age 61 with 30 years and 3 
days of departmental service plus 3 years, 4 months, and 21 days of 
other service that preceded the departmental service for which the 
deposit was fully paid on or before June 30, 1997. The Federal Benefit 
Payment begins at retirement. It is based on the 29 years, 8 months, and 
22 days of departmental service and 3 years, 4 months, and 21 days of 
service performed as of June 30, 1997. Thus, the Federal Benefit Payment 
is based on 33 years and 1 month of service; 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 23 years and 1 month of service at the 2 percent accrual rate. 
The total annuity is based on 33 years and 4 months of service; 5 years 
of service at the 1.5 percent accrual rate, 5 years of service at the 
1.75 percent accrual rate and 23 years and 4 months of service at the 2 
percent accrual rate.

                      Example 5A--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department Service: 30/00/03
Other service: 03/04/21
Deposit paid before freeze date:
Other service credit allowed:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: 03/04/21
Deposit paid before freeze date:
Other service credit allowed:
Sick Leave:
.015 service: 5
.0175 service: 5
.02 service: 23.08333; 13 days dropped
Average salary: $45,680.80
Total: $28,512.45
Total/month: $2,376.00
------------------------------------------------------------------------

    B. In this example, the employee in example 5A did not pay any of 
the deposit to obtain credit for the 3 years, 4 months, and 21 days of 
other service as of June 30, 1997. Thus, none of the other service is 
used in the computation of the Federal Benefit Payment. An individual 
covered by the Teachers Plan hired before 1996 retires in October 1997. 
At retirement, he is age 61 with 30 years and 3 days of departmental 
service plus 3 years, 4 months, and 21 days of other service that 
preceded the departmental service for which the deposit was paid in full 
in October 1997 (at retirement). The Federal Benefit Payment begins at 
retirement. It is based on only the 29 years, 8 months, and 22 days of 
departmental service performed as of June 30, 1997; 5 years of service 
at the 1.5 percent accrual rate, 5 years of service at the 1.75 percent 
accrual rate, and 19 years and 8 months of service at the 2 percent 
accrual rate. The total annuity is based on 33 years and 4 months of 
service; 5 years of service at the 1.5 percent accrual rate, 5 years of 
service at the 1.75 percent accrual rate and 23 years and 4 months of 
service at the 2 percent accrual rate.

                      Example 5B--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
 $0.00
Department service: 30/00/03
Other service: 03/04/21
Total deposit paid after 6/30/97
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67

[[Page 299]]

 
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Total deposit paid after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary: $45,680.80
Total: $25,390.90
Total/month: $2,116.00
------------------------------------------------------------------------

    C. In this example, the employee in examples 5A and B began 
installment payments on the deposit to obtain credit for the 3 years, 4 
months, and 21 days of other service as of June 30, 1997, but did not 
complete the deposit until October 1997 (at retirement). The other 
service is not used in the computation of the Federal Benefit Payment 
because the payment was not completed as of June 30, 1997. Thus, the 
result is the same as in example 5B.

                      Example 5C--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department service: 30/00/03
Other service: 03/04/21
Partial deposit paid as of 6/30/97:
Deposit completed after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Partial deposit paid as of 6/30/97:
Deposit completed after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary: $45,680.80
Total: $25,390.90
Total/month: $2,116.00
------------------------------------------------------------------------

                     Disability Retirement Examples

 Example 6: Disability Occurs Before Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in the 
line of duty in October 1997. At retirement, he is age 45 with 18 years, 
5 months, and 11 days of departmental service. Since he had performed 
less than 20 years of service and had not reached the age of eligibility 
for an optional retirement, the Federal Benefit Payment does not begin 
at retirement. When the disability annuitant reaches age 55, he 
satisfies the age and service requirements for deferred retirement. At 
that time (August 20, 2007), the Federal Benefit Payment begins. It is 
based on the 18 years, 1 month, and 17 days of departmental service 
performed as of June 30, 1997, all at the 2.5 percent accrual rate.

          Example 6A--Police Disability in Line of Duty, Age 45
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Separation date: 10/24/97
Department service: 18/05/11
Other service:
Sick leave:
.025 service: 18.416667
.03 service:
Average salary: $47,788.64
Final salary: $50,938.00
Total: $22,002.70
Total/month: $1,834.00
\2/3\ of average pay: $31,859.11
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Freeze date: 06/30/97
Department service: 18/01/17
Other service:
Sick leave:
.025 service: 18.083333
.03 service:
Average salary: $47,788.64
Final salary: $50,938.00
Total: $21,604.43
Total/month: $1,800.00; deferred
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan hired 
before 1996 retires based on a disability in December 1997. At 
retirement, she is age 49 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since she does not qualify for 
optional retirement at separation, the Federal Benefit Payment does not 
begin at separation. When the disability annuitant reaches age 62, she

[[Page 300]]

will satisfy the age and service requirements for deferred retirement. 
At that time (March 9, 2010), the Federal Benefit Payment begins. The 
time attributable to the excess leave without pay is subtracted from the 
service used to compute the Federal Benefit Payment. Since the excess 
leave without pay occurred before June 30, 1997, the deferred Federal 
Benefit Payment is based on the 23 years and 6 months of service; 5 
years of service at the 1.5 percent accrual rate, 5 years of service at 
the 1.75 percent accrual rate, and 13 and 6 months of service at the 2 
percent accrual rate.

                 Example 6B--Teachers Disability Age 49
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00; deferred
------------------------------------------------------------------------

 Example 7: Disability Occurs After Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in the 
line of duty in October 1997. At retirement, she is age 55 with 24 
years, 5 months, and 11 days of departmental service. Since she was also 
eligible for optional retirement at the time of separation, the Federal 
Benefit Payment commences at retirement. It is based on the 24 years, 1 
month, and 17 days of departmental service performed as of June 30, 
1997. Thus, the Federal Benefit Payment is based on 20 years of service 
at the 2.5 percent accrual rate and 4 years and 1 month of service at 
the 3 percent accrual rate. The total annuity is based on the disability 
formula and is equal to two-thirds of average pay because that amount is 
higher than the 63.25 percent payable based on total service.

          Example 7A--Police Disability in Line of Duty Age 55
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 10.01/42
Hire date: 05/14/73
Separation date: 10/24/97
Department service: 24/05/11
Other service:
Sick leave:
.025 service: 20
.03 service: 4.416667
Average salary: $47,788.64
Final salary: $50,938.00
Total: $30,226.31
Total/month: $2,519.00
2/3 of average pay: $31,859.11
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 10/01/42
Hire date: 05/14/73
Freeze date: 06/30/97
Department service: 24/01/17
Other service:
Sick leave:
.025 service: 20
.03 service: 4.083333
Average salary: $47,788.64
Final salary: $50,938.00
Total: $29,748.43
Total/month: $2,479.00
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan hired 
before 1996 retires based on a disability in December 1997. At 
retirement, he is age 60 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since he qualifies for optional 
retirement at separation, the Federal Benefit Payment begins at 
retirement. Since the excess leave without pay occurred before June 30, 
1997, and the total annuity is based on actual service (that is, exceeds 
the guaranteed disability minimum), the time attributable to the excess 
leave without pay is subtracted from the service used to compute the 
Federal Benefit Payment and total benefit. The Federal Benefit Payment 
is based on 23 years and 6 months of service; 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 13 years and 6 months of service at the 2 percent accrual 
rate. The total annuity payable is based on 24 years of service; 5 years 
of service at the 1.5 percent accrual rate, 5 years of service at the 
1.75 percent accrual rate, and 14 years of service at the 2 percent 
accrual rate.

                 Example 7B--Teachers Disability Age 60
                              [Pre-96 hire]
------------------------------------------------------------------------
                        TotaL Annuity Computation
-------------------------------------------------------------------------
Birth date: 03/09/37

[[Page 301]]

 
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00
------------------------------------------------------------------------

                      Deferred Retirement Examples

               Example 8: All Service Before June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in March 1986 with title 
to a deferred annuity. In November 1997, he reaches age 55 and becomes 
eligible for the deferred annuity based on his 15 years, 9 months, and 8 
days of departmental service, all at the 2.5 percent accrual rate. The 
total annuity is based on the same 15 years, 9 months, and 8 days of 
service all at the 2.5 percent accrual rate. Since all the service is 
creditable as of June 30, 1997, the Federal Benefit Payment equals the 
total annuity.

                       Example 8--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Separation date: 03/08/86
Department service: 15/09/08
Other service:
Sick leave:
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69
Total/month: $998.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Freeze date: 03/08/86
Department service: 15/09/08
Other service:
Sick leave:
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69
Total/month: $998.00
------------------------------------------------------------------------

               Example 9: Service Straddles June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in December 1997 with 
title to a deferred annuity. In November 2007, he will reach age 55 and 
becomes eligible to receive a deferred annuity. At that time, the 
Federal Benefit Payment begins. It is based on the 18 years and 1 month 
of departmental service performed as of June 30, 1997, all at the 2.5 
percent accrual rate. The total annuity begins at the same time, based 
on his 18 years, 6 months, and 8 days of departmental service, all at 
the 2.5 percent accrual rate.

                       Example 9--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Separation date: 12/08/97
Department service: 18/06/08
Other service:
Sick leave:
.025 service: 18.5
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $14,072.55
Total/month: $1,173.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Freeze date: 06/30/97
Department service: 18/01/00
Other service:
Sick leave:
.025 service: 18.083333
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $13,755.60
Total/month: $1,146.00; deferred
------------------------------------------------------------------------


[[Page 302]]

            Reduction To Provide a Survivor Annuity Examples

               Example 10: Survivor Reduction Calculations

    Both of the following examples involve a former teacher who elected 
a reduced annuity to provide a survivor benefit:
    A. In this example, the employee elected full survivor benefits. The 
Federal Benefit Payment is reduced by 2\1/2\ percent of the first $3600 
and 10 percent of the balance. The total annuity is also reduced by 2\1/
2\ percent of the first $3600 and 10 percent of the balance.

           Example 10A--Teachers Optional W/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Reduction: $3,976.41
Total reduced: $38,487.72
Total/month: $3,207.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total unreducted: $41,796.28
Reduction: $3,909.63
Total reduced: $37,886.65
Total/month: $3,157.00
------------------------------------------------------------------------

    B. In this example, the employee elects to provide a partial 
survivor annuity based on $3600 per year. The Federal Benefit Payment is 
reduced by $90 per year. The total benefit is reduced by $90 per year.

           Example 10B--Teachers Optional W/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Reduction: $90.00
Total reduced: $42,374.13
Total/month: $3,531.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire Date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total unreduced: $41,796.28
Reduction: $90.00
Total reduced: $41,706.28
Total/month: $3,476.00
------------------------------------------------------------------------

            Early Optional or Involuntary Retirement Examples

              Example 11: Early Optional With Age Reduction

    In this example, an individual covered by the Teachers Plan hired 
before 1996 retires voluntarily in February 1998, under a special 
program that allows early retirement with at least 20 years of service 
at age 50 older, or at least 25 years of service at any age. At 
retirement, she is 6 full months short of age 55. She has 25 years and 5 
months of departmental service; 6 years, 2 months, and 19 days of other 
service (creditable before June 30, 1997); and 2 months and 9 days of 
unused sick leave. Since she is not eligible for optional retirement and 
she is eligible to retire voluntarily only because of the District-
approved special program, the Federal Benefit Payment is calculated 
similar to a disability retirement. It does not begin until she becomes 
eligible for a deferred annuity at age 62. When it commences the Federal 
Benefit Payment will be based on the service creditable as of June 30, 
1997: 30 years and 11 months of service; 5 years of service at the 1.5 
percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 20 years and 11 months of service at the 2 percent accrual 
rate. The total annuity is based on 5 years of service at the 1.5 
percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate and 21 years and 9 months of service at the 2 percent accrual rate 
(including the unused sick leave). Because the Federal

[[Page 303]]

Benefit Payment is based on the deferred annuity, rather than the early 
voluntary retirement, it is not reduced by the age reduction factor used 
to compute the total benefit.

             Example 11--Teachers Early Out W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total/month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Reduction factor: 1.000000 no reduction
Total reduced: $40,240.80
Total/month: $3,353.00 deferred
------------------------------------------------------------------------

               Example 12: Involuntary With Age Reduction

    In this example, an individual covered by the Teachers Plan hired 
before 1996 retires involuntarily in February 1998. At retirement, she 
is 6 full months short of age 55. She has 25 years and 5 months of 
departmental service; 6 years, 2 months, and 19 days of other service 
(creditable before June 30, 1997); and 2 months and 9 days of unused 
sick leave. The Federal Benefit Payment begins at retirement. It is 
based on the 30 years and 11 months of service; 5 years of service at 
the 1.5 percent accrual rate, 5 years of service at the 1.75 percent 
accrual rate, and 20 years and 11 months of service at the 2 percent 
accrual rate. The total annuity is based on 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate and 21 years and 9 months of service at the 2 percent accrual rate 
(including the unused sick leave). Both the Federal Benefit Payment and 
the total benefit are reduced by the age reduction factor.

            Example 12--Teachers Involuntary W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total/month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Age reduction factor: 0.990000
Total reduced: $39,838.39
Total/month: $3,320.00
------------------------------------------------------------------------

                         Death Benefits Example

                 Example 13: Death Benefits Calculation

    Regardless of whether death occurs in service or after retirement, 
if the death benefit is not based on the length of service, the portion 
of a death benefit that is a Federal Benefit Payment is based on the 
ratio of the number of months of the deceased employee's service as of 
June 30, 1997, to the number of months of the deceased employee's total 
service. This proration will always apply to cases of death after 
retirement in which the survivor annuity is based on the reduction in 
the employee's annuity to provide the benefit. It also applies to lump-
sum benefits and benefits computed under a guaranteed-minimum or a 
percentage-of-disability-at-retirement formula.
    A. In this example, an individual covered by the Teachers Plan 
retires in April 1998 with 30 years of service and elects to provide a 
full survivor annuity. He dies in June 1998. The Federal Benefit Payment 
is 97\1/2\ percent (351 months/360 months) of the total survivor 
benefit.

                  Example 13A--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 04/01/46
Hire date: 04/01/68

[[Page 304]]

 
Separation date: 04/01/98
Death date: 06/24/98
Department service: 30/00/00
Other service:
Sick leave:
Months: 360
Annual Benefit: $12,000.00
Monthly Benefit: $1,000.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/46
Hire date: 04/01/68
Freeze date: 06/30/97
Death date: 06/24/98
Department service: 29/03/00
Other service:
Months: 351
 $11,700.00
 $975.00
------------------------------------------------------------------------

    B. In this example, a teacher dies in service on June 30, 1998 after 
31 years of departmental service. Since the survivor annuity is based on 
actual service, the Federal Benefit Payment is based on the 30 years of 
service as of June 30, 1997. The total benefit is based on the 31 years 
of total service. No proration is appropriate.

                  Example 13B--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Separation date: 06/30/98
Death date: 06/30/98
Department service: 31/00/00
Other service:
Sick leave:
Average salary: $38,787.88
Annual Benefit: $12,426.67
Monthly Benefit: $1,036.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Freeze date: 06/30/97
Death date: 06/30/98
Department service: 30/00/00
Other service:
Average salary: $38,787.88
 $12,000.00
 $1,000.00
------------------------------------------------------------------------

    C. In this example, a teacher dies in service on April 1, 1998 after 
15 years of departmental service. Since the survivor annuity is based on 
the guaranteed minimum, the Federal Benefit Payment is a prorated 
portion of the total benefit. Since the teacher had 171 months of 
service as of the freeze date and 180 months of service at death, the 
Federal Benefit Payment equals 171/180ths of the total benefit.

                  Example 13C--Teachers Death Benefits
                              [pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Separation date: 04/01/98
Death date: 04/01/98
Department service: 15/00/01
Average salary: $36,000.00
Months: 180
Annual Benefit: $7,920.00
Monthly Benefit: $660.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Freeze date: 06/30/97
Death date: 04/01/98
Department Service: 14/03/00
Average salary: $36,000.00
Months: 171
Ratio (171/180): 0.950000
 $7,524.00
 $627.00
------------------------------------------------------------------------

    D. In this example, as in the prior example, a teacher dies in 
service on April 1, 1998 after 15 years of departmental service. 
However, in this example, the teacher was age 40 on the hire date. The 
amount of service used in the survivor annuity calculation equals the 
amount of service that the teacher would have had if the teacher 
continued covered employment until age 60. Since the survivor annuity is 
based on projected service, a form of the guaranteed minimum, the 
Federal Benefit Payment is a prorated portion of the total benefit. 
Since the teacher had 171 months of service as of the freeze date and 
180 months of service at death, the Federal Benefit Payment equals 171/
180ths of the total benefit.

                  Example 13D--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 04/01/43
Hire date: 04/01/83
Separation date: 04/01/98
Death date: 04/01/98
Department service: 15/00/01
Departmental Service projected to age 60: 20/00/01
.015 service: 5
.0175 service: 5
.02 service: 10
Average salary: $36,000.00
Months: 180
Annual Benefit: $7,177.50
Monthly Benefit: $598.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/43
Hire date: 04/01/83
Freeze date: 06/30/97

[[Page 305]]

 
Death date: 04/01/98
Department service: 14/03/00
Average salary: $36,000.00
Months: 171
Ratio (171/180): 0.950000
 $6,818.63
 $568.00
------------------------------------------------------------------------

                   Cost of Living Adjustment Examples

          Example 14: Application of Cost of Living Adjustments

    Cost of living adjustments are applied directly to the Federal 
Benefit Payment to determine the new rate of the Federal Benefit Payment 
after a cost of living adjustment.
    A. In this example, the cost of living adjustment is the same for 
the Federal Benefit Payment and the non-Federal Benefit Payment portion 
of the total benefit. Effectively, the total cost of living adjustment 
is proportionally split between the Federal Benefit Payment and the non-
Federal Benefit Payment.

             Example 14A--Teachers Cost of Living Adjustment
                              [Pre-96 hire]
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
 Birth date: 11/04/48
 Hire date: 03/01/86
 Separation date: 02/28/2013
 Department service: 27/00/00
 Other service paid in 1995: 06/07/28
 Excess LWOP in 1990: 00/03/18
 .015 service: 5
 .0175 service: 5
 .02 service: 23.333333
 Average salary: $53,121.00
 Total: $33,421.98
 Total/month: $2,785.00
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
 Birth date: 11/04/48
 Hire date: 03/01/86
 Freeze date: 06/30/1997
 Department service: 11/04/00
 Other service paid in 1995: 06/07/28
 Excess LWOP in 1990: 00/03/18
 .015 service: 5
 .0175 service: 5
 .02 service: 7.666667
 Average salary: $53,121.00
 Total: $16,777.38
 Total/month: $1,398.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
DC COLA rate 4%
Total COLA: 111
New rate: 2896
Federal COLA rate 4%
 Federal COLA: 56
 New rate: 1454
------------------------------------------------------------------------

    B. In this example, a new District plan applies a different cost of 
living adjustment than is provided for the Federal Benefit Payment. The 
Federal Benefit Payment will be unaffected by the new District plan. In 
such a case, the total cost of living adjustment is no longer 
proportionally split between the Federal Benefit Payment and the non-
Federal Benefit Payment.

             Example 14B--Teachers Cost of Living Adjustment
                              [Pre-96 hire]
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
 Birth date: 11/04/48
 Hire date: 03/01/86
 Separation date: 02/28/2013
 Department service: 27/00/00
 Other service paid in 1995: 06/07/28
 Excess LWOP in 1990: 00/03/18
 .015 service: 5
 .0175 service: 5
 .02 service: 23.333333
 Average salary: $53,121.00
 Total: $33,421.96
 Total/month: $2,785.00
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
 Birth date: 11/04/48
 Hire date: 03/01/86
 Freeze date: 06/30/1997
 Department service: 11/04/00
 Other service paid in 1995: 06/07/28
 Excess LWOP in 1990: 00/03/18
 .015 service: 5
 .0175 service: 5
 .02 service: 7.666667
 Average salary: $53,121.00
 Total: $16,777.38
 Total/month: $1,398.00
------------------------------------------------------------------------
                       COLA Computation Variations
 
                               Variation 1
------------------------------------------------------------------------
DC COLA rate 5% of total benefit:
Total COLA: $139.00
New rate: $2,924.00
Federal COLA rate 4% of Federal
Benefit Payment:
Federal COLA: $56.00
 New rate: $1,454.00
------------------------------------------------------------------------

[[Page 306]]

 
                               Variation 2
------------------------------------------------------------------------
DC COLA rate 5% of DC Payment:
 Total COLA: $125.00
 New rate: $2,910.00
Federal COLA rate 4% of Federal
 Benefit Payment:
 Federal COLA: $56.00
 New rate: $1,454.00
------------------------------------------------------------------------

             Retroactive Payment of Accrued Annuity Example

             Example 15: Accrual of Federal Benefit Payment

    The Federal Benefit Payment begins to accrue on the annuity 
commencing date, regardless of whether the employee is added to the 
annuity roll in time for the regular payment cycle. If the employee is 
due a retroactive payment of accrued annuity, the portion of the 
retroactive payment that would have been Federal Benefit Payment (if it 
were made in the regular payment cycle) is still Federal Benefit 
Payment. In this example, a teacher retired effective September 11, 
1998. She was added to the retirement rolls on the pay date November 1, 
1998 (October 1 to October 31 accrual cycle). Her Federal Benefit 
Payment is $3000 per month and her total benefit payment is $3120 per 
month. Her initial check is $5200 because it includes a prorated payment 
for 20 days (September 11 to September 30). The Federal Benefit Payment 
is $5000 of the initial check ($3000 for the October cycle and $2000 for 
the September cycle).

                  Example 15--Teachers Accrued Benefit
                              [Pre-96 hire]
------------------------------------------------------------------------
                        Total Annuity Computation
-------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Separation date: 09/10/98
Department service: 32/00/10
.015 service: 5
.0175 service: 5
.02 service: 22
Average salary: $62,150.00
Total: $37,445.38
Total/month: $3,120.00
Sept 11-30: $2,080.00
Oct 1-31: $3,120.00
Nov 1-30: $3,120.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Freeze date: 06/30/97
Department service: 30/10/00
.15 service: 5
.0175 service: 5
.02 service: 20.833333
Average salary: $62,150.00
Total: $35,995.21
Total/month: $3,000.00
Sept 11-30: $2,000.00
Oct 1-31: $3,000.00
Nov 1-30: $3,000.00
------------------------------------------------------------------------



                 Subpart D_Claims and Appeals Procedures

    Source: 65 FR 80753, Dec. 22, 2000, unless otherwise noted.



Sec. 29.401  Purpose.

    (a) This subpart explains--
    (1) The procedures that participants and beneficiaries in the Judges 
Plan, Police and Firefighters Plan, and the Teachers Plan must follow in 
applying for Federal Benefit Payments;
    (2) The procedures for determining an individual's eligibility for a 
Federal Benefit Payment and the amount and form of an individual's 
Federal Benefit Payment as required by sections 11021 and 11251(a) 
(codified at DC Official Code section 11-1570(c)(2)(a)) of the Act;
    (3) The appeal rights available under section 11022(a) of the Act 
and section 3 of the 2004 Act (codified at DC Official Code section 11-
1570(c)(3)) to claimants whose claim for Federal Benefit Payments is 
denied in whole or in part; and
    (4) The special rules for processing competing claimant cases.
    (b) This subpart does not apply to processing collection of debts 
due to the United States.
    (c) This part does not apply to claims and appeals filed before 
October 1, 1997. Such claims must be pursued with the District of 
Columbia.

[65 FR 80753, Dec. 22, 2000, as amended at 70 FR 60005, Oct. 14, 2005]



Sec. 29.402  Definitions.

    In this subpart--
    Beneficiary means an individual designated by a participant, or by 
the terms of the Judges Plan, Police and Firefighters Plan, or Teachers 
Plan, who is or may become entitled to a benefit under those plans.

[[Page 307]]

    Claimant means any person seeking a benefit for themselves or 
another under the Judges Plan, Police and Firefighters Plan, or Teachers 
Plan.
    Department means the Secretary of the Treasury or a designee 
authorized to exercise the Secretary's authority with respect to Federal 
Benefit Payments under the Act.
    Participant means an individual who is or may become eligible to 
receive a benefit under the Police and Firefighters Plan or the Teachers 
Plan based on credit for service accrued as of June 30, 1997, or under 
the Judges Plan, or whose beneficiaries may be eligible to receive any 
such benefit.

[65 FR 80753, Dec. 22, 2000, as amended at 70 FR 60005, Oct. 14, 2005]



Sec. 29.403  Applications filed with the Benefits Administrator.

    All claimants for Federal Benefit Payments must file applications 
for benefits (including applications for retirement, refunds of 
contributions, and death benefits) with the Benefits Administrator.



Sec. 29.404  Initial benefit determinations and reconsideration by the 

Benefits Administrator.

    (a) Initial benefit determinations. The Benefits Administrator will 
process applications for Federal Benefit Payments and determine the 
eligibility for and the amount and form of Federal Benefit Payments. All 
initial benefit determination decisions which may reasonably be 
construed as a denial (in whole or part) of a claim for Federal Benefit 
Payments must be in writing, must advise claimants of their right to 
request reconsideration under paragraph (b), of this section and must 
state the time limits applicable to such a request.
    (b) Claimant's right to reconsideration of benefit denials. (1) 
Except as provided in paragraph (b)(2) of this section, claimants who 
disagree with the amount or form of a Federal Benefit Payment 
determination and wish to contest the determination must first request 
the Benefits Administrator to reconsider its determination.
    (2) A decision to collect a debt is not a denial of a benefit claim 
under this section.
    (c) Form and timing of requests for reconsideration. (1) A request 
for reconsideration must be in writing, must include the claimant's 
name, address, date of birth and claim number, if applicable, and must 
state the basis for the request.
    (2) A request for reconsideration must be received by the Benefits 
Administrator within 30 calendar days from the date of the written 
notice of the initial benefit determination.
    (d) Reconsideration decisions. A reconsideration decision by the 
Benefits Administrator denying (in whole or part) a claim for a Federal 
Benefit Payment must--
    (1) Be in writing;
    (2) Provide adequate notice of such denial, setting forth the 
specific reason for the denial in a manner calculated to be understood 
by the average participant; and
    (3) Provide notice of the right to appeal the Benefit 
Administrator's decision to the Department, the address to which such an 
appeal must be submitted, and the time limits applicable to such an 
appeal.
    (e) Appeal of reconsideration decisions. The Department will review 
an appeal of a reconsideration decision under Sec. 29.405.



Sec. 29.405  Appeals to the Department.

    (a) Who may file. Any claimant whose claim for a Federal Benefit 
Payment has been denied (in whole or part) by the Benefits Administrator 
in a reconsideration decision under Sec. 29.404(d) may appeal that 
decision to the Department.
    (b) Form of appeal. An appeal must be in writing, must include the 
claimant's name, address, date of birth and claim number, if applicable, 
and must state the basis for the appeal.
    (c) Time limits on Appeals. (1) An appeal must be received by the 
Department within 30 calendar days from the date of the reconsideration 
decision under Sec. 29.404(d).
    (2) The Department may extend the time limit for filing when the 
claimant shows that he or she was not notified of the time limit and was 
not otherwise aware of it, or that he or she was prevented by 
circumstances beyond his or her control from making the request

[[Page 308]]

within the time limit, or for other good and sufficient reason.
    (d) Final decision. After consideration of the appeal, the 
Department will issue a final decision. The Department's decision must 
be in writing, must fully set forth the Department's findings and 
conclusions on the appeal, and must contain notice of the right to 
judicial review provided in Sec. 29.406. Copies of the final decision 
must be sent to the claimant seeking appeal, to any competing claimants 
(see Sec. 29.407) and to the Benefits Administrator.



Sec. 29.406  Judicial review.

    An individual whose claim for a Federal Benefit Payment has been 
denied (in whole or part) in a final decision by the Department under 
Sec. 29.405 may, within 180 days of the date of the final decision, 
file a civil action in the United States District Court for the District 
of Columbia. Any such civil action must be filed in accordance with the 
rules of that court.



Sec. 29.407  Competing claimants.

    (a) Competing claimants are applicants for survivor benefits based 
on the service of a participant when--
    (1) A benefit is payable based on the service of the participant;
    (2) Two or more claimants have applied for benefits based on the 
service of the participant; and
    (3) A decision in favor of one claimant will adversely affect 
another claimant(s).
    (b)(1) When a competing claimant files a request for reconsideration 
under this section, the other competing claimants shall be notified of 
the request and given an opportunity to submit written substantiation of 
their claim.
    (2) When the Benefits Administrator receives an application from a 
competing claimant(s) before any payments are made based upon the 
service of the participant, and an initial determination of benefits in 
favor of one claimant adversely affects another claimant, all known 
claimants concerned will be notified in writing of that decision and 
those adversely affected will be given an opportunity to request 
reconsideration under the procedures and time limitations set forth in 
Sec. 29.404(c). The Benefits Administrator must not execute its 
decision until the time limit for filing a request for reconsideration 
has expired, or, if a reconsideration decision is made, until the time 
limit for filing an appeal to the Department has expired or the 
Department has issued a final decision on a timely appeal, whichever is 
later.
    (3) When the Benefits Administrator does not receive an application 
from a competing claimant(s) until after another person has begun to 
receive payments based upon the service of the participant, the payments 
will continue until the time limit for filing a request for 
reconsideration has expired, or, if a reconsideration decision is made, 
until the time limit for filing an appeal to the Department has expired 
or the Department has issued a final decision on a timely appeal, 
whichever is later.



           Subpart E_Debt Collection and Waivers of Collection

    Source: 66 FR 36705, July 13, 2001, unless otherwise noted.



Sec. 29.501  Purpose; incorporation by reference; scope.

    (a) This subpart regulates--
    (1) The recovery of overpayments of Federal Benefit Payments;
    (2) The standards for waiver of recovery of overpayments of Federal 
Benefit Payments; and
    (3) The use of Federal Benefit Payments to recover certain other 
debts due the United States.
    (b) The regulations of this subpart incorporate by this reference 
all provisions of the Federal Claims Collection Standards (FCCS) (parts 
900-904 of Title 31, Code of Federal Regulations), and supplement those 
regulations by the prescription of procedures and directives necessary 
and appropriate for the operation and administration of the Retirement 
Funds. To the extent they are not inconsistent with the regulations 
contained in this subpart, the regulations in part 5 of title 31, Code 
of Federal Regulations, also apply to the collection of debts under this 
subpart.
    (c)(1) Debts based on fraud, misrepresentation, or the presentation 
of a false claim. This subpart does not apply to

[[Page 309]]

any overpayments of Federal Benefit Payments which arose, in whole or in 
part, due to fraud, misrepresentation, or the presentation of a false 
claim by the debtor or any party having an interest in the claim. Such 
debts should be referred by the Benefits Administrator immediately to 
the U.S. Justice Department for action pursuant to 31 CFR 900.3.
    (2) Tax debts. This subpart does not apply to tax debts.
    (d)(1) Sections 29.501 through 29.506 state the rules of general 
applicability to this subpart.
    (2) Sections 29.511 through 29.520 prescribe procedures to be 
followed by the Benefits Administrator which are consistent with the 
FCCS in the collection of debts owed to the Retirement Funds.
    (3) Sections 29.521 through 29.526 prescribe the standards that the 
Department will apply in decisions to waive recoupment or recovery of 
overpayments from the Retirement Funds under sections 11021(3) and 
11251(c)(2)(B) of the Act.
    (e) This part does not apply to debt collection claims asserted and 
requests for waivers of collection initiated before October 1, 1997. 
Such debt collection claims must be pursued by the District of Columbia 
and such requests for waivers of collection must be pursued with the 
District of Columbia.

[66 FR 36705, July 13, 2001, as amended at 70 FR 60005, Oct. 14, 2005]



Sec. 29.502  Definitions.

    For purposes of this subpart--
    Additional charges means interest, penalties, and/or administrative 
costs owed on a debt.
    Administrative offset, as defined in 31 U.S.C. 3701(a)(1), means 
withholding funds payable by the United States to, or held by the United 
States for, a person to satisfy a debt the person owes the United 
States.
    Agency means:
    (1) An Executive agency as defined in section 105 of title 5, United 
States Code, including the U.S. Postal Service and the U.S. Postal Rate 
Commission;
    (2) A military department, as defined in section 102 of title 5, 
United States Code;
    (3) An agency or court in the judicial branch, including a court as 
defined in section 610 of title 28, United States Code, the District 
Court for the Northern Mariana Islands, and the Judicial Panel on 
Multidistrict Litigation;
    (4) An agency of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives; and
    (5) Other independent establishments that are entities of the 
Federal Government.
    Annuitant means a retired participant, former spouse, spouse, 
widow(er), child or other beneficiary receiving recurring Federal 
Benefit Payments.
    Annuity means the monthly benefit (including a retirement salary 
under the Judges Plan) of indefinite duration payable to an annuitant.
    Anticipated expenses means expenditures which are expected to occur 
and for which the debtor can provide documentation of the estimated 
cost.
    Beneficiary means an individual designated by a participant, or by 
the terms of the Judges Plan, Police Officers and Firefighters Plan, or 
Teachers Plan, who is or may become entitled to a benefit under those 
plans.
    Change of position for the worse means an individual would be left 
in a worse financial position after recovery of the overpayment than 
prior to the receipt of the overpayment because the individual 
reasonably relied on the amount of the overpayment to his or her 
detriment. For example, an individual has ``changed position for the 
worse'' if he or she made expenditures or assumed new liabilities that 
he or she would not have otherwise done, and he or she is unable to 
withdraw from the commitment without incurring significant financial 
loss.
    Compromise means accepting less than payment in full in satisfaction 
of a debt.
    Consent means the debtor has agreed in writing to administrative 
offset of one or more Federal Benefit Payments after receiving notice of 
the available rights under 31 U.S.C. 3716 and this subpart; to Federal 
salary offset after receiving notice of the available rights under 5 
U.S.C. 5514 and 31 CFR part 5; and to judgment offset under section 124 
of Public Law 97-276, 96 Stat. 1195-1196.

[[Page 310]]

    Credit bureau has the same meaning as the definition of ``consumer 
reporting agency'' provided in 31 U.S.C. 3701(a)(3).
    Creditor agency means the agency to which a debt is owed.
    Debt has the same meaning as the definition of ``debt'' provided in 
31 U.S.C. 3701(b)(1), and includes an overpayment of Federal Benefit 
Payments.
    Debtor means a person who owes a debt or from whom a debt is to be 
recovered, including an annuitant.
    Delinquent means delinquent as defined in 31 CFR 900.2(b).
    Department means the Secretary of the Treasury or a designee 
authorized to exercise the Secretary's authority with respect to Federal 
Benefit Payments under the Act.
    FCCS means the Federal Claims Collection Standards (parts 900-904 of 
Title 31, Code of Federal Regulations).
    Liquid asset means cash or other property readily convertible into 
cash with little or no loss of value.
    Lump-sum credit means:
    (1) Under the Judges Plan, the Police Officers and Firefighters 
Plan, and the Teachers Plan, the unrefunded amount consisting of--
    (i) Retirement contributions from the basic salary of a participant;
    (ii) Amounts deposited covering earlier creditable service; and
    (iii) Such interest as authorized by statute to be included in the 
payment of refunds of retirement contributions; and
    (2) Under the Judges Plan, ``lump-sum credit for survivor annuity'' 
is defined in section 11-1561(10) of the D.C. Code.
    Offset means to withhold the amount of a debt, or a portion of that 
amount, from one or more payments due the debtor. Offset also means the 
amount withheld in this manner.
    Ordinary and necessary living expenses means such expenses as rent, 
mortgage payments, utilities, maintenance, food (including expenses for 
dining out), clothing, insurance (life, health, and accident), taxes, 
installment payments, medical expenses, reasonable expenses for 
recreation and vacations, expenses for support of a dependent when the 
debtor holds primary or joint legal responsibility for such support, and 
other miscellaneous expenses that the debtor can establish as being 
ordinary and necessary.
    Overpayment or overpayment debt means a payment of one or more 
Federal Benefit Payments to an individual in the absence of entitlement 
or in excess of the amount to which an individual is properly entitled.
    Participant means an individual who is or may become eligible to 
receive a benefit under the Police Officers and Firefighters Plan or 
Teachers Plan based on credit for service accrued as of June 30, 1997, 
or under the Judges Plan, or whose beneficiaries may be eligible to 
receive any such benefit.
    Refund means the payment of a lump-sum credit to an individual who 
meets all requirements for payment and files an application for it.
    Relinquish a valuable right means the individual has relinquished a 
valuable privilege, claim, entitlement, or benefit having monetary worth 
because of the overpayment or because of notice that such a payment 
would be made.
    Repayment schedule means the amount of each payment and the number 
of payments to be made to liquidate the debt as determined by the 
Department or the Benefits Administrator.
    Salary offset means any offset authorized by 5 U.S.C. 5514 and 31 
U.S.C. 3716.
    Substantially all, as used in Sec. 29.524, means that a debtor's 
income is less than or equal to his or her ordinary and necessary 
expenses plus a reasonable monthly allowance for unexpected or emergency 
expenses and does not allow for the deduction of a reasonable monthly 
installment payment to recover the debt.
    Voluntary repayment agreement means an agreement wherein the debtor 
makes installment payments to repay an overpayment debt in accordance 
with a repayment schedule agreed to by the Benefits Administrator or the 
Department.
    Waiver means a decision not to recover all or part of an overpayment 
debt owed to the Retirement Funds under authority of sections 11021(3) 
or 11251(c)(2)(B) of the Act.

[[Page 311]]



Sec. 29.503  Prohibition against collection of debts.

    (a) Debts may be collected from Federal Benefit Payments only to the 
extent expressly authorized by Federal debt collection statutes and any 
other applicable Federal law.
    (b) When collection of a debt from Federal Benefit Payments is 
authorized under paragraph (a) of this section, the collection will be 
made in accordance with this subpart and other applicable federal law.



Sec. 29.504  Status of debts.

    A payment of a Federal Benefit Payment to a debtor because of an 
error on the part of the Department or Benefits Administrator, or the 
failure of the creditor agency to properly and/or timely submit a debt 
claim, does not erase the debt or affect the validity of the claim by 
the creditor agency.



Sec. 29.505  Compromise of debts; termination and suspension of collection actions.

    The procedures for compromise of a claim for an overpayment or the 
termination or suspension of a collection action seeking to recover an 
overpayment, other than waiver of an overpayment under Sec. Sec. 29.521 
through 29.526, are controlled exclusively by the FCCS and 31 CFR part 
5.



Sec. 29.506  Recovery of other debts owed to the United States.

    (a) Procedures for Creditor Agencies. Agencies seeking to recover a 
debt by offset of Federal Benefit Payments payable to the debtor must 
comply with the offset procedures set forth in 31 U.S.C. 3716 and the 
FCCS. A creditor agency may seek to collect a debt through offset of 
Federal Benefit Payments pursuant to the Department's procedures for 
administrative offset set forth in 31 CFR part 5.
    (b) Offset by the Benefits Administrator. As required by 31 U.S.C. 
3716(c), the Benefits Administrator must compare payment records of the 
Retirement Funds with records of debts submitted to the Financial 
Management Service for collection by administrative offset, and must 
offset payments to satisfy, in whole or in part, debts owed by any 
annuitant.

                       Collection of Overpayments



Sec. 29.511  Demand letters.

    Except as provided in Sec. 29.516(e), before starting collection 
action to recover an overpayment, the Benefits Administrator must send a 
demand letter that informs the debtor in writing--
    (a) That an overpayment has occurred, the amount of the overpayment, 
and the facts giving rise to the overpayment;
    (b) The date by which payment of the debt should be made to avoid 
additional charges (i.e., interest, penalties and administrative costs) 
permitted by the FCCS and enforced collection;
    (c) The requirement that any overpayment debt delinquent for more 
than 180 days be transferred to the Department of the Treasury's 
Financial Management Service for collection;
    (d) The name, address, and phone number of the appropriate person or 
office the debtor may contact about the debt;
    (e) The remedies which may be used to enforce payment of the debt, 
including assessment of interest, administrative costs and penalties; 
administrative wage garnishment; the use of collection agencies; Federal 
salary offset; tax refund offset; administrative offset; and litigation.
    (f) Whether offset is available and, if so, the types of payment(s) 
to be offset or eligible for offset, the repayment schedule (if any), 
the right to request an adjustment in the repayment schedule, and the 
right to request a voluntary repayment agreement in lieu of offset;
    (g) An explanation of the Department's policy on interest, 
penalties, and administrative costs as set forth in 31 CFR part 5, the 
FCCS, and 31 U.S.C. 3717, including a statement that such assessments 
must be made unless excused in accordance with the FCCS;
    (h) The debtor's opportunity to request repayment in installments if 
the debtor can show an inability to repay the debt in one lump sum;
    (i) The debtor's opportunity to inspect and/or receive a copy of the 
records relating to the overpayment;

[[Page 312]]

    (j) The method and time period (60 calendar days) for requesting 
reconsideration, waiver, and/or compromise of the overpayment;
    (k) That all requests for waiver or compromise must be accompanied 
by a disclosure of the debtor's financial condition and ability to pay 
the debt;
    (l) The standards used by the Department in deciding requests for 
waiver (set forth in Sec. Sec. 29.521 through 29.526) and compromise 
(set forth in 31 CFR 902.2); and
    (m) The fact that a timely filing of a request for reconsideration, 
waiver and/or compromise, or a subsequent timely appeal of a 
reconsideration decision, will stop collection proceedings, unless--
    (1) Failure to take the offset would substantially prejudice the 
Federal Government's ability to collect the debt; and
    (2) The time before the payment is to be made does not reasonably 
permit the completion of these procedures.



Sec. 29.512  Reconsideration by the Benefits Administrator.

    (a) Right to reconsideration of overpayment determinations. 
Individuals who receive a demand letter and who wish to contest the 
existence or amount of the overpayment may ask the Benefits 
Administrator to reconsider the determination.
    (b) Requests for waiver or compromise. Individuals who wish to seek 
waiver or compromise of the overpayment may file such requests with the 
Department under Sec. 29.514. An individual may file a request for 
reconsideration in addition to a request for waiver or compromise.
    (c) Form and timing of requests for reconsideration. (1) A request 
for reconsideration must be in writing and must state the basis for the 
request. Individuals requesting reconsideration will be given a full 
opportunity to present any pertinent information and documentation 
supporting their position and should, to the extent possible, include 
such information and documentation in their request.
    (2) A request for reconsideration must be received by the Benefits 
Administrator within 60 calendar days of the date of the demand letter. 
The Department may extend the time limit for filing when the individual 
shows that he or she was not notified of the time limit and was not 
otherwise aware of it, or that he or she was prevented by circumstances 
beyond his or her control from making the request within the time limit, 
or for other good and sufficient reason.
    (3) When a request for reconsideration covered by this subpart is 
properly filed before the death of the debtor, it will be processed to 
completion unless the relief sought is nullified by the debtor's death.
    (d) Reconsideration decisions. (1) The Benefits Administrator's 
decision on a request for reconsideration will be based upon the 
individual's written submissions, evidence of record, and other 
pertinent available information.
    (2) A reconsideration decision by the Benefits Administrator must--
    (i) Be in writing;
    (ii) Provide notice of the extent of the individual's liability for 
the overpayment, if any;
    (iii) If the individual is determined to be liable for all or a 
portion of the overpayment, reaffirm or modify the conditions for the 
collection of the overpayment previously proposed in the demand letter;
    (iv) Provide notice of the right to appeal the Benefits 
Administrator's decision to the Department, the address to which such an 
appeal must be submitted, and the time limits applicable to such an 
appeal; and
    (v) State that a timely appeal of the Benefits Administrator's 
decision to the Department will suspend action to collect the debt.
    (e) Appeal of reconsideration decisions. The Department will review 
an appeal of a reconsideration decision under Sec. 29.513.



Sec. 29.513  Appeals to the Department.

    (a) Form of appeal. An appeal of a reconsideration decision under 
Sec. 29.512 must be in writing and must state the basis for the appeal.
    (b) Time limits on appeals. (1) An appeal must be received by the 
Department within 60 calendar days from the date of the reconsideration 
decision.

[[Page 313]]

    (2) The Department may extend the time limit for filing when the 
individual shows that he or she was not notified of the time limit and 
was not otherwise aware of it, or that he or she was prevented by 
circumstances beyond his or her control from making the request within 
the time limit, or for other good and sufficient reason.
    (c) Final decision. After consideration of the appeal, the 
Department will issue a final decision. The Department's decision will 
be in writing, will fully set forth the Department's findings and 
conclusions on the appeal, and will contain notice of the right to 
judicial review provided in Sec. 29.515. If the Department determines 
that the individual is liable for all or a portion of the overpayment, 
the decision also will contain the conditions for the collection of the 
overpayment. Copies of the final decision will be sent to the individual 
seeking appeal and to the Benefits Administrator.



Sec. 29.514  Requests for waiver and/or compromise.

    (a) Right to request waiver and/or compromise. Individuals who 
receive a demand letter regarding an overpayment may ask the Department 
to waive and/or compromise, in whole or part, the amount of the 
overpayment.
    (b) Requests for reconsideration. Individuals who have filed a 
request for reconsideration under Sec. 29.512 may also request a waiver 
and/or compromise under this section.
    (c) Form and timing of requests for waiver and/or compromise. (1) A 
request for waiver and/or compromise must be in writing and must state 
the basis for the request. Individuals making such requests will be 
given a full opportunity to present any pertinent information and 
documentation supporting their position and should, to the extent 
possible, include such information and documentation in their request. 
Individuals seeking waiver or compromise of an overpayment must also 
submit required financial information identified in the demand letter.
    (2) A request for waiver or compromise must be filed with the 
Department. If the request is sent by mail, it must be postmarked within 
60 calendar days of the date of the demand letter. If the request is 
hand delivered or delivered electronically, it must be received within 
60 calendar days of the date of the demand letter. The Department may 
extend the time limit for filing when the individual shows that he or 
she was not notified of the time limit and was not otherwise aware of 
it, or that he or she was prevented by circumstances beyond his or her 
control from making the request within the time limit, or for other good 
and sufficient reason.
    (3) When a request for waiver and/or compromise under this section 
is properly filed before the death of the debtor, it will be processed 
to completion unless the relief sought is nullified by the debtor's 
death.
    (d) Waiver and/or compromise decisions. (1) The Department's 
decision on a request for waiver and/or compromise will be based upon 
the individual's written submissions, evidence of record, and other 
pertinent available information. An individual's request for waiver will 
be evaluated by the standards set forth in Sec. 29.521 through Sec. 
29.526. An individual's request for compromise will be evaluated by the 
standards set forth in the FCCS in 31 CFR part 902.
    (2) A waiver or compromise decision by the Department will--
    (i) Be in writing;
    (ii) Provide notice of whether the overpayment will be waived or 
compromised, and the extent to which the individual is still liable for 
the overpayment, if at all;
    (iii) If the individual is determined to be liable for all or a 
portion of the overpayment, reaffirm or modify the conditions for the 
collection of the overpayment previously proposed in the demand letter; 
and
    (iv) Be issued within 120 calendar days from the Department's 
receipt of a timely request for waiver and/or compromise. This time 
limit does not apply to requests for compromise that are referred to the 
Department of Justice for consideration pursuant to 31 CFR 902.1(b).



Sec. 29.515  Judicial review.

    An individual whose request for reconsideration has been denied (in 
whole

[[Page 314]]

or part) in a final decision by the Department under Sec. 29.513 may, 
within 180 days of the date of the final decision, file a civil action 
in the United States District Court for the District of Columbia. Any 
such civil action must be filed in accordance with the rules of that 
court.



Sec. 29.516  Collection of overpayments.

    (a) Means of collection. Collection of an overpayment may be made by 
means of offset under Sec. 29.517, or under any statutory provision 
providing for offset of money due the debtor from the Federal Government 
including, but not limited to, Federal Benefit Payments. Collection may 
also be effected by referral to the Justice Department for litigation, 
as provided in Sec. 29.520, or referral to a collection agency as 
provided in Sec. 29.519, or by other means authorized by federal law.
    (b) Additional charges. Interest, penalties, and administrative 
costs will be assessed on the overpayment in accordance with standards 
established in 31 U.S.C. 3717 and 31 CFR 901.9. Additional charges will 
be waived when required by the FCCS. The Department will waive the 
collection of interest on the overpayment pending the Benefits 
Administrator's consideration of a request for reconsideration and the 
Department's consideration of a request for waiver and/or compromise or 
the appeal of a reconsideration decision. In addition, such charges may 
be waived when the Department determines--
    (1) Collection of those charges would be against equity and good 
conscience under the standards prescribed in Sec. Sec. 29.523 through 
29.525; or
    (2) Waiver of those charges would be in the best interest of the 
United States.
    (c) Collection in installments. (1) Whenever feasible, overpayments 
will be collected in one lump sum.
    (2) However, installment payments may be effected when--
    (i) The debtor establishes that he or she is financially unable to 
pay in one lump sum; or
    (ii)(A) The benefit payable is insufficient to make collection in 
one lump sum;
    (B) The debtor fails to respond to a demand for full payment; and
    (C) Offset is available.
    (d) Offset Amount. (1) The amount offset from a monthly Federal 
Benefit Payment will be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs;
    (ii) An amount equal to 15 percent of the monthly Federal Benefit 
Payment; or
    (iii) The amount, if any, by which the monthly Federal Benefit 
Payment exceeds $750.
    (2) For purposes of this subsection, the ``monthly Federal Benefit 
Payment'' is the amount of the gross monthly benefit after any 
reductions or deductions required under law, including reductions made 
to recover overpayments of Federal Benefit Payments.
    (e) Commencement of collection. (1) Except as provided in paragraph 
(e)(2) of this section, collection will begin after the time limits for 
requesting further rights stated in Sec. 29.512 through Sec. 29.514 
expire and no such requests have been made, or after the Benefits 
Administrator and/or the Department have issued decisions on all timely 
requests for or appeals of those rights, unless failure to make an 
offset would substantially prejudice the Department's ability to collect 
the overpayment and the time before the payment is to be made does not 
reasonably permit the completion of the proceedings in Sec. 29.511 
through Sec. 29.514 or litigation. When offset begins without 
completion of the administrative review process, these procedures will 
be completed promptly, and amounts recovered by offset but later found 
not owed will be refunded promptly.
    (2) The procedures identified in Sec. 29.511 through Sec. 29.514 
will not be applied when the overpayment is caused by--
    (i) A retroactive adjustment in the periodic rate of annuity or any 
deduction taken from annuity when the adjustment is a result of the 
annuitant's election of different entitlements under law, if the 
adjustment is made within 120 days of the effective date of the 
election; or
    (ii) interim estimated payments made before the formal determination 
of entitlement to annuity, if the

[[Page 315]]

amount is recouped from the total annuity payable on the first day of 
the month following the later of--
    (A) The last interim payment or
    (B) The date the formal determination is made.
    (f) Collection of delinquent debts--(1) Debts delinquent over 180 
days. The Benefits Administrator must refer all overpayment debts that 
are over 180 days delinquent to the Secretary for collection pursuant to 
31 U.S.C. 3711(g) and 3716, and 31 CFR part 901.
    (2) Debts delinquent less than 180 days. Once an overpayment debt 
becomes delinquent, the Benefits Administrator should refer it to the 
Secretary for collection by centralized administrative offset pursuant 
to 31 CFR 901.3, unless collection of the debt by some other means is 
likely to occur in a more timely and efficient manner.
    (3) Once a debt is referred under this subsection, the Benefits 
Administrator has no further obligation to collect the debt.



Sec. 29.517  Collection by offset.

    (a) Offset from retirement payments. An overpayment may be collected 
in whole or in part from any refund payment or recurring Federal Benefit 
Payments.
    (b) Offset from other payments--(1) Administrative offset. When 
offset under subsection (a) is not available, an overpayment may be 
offset from other Federal payments due the debtor from other agencies 
under the procedures set forth in 31 CFR part 5 and 31 CFR 901.3(c).
    (2) Salary offset. When the debtor is an employee of the Federal 
Government, the Department may effect collection of an overpayment by 
offset of the debtor's pay in accordance with regulations published to 
implement such offsets under 5 U.S.C. 5514 (see 5 CFR part 550, subpart 
K; 31 CFR 285.7; and 31 CFR Part 5). Due process described in the 
federal salary offset regulations of 31 CFR part 5 will apply. When the 
debtor did not receive a hearing under those regulations and requests 
such a hearing, one will be conducted in accordance with 5 CFR part 550, 
subpart K and 31 CFR part 5.
    (3) Tax refund offset. The Department may effect collection of an 
overpayment by offset of the debtor's tax refund in accordance with the 
Department's tax refund offset regulations found at 31 CFR part 5.



Sec. 29.518  Reporting delinquent debts to credit bureaus.

    (a) Notice. If a debtor's response to the demand letter does not 
result in payment in full, payment by offset, or payment in accordance 
with a voluntary repayment agreement or other repayment schedule 
acceptable to the Benefits Administrator, and the debtor's rights under 
Sec. 29.512 through Sec. 29.514 have been exhausted, the Benefits 
Administrator must report the debtor to a credit bureau. In addition, a 
debtor's failure to make subsequent payments in accordance with a 
repayment schedule must result in a report to a credit bureau. Before 
making a report to a credit bureau, the Benefits Administrator must 
notify the debtor in writing that--
    (1) The payment is overdue;
    (2) The Benefits Administrator intends, after 60 days, to make a 
report as described in paragraph (b) of this section to a credit bureau;
    (3) The debtor's right to dispute the liability has been exhausted 
under Sec. 29.512 through Sec. 29.514; and
    (4) The debtor may avoid having the Benefits Administrator report 
the debtor to a credit bureau by paying the debt in one lump sum or 
making payments current under a repayment schedule.
    (b) Report. If, after being sent the notice described in paragraph 
(a) of this section, the debtor does not pay the overpayment debt or 
make payments current under a repayment schedule or fails to respond to 
the notice, and 60 days have elapsed since the notice was mailed, the 
Benefits Administrator will report to a credit bureau that the debtor is 
responsible for an unpaid debt and provide the following information:
    (1) The debtor's name, address, taxpayer identification number, and 
any other information necessary to establish the identity of the 
individual;
    (2) The amount, status, and history of the debt; and
    (3) The fact that the debt arose in connection with the 
administration of Federal Benefit Payments under a District Retirement 
Fund.

[[Page 316]]

    (c) Subsequent reports. The Benefits Administrator must update its 
report to the credit bureau whenever it has knowledge of events that 
substantially change the status or the amount of the liability.
    (d) Other reporting of delinquent debts. Pursuant to 31 CFR 901.4, 
delinquent overpayment debts should be reported to the Department of 
Housing and Urban Development's Credit Alert Interactive Voice Response 
System (CAIVRS).
    (e) Privacy Act considerations. A delinquent debt may not be 
reported under this section unless a notice issued pursuant to the 
Privacy Act, 5 U.S.C. 552a(e)(4), authorizes the disclosure of 
information about the debtor to a credit bureau or CAIVRS.



Sec. 29.519  Referral to a collection agency.

    (a) The Department retains the responsibility for resolving 
disputes, compromising debts, referring overpayment debts for 
litigation, and suspending or terminating collection action.
    (b) The Department may not refer overpayment debts to commercial 
collection agencies until all procedures required by or requested under 
Sec. 29.511 through Sec. 29.514 have been completed.



Sec. 29.520  Referral for litigation.

    The Department may refer to the Justice Department for litigation 
overpayment debts which cannot be compromised or waived, or on which 
collection activity cannot be suspended or terminated, and which the 
Department has been unable to recover pursuant to the collection 
activity described in Sec. 29.511 through Sec. 29.519. (See 31 CFR 
part 904.) Such debts should be referred to the Justice Department as 
early as possible, but at least within 1 year of the date such debts 
last became delinquent. In the case of overpayments arising from fraud, 
misrepresentation, or the presentation of a false claim, referral should 
be made to the Justice Department immediately. (See 31 CFR 900.3(a).) 
Referral of a debt to the Justice Department will suspend processing 
under Sec. 29.511 through Sec. 29.519 of this subpart.

                  Standards for Waiver of Overpayments



Sec. 29.521  Conditions for waiver and other adjustments.

    (a) General. Overpayments made from the Retirement Funds will be 
recovered unless there is substantial evidence that the individual from 
whom recovery is to be made is eligible for waiver.
    (b) Waiver. The Department may waive an overpayment from the 
Retirement Funds (provided there is no indication of fraud, 
misrepresentation, or lack of good faith on the part of the debtor) 
under sections 11021(3) or 11251(c)(2)(B) of the Act when it is 
established by substantial evidence that the individual from whom 
recovery is to be made--
    (1) Is not at fault in causing or contributing to the overpayment, 
and
    (2) Recovery would be against equity and good conscience.
    (c) Adjustment in the installment schedule. (1)(i) An overpayment 
will not be waived because of financial hardship if a reasonable 
installment schedule can be established for repayment of the debt by 
adjusting the installment schedule originally established.
    (ii) For example, if the Department finds that the original 
installment schedule--24 installments at $125 each--causes the debtor 
financial hardship, but that repayment in 60 installments at $50 each 
does not, it may adjust the installments and recover the debt in full.
    (2) Where it has been determined that an individual is ineligible 
for a waiver, but the individual has shown that collection action 
pursuant to the original installment schedule would cause him or her 
financial hardship, the Department may--
    (i) Adjust the installment schedule if the individual shows that it 
would cause him or her financial hardship to make payments at the rate 
initially scheduled by the Department; or
    (ii) Terminate the collection action under 31 CFR 903.3 if the costs 
of collecting the debt are anticipated to exceed the amount recoverable.



Sec. 29.522  Fault.

    (a) General rule. A debtor is considered to be at fault if he or 
she, or any

[[Page 317]]

other person having an interest in obtaining a waiver of the claim, 
caused or contributed to the accrual of the overpayment. The Department 
considers a debtor or any other person having an interest in obtaining a 
waiver of the claim to have caused or contributed to the accrual of an 
overpayment if--
    (1) Payment resulted from the individual's incorrect but not 
fraudulent statement, which the individual knew or should have known to 
be incorrect; or
    (2) Payment resulted from the individual's failure to disclose facts 
in his or her possession which the individual knew or should have known 
were material, when the Department has identified that the individual 
has a duty to report and has clearly notified the individual of this 
reporting requirement.
    (3) The following factors may affect the decision as to whether the 
debtor is or is not at fault where the debtor submitted an incorrect 
statement, or the debtor failed to disclose material facts in his or her 
possession--
    (i) The debtor's age;
    (ii) The debtor's physical and/or mental condition; and
    (iii) The availability and nature of the information provided to the 
debtor by the Department.
    (b) Knowledge of an overpayment. (1) Individuals who are aware that 
they are not entitled to a payment or are aware that a payment is higher 
than the payment to which they are entitled are not considered to have 
contributed to the overpayment if they promptly contact the Benefits 
Administrator and question the correctness of the payment and take no 
further action in reliance of the overpayment.
    (2) Any contact made with the Benefits Administrator concerning the 
overpayment within 60 days of receipt (if the overpayment is a recurring 
payment, contact must be made within 60 days of the initial payment) 
will satisfy the prompt notification requirement.
    (c) Reasonable person standard. The Department will use a reasonable 
person standard to determine whether an individual should have known 
that a statement was incorrect or that material facts in the 
individual's possession should have been disclosed. The reasonable 
person standard will take into account the objective factors set forth 
is paragraph (a)(3) of this section.



Sec. 29.523  Equity and good conscience.

    Recovery is against equity and good conscience when there is 
substantial evidence that--
    (a) It would cause financial hardship to the person from whom it is 
sought no matter what the amount and length of the proposed installment;
    (b) The recipient of the overpayment can show (regardless of his or 
her financial circumstances) that due to the notice that such payment 
would be made or because of the incorrect payment he or she either has 
relinquished a valuable right or has changed positions for the worse; or
    (c) Recovery would be unconscionable under the circumstances.



Sec. 29.524  Financial hardship.

    Financial hardship may be deemed to exist when the debtor needs 
substantially all of his or her current and anticipated income and 
liquid assets to meet current and anticipated ordinary and necessary 
living expenses during the projected period of collection. Financial 
hardship will not be found to exist when the debtor merely establishes 
that the repayment causes a financial burden, i.e., when it is 
inconvenient to repay the debt. If there are anticipated changes in 
income or expenses that would allow for the recovery of the overpayment 
at a later date, the Department may suspend collection action until a 
future date.
    (a) Considerations. Pertinent considerations in determining whether 
recovery would cause financial hardship include the following:
    (1) The debtor's financial ability to pay at the time collection is 
scheduled to be made, and
    (2) Income to other family member(s), if such member's ordinary and 
necessary living expenses are included in expenses reported by the 
debtor.



Sec. 29.525  Ordinary and necessary living expenses.

    An individual's ordinary and necessary living expenses include rent, 
mortgage payments, utilities, maintenance, transportation, food, 
clothing,

[[Page 318]]

insurance (life, health, and accident), taxes, installment payments for 
which the individual is already liable, medical expenses, support 
expenses for which the individual is legally responsible, and other 
miscellaneous expenses that the individual can establish as being 
ordinary and necessary.



Sec. 29.526  Waiver precluded.

    Waivers will not be offered or granted when--
    (1) The overpayment was obtained by fraud, misrepresentation, or by 
improper negotiation of checks or withdrawal of electronic fund transfer 
payments after the death of the payee; or
    (2) The overpayment was made to an estate and a timely demand for 
repayment is made prior to the final disbursement by the administrator 
or executor of the estate.



PART 30_TARP STANDARDS FOR COMPENSATION AND CORPORATE GOVERNANCE--Table of 

Contents




Sec.
30.0 Executive compensation and corporate governance.
30.1 Q-1: What definitions apply in this part?
30.2 Q-2: To what entities does this part apply?
30.3 Q-3: How are the SEOs and the most highly compensated employees 
          identified for purposes of compliance with this part?
30.4 Q-4: What actions are necessary for a TARP recipient to comply with 
          the standards established under sections 111(b)(3)(A), 
          111(b)(3)(E), 111(b)(3)(F) and 111(c) of EESA (evaluation of 
          employee plans and potential to encourage excessive risk or 
          manipulation of earnings)?
30.5 Q-5: How does a TARP recipient comply with the requirements under 
          Sec. 30.4 (Q-4) of this part that the compensation committee 
          discuss, evaluate, and review the SEO compensation plans and 
          other employee compensation plans to ensure that the SEO 
          compensation plans do not encourage the SEOs to take 
          unnecessary and excessive risks that threaten the value of the 
          TARP recipient, or that the employee compensation plans pose 
          unnecessary risks to the TARP recipient?
30.6 Q-6: How does a TARP recipient comply with the requirement under 
          Sec. 30.4 (Q-4) of this part that the compensation committee 
          discuss, evaluate, and review the employee compensation plans 
          to ensure that these plans do not encourage the manipulation 
          of reported earnings of the TARP recipient to enhance the 
          compensation of any of the TARP recipient's employees?
30.7 Q-7: How does a TARP recipient comply with the certification and 
          disclosure requirements under Sec. 30.4 (Q-4) of this part?
30.8 Q-8: What actions are necessary for a TARP recipient to comply with 
          the standards established under section 111(b)(3)(B) of EESA 
          (the ``clawback'' provision requirement)?
30.9 Q-9: What actions are necessary for a TARP recipient to comply with 
          the standards established under section 111(b)(3)(C) of EESA 
          (the prohibition on golden parachute payments)?
30.10 Q-10: What actions are necessary for a TARP recipient to comply 
          with section 111(b)(3)(D) of EESA (the limitation on bonus 
          payments)?
30.11 Q-11: Are TARP recipients required to meet any other standards 
          under the executive compensation and corporate governance 
          standards in section 111 of EESA?
30.12 Q-12: What actions are necessary for a TARP recipient to comply 
          with section 111(d) of EESA (the excessive or luxury 
          expenditures policy requirement)?
30.13 Q-13: What actions are necessary for a TARP recipient to comply 
          with section 111(e) of EESA (the shareholder resolution on 
          executive compensation requirement)?
30.14 Q-14: How does section 111 of EESA operate in connection with an 
          acquisition, merger, or reorganization?
30.15 Q-15: What actions are necessary for a TARP recipient to comply 
          with the certification requirements of section 111(b)(4) of 
          EESA?
30.16 Q-16: What is the Office of the Special Master for TARP Executive 
          Compensation, and what are its powers, duties and 
          responsibilities?
30.17 Q-17: How do the effective date provisions apply with respect to 
          the requirements under section 111 of EESA?

    Authority: 12 U.S.C. 5221; 31 U.S.C. 321.

    Source: 74 FR 28405, June 15, 2009, unless otherwise noted.



Sec. 30.0  Executive compensation and corporate governance.

    The following questions and answers reflect the executive 
compensation and corporate governance requirements of section 111 of the 
Emergency Economic Stabilization Act of 2008, as amended (12 U.S.C. 
5221) (EESA), with respect to participation in the Troubled Assets 
Relief Program (TARP) established by

[[Page 319]]

the Department of the Treasury (Treasury) thereunder.



Sec. 30.1  Q-1: What definitions apply in this part?

    Affiliate. The term ``affiliate'' means an ``affiliate'' as that 
term is defined in Rule 405 of the Securities Act of 1933 (17 CFR 
230.405).
    Annual compensation. (1) General rule. The term ``annual 
compensation'' means, except as otherwise explicitly provided in this 
part, the dollar value for total compensation for the applicable fiscal 
year as determined pursuant to Item 402(a) of Regulation S-K under the 
Federal securities laws (17 CFR 229.402(a)). Accordingly, for this 
purpose the amounts required to be disclosed pursuant to paragraph 
(c)(2)(viii) of Item 402(a) of Regulation S-K (actuarial increases in 
pension plans and above market earnings on deferred compensation) are 
not required to be included in annual compensation.
    (2) Application to private TARP recipients. For purposes of 
determining annual compensation, a TARP recipient that does not have 
securities registered with the SEC pursuant to the Federal securities 
laws must follow the requirements set forth in paragraph (1) of this 
definition.
    ARRA. The term ``ARRA'' means the American Recovery and Reinvestment 
Act of 2009 (Pub. L. 111-5).
    Benefit plan. The term ``benefit plan'' means any plan, contract, 
agreement or other arrangement that is an ``employee welfare benefit 
plan'' as that term is defined in section 3(1) of the Employee 
Retirement Income Security Act of 1974, as amended (29 U.S.C. 1002(1)), 
or other usual and customary plans such as dependent care, tuition 
reimbursement, group legal services or cafeteria plans; provided, 
however, that this term does not include:
    (1) Any plan that is a deferred compensation plan; or
    (2) Any severance pay plan, whether or not nondiscriminatory, or any 
other arrangement that provides for payment of severance benefits to 
eligible employees upon voluntary termination for good reason, 
involuntary termination, or termination under a window program as 
defined in 26 CFR 1.409A-1(b)(9)(vi).
    Bonus. The term ``bonus'' means any payment in addition to any 
amount payable to an employee for services performed by the employee at 
a regular hourly, daily, weekly, monthly, or similar periodic rate. Such 
term generally does not include payments to or on behalf of an employee 
as contributions to any qualified retirement plan (as defined in section 
4974(c) of the Internal Revenue Code (26 U.S.C. 4974(c)), benefits under 
a broad-based benefit plan, bona fide overtime pay, or bona fide and 
routine expense reimbursements. In addition, provided that the rate of 
commission is pre-established and reasonable, and is applied 
consistently to the sale of substantially similar goods or services, 
commission compensation will not be treated as a bonus. For this 
purpose, a bonus may include a contribution to, or other increase in 
benefits under, a nonqualified deferred compensation plan, regardless of 
when the actual payment will be made under the plan. A bonus may also 
qualify as a retention award or as incentive compensation.
    Bonus payment. For purposes of this part, except where otherwise 
noted, the term ``bonus payment'' includes a payment that is, or is in 
the nature of, a bonus, incentive compensation, or retention award. 
Whether a payment is a bonus payment, or whether the right to a payment 
is a right to a bonus payment, is determined based upon all the facts 
and circumstances, and a payment may be a bonus payment regardless of 
the characterization of such payment by the TARP recipient or the 
employee. For purposes of this part, a bonus payment may include the 
forgiveness of a loan or other amount that otherwise may be required to 
be paid by the employee to the employer.
    Commission compensation. (1) Definition. The term ``commission 
compensation'' means:
    (i) Compensation or portions of compensation earned by an employee 
consistent with a program in existence for that type of employee as of 
February 17, 2009, if a substantial portion of the services provided by 
this employee consists of the direct sale of a product or service to an 
unrelated customer, these sales occur frequently and in the ordinary 
course of business of the TARP

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recipient (but not a specified transaction, such as an initial public 
offering or sale or acquisition of a specified entity or entities), the 
compensation paid by the TARP recipient to the employee consists of 
either a portion of the purchase price for the product or service sold 
to the unrelated customer or an amount substantially all of which is 
calculated by reference to the volume of sales to the unrelated 
customers, and payment of the compensation is either contingent upon the 
TARP recipient receiving payment from the unrelated customer for the 
product or service or, if applied consistently to all similarly situated 
employees, is contingent upon the closing of the sales transaction and 
such other requirements as may be specified by the TARP recipient before 
the closing of the sales transaction with the unrelated customer;
    (ii) Compensation or portions of compensation earned by an employee 
that meet the requirements of paragraph (1)(i) of this definition except 
that the transaction occurs with a related customer, provided that 
substantial sales from which commission compensation arises are made, or 
substantial services from which commission compensation arises are 
provided, to unrelated customers by the service recipient, the sales and 
service arrangement and the commission arrangement with respect to the 
related customer are bona fide, arise from the service recipient's 
ordinary course of business, and are substantially the same, both in 
term and in practice, as the terms and practices applicable to unrelated 
customers to which individually or in the aggregate substantial sales 
are made or substantial services provided by the service recipient; or
    (iii) Compensation or portions of compensation earned by an employee 
consistent with a program in existence for that type of employee as of 
February 17, 2009, if a substantial portion of the services provided by 
this employee to the TARP recipient consists of sales of financial 
products or other direct customer services with respect to unrelated 
customer assets or unrelated customer asset accounts that are generally 
intended to be held indefinitely (and not customer assets intended to be 
used for a specific transaction, such as an initial public offering, or 
sale or acquisition of a specified entity or entities), the unrelated 
customer retains the right to terminate the customer relationship and 
may move or liquidate the assets or asset accounts without undue delay 
(which may be subject to a reasonable notice period), the compensation 
consists of a portion of the value of the unrelated customer's overall 
assets or asset account balance, an amount substantially all of which is 
calculated by reference to the increase in the value of the overall 
assets or account balance during a specified period, or both, or is 
calculated by reference to a contractual benchmark (such as a securities 
index or peer results), and the value of the overall assets or account 
balance and commission compensation is determined at least annually. For 
purposes of this definition, a customer is treated as an unrelated 
customer if the person would not be treated as related to the TARP 
recipient under 26 CFR 1.409A-1(f)(2)(ii) and the person would not be 
treated as providing management services to the TARP recipient under 26 
CFR 1.409A-1(f)(2)(iv).
    (2) Examples. The following examples illustrate the provisions of 
paragraph (1) of this definition:

    Example 1. Employee A is an employee of TARP recipient. Among TARP 
recipient's businesses is the sale of life insurance policies, and TARP 
recipient buys and sells such policies frequently as part of its 
ordinary course of business. Employee A's primary duties consist of 
selling life insurance policies to customers unrelated to the TARP 
recipient. Under a commission program existing for all TARP Recipient 
employees selling life insurance policies as of February 17, 2009, 
Employee A is entitled to receive an amount equal to 75% of the total 
first year's premium paid by an unrelated customer to whom Employee A 
has sold a life insurance policy. The payments to Employee A under the 
program constitute commission compensation.
    Example 2. The same facts as Example 1, except that under the 
program, the rate of commission increases to 80% of the total first 
year's premium paid by a customer once Employee A has sold $10 million 
in policies in a year. Provided that 80% is a reasonable commission, the 
payments to Employee A under the program constitute commission 
compensation.

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    Example 3. Employee B is an employee of TARP recipient. Among TARP 
recipient's businesses is the investment management of unrelated 
customer asset accounts, and TARP recipient provides such services 
routinely and in the ordinary course of business. Employee B's primary 
duties as an employee consist of managing the investments of the asset 
accounts of specified unrelated customers who have deposited amounts 
with the TARP recipient. Under a program in existence on February 17, 
2009, Employee B is entitled to receive an amount equal to 1% of the 
aggregate account balances of the assets under management, as determined 
each December 31. The payments to Employee B constitute commission 
compensation.
    Example 4. TARP recipient employs Employee C. As part of Employee 
C's duties, Employee C is responsible for specified aspects of any 
acquisition of an unrelated entity by TARP Recipient. As part of an 
acquisition in 2009, Employee C is entitled to 1% of the purchase price 
if and when the transaction closes. Regardless of whether such an 
arrangement was customary or established under a specific program as of 
February 17, 2009, the amount is not commission compensation because the 
compensation relates to a specified transaction, in this case the 
purchase of the entity. Accordingly, the compensation is incentive 
compensation.
    Example 5. TARP recipient employs Employee D. As part of Employee 
D's duties, Employee D is responsible for managing the initial public 
offerings of securities of unrelated customers of TARP recipient. As 
part of an initial public offering in 2009, Employee D is entitled to 1% 
of the purchase price if and when the initial public offering closes. 
Regardless of whether such an arrangement was customary or established 
under a specific program as of February 17, 2009, the amount is not 
commission compensation because the compensation relates to a specified 
transaction, in this case the initial public offering. Accordingly, the 
compensation is incentive compensation.

    Compensation means all remuneration for employment, including but 
not limited to salary, commissions, tips, welfare benefits, retirement 
benefits, fringe benefits and perquisites.
    Compensation committee. (1) General rule. The term ``compensation 
committee'' means a committee of independent directors, whose 
independence is determined pursuant to Item 407(a) of Regulation S-K 
under the Federal securities laws (17 CFR 229.407(a)).
    (2) Application to private TARP recipients. For purposes of 
determining director independence, a TARP recipient that does not have 
securities registered with the SEC pursuant to the Federal securities 
laws must follow the requirements set forth in Item 407(a)(1)(ii) of 
Regulation S-K under the Federal securities laws (17 CFR 
229.407(a)(1)(ii)).
    Compensation structure. The term ``compensation structure'' means 
the characteristics of the various forms of total compensation that an 
employee receives or may receive, including the amounts of such 
compensation or potential compensation relative to the amounts of other 
types of compensation or potential compensation, the amounts of such 
compensation or potential compensation relative to the total 
compensation over the relevant period, and how such various forms of 
compensation interrelate to provide the employee his or her ultimate 
total compensation. These characteristics include, but are not limited 
to, whether the compensation is provided as salary, short-term incentive 
compensation, or long-term incentive compensation, whether the 
compensation is provided as cash compensation, equity-based 
compensation, or other types of compensation (such as executive 
pensions, other benefits or perquisites), and whether the compensation 
is provided as current compensation or deferred compensation.
    Deferred compensation plan. The term ``deferred compensation plan'' 
means
    (1) Any plan, contract, agreement, or other arrangement under which 
an employee voluntarily elects to defer all or a portion of the 
reasonable compensation, wages, or fees paid for services rendered which 
otherwise would have been paid to the employee at the time the services 
were rendered (including a plan that provides for the crediting of a 
reasonable investment return on such elective deferrals), provided that 
the TARP recipient either:
    (i) Recognizes a compensation expense and accrues a liability for 
the benefit payments according to GAAP; or
    (ii) Segregates or otherwise sets aside assets in a trust which may 
only be used to pay plan and other benefits, except that the assets of 
this trust may be available to satisfy claims of the TARP recipient's 
creditors in the case of insolvency; or

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    (2) A nonqualified deferred compensation or supplemental retirement 
plan, other than an elective deferral plan established by a TARP 
recipient:
    (i) Primarily for the purpose of providing benefits for a select 
group of directors, management, or highly compensated employees in 
excess of the limitations on contributions and benefits imposed by 
sections 415, 401(a)(17), 402(g) or any other applicable provision of 
the Internal Revenue Code (26 U.S.C. 415, 401(a)(17), 402(g)); or
    (ii) Primarily for the purpose for providing supplemental retirement 
benefits or other deferred compensation for a select group of directors, 
management or highly compensated employees (excluding severance 
payments).
    EESA. The term ``EESA'' means the Emergency Economic Stabilization 
Act of 2008, as amended.
    Employee. The term ``employee'' means an individual serving as a 
servant in the conventional master-servant relationship as understood by 
the common-law agency doctrine. In general, a partner of a partnership, 
a member of a limited liability company, or other similar owner in a 
similar type of entity, will not be treated as an employee for this 
purpose. However, to the extent that the primary purpose for the 
creation or utilization of such partnership, limited liability company, 
or other similar type of entity is to avoid or evade any or all of the 
requirements of section 111 of EESA or these regulations with respect to 
a partner, member or other similar owner, the partner, member or other 
similar owner will be treated as an employee. In addition, a personal 
service corporation or similar intermediary between the TARP recipient 
and an individual providing services to the TARP recipient will be 
disregarded for purposes of determining whether such individual is an 
employee of the TARP recipient.
    Employee compensation plan. The term ``employee compensation plan'' 
means ``plan'' as that term is defined in Item 402(a)(6)(ii) of 
Regulation S-K under the Federal securities laws (17 CFR 
229.402(a)(6)(ii)), but only any employee compensation plan in which two 
or more employees participate and without regard to whether an executive 
officer participates in the employee compensation plan.
    Exceptional financial assistance. The term ``exceptional financial 
assistance'' means any financial assistance provided under the Programs 
for Systemically Significant Failing Institutions, the Targeted 
Investment Program, the Automotive Industry Financing Program, and any 
new program designated by the Secretary as providing exceptional 
financial assistance.
    Excessive or luxury expenditures. The term ``excessive or luxury 
expenditures'' means excessive expenditures on any of the following to 
the extent such expenditures are not reasonable expenditures for staff 
development, reasonable performance incentives, or other similar 
reasonable measures conducted in the normal course of the TARP 
recipient's business operations:
    (1) Entertainment or events;
    (2) Office and facility renovations;
    (3) Aviation or other transportation services; and
    (4) Other similar items, activities, or events for which the TARP 
recipient may reasonably anticipate incurring expenses, or reimbursing 
an employee for incurring expenses.
    Excessive or luxury expenditures policy. The term ``excessive or 
luxury expenditures policy'' means written standards applicable to the 
TARP recipient and its employees that address the four categories of 
expenses set forth in the definition of ``excessive or luxury 
expenditures'' (entertainment or events, office and facility 
renovations, aviation or other transportation services, and other 
similar items, activities or events), and that are reasonably designed 
to eliminate excessive and luxury expenditures. Such written standards 
must:
    (1) Identify the types or categories of expenditures which are 
prohibited (which may include a threshold expenditure amount per item, 
activity, or event or a threshold expenditure amount per employee 
receiving the item or participating in the activity or event);
    (2) Identify the types or categories of expenditures for which prior 
approval is required (which may include a threshold expenditure amount 
per

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item, activity, or event or a threshold expenditure amount per employee 
receiving the item or participating in the activity or event);
    (3) Provide reasonable approval procedures under which an 
expenditure requiring prior approval may be approved;
    (4) Require PEO and PFO certification that the approval of any 
expenditure requiring the prior approval of any SEO, any executive 
officer of a substantially similar level of responsibility, or the TARP 
recipient's board of directors (or a committee of such board of 
directors), was properly obtained with respect to each such expenditure;
    (5) Require the prompt internal reporting of violations to an 
appropriate person or persons identified in this policy; and
    (6) Mandate accountability for adherence to this policy.
    Executive officer. The term ``executive officer'' means an 
``executive officer'' as that term is defined in Rule 3b-7 of the 
Securities Exchange Act of 1934 (Exchange Act) (17 CFR 240.3b-7).
    Financial assistance. (1) Definition. The term ``financial 
assistance'' means any funds or fund commitment provided through the 
purchase of troubled assets under the authority granted to Treasury 
under section 101 of EESA or the insurance of troubled assets under the 
authority granted to Treasury under section 102 of EESA, provided that 
the term ``financial assistance'' does not include any loan modification 
under sections 101 and 109 of EESA. A change in the form of previously 
received financial assistance, such as a conversion of convertible 
preferred stock to common stock, is not treated as new or additional 
financial assistance.
    (2) Examples. The following examples illustrate the provisions of 
paragraph (1) of this definition:

    Example 1. Company A sells $500,000,000 of preferred stock to 
Treasury through the Capital Purchase Program. Company A has received 
financial assistance.
    Example 2. Company B posts collateral to and receives a loan from 
the Federal Reserve special purpose vehicle under the Term Asset-Backed 
Security Loan Facility program. Company B has neither sold troubled 
assets to Treasury, nor insured troubled assets through Treasury, and 
therefore has not received financial assistance.
    Example 3. LP C is a limited partnership established for the purpose 
of participating in the Public Private Investment Program. LP C has a 
general partner (GP) that makes management decisions on behalf of LP C. 
A limited liability company controlled by an affiliate of GP (LLC 
partner) raises $55,000,000 from twenty investors, with each investing 
equal shares, joins LP C as a limited partner, and invests those funds 
for a 55% equity interest in LP C. LP C sells a $45,000,000 equity 
interest to Treasury. LP C, at the direction of the GP, will buy and 
sell securities as investments and manage those investments. LP C will 
contract for investment advice from an investment advisor that is an 
affiliate of GP. LP C has received financial assistance. LLC partner has 
received financial assistance because it is treated as the same employer 
as LP C according to the standards set forth in paragraph (1)(ii) of the 
definition of ``TARP recipient''. The investors in the LLC partner have 
not received financial assistance because they are not treated as the 
same employer as LP C according to the standards set forth in paragraph 
(1)(ii) of the definition of ``TARP recipient''. GP is not an employee 
of LP C pursuant to the definition of ``employee'' in this rule, and is 
not treated as the same employer as LP C according to the standards set 
forth in paragraph (1)(ii) of the definition of ``TARP recipient''. The 
investment advisor-contractor to LP C has not received financial 
assistance. Entities that sell securities to or buy securities from LP C 
have neither sold troubled assets to Treasury nor insured troubled 
assets through Treasury, and therefore have not received financial 
assistance.
    Example 4. Company D, a servicer of mortgage loans or mortgaged-
backed securities, issues a financial instrument to Treasury's financial 
agent in which Company D commits to modify mortgages it is servicing 
consistent with guidelines established by Treasury under the Home 
Affordable Modification Program. Treasury, through its financial agent, 
commits to pay up to $800,000,000 in incentive payments and credit 
enhancements for Company E's commitment to modify mortgages. Company E 
has not received financial assistance.

    GAAP. The term ``GAAP'' means U.S. generally accepted accounting 
principles.
    Golden parachute payment. (1) General rule. The term ``golden 
parachute payment'' means any payment for the departure from a TARP 
recipient for any reason, or any payment due to a change in control of 
the TARP recipient or any entity that is included in a group of entities 
treated as one TARP

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recipient, except for payments for services performed or benefits 
accrued. For this purpose, a change in control includes any event that 
would qualify as a change in control event as defined in 26 CFR 1.280G-
1, Q&A-27 through Q&A-29 or as a change in control event as defined in 
26 CFR 1.409A-3(i)(5)(i). For this purpose, a golden parachute payment 
includes the acceleration of vesting due to the departure or the change 
in control event, as applicable. A golden parachute payment is treated 
as paid at the time of departure or change in control event, and is 
equal to the aggregate present value of all payments made for a 
departure or a change in control event (including the entire aggregate 
present value of the payment if the vesting period was not otherwise 
completed but was accelerated due to departure, regardless of whatever 
portion of the required vesting period the employee had completed). 
Thus, a golden parachute payment may include a right to amounts actually 
payable after the TARP period.
    (2) Exclusions. For purposes of this part, a golden parachute 
payment does not include any of the following:
    (i) Any payment made pursuant to a pension or retirement plan which 
is qualified (or is intended within a reasonable period of time to be 
qualified) under section 401 of the Internal Revenue Code (26 U.S.C. 
401) or pursuant to a pension or other retirement plan which is governed 
by the laws of any foreign country;
    (ii) Any payment made by reason of the departure of the employee due 
to the employee's death or disability; or
    (iii) Any severance or similar payment which is required to be made 
pursuant to a State statute or foreign law (independent of any terms of 
a contract or other agreement) which is applicable to all employers 
within the appropriate jurisdiction (with the exception of employers 
that may be exempt due to their small number of employees or other 
similar criteria).
    (3) Payments for services performed or benefits accrued. (i) General 
rules. Except as otherwise provided for payments made under a deferred 
compensation plan or a benefit plan in paragraph (4) of this definition, 
a payment made, or a right to a payment arising under a plan, contract, 
agreement, or other arrangement (including the acceleration of any 
vesting conditions) is for services performed or benefits accrued only 
if the payment was made, or the right to the payment arose, for current 
or prior services to the TARP recipient (except that an appropriate 
allowance may be made for services for a predecessor employer). Whether 
a payment is for services performed or benefits accrued is determined 
based on all the facts and circumstances. However, a payment, or a right 
to a payment, generally will be treated as a payment for services 
performed or benefits accrued only if the payment would be made 
regardless of whether the employee departs or the change in control 
event occurs, or if the payment is due upon the departure of the 
employee, regardless of whether the departure is voluntary or 
involuntary (other than reasonable restrictions, such as the forfeiture 
of the right to a payment for an involuntary departure for cause, but 
not restrictions relating to whether the departure was a voluntary 
departure for good reason or subsequent to a change in control).
    (ii) Examples. The following examples illustrate the general rules 
in paragraph (3)(i) of this definition:

    Example 1. Employee A is a SEO of Entity B at all relevant times. On 
September 1, 2007, Employee A received a stock appreciation right 
granting him the right to appreciation on the underlying shares that 
would vest 25% for every twelve months of continued services. Under the 
terms of the grant, the stock appreciation right would be immediately 
exercised and payable upon termination of employment. Entity B becomes a 
TARP recipient in December 2008. On September 1, 2009, Entity B 
involuntarily terminates Employee A, at which time Employee A receives a 
payment equal to the post-September 1, 2007 appreciation on 50% of the 
shares under the stock appreciation right (the portion of the shares 
that had vested before the termination of employment). The payment is 
treated as a payment for services performed and does not constitute a 
golden parachute payment.
    Example 2. The facts are the same as the facts in Example 1, except 
that under Employee A's employment agreement, Employee A is entitled to 
accelerate vesting if Employee A is terminated involuntarily

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other than for cause. If Entity B pays Employee A the post-September 1, 
2007 appreciation on 100% of the shares under the stock appreciation 
right, the portion of the payment representing the additional 50% 
accelerated vesting due to the termination of employment would not be 
for services performed and would be a golden parachute payment.

    (4) Payments from benefit plans and deferred compensation plans. A 
payment from a benefit plan or a deferred compensation plan is treated 
as a payment for services performed or benefits accrued only if the 
following conditions are met:
    (i) The plan was in effect at least one year prior to the employee's 
departure;
    (ii) The payment is made pursuant to the plan and is made in 
accordance with the terms of the plan as in effect no later than one 
year before the departure and in accordance with any amendments to the 
plan during this one year period that do not increase the benefits 
payable hereunder;
    (iii) The employee has a vested right, as defined under the 
applicable plan document, at the time of the departure or the change in 
control event (but not due to the departure or the change in control 
event) to the payments under the plan;
    (iv) Benefits under the plan are accrued each period only for 
current or prior service rendered to the TARP recipient (except that an 
appropriate allowance may be made for service for a predecessor 
employer);
    (v) Any payment made pursuant to the plan is not based on any 
discretionary acceleration of vesting or accrual of benefits which 
occurs at any time later than one year before the departure or the 
change in control event; and
    (vi) With respect to payments under a deferred compensation plan, 
the TARP recipient has previously recognized compensation expense and 
accrued a liability for the benefit payments according to GAAP or 
segregated or otherwise set aside assets in a trust which may only be 
used to pay plan benefits, except that the assets of this trust may be 
available to satisfy claims of the TARP recipient's creditors in the 
case of insolvency and payments pursuant to the plan are not in excess 
of the accrued liability computed in accordance with GAAP.
    Gross-up. The term ``gross-up'' means any reimbursement of taxes 
owed with respect to any compensation, provided that a gross-up does not 
include a payment under a tax equalization agreement, which is an 
agreement, method, program, or other arrangement that provides payments 
intended to compensate an employee for some or all of the excess of the 
taxes actually imposed by a foreign jurisdiction on the compensation 
paid by the TARP recipient to the employee over the taxes that would be 
imposed if the compensation were subject solely to U.S. Federal, State, 
and local income tax, or some or all of the excess of the U.S. Federal, 
State, and local income tax actually imposed on the compensation paid by 
the TARP recipient to the employee over the taxes that would be imposed 
if the compensation were subject solely to taxes in the applicable 
foreign jurisdiction, provided that the payment made under such 
agreement, method, program, or other arrangement may not exceed such 
excess and the amount necessary to compensate for the additional taxes 
on the amount paid under the agreement, method, program, or other 
arrangement.
    Incentive compensation. The term ``incentive compensation'' means 
compensation provided under an incentive plan.
    Incentive plan. (1) Definition. The term ``incentive plan'' means an 
``incentive plan'' as that term is defined in Item 402(a)(6)(iii) of 
Regulation S-K under the Federal securities laws (17 CFR 
229.402(a)(6)(iii)), and any plan providing stock or options as defined 
in Item 402(a)(6)(i) of Regulation S-K under the Federal securities laws 
(17 CFR 229.402(a)(6)(i)) or other equity-based compensation such as 
restricted stock units or stock appreciation rights, except for the 
payment of salary or other permissible payments in stock, stock units, 
or other property as described in paragraph (2) of this definition. An 
incentive plan does not include the payment of salary, but does include 
an arrangement under which an employee would earn compensation in the 
nature of a commission, unless

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such compensation qualifies as commission compensation (as defined 
above). Accordingly, an incentive plan includes an arrangement under 
which an employee receives compensation only upon the completion of a 
specified transaction, such as an initial public offering or sale or 
acquisition of a specified entity or entities, regardless of how such 
compensation is measured. For examples, see the definition of 
``commission compensation,'' above. An incentive plan, or a grant under 
an incentive plan, may also qualify as a bonus or a retention award.
    (2) Salary or other permissible payments paid in property. The term 
``incentive plan'' does not include an arrangement under which an 
employee receives salary or another permissible payment in property, 
such as TARP recipient stock, provided that such property is not subject 
to a substantial risk of forfeiture (as defined in 26 CFR 1.83-3(c)) or 
other future period of required services, the amount of the payment is 
determinable as a dollar amount through the date such compensation is 
earned (for example, an agreement that salary payments will be made in 
stock equal to the value of the cash payment that would otherwise be 
due), and the amount of stock or other property accrues at the same time 
or times as the salary or other permissible payments would otherwise be 
paid in cash. The term ``incentive plan'' also does not include an 
arrangement under which an employee receives a restricted stock unit 
that is analogous to TARP recipient stock, that otherwise meets the 
requirements of the previous sentence. For this purpose, a unit is 
analogous to stock if the unit is based upon stock of the TARP 
recipient, or is applied as if the applicable entity, division, or other 
unit were a corporation with one class of stock and the number of units 
of stock granted is determined based on a fixed percentage of the 
overall value of this corporation, and the term ``TARP recipient stock'' 
with respect to a particular employee recipient means the stock of a 
corporation (or the entity, division, or other unit the value of which 
forms the basis for the unit) that is an ``eligible issuer of service 
recipient stock'' under 26 CFR 1.409A-1(b)(5)(iii)(E) (applied by 
analogy to non-corporate entities).
    (3) Examples. The following examples illustrate the provisions of 
paragraph (2) of this definition.

    Example 1. Employee is an employee of TARP recipient. For 2010, TARP 
recipient agrees to pay a salary of $15,000, payable monthly. At each 
salary payment date Employee will receive a $10,000 payment in cash, and 
be transferred a number of shares of common stock of TARP recipient 
equal to $5,000 divided by the fair market value of a share of common 
stock on the salary payment date. The arrangement is for the payment of 
salary, and is not an incentive plan.
    Example 2. Same facts as Example 1, except that pursuant to a valid 
elective deferral election, Employee elects to defer 20% of each salary 
payment into a nonqualified deferred compensation plan. At each salary 
payment date Employee will receive an $8,000 payment in cash, be 
transferred a number of shares of common stock of TARP recipient equal 
to $4,000 divided by the fair market value of a share of common stock on 
the salary payment date, and a $3,000 contribution to an account under a 
nonqualified deferred compensation plan. The arrangement is for the 
payment of salary, and is not an incentive plan.
    Example 3. Employee is an employee of TARP recipient. For 2010, TARP 
recipient agrees to pay a salary of $15,000, payable monthly. At each 
salary payment date, Employee will receive a $10,000 payment in cash, 
and accrue a right to a number of shares of common stock of TARP 
recipient equal to $5,000 divided by the fair market value of a share of 
common stock on the salary payment date. At the end of the year, TARP 
recipient will transfer the total number of accrued shares to Employee, 
subject to a multi-year holding period (a restriction that the shares 
may not be transferred or otherwise disposed of by Employee for a 
specified number of years). If Employee's employment with the TARP 
recipient terminates during the holding period, the termination will not 
affect the duration or application of the holding period or Employee's 
right to retain the shares and to transfer or otherwise dispose of them 
at the end of the holding period. The arrangement is for the payment of 
salary, and is not an incentive plan. The arrangement would also be for 
the payment of salary, and not an incentive plan, if the arrangement 
provided that the holding period was to last until the later of a 
specified time period or a specified time following Employee's 
retirement or other termination of employment.
    Example 4. Employee is an employee of TARP recipient. For 2010, TARP 
recipient agrees to pay a salary of $15,000, payable

[[Page 327]]

monthly. At each salary payment date, Employee will receive a $10,000 
payment in cash, and accrue a right to a contribution to an account 
equal to $5,000 divided by the fair market value of a share on the 
salary payment date. The account balance will be subject to notional 
gains and losses based on the investment return on TARP recipient common 
stock. The amount will be payable upon the last day of the second year 
immediately following the year the services are performed. The 
arrangement is for the payment of salary, and is not an incentive plan. 
However, the arrangement generally will provide deferred compensation 
for purposes of section 409A of the Internal Revenue Code.

    Internal Revenue Code. The term ``Internal Revenue Code'' means the 
Internal Revenue Code of 1986, as amended.
    Long-term restricted stock. The term ``long-term restricted stock'' 
means restricted stock or restricted stock units that include the 
following features:
    (1) The restricted stock or restricted stock units are issued with 
respect to common stock of the TARP recipient. For this purpose, a 
restricted stock unit includes a unit that is payable, or may be 
payable, in cash or stock, provided that the value of the payment is 
equal to the value of the underlying stock. With respect to a specified 
division or other unit within a TARP recipient or a TARP recipient that 
is not a stock corporation, a unit analogous to common stock may be 
used. For this purpose, a unit is analogous to common stock if applied 
as if the entity, division, or other unit were a corporation with one 
class of common stock and the number of units of common stock granted is 
determined based on a fixed percentage of the overall value of this 
corporation. Notwithstanding the foregoing, with respect to a particular 
employee recipient, the corporation the stock of which is utilized (or 
the entity, division, or other unit the value of which forms the basis 
for the unit) must be an ``eligible issuer of service recipient stock'' 
under 26 CFR 1.409A-1(b)(5)(iii)(E) (applied by analogy to non-corporate 
entities).
    (2) The restricted stock or restricted stock unit may not become 
transferable (as defined in 26 CFR 1.83-3(d)), or payable as applied to 
a restricted stock unit, at any time earlier than permitted under the 
following schedule (except as necessary to reflect a merger or 
acquisition of the TARP recipient):
    (i) 25% of the shares or units granted at the time of repayment of 
25% of the aggregate financial assistance received.
    (ii) An additional 25% of the shares or units granted (for an 
aggregate total of 50% of the shares or units granted) at the time of 
repayment of 50% of the aggregate financial assistance received.
    (iii) An additional 25% of the shares or units granted (for an 
aggregate total of 75% of the shares or units granted) at the time of 
repayment of 75% of the aggregate financial assistance received.
    (iv) The remainder of the shares or units granted at the time of 
repayment of 100% of the aggregate financial assistance received.
    (3) Notwithstanding the foregoing, in the case of restricted stock 
for which the employee does not make an election under section 83(b) of 
the Internal Revenue Code (26 U.S.C. 83(b)), at any time beginning with 
the date upon which the stock becomes substantially vested (as defined 
in 26 CFR 1.83-3(b)) and ending on December 31 of the calendar year 
including that date, a portion of the restricted stock may be made 
transferable as may reasonably be required to pay the Federal, State, 
local, or foreign taxes that are anticipated to apply to the income 
recognized due to this vesting, and the amounts made transferable for 
this purpose shall not count toward the percentages in the schedule 
above.
    (4) The employee must be required to forfeit the restricted stock or 
restricted stock unit if the employee does not continue performing 
substantial services for the TARP recipient for at least two years from 
the date of grant, other than due to the employee's death or disability, 
or a change in control event (as defined in 26 CFR 1.280G-1, Q&A-27 
through Q&A-29 or as defined in 26 CFR 1.409A-3(i)(5)(i)) with respect 
to the TARP recipient before the second anniversary of the date of 
grant.
    (5) Nothing in paragraphs (1), (2), (3), and (4) of this definition 
is intended to prevent the placement on such restricted stock or 
restricted stock unit

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of any additional restrictions, conditions, or limitations that are not 
inconsistent with the requirements of these paragraphs.
    Most highly compensated employee. (1) In general. The term ``most 
highly compensated employee'' means the employee of the TARP recipient, 
other than the SEOs of the TARP recipient, whose annual compensation is 
determined to be the highest among all employees of the TARP recipient, 
provided that, for this purpose, a former employee who is no longer 
employed as of the first day of the relevant fiscal year of the TARP 
recipient is not a most highly compensated employee unless it is 
reasonably anticipated that such employee will return to employment with 
the TARP recipient during such fiscal year.
    (2) Application to new entities. For an entity that is created or 
organized in the same year that the entity becomes a TARP recipient, a 
most highly compensated employee for the first year includes the person 
that the TARP recipient determines will be the most highly compensated 
employee for the next year based upon a reasonable, good faith 
determination of the projected annual compensation of such person earned 
during that year. This determination must be made as of the later of the 
date the entity is created or organized or the date the entity becomes a 
TARP recipient, and must be made only once. However, a person need not 
yet be an employee to be treated as a most highly compensated employee, 
if it is reasonably anticipated that the person will become an employee 
of the TARP recipient during the first year.
    Obligation. (1) Definition. The term ``obligation'' means a 
requirement for, or an ability of, a TARP recipient to repay financial 
assistance received from Treasury, as provided in the terms of the 
applicable financial instrument and related agreements, through the 
repayment of a debt obligation or the redemption or repurchase of an 
equity security, but not including warrants to purchase common stock of 
the TARP recipient.
    (2) Examples. The following examples illustrate the provisions of 
paragraph (1) of this definition.

    Example 1. TARP recipient sells $500 million of preferred stock to 
Treasury, and provides warrants to Treasury for the purchase of $75 
million of common stock. The TARP recipient has an ability to redeem the 
preferred stock and thus maintains an outstanding obligation to 
Treasury.
    Example 2. Same facts as Example 1, except that TARP recipient 
redeems the $500 million of preferred stock, so that Treasury holds only 
the $75 million of warrants to purchase common stock outstanding. TARP 
recipient does not maintain an outstanding obligation to Treasury.
    Example 3. TARP recipient sells $120 million of securities backed by 
Small Business Administration-guaranteed loans to Treasury through the 
Consumer and Business Lending initiative, and provides warrants to 
Treasury for the purchase of $10 million of common stock. Because the 
TARP recipient does not as a result of this transaction owe a debt 
obligation or have a requirement or right to redeem or repurchase an 
equity security (other than the warrants to purchase common stock 
provided to the Treasury), the TARP recipient does not have an 
outstanding obligation to Treasury as a result of this transaction.

    PEO. The term ``PEO'' means the principal executive officer or an 
employee acting in a similar capacity.
    Perquisite. The term ``perquisite'' means a ``perquisite or other 
personal benefit'' the amount of which is required to be included in the 
amount reported under Item 402(c)(2)(ix)(A) of Regulation S-K under the 
Federal securities laws (17 CFR 229.402(c)(2)(ix)(A)) (Column (i) of the 
Summary Compensation Table (All Other Compensation)), modified to also 
include any such perquisite or other personal benefit provided to a most 
highly compensated employee subject to Sec. 30.11(b) (Q-11).
    PFO. The term ``PFO'' means the principal financial officer or an 
employee acting in a similar capacity.
    Primary regulatory agency. The term ``primary regulatory agency'' 
means the Federal regulatory agency that has primary supervisory 
authority over the TARP recipient. For a TARP recipient that is a State-
chartered bank that does not have securities registered with the SEC 
pursuant to the Federal securities laws, the primary regulatory agency 
is the TARP recipient's primary Federal banking regulator. If a TARP 
recipient is not subject to the supervision of a Federal regulatory

[[Page 329]]

agency, the term ``primary regulatory agency'' means the Treasury.
    Repayment. The term ``repayment'' means satisfaction of an 
obligation.
    Retention award. (1) General definition. The term ``retention 
award'' means any payment to an employee, other than a payment of 
commission compensation, a payment made pursuant to a pension or 
retirement plan which is qualified (or is intended within a reasonable 
period of time to be qualified) under section 401 of the Internal 
Revenue Code (26 U.S.C. 401), a payment made pursuant to a benefit plan, 
or a payment of a fringe benefit, overtime pay, or reasonable expense 
reimbursement that:
    (i) Is not payable periodically to an employee for services 
performed by the employee at a regular hourly, daily, weekly, monthly, 
or similar periodic rate (or would not be payable in such manner absent 
an elective deferral election);
    (ii) Is contingent on the completion of a period of future service 
with the TARP recipient or the completion of a specific project or other 
activity of the TARP recipient; and
    (iii) Is not based on the performance of the employee (other than a 
requirement that the employee not be separated from employment for 
cause) or the business activities or value of the TARP recipient.
    (2) New hires. With respect to newly hired employees, a payment that 
will be made only if the new hire continues providing services for a 
specified period generally constitutes a retention award. For example, a 
signing bonus that must be repaid unless the newly hired employee 
completes a certain period of service is a retention award. Similarly, a 
``make-whole'' agreement under which a newly hired employee is provided 
benefits intended to make up for benefits foregone at his former 
employer, where these new benefits are subject to a continued service 
period vesting requirement (such as a continuation of the vesting period 
at the former employer), is a retention award.
    (3) Deferred compensation plans. Whether a benefit under a deferred 
compensation plan that is subject to a service vesting period is a 
retention award depends on all the facts and circumstances. However, to 
the extent an employee continues to accrue, or becomes eligible to 
accrue, a benefit under a plan the benefits under which have not been 
materially enhanced for a significant period of time prior to the 
employee becoming an SEO or most highly compensated employee (including 
through expansion of the eligibility for such plan), the benefits 
accrued generally will not be a retention award. However, to the extent 
the plan is amended to materially enhance the benefits provided under 
the plan or to make such employee eligible to participate in such plan, 
and such benefits are subject to a requirement of a continued period of 
service, such an amendment generally will be a retention award.
    SEC. The term ``SEC'' means the U.S. Securities and Exchange 
Commission.
    Senior executive officer or SEO. (1) General definition. The term 
``senior executive officer'' or ``SEO'' means a ``named executive 
officer'' as that term is determined pursuant to Instruction 1 to Item 
402(a)(3) of Regulation S-K under the Federal securities laws (17 CFR 
229.402(a)) who is an employee of the TARP recipient.
    (2) Application to smaller reporting company. A TARP recipient that 
is a smaller reporting company must identify SEOs pursuant to paragraph 
(1) of this definition. Such a TARP recipient must identify at least 
five SEOs, even if only three named executive officers are provided in 
the disclosure pursuant to Item 402(m)(2) of Regulation S-K under the 
Federal securities laws (17 CFR 229.402(m)(2)), provided that no 
employee must be identified as a SEO if the employee's total annual 
compensation does not exceed $100,000 as defined in Item 402(a)(3)(1) of 
Regulation S-K under the Federal securities laws (17 CFR 
229.402(a)(3)(1)).
    (3) Application to private TARP recipients. A TARP recipient that 
does not have securities registered with the SEC pursuant to the Federal 
securities laws must identify SEOs in accordance with rules analogous to 
the rules in paragraph (1) of this definition.
    SEO compensation plan. The term ``SEO compensation plan'' means 
``plan'' as that term is defined in Item 402(a)(6)(ii) of Regulation S-K 
under the Federal securities laws (17 CFR

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229.402(a)(6)(ii)), but only with regard to a SEO compensation plan in 
which a SEO participates.
    Senior risk officer. The term ``senior risk officer'' means a senior 
risk executive officer or employee acting in a similar capacity.
    Smaller reporting company. The term ``smaller reporting company'' 
means a ``smaller reporting company'' as that term is defined in Item 
10(f) of Regulation S-K under the Federal securities laws (17 CFR 
229.10(f)).
    Sunset date. The term ``sunset date'' means the date on which the 
authorities provided under EESA section 101 and 102 terminate, pursuant 
to EESA section 120, taking into account any extensions pursuant to EESA 
section 120(b).
    TARP. The term ``TARP'' means the Troubled Asset Relief Program, 
established pursuant to EESA.
    TARP fiscal year. The term ``TARP fiscal year'' means a fiscal year 
of a TARP recipient, or the portion of a fiscal year of a TARP 
recipient, that is also a TARP period.
    TARP period. The term ``TARP period'' means the period beginning 
with the TARP recipient's receipt of any financial assistance and ending 
on the last date upon which any obligation arising from financial 
assistance remains outstanding (disregarding any warrants to purchase 
common stock of the TARP recipient that the Treasury may hold).
    TARP recipient. (1) General definition. The term ``TARP recipient'' 
means
    (i) Any entity that has received or holds a commitment to receive 
financial assistance; and
    (ii) Any entity that would be treated as the same employer as an 
entity receiving financial assistance based on the rules in sections 
414(b) and 414(c) of the Internal Revenue Code (26 U.S.C. 414(b) or 
(c)), but modified by substituting ``50%'' for ``80%'' in each place it 
appears in section 414(b) or 414(c) and the accompanying regulations. 
However, for purposes of applying the aggregation rules to determine the 
applicable employer, the rules for brother-sister controlled groups and 
combined groups are disregarded (including disregarding the rules in 
section 1563(a)(2) and (a)(3) of the Internal Revenue Code (26 U.S.C. 
1563(a)(2) and (a)(3)) with respect to corporations and the parallel 
rules that are in 26 CFR 1.414(c)-2(c) with respect to other 
organizations conducting trades or businesses).
    (2) Certain excluded entities. Neither any entity receiving funds 
under TARP pursuant to section 109 of EESA nor any Federal Reserve bank 
as that term is used in the Federal Reserve Act (12 U.S.C. 221 et seq.) 
will be treated as a TARP recipient subject to section 111 of EESA and 
any rules and regulations promulgated thereunder.
    (3) Anti-abuse rule. Notwithstanding paragraph (1) of this 
definition, the term ``TARP recipient'' means any entity that has 
received, or holds a commitment to receive, financial assistance; and 
any entity related to such TARP recipient to the extent that the primary 
purpose for the creation or utilization of such entity is to avoid or 
evade any or all of the requirements of section 111 of EESA or these 
regulations.
    Treasury. The term ``Treasury'' means the U.S. Department of the 
Treasury.
    Valid employment contract. The term ``valid employment contract'' 
means a written employment contract that is:
    (1)(i) A material contract as determined pursuant to Item 
601(b)(10)(iii)(A) of Regulation S-K under the Federal securities laws 
(17 CFR 229.601(b)(10)(iii)(A)); or
    (ii) A contract that would be deemed a material contract as 
determined pursuant to Item 601(b)(10)(iii) of Regulation S-K under the 
Federal securities laws (17 CFR 229.601(b)(10)(iii)), but for the fact 
that the material contract relates to one or more employee who is not an 
executive officer; and
    (2) Is enforceable under the law of the applicable jurisdiction.



Sec. 30.2  Q-2: To what entities does this part apply?

    This part applies to any TARP recipient, provided that the 
requirements of sections 111(b) (portions of Sec. 30.4 (Q-4), Sec. 
30.5 (Q-5) and Sec. 30.7 (Q-7), as applicable, Sec. 30.6 (Q-6), and 
Sec. 30.8 (Q-8) through Sec. 30.11 (Q-11), and Sec. 30.15 (Q-15)), 
and section 111(e) (Sec. 30.13 (Q-13)) apply only

[[Page 331]]

during the period during which any obligation to the Federal government 
arising from financial assistance provided under the TARP remains 
outstanding. The requirements of section 111(c) (including portions of 
Sec. 30.4 (Q-4), Sec. 30.5 (Q-5) and Sec. 30.7 (Q-7), as applicable) 
and section 111(d) (Sec. 30.12 (Q-12)) apply through the later of the 
last day of the period during which any obligation to the Federal 
government arising from financial assistance provided under the TARP 
remains outstanding for TARP recipients with an obligation, or the last 
day of the TARP recipient's fiscal year including the sunset date for a 
TARP recipient that has never had an obligation. For this purpose, an 
obligation includes the ownership by the Federal government of common 
stock of a TARP recipient.



Sec. 30.3  Q-3: How are the SEOs and most highly compensated employees 

identified for purposes of compliance with this part?

    (a) Identification. The SEOs for a year are the ``named executive 
officers'' who are employees and are identified in the TARP recipient's 
annual report on Form 10-K or annual meeting proxy statement for that 
year (reporting the SEOs' compensation for the immediately preceding 
year). These employees are considered the SEOs throughout that entire 
year. For purposes of the standards in this part applicable to the most 
highly compensated employees, the determination of whether an employee 
is a most highly compensated employee in a current fiscal year looks 
back to the annual compensation for the last completed fiscal year 
without regard to whether the compensation is includible in the 
employee's gross income for Federal income tax purposes.
    (b) Compliance. Regardless of when during the current fiscal year 
the TARP recipient determines the SEOs or the most highly compensated 
employees, the TARP recipient must ensure that any of the SEOs or 
employees potentially subject to the requirements in this part for the 
current fiscal year complies with the requirements in this part as 
applicable.



Sec. 30.4  Q-4: What actions are necessary for a TARP recipient to comply with 

the standards established under sections 111(b)(3)(A), 111(b)(3)(E), 

111(b)(3)(F) and 111(c) of EESA (evaluation of employee plans and potential to 

encourage excessive risk or manipulation of earnings)?

    (a) General rule. To comply with the standards established under 
sections 111(b)(3)(A), 111(b)(3)(E), 111(b)(3)(F) and 111(c) of EESA, a 
TARP recipient must establish a compensation committee by the later of 
ninety days after the closing date of the agreement between the TARP 
recipient and Treasury or September 14, 2009, and maintain a 
compensation committee during the remainder of the TARP period. If a 
compensation committee is already established before the later of the 
closing date or September 14, 2009, the TARP recipient must maintain its 
compensation committee. During the remainder of the TARP period after 
the later of ninety days after the closing date of the agreement between 
the TARP recipient and Treasury or September 14, 2009, the compensation 
committee must:
    (1) Discuss, evaluate, and review at least every six months with the 
TARP recipient's senior risk officers the SEO compensation plans to 
ensure that the SEO compensation plans do not encourage SEOs to take 
unnecessary and excessive risks that threaten the value of the TARP 
recipient;
    (2) Discuss, evaluate, and review with senior risk officers at least 
every six months employee compensation plans in light of the risks posed 
to the TARP recipient by such plans and how to limit such risks;
    (3) Discuss, evaluate, and review at least every six months the 
employee compensation plans of the TARP recipient to ensure that these 
plans do not encourage the manipulation of reported earnings of the TARP 
recipient to enhance the compensation of any of the TARP recipient's 
employees;
    (4) At least once per TARP recipient fiscal year, provide a 
narrative description of how the SEO compensation plans do not encourage 
the SEOs to take unnecessary and excessive risks that threaten the value 
of the TARP recipient, including how these SEO

[[Page 332]]

compensation plans do not encourage behavior focused on short-term 
results rather than long-term value creation, the risks posed by 
employee compensation plans and how these risks were limited, including 
how these employee compensation plans do not encourage behavior focused 
on short-term results rather than long-term value creation, and how the 
TARP recipient has ensured that the employee compensation plans do not 
encourage the manipulation of reported earnings of the TARP recipient to 
enhance the compensation of any of the TARP recipient's employees; and
    (5) Certify the completion of the reviews of the SEO compensation 
plans and employee compensation plans required under paragraphs (a)(1), 
(2), and (3) of this section.
    (b) Exclusion of TARP recipients with no employees or no affected 
employees. For any period during which a TARP recipient has no 
employees, or has no SEO or compensation plan subject to the review 
process, the TARP recipient is not subject to the requirements of 
paragraph (a) of this section.
    (c) Application to private TARP recipients. The rules provided in 
paragraph (a) of this section are also applicable to TARP recipients 
that do not have securities registered with the SEC pursuant to the 
Federal securities laws. A TARP recipient that does not have securities 
registered with the SEC pursuant to the Federal securities laws and has 
received $25,000,000 or less in financial assistance is subject to 
paragraph (a) of this section, except that, in lieu of establishing and 
maintaining a compensation committee, such a TARP recipient is permitted 
to ensure that all the members of the board of directors carry out the 
duties of the compensation committee as described in paragraph (a) of 
this section. However, such a TARP recipient will be required to 
establish and maintain a compensation committee satisfying the 
requirements of paragraph (a) of this section for the first fiscal year 
following a fiscal year during which the TARP recipient either registers 
securities with the SEC pursuant to the Federal securities laws or has 
received more than $25,000,000 in financial assistance, and during 
subsequent years of the TARP period.
    (d) Application to TARP recipients that have never had an 
outstanding obligation. For TARP recipients that have never had an 
outstanding obligation, only paragraphs (a)(2), (a)(4), (a)(5) (but for 
the narrative and certification requirements of (a)(4) and (a)(5), 
applied only to the requirements of paragraph (a)(2)), (b) and (c) of 
this Sec. 30.4 (Q-4) shall apply.



Sec. 30.5  Q-5: How does a TARP recipient comply with the requirements under 

Sec. 30.4 (Q-4) of this part that the compensation committee discuss, 

evaluate, and review the SEO compensation plans and employee compensation 

plans to ensure that the SEO compensation plans do not encourage the SEOs to 

take unnecessary and excessive risks that threaten the value of the TARP 

recipient, or that the employee compensation plans do not pose unnecessary 

risks to the TARP recipient?

    At least every six months, the compensation committee must discuss, 
evaluate, and review with the TARP recipient's senior risk officers any 
risks (including long-term as well as short-term risks) that the TARP 
recipient faces that could threaten the value of the TARP recipient. The 
compensation committee must identify the features in the TARP 
recipient's SEO compensation plans that could lead SEOs to take these 
risks and the features in the employee compensation plans that pose 
risks to the TARP recipient, including any features in the SEO 
compensation plans and the employee compensation plans that would 
encourage behavior focused on short-term results and not on long-term 
value creation. The compensation committed is required to limit these 
features to ensure that the SEOs are not encouraged to take risks that 
are unnecessary or excessive and that the TARP recipient is not 
unnecessarily exposed to risks.

[[Page 333]]



Sec. 30.6  Q-6: How does a TARP recipient comply with the requirement under 

Sec. 30.4 (Q-4) of this part that the compensation committee discuss, 

evaluate, and review the employee compensation plans to ensure that 

these plans do not encourage the manipulation of reported earnings of the TARP 

recipient to enhance the compensation of any of the TARP recipient's 

employees?

    The compensation committee must discuss, evaluate, and review at 
least every six months the terms of each employee compensation plan and 
identify and eliminate the features in these plans that could encourage 
the manipulation of reported earnings of the TARP recipient to enhance 
the compensation of any employee.



Sec. 30.7  Q-7: How does a TARP recipient comply with the certification and 

disclosure requirements under Sec. 30.4 (Q-4) of this part?

    (a) Certification. The compensation committee must provide the 
certifications required by Sec. 30.4 (Q-4) of this part stating that it 
has reviewed, with the TARP recipient's senior risk officers, the SEO 
compensation plans to ensure that these plans do not encourage SEOs to 
take unnecessary and excessive risks, the employee compensation plans to 
limit any unnecessary risks these plans pose to the TARP recipient, and 
the employee compensation plans to eliminate any features of these plans 
that would encourage the manipulation of reported earnings of the TARP 
recipient to enhance the compensation of any employee. For any period 
during which no obligation arising from financial assistance provided 
under the TARP remains outstanding, the requirements under this 
paragraph shall be modified to be consistent with Sec. 30.4(d) (Q-
4(d)). Providing a statement similar to the following and in the manner 
provided in paragraphs (c) and (d) of this section, as applicable, would 
satisfy this standard: ``The compensation committee certifies that:
    (1) It has reviewed with senior risk officers the senior executive 
officer (SEO) compensation plans and has made all reasonable efforts to 
ensure that these plans do not encourage SEOs to take unnecessary and 
excessive risks that threaten the value of [identify TARP recipient];
    (2) It has reviewed with senior risk officers the employee 
compensation plans and has made all reasonable efforts to limit any 
unnecessary risks these plans pose to the [identify TARP recipient]; and
    (3) It has reviewed the employee compensation plans to eliminate any 
features of these plans that would encourage the manipulation of 
reported earnings of [identify TARP recipient] to enhance the 
compensation of any employee.''
    (b) Disclosure. At least once per TARP recipient fiscal year, the 
compensation committee must provide a narrative description identifying 
each SEO compensation plan and explaining how the SEO compensation plan 
does not encourage the SEOs to take unnecessary and excessive risks that 
threaten the value of the TARP recipient. The compensation committee 
must also identify each employee compensation plan, explain how any 
unnecessary risks posed by the employee compensation plan have been 
limited, and further explain how the employee compensation plan does not 
encourage the manipulation of reported earnings to enhance the 
compensation of any employee.
    (c) Location. For TARP recipients with securities registered with 
the SEC pursuant to the Federal securities law, the compensation 
committee must provide these certifications and disclosures in the 
Compensation Committee Report required pursuant to Item 407(e) of 
Regulation S-K under the Federal securities laws (17 CFR 229.407(e)) and 
to Treasury. These disclosures must be provided in the Compensation 
Committee Report for any disclosure pertaining to any fiscal year any 
portion of which is a TARP period (for a TARP recipient with an 
obligation), or for any disclosure pertaining to any fiscal year 
including a date on or before the sunset date (for a TARP recipient that 
has never had an obligation). Within 120 days of the completion of a 
fiscal year during any part of which is a TARP period (for a TARP 
recipient with an obligation), or the completion of a fiscal year 
including a date on or

[[Page 334]]

before the sunset date (for a TARP recipient that has never had an 
obligation), a TARP recipient that is a smaller reporting company must 
provide the certifications of the compensation committee to its primary 
regulatory agency and to Treasury.
    (d) Application to private TARP recipients. The rules provided in 
paragraphs (a), (b), and (c) of this section are also applicable to TARP 
recipients that do not have securities registered with the SEC pursuant 
to the Federal securities laws. Within 120 days of the completion of the 
fiscal year during any part of which is a TARP period (for a TARP 
recipient with an obligation), or the completion of a fiscal year 
including a date on or before the sunset date (for a TARP recipient that 
has never had an obligation), a private TARP recipient must provide the 
certification of the compensation committee (or board of directors, as 
applicable under Sec. 30.4 (Q-4)) to its primary regulatory agency and 
to Treasury.



Sec. 30.8  Q-8: What actions are necessary for a TARP recipient to comply with 

the standards established under section 111(b)(3)(B) of EESA (the ``clawback'' 

provision requirement)?

    To comply with the standards established under section 111(b)(3)(B) 
of EESA, a TARP recipient must ensure that any bonus payment made to a 
SEO or the next twenty most highly compensated employees during the TARP 
period is subject to a provision for recovery or ``clawback'' by the 
TARP recipient if the bonus payment was based on materially inaccurate 
financial statements (which includes, but is not limited to, statements 
of earnings, revenues, or gains) or any other materially inaccurate 
performance metric criteria. Whether a financial statement or 
performance metric criteria is materially inaccurate depends on all the 
facts and circumstances. However, for this purpose, a financial 
statement or performance metric criteria shall be treated as materially 
inaccurate with respect to any employee who knowingly engaged in 
providing inaccurate information (including knowingly failing to timely 
correct inaccurate information) relating to those financial statements 
or performance metrics. Otherwise, with respect to a performance 
criteria, whether the inaccurate measurement of the performance or 
inaccurate application of the performance to the performance criteria is 
material depends on whether the actual performance or accurate 
application of the actual performance to the performance criteria is 
materially different from the performance required under the performance 
criteria or the inaccurate application of the actual performance to the 
performance criteria. The TARP recipient must exercise its clawback 
rights except to the extent it demonstrates that it is unreasonable to 
do so, such as, for example, if the expense of enforcing the rights 
would exceed the amount recovered. For the purpose of this section, a 
bonus payment is deemed to be made to an individual when the individual 
obtains a legally binding right to that payment.



Sec. 30.9  Q-9: What actions are necessary for a TARP recipient to comply with 

the standards established under section 111(b)(3)(C) of EESA (the prohibition 

on golden parachute payments)?

    (a) Prohibition on golden parachute payments. To comply with the 
standards established under section 111(b)(3)(C) of EESA, a TARP 
recipient must prohibit any golden parachute payment to a SEO and any of 
the next five most highly compensated employees during the TARP period. 
A golden parachute payment is treated as paid at the time of departure 
and is equal to the aggregate present value of all payments made for a 
departure. Thus, a golden parachute payment during the TARP period may 
include a right to amounts actually payable after the TARP period.
    (b) Examples. The following examples illustrate the provisions of 
paragraph (a) of this section:

    Example 1. Employee A is a SEO of a TARP recipient. Employee A is 
entitled to a payment of three times his annual compensation upon an 
involuntary termination of employment or voluntary termination of 
employment for good reason, but such amount is not payable unless and 
until the TARP period expires with respect to TARP recipient. Employee A 
terminates employment during the TARP period. Because, for purposes of

[[Page 335]]

the prohibition on golden parachute payments, the payment is made at the 
time of departure, Employee A may not obtain the right to the payment 
upon the termination of employment.
    Example 2. Employee B involuntarily terminated employment on July 1, 
2008, at which time Employee B was a SEO of a financial institution. 
Employee B's employment agreement provided that if Employee B were 
involuntarily terminated or voluntarily terminated employment for good 
reason, Employee B would be entitled to a series of five equal annual 
payments. After the first payment, but before any subsequent payment, 
the entity became a TARP recipient. Because, for purposes of the 
prohibition on golden parachute payments, all of the five payments are 
deemed to have occurred at termination of employment and because, in 
this case, termination of employment occurred before the beginning of 
the applicable TARP period, the payment of the four remaining payments 
due under the agreement will not violate the requirements of this 
section.



Sec. 30.10  Q-10: What actions are necessary for a TARP recipient to comply 

with section 111(b)(3)(D) of EESA (the limitations on bonus payments)?

    (a) General rule. To comply with section 111(b)(3)(D) of EESA, 
pursuant to the schedule under paragraph (b) of this section and subject 
to the exclusions under paragraph (e) of this section, a TARP recipient 
must prohibit the payment or accrual of any bonus payment during the 
TARP period to or by the employees identified pursuant to paragraph (b) 
of this section.
    (b)(1) Schedule. The prohibition required under paragraph (a) of 
this section applies as follows to:
    (i) The most highly compensated employee of any TARP recipient 
receiving less than $25,000,000 in financial assistance;
    (ii) At least the five most highly compensated employees of any TARP 
recipient receiving $25,000,000 but less than $250,000,000 in financial 
assistance;
    (iii) The SEOs and at least the ten next most highly compensated 
employees of any TARP recipient receiving $250,000,000 but less than 
$500,000,000 in financial assistance; and
    (iv) The SEOs and at least the twenty next most highly compensated 
employees of any TARP recipient receiving $500,000,000 or more in 
financial assistance.
    (2) Changes in level of financial assistance. The determination of 
which schedule in paragraph (b) of this section is applicable to a TARP 
recipient during the TARP period is determined by the gross amount of 
all financial assistance provided to the TARP recipient, valued at the 
time the financial assistance was received. Whether a TARP recipient's 
financial assistance has increased during a fiscal year to the point in 
the schedule under paragraph (b) of this section that the SEOs or a 
greater number of the most highly compensated employees will be subject 
to the requirements under paragraph (a) of this section is determined as 
of the last day of the TARP recipient's fiscal year, and the increase in 
coverage is effective for the subsequent fiscal year.
    (3) Application to first year of financial assistance. For employers 
who become TARP recipients after June 15, 2009, the bonus payment 
limitation provision under this paragraph (b) does not apply to bonus 
payments paid or accrued by TARP recipients or their employees before 
the first date of the TARP period. Certain bonus payments may relate to 
a service period beginning before and ending after the first date of the 
TARP period. In these circumstances, the employee will not be treated as 
having accrued the bonus payment on or after the first date of the TARP 
period if the bonus payment is reduced to reflect at least the portion 
of the service period that occurs on or after the first date of the TARP 
period. However, if the employee is a SEO or most highly compensated 
employee at the time the amount would otherwise be paid, the bonus 
payment amount as reduced in accordance with the previous sentence still 
may not be paid until such time as bonus payments to that employee are 
permitted.
    (c) Accrual. (1) General rule. Whether an employee has accrued a 
bonus payment is determined based on the facts and circumstances. An 
accrual may include the granting of service credit (whether toward the 
calculation of the benefit or any vesting requirement) or credit for the 
compensation received

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(or that otherwise would have been received) during the period the 
employee was subject to the restriction under paragraph (a) of this 
section. For application of this rule to the fiscal year including June 
15, 2009, see Sec. 30.17 (Q-17).
    (2) Payments or accruals after the employee is no longer a SEO or 
most highly compensated employee. If after the employee is no longer a 
SEO or most highly compensated employee, the employee is paid a bonus 
payment or provided a legally binding right to a bonus payment that is 
based upon services performed or compensation received during the period 
the employee was a SEO or most highly compensated employee, the employee 
will be treated as having accrued such bonus payment during the period 
the employee was a SEO or most highly compensated employee. For example, 
if the employee is retroactively granted service credit under an 
incentive plan (whether for vesting or benefit calculation purposes) for 
the period in which the employee was a SEO or most highly compensated 
employee, the employee will be treated as having accrued that benefit 
during the period the employee was a SEO or most highly compensated 
employee.
    (3) Multi-year service periods. Certain bonus payments may relate to 
a multi-year service period, during some portion of which the employee 
is a SEO or most highly compensated employee subject to paragraph (a) of 
this section, and during some portion of which the employee is not. In 
these circumstances, the employee will not be treated as having accrued 
the bonus payment during the period the employee was a SEO or most 
highly compensated employee if the bonus payment is at least reduced to 
reflect the portion of the service period that the employee was a SEO or 
most highly compensated employee. If the employee is a SEO or most 
highly compensated employee at the time the net bonus payment amount 
after such reduction would otherwise be paid, the amount still may not 
be paid until such time as bonus payments to that employee are 
permitted.
    (d) Examples. The following examples illustrate the rules of 
paragraphs (a) through (c) of this section:

    Example 1. Employee A is a SEO of a TARP recipient in 2010, but not 
in 2011. The TARP recipient maintains an annual bonus program, generally 
paying bonus payments in March of the following year. Employee A may not 
be paid a bonus payment in 2010 (for services performed in 2009 or any 
other year). In addition, Employee A may not be paid a bonus payment in 
2011 to the extent such bonus payment is based on services performed in 
2010.
    Example 2. Same facts as in Example 1, provided further that 
Employee A receives a salary increase for 2011. The salary increase 
equals the same percentage as similarly situated executive officers, 
with an additional percentage increase which, over the course of twelve 
months, equals the bonus that would have been payable to Employee A in 
2011 (for services performed in 2010), except for application of 
paragraph (a) of this section. Under these facts and circumstances, the 
additional percentage increase will be treated as a bonus payment 
accrued in 2010 and Employee A may not be paid this bonus payment.
    Example 3. Same facts as in Example 1, provided further that on 
March 1, 2011, Employee A is granted a stock option under the TARP 
recipient stock incentive plan with a value approximately equal to the 
bonus that would have been payable to Employee A in 2011 (for services 
performed in 2010), except for application of paragraph (a) of this 
section. Other similarly situated employee not covered by the bonus 
limitation for 2010 do not receive such a grant. Under these facts and 
circumstances, the stock option grant will be treated as a bonus payment 
accrued in 2010 and will not be permitted to be paid to Employee A.
    Example 4. Employee B is not a SEO or a most highly compensated 
employee of a TARP recipient during 2009. On July 1, 2009, Employee B is 
granted the right to a bonus payment of $50,000 if Employee B is 
employed by the TARP recipient through July 1, 2011 (two years). 
Employee B is a SEO of a TARP recipient during 2010, but is not a SEO or 
a most highly compensated employee of the TARP recipient during 2011. 
Employee B is employed by the TARP recipient on July 1, 2011. Thus, 
Employee B was a SEO or most highly compensated employee during one-half 
of the two-year required service period. Provided that Employee B is 
paid not more than half of the otherwise payable bonus payment, or 
$25,000, Employee B will not be treated as having accrued a bonus 
payment while Employee B was a SEO or a most highly compensated 
employee.

    (e) Exclusions--(1) Long-term restricted stock--(i) General rule. 
The TARP recipient is permitted to award long-term restricted stock to 
the employees

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whose compensation is limited according to the schedule under paragraph 
(b) of this section, provided that the value of this grant may not 
exceed one third of the employee's annual compensation as determined for 
that fiscal year (that is, not using the look-back method for the prior 
year). For purposes of this paragraph, in determining an employee's 
annual compensation, all equity-based compensation granted in fiscal 
years ending after June 15, 2009 will only be included in the 
calculation in the year in which it is granted at its total fair market 
value on the grant date, and all equity-based compensation granted in 
fiscal years ending prior to June 15, 2009 will not be included in the 
calculation of annual compensation for any subsequent fiscal year. For 
purposes of this paragraph, in determining the value of the long-term 
restricted stock grant, the long-term restricted stock granted in 
accordance with this paragraph will only be included in the calculation 
in the year in which the restricted stock is granted at its total fair 
market value on the grant date.

    (ii) Example. During 2008, Employee A receives compensation of $1 
million salary and a $1,200,000 long-term restricted stock grant subject 
to a three-year vesting period. During 2009, Employee A received 
compensation of $1 million salary and no grant of long-term restricted 
stock. During 2010, Employee A receives compensation of $600,000 salary 
and a $300,000 long-term restricted stock grant subject to a three-year 
vesting period. Under the general SEC compensation disclosure rules used 
to define annual compensation in Sec. 30.1 (Q-1) of this part, the 
compensation related to the long-term restricted stock grants would be 
allocated over the vesting period. Assume for this purpose, that for 
2010, $400,000 of the 2008 long-term restricted stock grant is allocated 
as compensation, and $100,000 of the 2010 long-term restricted stock 
grant is allocated as compensation, so that the total annual 
compensation is $1,100,000 ($600,000 salary + $400,000 + $100,000). 
However, for purposes of determining Employee A's annual compensation to 
apply the limit on the value of the long-term restricted stock that may 
be granted to Employee A in 2010, the entire $300,000 value of the 2010 
grant is included but the $400,000 value attributed to the 2008 grant is 
excluded. Accordingly, Employee A's adjusted annual compensation is 
$900,000 ($1,100,000 - $100,000 + $300,000 - $400,000). In addition, the 
entire fair market value of the 2010 long-term restricted stock grant is 
included for purposes of determining whether the limit has been 
exceeded. Because the $300,000 adjusted value of the long-term 
restricted stock grant does not exceed one-third of the $900,000 
adjusted annual compensation, the grant complies with paragraph 
(e)(1)(i).

    (2) Legally binding right under valid employment contracts--(i) 
General rule. The prohibition under paragraph (a) of this section does 
not apply to bonus payments required to be paid under a valid employment 
contract if the employee had a legally binding right under the contract 
to a bonus payment as of February 11, 2009. For purposes of determining 
whether an employee had a legally binding right to a bonus payment, see 
26 CFR 1.409A-1(b)(i). In addition, the bonus payment must be made in 
accordance with the terms of the contract as of February 11, 2009 (which 
may include application of an elective deferral election under a 
qualified retirement plan or a nonqualified deferred compensation plan), 
such that any subsequent amendment to the contract to increase the 
amount payable, accelerate any vesting conditions, or otherwise 
materially enhance the benefit available to the employee under the 
contract will result in the bonus payment being treated as not made 
under the employment contract executed on or before February 11, 2009. 
However, amendment of a valid employment contract executed on or before 
February 11, 2009 under which an employee has a legally binding right to 
a bonus payment to reduce the amount of the bonus payment or to enhance 
or include service-based or performance-based vesting requirements or 
holding period requirements will not result in this treatment. The 
amended employment contract would still be deemed a valid employment 
contract and the employee would still be treated as having a legally 
binding right to the bonus payment under the original employment 
contract. The TARP recipient and the employees of the TARP recipient 
should be cognizant of the restrictions under section 409A of the 
Internal Revenue Code (26 U.S.C. 409A) in the case of an amendment 
described in the preceding sentence.

[[Page 338]]

    (ii) Examples. The following examples illustrate the provisions of 
this paragraph (2).

    Example 1. TARP recipient sponsors a written restricted stock unit 
plan. Under the plan, restricted stock units are traditionally granted 
each July 1, and are subject to a three-year vesting requirement. 
Employee A, a SEO of TARP recipient, received grants on July 1, 2007, 
July 1, 2008, and July 1, 2009. The July 1, 2007 and July 1, 2008 grants 
are excluded from the limitation on payments, because although the 
awards were subject to a continuing service vesting requirement, 
Employee A retained a legally binding right to the restricted stock 
units as of February 11, 2009. However, regardless of the fact that the 
restricted stock unit program was in existence on February 11, 2009, 
Employee A did not retain a legally binding right to a restricted stock 
unit for 2009 as of February 11, 2009, but rather obtained the legally 
binding right only when the restricted stock unit was granted on July 1, 
2009. Accordingly, the July 1, 2009 grant is subject to the limitation 
and is not permitted to be accrued or paid (unless such grant complies 
with the exception for certain grants of long-term restricted stock).
    Example 2. TARP recipient sponsors an annual bonus program 
documented in a written plan. Under the bonus program, the board of 
directors retains the discretion to eliminate or reduce the bonus of any 
employee in the bonus pool. Employees B and C, both SEOs, are in the 
bonus pool for 2008. On January 15, 2009, the compensation committee 
determines the bonuses to which the employees of the division in which 
Employee B works are entitled, and awards Employee B a $10,000 bonus 
payable on June 1. Employee B has a legally binding right to the bonus 
as of February 11, 2009 and payment of the bonus is not subject to the 
limitation. However, as of February 11, 2009, the board of directors has 
not met to determine which employees of the division in which Employee C 
works will be entitled to a bonus or the amount of such bonus. 
Accordingly, Employee C did not have a legally binding right to a bonus 
as of February 11, 2009 and may be subject to the bonus payment 
limitation.
    Example 3. TARP recipient sponsors a written stock option plan under 
which stock options may be granted to SEOs designated by the 
compensation committee. Designations and grants typically occur at a 
meeting in August of every year, and no meeting occurred in 2009 before 
August. Regardless of the existence of the general plan, no SEO had a 
legally binding right to a stock option grant for 2009 as of February 
11, 2009 because no grants had been made under the plan. Accordingly, 
any 2009 grant will be subject to the limitation and is not permitted to 
be made.
    Example 4. Employee D is an SEO of a TARP recipient. Under Employee 
D's written employment agreement executed before February 11, 2009, 
Employee D is entitled to the total of whatever bonuses are made 
available to Employee E and Employee F. As of February 11, 2009, 
Employee E had a legally binding right to a $100,000 bonus. Employees E 
and F are never at any time SEOs or highly compensated employees subject 
to the limitation. As of February 11, 2009, Employee F had no legally 
binding right to a bonus, but was eligible to participate in a bonus 
pool and was ultimately awarded a bonus of $50,000. As of February 11, 
2009, Employee D had a legally binding right to a $100,000 bonus, so 
that bonus is not subject to the limitation. However, as of February 11, 
2009, Employee D did not have a legally binding right to the additional 
$50,000 bonus, so that bonus is subject to the bonus payment limitation 
and, if not paid before June 15, 2009 is not permitted to be paid.

    (f) Application to private TARP recipients. The rules set forth in 
this section are also applicable to TARP recipients that do not have 
securities registered with the SEC pursuant to the Federal securities 
laws.



Sec. 30.11  Q-11: Are TARP recipients required to meet any other standards 

under the executive compensation and corporate governance standards in section 

111 of EESA?

    (a) Approval of compensation payments to, and compensation 
structures for, certain employees of TARP recipients receiving 
exceptional financial assistance. For any period during which a TARP 
recipient is designated as a TARP recipient that has received 
exceptional financial assistance, the TARP recipient must obtain the 
approval by the Special Master of all compensation payments to, and 
compensation structures for, SEOs and most highly compensated employees 
subject to paragraph (b) of Sec. 30.10 (Q-10). TARP recipients that 
receive exceptional financial assistance must also receive approval by 
the Special Master for all compensation structures for other employees 
who are executive officers (as defined under the Securities and Exchange 
Act, Rule 3b-7) or one of the 100 most highly compensated employees of a 
TARP recipient receiving exceptional assistance (or both), who are not 
subject to the bonus limitations under Sec. 30.10 (Q-10). For this 
purpose, compensation payments and compensation

[[Page 339]]

structures may include awards or other rights to compensation which an 
employee has already received but not yet been paid or, in some 
instances, fully accrued. Accordingly, the Special Master has the 
authority to require that such compensation payments or compensation 
structures be altered to meet the standards set forth in Sec. 30.16 (Q-
16). However, this approval requirement is not applicable to payments 
that are not subject to paragraph (a) of Sec. 30.10 (Q-10) due to the 
application of paragraph (e)(2) of Sec. 30.10 (Q-10) or the effective 
date provisions of Sec. 30.17 (Q-17), though the Special Master will 
take such payments into account in reviewing the compensation structure 
and amounts payable, as applicable, that are subject to review. 
Notwithstanding any of the foregoing, approval is not required with 
respect to an employee not subject to the bonus payment limitations to 
the extent that the employee's annual compensation, as modified in Sec. 
30.16 (Q-16) to include certain deferred compensation and pension 
accruals but to disregard any grant of long-term restricted stock, is 
limited to $500,000 or less, and any further compensation is provided in 
the form of long-term restricted stock. For details, see Sec. 30.16 (Q-
16).
    (b) Perquisite disclosure--(1) General rule. TARP recipients must 
annually disclose during the TARP period any perquisite whose total 
value for the TARP recipient's fiscal year exceeds $25,000 for each of 
the SEOs and most highly compensated employees that are subject to 
paragraph (a) of Sec. 30.10 (Q-10). TARP recipients must provide a 
narrative description of the amount and nature of these perquisites, the 
recipient of these perquisites, and a justification for offering these 
perquisites (including a justification for offering the perquisite, and 
not only for offering the perquisite with a value that exceeds $25,000). 
Such disclosure must be provided within 120 days of the completion of a 
fiscal year any part of which is a TARP period.
    (2) Location. A TARP recipient must provide this disclosure to 
Treasury and to its primary regulatory agency.
    (c) Compensation consultant disclosure--(1) General rule. The 
compensation committee of the TARP recipient must provide annually a 
narrative description of whether the TARP recipient, the board of 
directors of the TARP recipient, or the compensation committee has 
engaged a compensation consultant; and all types of services, including 
non-compensation related services, the compensation consultant or any of 
its affiliates has provided to the TARP recipient, the board, or the 
compensation committee during the past three years, including any 
``benchmarking'' or comparisons employed to identify certain percentile 
levels of compensation (for example, entities used for benchmarking and 
a justification for using these entities and the lowest percentile level 
proposed for compensation). Such disclosure must be provided within 120 
days of the completion of a fiscal year any part of which is a TARP 
period.
    (2) Application to TARP recipients not required to maintain 
compensation committees. For those TARP recipients not required to 
establish and maintain compensation committees under Sec. 30.4(c) (Q-
4), the board of directors must provide the disclosure under Sec. 
30.4(c)(1).
    (3) Location. A TARP recipient must provide this disclosure to 
Treasury and to its primary regulatory agency.
    (d) Prohibition on gross-ups. Except as explicitly permitted under 
this part, TARP recipients are prohibited from providing (formally or 
informally) gross-ups to any of the SEOs and next twenty most highly 
compensated employees during the TARP period. For this purpose, 
providing a gross-up includes providing a right to a payment of such a 
gross-up at a future date, for example a date after the TARP period.



Sec. 30.12  Q-12: What actions are necessary for a TARP recipient to comply 

with section 111(d) of EESA (the excessive or luxury expenditures policy 

requirement)?

    To comply with section 111(d) of EESA, by the later of ninety days 
after the closing date of the agreement between the TARP recipient and 
Treasury or September 14, 2009, the board of directors of the TARP 
recipient must adopt an excessive or luxury expenditures policy, provide 
this policy to Treasury and its primary regulatory agency, and post the 
text of this policy

[[Page 340]]

on its Internet Web site, if the TARP recipient maintains a company Web 
site. After adoption of the policy, the TARP recipient must maintain the 
policy during the remaining TARP period (if the TARP recipient has an 
obligation), or through the last day of the TARP recipient's fiscal year 
including the sunset date (if the TARP recipient has never had an 
obligation). If, after adopting an excessive or luxury expenditures 
policy, the board of directors of the TARP recipient makes any material 
amendments to this policy, within ninety days of the adoption of the 
amended policy, the board of directors must provide the amended policy 
to Treasury and its primary regulatory agency and post the amended 
policy on its Internet Web site, if the TARP recipient maintains a 
company Web site. This disclosure must continue through the TARP period 
(if the TARP recipient has an obligation), or through the last day of 
the TARP recipient's fiscal year that includes the sunset date (if the 
TARP recipient has never had an obligation).



Sec. 30.13  Q-13: What actions are necessary for a TARP recipient to comply 

with section 111(e) of EESA (the shareholder resolution on executive 

compensation requirement)?

    (a) General rule. As provided in section 111(e) of EESA, any proxy 
or consent or authorization for an annual or other meeting of the 
shareholders of any TARP recipient that occurs during the TARP period 
must permit a separate shareholder vote to approve the compensation of 
executives, as required to be disclosed pursuant to the Federal 
securities laws (including the compensation discussion and analysis, the 
compensation tables, and any related material). To meet this standard, a 
TARP recipient must comply with any rules, regulations, or guidance 
promulgated by the SEC.



Sec. 30.14  Q-14: How does section 111 of EESA operate in connection with an 

acquisition, merger, or reorganization?

    (a) Special rules for acquisitions, mergers, or reorganizations. In 
the event that a TARP recipient (target) is acquired by an entity that 
is not an affiliate of the target (acquirer) in an acquisition of any 
form, including a purchase of substantially all of the assets of the 
target, such that the acquirer after the transaction would have been 
treated as a TARP recipient if the target had received the TARP funds 
immediately after the transaction, acquirer will not become subject to 
section 111 of EESA merely as a result of the acquisition. If the 
acquirer is not subject to section 111 of EESA immediately after the 
transaction, then any employees of the acquirer immediately after the 
transaction (including target employees who were SEOs or most highly 
compensated employees immediately prior to the transaction and became 
acquirer employees as a result of the transaction) will not be subject 
to section 111 of EESA.
    (b) Anti-abuse rule. Notwithstanding the provisions of paragraph (a) 
of this section, if the primary purpose of a transaction involving the 
acquisition, in any form, of a TARP recipient is to avoid or evade the 
application of any of the requirements of section 111 of EESA, the 
acquirer will be treated as a TARP recipient immediately upon such 
acquisition. In such a case, the SEOs and the most highly compensated 
employees to whom any of the requirements of section 111 of EESA and 
this Interim Final Rule apply shall be redetermined as of the date of 
the acquisition. The redetermined SEOs and most highly compensated 
employees of the post-acquisition acquirer shall consist of the PEO and 
PFO of the post-acquisition acquirer, plus the applicable number of next 
most highly compensated employees determined by aggregating the post-
acquisition employees of the acquirer (to include the pre-acquisition 
employees of the target employed by the acquirer, or anticipated to be 
employed by the acquirer), and ranking such employees in order of 
compensation for the immediately preceding fiscal year of the pre-
acquisition target or pre-acquisition acquirer, as appropriate. In the 
case of an asset acquisition, the entity or entities to whom the 
target's assets are transferred shall be treated as the direct recipient 
of the financial assistance for purposes of determining which other 
related entities are treated, in the aggregate, as the TARP recipient 
under

[[Page 341]]

the definition of ``TARP recipient'' in Sec. 30.1 (Q-1).



Sec. 30.15  Q-15: What actions are necessary for a TARP recipient to comply 

with certification requirements of section 111(b)(4) of EESA?

    (a) Certification Requirements--(1) General. To comply with section 
111(b)(4) of EESA, the PEO and the PFO of the TARP recipient must 
provide the following certifications with respect to the compliance of 
the TARP recipient with section 111 of EESA as implemented under this 
part:
    (2) First Fiscal Year Certification. (i) Within ninety days of the 
completion of the first annual fiscal year of the TARP recipient any 
portion of which is a TARP period, the PEO and the PFO of the TARP 
recipient must provide certifications similar to the model provided in 
appendix A to this section.
    (ii) If the first annual fiscal year of a TARP recipient any portion 
of which is a TARP period ends within thirty days after the closing date 
of the applicable agreement between the TARP recipient and Treasury, the 
TARP recipient shall have an additional sixty days beginning on the day 
after the end of the fiscal year during which it can establish the 
compensation committee, if not already established, and during which the 
compensation committee shall meet with senior risk officers to discuss, 
review, and evaluate the SEO compensation plans and employee 
compensation plans in accordance with Sec. 30.4 (Q-4) of this part. The 
certifications of the PEO and the PFO of the TARP recipient must be 
amended to reflect the timing of the establishment and reviews of the 
compensation committee.
    (3) Years Following First Fiscal Year Certification. Within ninety 
days of the completion of each TARP fiscal year of the TARP recipient 
after the first TARP fiscal year, the PEO and the PFO of the TARP 
recipient must provide a certification similar to the model provided in 
Appendix B to this section.
    (4) Location. A TARP recipient with securities registered with the 
SEC pursuant to the Federal securities law must provide these 
certifications as an exhibit (pursuant to Item 601(b)(99)(i) of 
Regulation S-K under the Federal securities laws (17 CFR 
229.601(b)(99)(i)) to the TARP recipient's annual report on Form 10-K 
and to Treasury. To the extent that the PEO or the PFO of the TARP 
recipient is unable to provide any of these certifications in a timely 
manner, the PEO or the PFO must provide Treasury an explanation of the 
reason such certification has not been provided. These certifications 
are in addition to the compensation committee certifications required by 
Sec. 30.5 (Q-5) of this part.
    (5) Application to private TARP recipients. The rules provided in 
this section are also applicable to TARP recipients that do not have 
securities registered with the SEC pursuant to the Federal securities 
laws, except the certifications under paragraphs (a)(2)(x) and (a)(3)(x) 
of this section are not required. A private TARP recipient must provide 
these certifications to its primary regulatory agency and to Treasury.
    (6) Application to TARP recipients that have never had an 
obligation. For those TARP recipients that have never had an obligation, 
the PEO and PFO must provide the certifications pursuant to this 
paragraph (a) only with respect to the requirements applicable to a TARP 
recipient that has never had an obligation (generally certain 
compensation committee reviews of employee compensation plans and the 
issuance of, and compliance with, an excessive or luxury expenses 
policy).
    (b) Recordkeeping requirements. The TARP recipient must preserve 
appropriate documentation and records to substantiate each certification 
required under paragraph (a) of this section for a period of not less 
than six years after the date of the certification, the first two years 
in an easily accessible place. The TARP recipient must furnish promptly 
to Treasury legible, true, complete, and current copies of the 
documentation and records that are required to be preserved under 
paragraph (b) of this section that are requested by any representative 
of Treasury.

[[Page 342]]

    (c) Penalties for making or providing false or fraudulent 
Statements. Any individual or entity that provides information or makes 
a certification to Treasury pursuant to the Interim Final Rule or as 
required pursuant to 31 CFR Part 30 may be subject to 18 U.S.C. 1001, 
which generally prohibits the making of any false or fraudulent 
statement in a matter within the jurisdiction of the Federal government. 
Upon receipt of information indicating that any individual or entity has 
violated any provision of title 18 of the U.S. Code or other provision 
of Federal law, Treasury shall refer such information to the Department 
of Justice and the Special Inspector General for the Troubled Asset 
Relief Program.

  Appendix A to Sec. 30.15--Model Certification for First Fiscal Year 
                              Certification

    ``I, [identify certifying individual], certify, based on my 
knowledge, that:
    (i) The compensation committee of [identify TARP recipient] has 
discussed, reviewed, and evaluated with senior risk officers at least 
every six months during the period beginning on the later of the closing 
date of the agreement between the TARP recipient and Treasury or June 
15, 2009 and ending with the last day of the TARP recipient's fiscal 
year containing that date, senior executive officer (SEO) compensation 
plans and employee compensation plans and the risks these plans pose to 
[identify TARP recipient];
    (ii) The compensation committee of [identify TARP recipient] has 
identified and limited during the period beginning on the later of the 
closing date of the agreement between the TARP recipient and Treasury or 
June 15, 2009 and ending with the last day of the TARP recipient's 
fiscal year containing that date, the features in the SEO compensation 
plans that could lead SEOs to take unnecessary and excessive risks that 
could threaten the value of [identify TARP recipient] and identified any 
features in the employee compensation plans that pose risks to [identify 
TARP recipient] and limited those features to ensure that [identify TARP 
recipient] is not unnecessarily exposed to risks;
    (iii) The compensation committee has reviewed at least every six 
months during the period beginning on the later of the closing date of 
the agreement between the TARP recipient and Treasury or June 15, 2009 
and ending with the last day of the TARP recipient's fiscal year 
containing that date, the terms of each employee compensation plan and 
identified the features in the plan that could encourage the 
manipulation of reported earnings of [identify TARP recipient] to 
enhance the compensation of an employee and has limited those features;
    (iv) The compensation committee of [identify TARP recipient] will 
certify to the reviews of the SEO compensation plans and employee 
compensation plans required under (i) and (iii) above;
    (v) The compensation committee of [identify TARP recipient] will 
provide a narrative description of how it limited during any part of the 
most recently completed fiscal year that included a TARP period the 
features in
    (A) SEO compensation plans that could lead SEOs to take unnecessary 
and excessive risks that could threaten the value of [identify TARP 
recipient];
    (B) Employee compensation plans that unnecessarily expose [identify 
TARP recipient] to risks; and
    (C) Employee compensation plans that could encourage the 
manipulation of reported earnings of [identify TARP recipient] to 
enhance the compensation of an employee;
    (vi) [Identify TARP recipient] has required that bonus payments, as 
defined in the regulations and guidance established under section 111 of 
EESA (bonus payments), of the SEOs and twenty next most highly 
compensated employees be subject to a recovery or ``clawback'' provision 
during any part of the most recently completed fiscal year that was a 
TARP period if the bonus payments were based on materially inaccurate 
financial statements or any other materially inaccurate performance 
metric criteria;
    (vii) [Identify TARP recipient] has prohibited any golden parachute 
payment, as defined in the regulations and guidance established under 
section 111 of EESA, to an SEO or any of the next five most highly 
compensated employees during the period beginning on the later of the 
closing date of the agreement between the TARP recipient and Treasury or 
June 15, 2009 and ending with the last day of the TARP recipient's 
fiscal year containing that date;
    (viii) [Identify TARP recipient] has limited bonus payments to its 
applicable employees in accordance with section 111 of EESA and the 
regulations and guidance established thereunder during the period 
beginning on the later of the closing date of the agreement between the 
TARP recipient and Treasury or June 15, 2009 and ending with the last 
day of the TARP recipient's fiscal year containing that date, [for 
recipients of exceptional assistance: and has received or is in the 
process of receiving approvals from the Office of the Special Master for 
TARP Executive Compensation for compensation payments and structures as 
required under the regulations and guidance established under section 
111 of EESA, and has not made any payments

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inconsistent with those approved payments and structures];
    (ix) The board of directors of [identify TARP recipient] has 
established an excessive or luxury expenditures policy, as defined in 
the regulations and guidance established under section 111 of EESA, has 
provided this policy to Treasury and its primary regulatory agency, and 
[identify TARP recipient] and its employees have complied with this 
policy during the period beginning on the later of the closing date of 
the agreement between the TARP recipient and Treasury or June 15, 2009 
and ending with the last day of the TARP recipient's fiscal year 
containing that date, and that any expenses requiring approval of the 
board of directors, a committee of the board of directors, an SEO, or an 
executive officer with a similar level of responsibility, were properly 
approved;
    (x) [Identify TARP recipient] will permit a non-binding shareholder 
resolution in compliance with any applicable Federal securities rules 
and regulations on the disclosures provided under the Federal securities 
laws related to SEO compensation paid or accrued during the period 
beginning on the later of the closing date of the agreement between the 
TARP recipient and Treasury or June 15, 2009 and ending with the last 
day of the TARP recipient's fiscal year containing that date;
    (xi) [Identify TARP recipient] will disclose the amount, nature, and 
justification for the offering during the period beginning on the later 
of the closing date of the agreement between the TARP recipient and 
Treasury or June 15, 2009 and ending with the last day of the TARP 
recipient's fiscal year containing that date of any perquisites, as 
defined in the regulations and guidance established under section 111 of 
EESA, whose total value exceeds $25,000 for each employee subject to the 
bonus payment limitations identified in paragraph (vii);
    (xii) [Identify TARP recipient] will disclose whether [identify TARP 
recipient], the board of directors of [identify TARP recipient], or the 
compensation committee of [TARP recipient] has engaged during the period 
beginning on the later of the closing date of the agreement between the 
TARP recipient and Treasury or June 15, 2009 and ending with the last 
day of the TARP recipient's fiscal year containing that date, a 
compensation consultant; and the services the compensation consultant or 
any affiliate of the compensation consultant provided during this 
period;
    (xiii) [Identify TARP recipient] has prohibited the payment of any 
gross-ups, as defined in the regulations and guidance established under 
section 111 of EESA, to the SEOs and the next twenty most highly 
compensated employees during the period beginning on the later of the 
closing date of the agreement between the TARP recipient and Treasury or 
June 15, 2009 and ending with the last day of the TARP recipient's 
fiscal year containing that date;
    (xiv) [Identify TARP recipient] has substantially complied with all 
other requirements related to employee compensation that are provided in 
the agreement between [identify TARP recipient] and Treasury, including 
any amendments;
    (xv) The following employees are the SEOs and the twenty next most 
highly compensated employees for the current fiscal year and the most 
recently completed fiscal year, with the non-SEOs ranked in order of 
level of annual compensation starting with the greatest amount: 
[identify name, title, and employer of each SEO and most highly 
compensated employee]; and
    (xvi) I understand that a knowing and willful false or fraudulent 
statement made in connection with this certification may be punished by 
fine, imprisonment, or both. (See, for example, 18 U.S.C. 1001.)''

Appendix B to Sec. 30.15--Model Certification for Years Following First 
                        Fiscal Year Certification

    ``I, [identify certifying individual], certify, based on my 
knowledge, that:
    (i) The compensation committee of [identify TARP recipient] has 
discussed, reviewed, and evaluated with senior risk officers at least 
every six months during any part of the most recently completed fiscal 
year that was a TARP period, senior executive officer (SEO) compensation 
plans and employee compensation plans and the risks these plans pose to 
[identify TARP recipient];
    (ii) The compensation committee of [identify TARP recipient] has 
identified and limited during any part of the most recently completed 
fiscal year that was a TARP period the features in the SEO compensation 
plans that could lead SEOs to take unnecessary and excessive risks that 
could threaten the value of [identify TARP recipient] and identified any 
features in the employee compensation plans that pose risks to [identify 
TARP recipient] and limited those features to ensure that [identify TARP 
recipient] is not unnecessarily exposed to risks;
    (iii) The compensation committee has reviewed at least every six 
months during any part of the most recently completed fiscal year that 
was a TARP period the terms of each employee compensation plan and 
identified the features in the plan that could encourage the 
manipulation of reported earnings of [identify TARP recipient] to 
enhance the compensation of an employee and has limited these features 
that would encourage the manipulation of reported earnings of [identify 
TARP recipient];
    (iv) The compensation committee of [identify TARP recipient] will 
certify to the reviews of the SEO compensation plans and

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employee compensation plans required under (i) and (iii) above;
    (v) The compensation committee of [identify TARP recipient] will 
provide a narrative description of how it limited during any part of the 
most recently completed fiscal year that was a TARP period the features 
in
    (A) SEO compensation plans that could lead SEOs to take unnecessary 
and excessive risks that could threaten the value of [identify TARP 
recipient];
    (B) Employee compensation plans that unnecessarily expose [identify 
TARP recipient] to risks; and
    (C) Employee compensation plans that could encourage the 
manipulation of reported earnings of [identify TARP recipient] to 
enhance the compensation of an employee;
    (vi) [Identify TARP recipient] has required that bonus payments to 
SEOs or any of the next twenty most highly compensated employees, as 
defined in the regulations and guidance established under section 111 of 
EESA (bonus payments), be subject to a recovery or ``clawback'' 
provision during any part of the most recently completed fiscal year 
that was a TARP period if the bonus payments were based on materially 
inaccurate financial statements or any other materially inaccurate 
performance metric criteria;
    (vii) [Identify TARP recipient] has prohibited any golden parachute 
payment, as defined in the regulations and guidance established under 
section 111 of EESA, to a SEO or any of the next five most highly 
compensated employees during any part of the most recently completed 
fiscal year that was a TARP period;
    (viii) [Identify TARP recipient] has limited bonus payments to its 
applicable employees in accordance with section 111 of EESA and the 
regulations and guidance established thereunder during any part of the 
most recently completed fiscal year that was a TARP period [for 
recipients of exceptional assistance] and has received or is in the 
process of receiving approvals from the Office of the Special Master for 
TARP Executive Compensation for compensation payments and structures as 
required under the regulations and guidance established under section 
111 of EESA, and has not made any payments inconsistent with those 
approved payments and structures;
    (ix) [Identify TARP recipient] and its employees have complied with 
the excessive or luxury expenditures policy, as defined in the 
regulations and guidance established under section 111 of EESA, during 
any part of the most recently completed fiscal year that was a TARP 
period, and that any expenses requiring approval of the board of 
directors, a committee of the board of directors, an SEO, or an 
executive officer with a similar level of responsibility, were properly 
approved;
    (x) [Identify TARP recipient] will permit a non-binding shareholder 
resolution in compliance with any applicable Federal securities rules 
and regulations on the disclosures provided under the Federal securities 
laws related to SEO compensation paid or accrued during any part of the 
most recently completed fiscal year that was a TARP period;
    (xi) [Identify TARP recipient] will disclose the amount, nature, and 
justification for the offering during any part of the most recently 
completed fiscal year that was a TARP period of any perquisites, as 
defined in the regulations and guidance established under section 111 of 
EESA, whose total value exceeds $25,000 for for each employee subject to 
the bonus payment limitations identified in paragraph (viii);
    (xii) [Identify TARP recipient] will disclose whether [identify TARP 
recipient], the board of directors of [identify TARP recipient], or the 
compensation committee of [identify TARP recipient] has engaged during 
any part of the most recently completed fiscal year that was a TARP 
period a compensation consultant; and the services the compensation 
consultant or any affiliate of the compensation consultant provided 
during this period;
    (xiii) [Identify TARP recipient] has prohibited the payment of any 
gross-ups, as defined in the regulations and guidance established under 
section 111 of EESA, to the SEOs and the next twenty most highly 
compensated employees during any part of the most recently completed 
fiscal year that was a TARP period;
    (xiv) [Identify TARP recipient] has substantially complied with all 
other requirements related to employee compensation that are provided in 
the agreement between [identify TARP recipient] and Treasury, including 
any amendments;
    (xv) The following employees are the SEOs and the twenty most highly 
compensated employees for the current fiscal year, with the non-SEOs 
ranked in order of level of annual compensation starting with the 
greatest amount: [identify name, title, and employer of each SEO]; and
    (xvi) I understand that a knowing and willful false or fraudulent 
statement made in connection with this certification may be punished by 
fine, imprisonment, or both. (See, for example 18 U.S.C. 1001.)''



Sec. 30.16  Q-16: What is the Office of the Special Master for TARP Executive 

Compensation, and what are its powers, duties and responsibilities?

    (a) The Office of the Special Master for TARP Executive 
Compensation. The Secretary of the Treasury shall establish the Office 
of the Special Master for TARP Executive Compensation (Special Master). 
The Special Master shall

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serve at the pleasure of the Secretary, and may be removed by the 
Secretary without notice, without cause, and prior to the naming of any 
successor Special Master. The Special Master shall have the following 
powers, duties and responsibilities:
    (1) Interpretative authority. The Special Master shall have 
responsibility for interpreting section 111 of EESA, these regulations, 
and any other applicable guidance, to determine how the requirements 
under section 111 of EESA, these regulations, and any other applicable 
guidance, apply to particular facts and circumstances. Accordingly, the 
Special Master shall make all determinations, as required, as to the 
meaning of such guidance and whether such requirements have been met in 
any particular circumstances. In addition, a TARP recipient or a TARP 
recipient employee may submit a request, in accordance with paragraph 
(c)(3) of this section, for an advisory opinion with respect to the 
requirements under section 111 of EESA, these regulations and any other 
applicable guidance.
    (2) Review of prior payments to employees. Section 111(f) of EESA 
provides that the Secretary shall review bonuses, retention awards, and 
other compensation paid before February 17, 2009, to employees of each 
entity receiving TARP assistance before February 17, 2009, to determine 
whether any such payments were inconsistent with the purposes of section 
111 of EESA or TARP, or otherwise contrary to the public interest. 
Section 111(f) of EESA provides that, if the Secretary makes such a 
determination, the Secretary shall seek to negotiate with the TARP 
recipient and the subject employee for appropriate reimbursements to the 
Federal Government with respect to compensation or bonuses. The Special 
Master shall have the responsibility for administering these provisions, 
including the identification of the payments that are inconsistent with 
the purposes of EESA or TARP, or otherwise contrary to the public 
interest, and the Special Master shall have responsibility for the 
negotiation with the TARP recipient and the subject employee for 
appropriate reimbursements to the Federal Government with respect to 
compensation or bonuses. The Special Master shall make this 
determination by application of the principles outlined in paragraph (b) 
of this section. The Special Master's administration of these provisions 
may provide for the scope of review by the Special Master of a payment, 
including a limited review or no review, depending on the payment 
amount, the type of payment, the overall compensation earned by the 
employee during the relevant period, a combination thereof, or such 
other factors as the Special Master may determine, where the Special 
Master determines that such factors demonstrate that such payments are 
not, or are highly unlikely to be, inconsistent with the purposes of 
section 111 of EESA or TARP, or otherwise contrary to the public 
interest, or that renegotiation of such payments is not in the public 
interest. The Special Master may request in writing any information from 
TARP recipients necessary to carry out the review of prior compensation 
required under section 111(f) of EESA. TARP recipients must submit any 
requested information to the Special Master within 30 days of the 
request.
    (3) Approval of certain payments to employees of TARP recipients 
receiving exceptional financial assistance. (i) SEOs and most highly 
compensated employees. The Special Master shall determine whether the 
compensation structure for each SEO or most highly compensated employee 
of a TARP recipient receiving exceptional assistance, including the 
amounts payable or potentially payable under such compensation 
structure, will or may result in payments that are inconsistent with the 
purposes of section 111 of EESA or TARP, or are otherwise contrary to 
the public interest. The Special Master shall make such determinations 
by applying the principles outlined in paragraph (b) of this section, 
subject to the requirement that the compensation structure and payments 
satisfy the applicable limitations under Sec. 30.10 (Q-10). This 
requirement shall apply to any compensation accrued or paid during any 
period the SEO or most highly compensated employee is subject to the 
limitations under Sec. 30.10 (Q-10). Initial requests for such approval 
must be

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submitted no later than August 14, 2009. The Special Master's 
administration of these provisions may provide for the Special Master's 
scope of review, including a limited review or no review, of a portion 
of a compensation structure or payment depending on the amount of such 
payments, the type of such payments, the overall compensation earned by 
the employee during the relevant period, a combination thereof, or such 
other factors as the Special Master determines, if the Special Master 
has determined that such factors demonstrate that such payments are not, 
or are highly unlikely to be, inconsistent with the purposes of section 
111 of EESA or TARP, or otherwise contrary to the public interest. The 
Special Master shall issue a determination within 60 days of the receipt 
of a substantially complete submission. The TARP recipient must make a 
further request for approval to the extent the compensation structure 
for any SEO or most highly compensated employee, including the amounts 
that are or may be payable, for any SEO or highly compensated employee 
is materially modified. In reviewing compensation structures and 
compensation payments for any period subject to Special Master review, 
the Special Master may take into account other compensation structures 
and other compensation earned, accrued or paid, including such 
compensation and compensation structures that are not subject to the 
restrictions of Section 111 of EESA pursuant to section 
111(b)(3)(D)(iii) (see Sec. 30.10(e)(2) (Q-30.10(e)(2) (certain legally 
binding rights under valid written employment contracts)), and amounts 
that were accrued or paid prior to June 15, 2009 and are therefore not 
subject to review by the Special Master.
    (ii) Other executive officers and most highly compensated employees. 
With respect to any employee who is either an executive officer (as 
defined under the Securities and Exchange Act Rule 3b-7) or one of the 
100 most highly compensated employees of a TARP recipient receiving 
exceptional assistance (or both), who is not subject to the bonus 
limitations under Sec. 30.10 (Q-10), the Special Master shall determine 
whether the compensation structure for such employees will or may result 
in payments that are inconsistent with the purposes of section 111 of 
EESA or TARP, or are otherwise contrary to the public interest. The 
Special Master shall make such determination through application of the 
principles outlined in paragraph (b) of this section. With respect to 
the scope of the required review, the Special Master shall determine 
only whether the compensation arrangements are adequately structured, 
and is not required to rule with respect to the amounts that are or may 
be payable thereunder. However, the TARP recipient may also request an 
advisory opinion with respect to the amounts that are or may be payable, 
which the Special Master may provide in his sole discretion. 
Notwithstanding the foregoing, if the total annual compensation to an 
employee complies with the rules applicable to an SEO under Sec. 30.10 
(Q-10) applied without any limits on the grant of long-term restricted 
stock, and the annual compensation other than long-term restricted stock 
does not exceed $500,000 (or for 2009, $500,000 prorated to reflect the 
remaining portion of 2009 after June 15, 2009), the compensation 
structure will automatically be deemed to meet the requirements and no 
prior approval by the Special Master will be required. For purposes of 
the $500,000 limit, in determining annual compensation, all equity-based 
compensation granted in fiscal years ending after June 15, 2009 will be 
included in the calculation only in the year in which they are granted 
at their total fair market value on the grant date and all equity-based 
compensation granted in fiscal years ending prior to June 15, 2009 will 
not be included in the calculation of annual compensation. In addition, 
solely for purposes of applying the limit (and not for purposes of 
identifying the most highly compensated employees), the term annual 
compensation includes amounts required to be disclosed under paragraph 
(viii) of Item 402(a) of Regulation S-K of the Federal securities laws 
(change in the actuarial present value of benefits under a pension plan 
and above-market earnings on deferred compensation). The Special 
Master's administration of these provisions may provide

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for limited or no review of a portion of a compensation structure by the 
Special Master depending on the amount of potential payments, the type 
of such payments, the overall compensation earned by the employee during 
the relevant period, a combination thereof, or such other factors as the 
Special Master determines, where the Special Master has determined that 
such factors demonstrate that such payments are not, or are highly 
unlikely to be, inconsistent with the purposes of section 111 of EESA or 
TARP, or otherwise contrary to the public interest. Initial requests for 
such approval must be submitted no later than 120 days after publication 
of the final rule. Separate requests need not be submitted for each 
individual covered employee, but should be submitted for identified 
groups of employees subject to the same compensation structures to the 
extent possible as long as sufficient detail regarding individual 
compensation awards are provided as necessary to evaluate such 
employee's compensation structure. The Special Master shall issue a 
determination within 60 days of the receipt of a substantially complete 
submission. The TARP recipient must make a further request for approval 
to the extent the compensation structure, including the amounts that are 
or may be payable, for any executive officer is materially amended. In 
reviewing compensation structures for any period subject to Special 
Master review, the Special Master may take into account other 
compensation structures and other compensation earned, accrued or paid, 
including such compensation and compensation structures that are not 
subject to the restrictions of Section 111 of EESA pursuant to section 
111(b)(3)(D)(iii) (see Sec. 30.10(e)(2) (Q-30.10(e)(2) (certain legally 
binding rights under valid written employment contracts)), and amounts 
that were accrued or paid prior to June 15, 2009 and are therefore not 
subject to review by the Special Master.
    (iii) Period from June 15, 2009 through final determination. For the 
period from June 15, 2009 through the date of the Special Master's final 
determination, the TARP recipient will be treated as complying with this 
section if, with respect to employees covered by paragraph (a)(3)(i) of 
this section, the TARP recipient continues to pay compensation to such 
employees in accordance with the terms of employment as of June 14, 2009 
to the extent otherwise permissible under this Interim Final Rule (for 
example, continued salary payments but not any bonus payments) and if, 
with respect to employees covered by paragraph (a)(3)(ii) of this 
section, the TARP recipient continues to pay compensation to such 
employees under the compensation structure established as of June 14, 
2009, and if in addition the TARP recipient promptly complies with any 
modifications that may be required by the Special Master's final 
determination. However, the Special Master may take into account the 
amounts paid to an employee during such period in determining the 
appropriate compensation amounts and compensation structures, as 
applicable, for the remainder of the year.
    (4) Advisory opinions on compensation structures or compensation 
payments to employees of TARP recipients. A TARP recipient or TARP 
recipient employee may request an advisory opinion from the Special 
Master as to whether a compensation structure is, or will or may result 
in payments that are, inconsistent with the purposes of EESA or TARP, or 
otherwise contrary to the public interest. In addition, the Special 
Master may become aware of compensation structures or payments at any 
TARP recipient for which it may be useful to provide an advisory opinion 
as to whether such structure or payments meets this standard. 
Accordingly, the Special Master shall have the authority to render 
advisory opinions upon request or at the Special Master's initiative, as 
to whether a compensation structure is, or will or may result in 
payments to an employee that are inconsistent with the purposes of 
section 111 of EESA or TARP, or otherwise contrary to the public 
interest, or whether a compensation payment made, or to be made, was or 
will be inconsistent with the purposes of section 111 of EESA or TARP, 
or otherwise contrary to the public interest. If the Special Master 
renders an adverse opinion, the Special Master shall have the authority 
to seek to negotiate with

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the TARP recipient and the subject employee for appropriate 
reimbursements to the TARP recipient or the Federal government. Any 
advisory opinion shall reflect the Special Master's application of the 
principles outlined in paragraph (b) of this section. The Special Master 
shall not be required to render an advisory opinion in every instance, 
but may do so only where the Special Master deems appropriate and 
feasible in the context of the Special Master's other responsibilities. 
In any case, the Special Master shall render an opinion, or 
affirmatively decline to render an advisory opinion, within 60 days of 
the receipt of a substantially complete submission. The Special Master 
shall not be required to explain any decision to decline to render an 
advisory opinion.
    (5) Other designated duties and powers. The Special Master shall 
have such other duties and powers related to the application of 
compensation issues arising in the administration of EESA or TARP as the 
Secretary or the Secretary's designate may delegate to the Special 
Master, including, but not limited to, the interpretation or application 
of contractual provisions between the Federal government and a TARP 
recipient as those provisions relate to the compensation paid to, or 
accrued by, an employee of such TARP recipient.
    (b) Determination of whether compensation is inconsistent with the 
purposes of section 111 of EESA or TARP or is otherwise contrary to the 
public interest--(1) Principles. In reviewing a compensation structure 
or a compensation payment to determine whether it is inconsistent with 
the purposes of section 111 of EESA or TARP or is otherwise contrary to 
the public interest, the Special Master shall apply the principles 
enumerated below. The principles are intended to be consistent with 
sound compensation practices appropriate for TARP recipients, and to 
advance the purposes and considerations described in EESA sections 2 and 
103, including the maximization of overall returns to the taxpayers of 
the United States and providing stability and preventing disruptions to 
financial markets. The Special Master has discretion to determine the 
appropriate weight or relevance of a particular principle depending on 
the facts and circumstances surrounding the compensation structure or 
payment under consideration, such as whether a payment occurred in the 
past or is proposed for the future, the role of the employee within the 
TARP recipient, the situation of the TARP recipient within the 
marketplace and the amount and type of financial assistance provided. To 
the extent that two or more principles may appear inconsistent in a 
particular situation, the Special Master will determine the relative 
weight to be accorded each principle. In the case of any review of 
payments already made under paragraph (c)(2) of this section, or of any 
rights to bonuses, awards, or other compensation already granted, the 
Special Master shall apply these principles by considering the facts and 
circumstances at the time the compensation was granted, earned, or paid, 
as appropriate.
    (i) Risk. The compensation structure should avoid incentives to take 
unnecessary or excessive risks that could threaten the value of the TARP 
recipient, including incentives that reward employees for short-term or 
temporary increases in value, performance, or similar measure that may 
not ultimately be reflected by an increase in the long-term value of the 
TARP recipient. Accordingly, incentive payments or similar rewards 
should be structured to be paid over a time horizon that takes into 
account the risk horizon so that the payment or reward reflects whether 
the employee's performance over the particular service period has 
actually contributed to the long-term value of the TARP recipient.
    (ii) Taxpayer return. The compensation structure, and amount payable 
where applicable, should reflect the need for the TARP recipient to 
remain a competitive enterprise, to retain and recruit talented 
employees who will contribute to the TARP recipient's future success, 
and ultimately to be able to repay TARP obligations.
    (iii) Appropriate allocation. The compensation structure should 
appropriately allocate the components of compensation such as salary, 
short-term and long-term incentives, as well as the extent to which 
compensation is

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provided in cash, equity or other types of compensation such as 
executive pensions, other benefits, or perquisites, based on the 
specific role of the employee and other relevant circumstances, 
including the nature and amount of current compensation, deferred 
compensation, or other compensation and benefits previously paid or 
awarded. The appropriate allocation may be different for different 
positions and for different employees, but generally, in the case of an 
executive or other senior level position a significant portion of the 
overall compensation should be long-term compensation that aligns the 
interest of the employee with the interests of shareholders and 
taxpayers.
    (iv) Performance-based compensation. An appropriate portion of the 
compensation should be performance-based over a relevant performance 
period. Performance-based compensation should be determined through 
tailored metrics that encompass individual performance and/or the 
performance of the TARP recipient or a relevant business unit taking 
into consideration specific business objectives. Performance metrics may 
relate to employee compliance with relevant corporate policies. In 
addition, the likelihood of meeting the performance metrics should not 
be so great that the arrangement fails to provide an adequate incentive 
for the employee to perform, and performance metrics should be 
measurable, enforceable, and actually enforced if not met. The 
appropriate allocation and the appropriate performance metrics may be 
different for different positions and for different employees, but 
generally a significant portion of total compensation should be 
performance-based compensation, and generally that portion should be 
greater for positions that exercise higher levels of responsibility.
    (v) Comparable structures and payments. The compensation structure, 
and amount payable where applicable, should be consistent with, and not 
excessive, taking into account compensation structures and amounts for 
persons in similar positions or roles at similar entities that are 
similarly situated, including, as applicable, entities competing in the 
same markets and similarly situated entities that are financially 
distressed or that are contemplating or undergoing reorganization.
    (vi) Employee contribution to TARP recipient value. The compensation 
structure, and amount payable where applicable, should reflect the 
current or prospective contributions of an employee to the value of the 
TARP recipient, taking into account multiple factors such as revenue 
production, specific expertise, compliance with company policy and 
regulation (including risk management), and corporate leadership, as 
well as the role the employee may have had with respect to any change in 
the financial health or competitive position of the TARP recipient.
    (2) Further guidance. The Secretary reserves the discretion to 
modify or amend the foregoing principles through notice, announcement or 
other generally applicable guidance, provided that such guidance shall 
apply only prospectively from its date of publication and shall not 
provide a basis for reconsideration of a determination of the Special 
Master, except as the Special Master deems appropriate in light of such 
modification or amendment.
    (c) Special Master determinations-- (1) Initial determinations. The 
Special Master shall provide an initial determination in writing, within 
60 days of the receipt of a substantially complete submission, setting 
forth the facts and analysis that formed the basis for the 
determination. The TARP recipient shall have 30 days to request in 
writing that the Special Master reconsider the initial determination. 
The request for reconsideration must specify a factual error or relevant 
new information not previously considered, and must demonstrate that 
such error or lack of information resulted in a material error in the 
initial determination. The Special Master must provide a final 
determination in writing within 30 days, setting forth the facts and 
analysis that formed the basis for the determination. If a TARP 
recipient does not request reconsideration within 30 days, the initial 
determination shall be treated as a final determination.
    (2) Final determinations. In the case of any final determination 
that the TARP recipient is required to receive, the

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final determination of the Special Master shall be final and binding and 
treated as the determination of the Treasury.
    (3) Advisory Opinions. An advisory opinion of the Special Master 
shall not be binding upon any TARP recipient or employee, but may be 
relied upon by a TARP recipient or employee if the advisory opinion 
applies to the TARP recipient and the employee and the TARP recipient 
and employee comply in all respects with the advisory opinion.
    (d) Submissions to the Special Master--(1) Submission procedures. 
Submissions to the Special Master may be made under such procedures as 
the Special Master shall determine. The Special Master may reserve the 
right to request further information at any time and a submission shall 
not be treated as substantially complete unless the Special Master has 
so designated.
    (2) Disclosure procedures. Materials submitted to the Special Master 
and the initial and final determinations of the Special Master are 
subject to disclosure under the standards provided in the Freedom of 
Information Act (FOIA, (5 U.S.C. 552 et seq.)). In addition, the final 
determinations of the Special Master shall be disclosed to the public. 
The Special Master shall promulgate procedures for ensuring that 
disclosed materials have been subject to appropriate redaction to 
protect personal privacy, privileged or confidential commercial or 
financial information or other appropriate redactions permissible under 
the FOIA, which may include a procedure for the person or entity making 
the submission to request redactions and to review and request 
reconsideration of any proposed redactions before such redacted 
materials are released.



Sec. 30.17  Q-17: How do the effective date provisions apply with respect to 

the requirements under section 111 of EESA?

    (a) General rule. The requirements under this part with respect to 
sections 111(b), 111(c), 111(d) and 111(f) are effective upon June 15, 
2009. The guidance under this part with respect to those sections 
supersedes any previous guidance applicable to a TARP recipient to the 
extent that guidance is inconsistent with those requirements, but 
supersedes that guidance only as of June 15, 2009. To the extent 
previous contractual provisions are not inconsistent with ARRA or the 
guidance under this part, those contractual provisions remain in effect 
and continue to apply in accordance with their terms.
    (b) Bonus payment limitation. The bonus payment limitation provision 
under Sec. 30.10 (Q-10) of this part does not apply to bonus payments 
paid or accrued by TARP recipients or their employees before June 15, 
2009. Certain bonus payments may relate to a service period beginning 
before and ending after June 15, 2009. In these circumstances, the 
employee will not be treated as having accrued the bonus payment on or 
after June 15, 2009 if the bonus payment is at least reduced to reflect 
the portion of the service period that occurs after June 15, 2009. If 
the employee is an SEO or most highly compensated employee at the time 
the net bonus payment after such reduction would otherwise be paid, the 
amount still may not be paid until such time as bonus payments to that 
employee are permitted.



PART 31_TROUBLED ASSET RELIEF PROGRAM--Table of Contents




Sec.
31.1 General.

Subpart A [Reserved]

                     Subpart B_Conflicts of Interest

31.200 Purpose and scope.
31.201 Definitions.
31.211 Organizational conflicts of interest.
31.212 Personal conflicts of interest.
31.213 General standards.
31.214 Limitations on concurrent activities.
31.215 Grant of Waivers.
31.216 Communications with Treasury employees.
31.217 Confidentiality of information.
31.218 Enforcement.

    Authority: 31 U.S.C. 321; Pub. L. 110-343; 122 Stat 3765.

    Source: 74 FR 3433, Jan. 21, 2009, unless otherwise noted.

[[Page 351]]



Sec. 31.1  General.

    This Part sets forth regulations to implement and administer the 
Emergency Economic Stabilization Act of 2008 (Pub. L. 110-343; 122 Stat 
3765).

Subpart A [Reserved]



                     Subpart B_Conflicts of Interest



Sec. 31.200  Purpose and scope.

    (a) Purpose. This regulation sets forth standards to address and 
manage or to prohibit conflicts of interest that may arise in connection 
with the administration and execution of the authorities under the 
Troubled Asset Relief Program (TARP), established under sections 101 and 
102 of the Emergency Economic Stabilization Act of 2008 (EESA).
    (b) Scope. This regulation addresses actual and potential conflicts 
of interest that may arise from contracts and financial agency 
agreements between private sector entities and the Treasury for services 
under the TARP, other than administrative services identified by TARP 
Chief Compliance Officer.



Sec. 31.201  Definitions.

    As used in this part:
    Arrangement means a contract or financial agency agreement between a 
private sector entity and the Treasury for services under the TARP, 
other than administrative services identified by the TARP Chief 
Compliance Officer.
    EESA means the Emergency Economic Stabilization Act of 2008.
    Key individual means an individual providing services to a private 
sector entity who participates personally and substantially, through 
decision, approval, disapproval, recommendation, or the rendering of 
advice, in the negotiation or performance of, or monitoring for 
compliance under, the arrangement with the Treasury. For purposes of the 
definition of key individual, the words ``personally and substantially'' 
shall have the same meaning and interpretation as such words have in 5 
CFR 2635.402(b)(4).
    Management official means an individual within a retained entity's 
organization who has substantial responsibility for the direction and 
control of the retained entity's policies and operations. With respect 
to organizations that have a management committee or executive committee 
that has been given such responsibilities, this means the members of 
those committees and, if no such committee exists, this means each of 
the general partners.
    Organizational conflict of interest means a situation in which the 
retained entity has an interest or relationship that could cause a 
reasonable person with knowledge of the relevant facts to question the 
retained entity's objectivity or judgment to perform under the 
arrangement, or its ability to represent the Treasury. Without limiting 
the scope of this definition, organizational conflicts of interest may 
include the following situations:
    (1) A prior or current arrangement between the Treasury and the 
retained entity that may give the retained entity an unfair competitive 
advantage in obtaining a new arrangement with Treasury.
    (2) The retained entity is, or represents, a party in litigation 
against the Treasury relating to activities under the EESA.
    (3) The retained entity provides services for Treasury relating to 
the acquisition, valuation, disposition, or management of troubled 
assets at the same time it provides those services for itself or others.
    (4) The retained entity gains, or stands to gain, an unfair 
competitive advantage in private business arrangements or investments by 
using information provided under an arrangement or obtained or developed 
pursuant to an arrangement with Treasury.
    (5) The retained entity is a potential candidate for relief under 
EESA, is currently participating in an EESA program, or has a financial 
interest that could be affected by its performance of the arrangement.
    Personal conflict of interest means a personal, business, or 
financial interest of an individual, his or her spouse, minor child, or 
other family member with whom the individual has a close personal 
relationship, that could adversely affect the individual's ability to 
perform under the arrangement, his or her objectivity or judgment in 
such

[[Page 352]]

performance, or his or her ability to represent the interests of the 
Treasury;
    Related entity means the parent company and subsidiaries of a 
retained entity, any entity holding a controlling interest in the 
retained entity, and any entity in which the retained entity holds a 
controlling interest.
    Retained entity means the individual or entity seeking an 
arrangement with the Treasury or having such an arrangement with the 
Treasury, but does not include special government employees. A 
``retained entity'' includes the subcontractors and consultants it hires 
to perform services under the arrangement.
    Special government employee means any employee serving the Treasury 
with or without compensation for a period not to exceed 130 days during 
any 365-day period on a full-time or intermittent basis.
    Treasury means the United States Department of the Treasury.
    Treasury employee means an officer or employee of the Treasury, 
including a special government employee, or an employee of any other 
government agency who is properly acting on behalf of the Treasury.
    Troubled assets means residential or commercial mortgages and any 
securities, obligations, or other instruments that are based on or 
related to such mortgages, that in each case originated or was issued on 
or before March 14, 2008; and any other financial instrument that the 
Secretary of the Treasury has determined, upon transmittal in writing to 
the appropriate committees of Congress, the purchase of which is 
necessary to promote financial market stability.



Sec. 31.211  Organizational conflicts of interest.

    (a) Retained entity's responsibility. A retained entity working 
under an arrangement shall not permit an organizational conflict of 
interest unless the conflict has been disclosed to Treasury under this 
Section and mitigated under a plan approved by Treasury, or Treasury has 
waived the conflict. With respect to arrangements for the acquisition, 
valuation, management, or disposition of troubled assets, the retained 
entity shall maintain a compliance program designed to detect and 
prevent violations of federal securities laws and organizational 
conflicts of interest.
    (b) Information required about the retained entity. As early as 
possible before entering an arrangement to perform services for Treasury 
under the EESA, a retained entity shall provide Treasury with sufficient 
information to evaluate any organizational conflicts of interest. The 
information shall include the following:
    (1) The retained entity's relationship to any related entities.
    (2) The categories of troubled assets owned or controlled by the 
retained entity and its related entities, if the arrangement relates to 
the acquisition, valuation, disposition, or management of troubled 
assets.
    (3) Information concerning all other business or financial interests 
of the retained entity, its proposed subcontractors, or its related 
entities, which could conflict with the retained entity's obligations 
under the arrangement with Treasury.
    (4) A description of all organizational conflicts of interest and 
potential conflicts of interest.
    (5) A written detailed plan to mitigate all organizational conflicts 
of interest, along with supporting documents.
    (6) Any other information or documentation about the retained 
entity, its proposed subcontractors, or its related entities that 
Treasury may request.
    (c) Plans to mitigate organizational conflicts of interest. The 
steps necessary to mitigate a conflict may depend on a variety of 
factors, including the type of conflict, the scope of work under the 
arrangement, and the organizational structure of the retained entity. 
Some conflicts may be so substantial and pervasive that they cannot be 
mitigated. Retained entities should consider the following measures when 
designing a mitigation plan:
    (1) Adopting, implementing, and enforcing appropriate information 
barriers to prevent unauthorized people from learning nonpublic 
information relating to the arrangement and isolate key individuals from 
learning how

[[Page 353]]

their performance under the arrangement could affect the financial 
interests of the retained entity, its clients, and related entities.
    (2) Divesting assets that give rise to conflicts of interest.
    (3) Terminating or refraining from business relationships that give 
rise to conflicts of interest.
    (4) If consistent with the terms of the arrangement and permitted by 
Treasury, refraining from performing specific types of work under the 
arrangement.
    (5) Any other steps appropriate under the circumstances.
    (d) Certification required. When the retained entity provides the 
information required by paragraph (b) of this section, the retained 
entity shall certify that the information is complete and accurate in 
all material respects.
    (e) Determination required. Prior to entering into any arrangement, 
the Treasury must conclude that no organizational conflict of interest 
exists that has not been adequately mitigated, or if a conflict cannot 
be adequately mitigated, that Treasury has expressly waived it. Once 
Treasury has approved a conflicts mitigation plan, the plan becomes an 
enforceable term under the arrangement.
    (f) Subsequent notification. The retained entity has a continuing 
obligation to search for and to report any potential organizational 
conflict of interest. Within five (5) business days after learning of a 
potential organizational conflict of interest, the retained entity shall 
disclose the potential conflict of interest in writing to the TARP Chief 
Compliance Officer. The disclosure shall describe the steps it has taken 
or proposes to take to mitigate the potential conflict or request a 
waiver from Treasury.
    (g) Periodic Certification. No later than one year after the 
arrangement's effective date, and at least annually thereafter, the 
retained entity shall certify in writing that it has no organizational 
conflicts of interest, or explain in detail the extent to which it can 
certify, and describe the actions is has taken and plans to take to 
mitigate any conflicts. Treasury may require more frequent 
certifications, depending on the arrangement
    (h) Retention of information. A retained entity shall retain the 
information needed to comply with this section and to support the 
certifications required by this section for three (3) years following 
termination or expiration of the arrangement, and shall make that 
information available to Treasury upon request. Such retained 
information shall include, but is not limited to, written documentation 
regarding the factors the retained entity considered in its mitigation 
plan as well as written documentation addressing the results of the 
retained entities' periodic review of the mitigation plan.



Sec. 31.212  Personal conflicts of interest.

    (a) Retained entity's responsibility. A retained entity shall ensure 
that all management officials performing work under the arrangement and 
key individuals have no personal conflicts of interest unless mitigation 
measures have neutralized the conflict, or Treasury has waived the 
conflict.
    (b) Information required. Before management officials and key 
individuals begin work under an arrangement, a retained entity shall 
obtain information from each of them in writing about their personal, 
business, and financial relationships, as well as those of their 
spouses, minor children, and other family members with whom the 
individuals have a close personal relationship that would cause a 
reasonable person with knowledge of the relevant facts to question the 
individual's ability to perform, his or her objectivity or judgment in 
such performance, or his or her ability to represent the interests of 
the Treasury. When the arrangement concerns the acquisition, valuation, 
management, or disposition of troubled assets, the information shall be 
no less extensive than that required of certain new federal employees 
under Office of Government Ethics Form 278. Treasury may extend the time 
necessary to meet these requirements in urgent and compelling 
circumstances.
    (c) Disqualification. The retained entity shall disqualify persons 
with personal conflicts of interests from performing work pursuant to 
the arrangement unless mitigation measures have

[[Page 354]]

neutralized the conflict to the satisfaction of the TARP Chief 
Compliance Officer. The retained entity may seek a waiver from the TARP 
Chief Compliance Officer to allow an individual with a personal conflict 
of interest to work under the arrangement.
    (d) Initial Certification. No later than ten business days after the 
effective date of the arrangement, the retained entity shall certify to 
the Treasury that all management officials and key individuals 
performing services under the arrangement have no personal conflicts of 
interest, or are subject to a mitigation plan or waiver approved by 
Treasury. In making this certification, the retained entity may rely on 
the information obtained pursuant to paragraph (b) of this section, 
unless the retained entity knows or should have known that the 
information provided is false or inaccurate. Treasury may extend the 
certification deadline in urgent and compelling circumstances.
    (e) Periodic Certification. No later than one year after the 
arrangement's effective date, and at least annually thereafter, the 
retained entity shall renew the certification required by paragraph (d) 
of this section. The retained entity shall provide more frequent 
certifications to Treasury when requested.
    (f) Retained Entities' Responsibilities. The retained entity shall 
adopt and implement procedures designed to discover, monitor, and report 
personal conflicts of interest on a continuous basis.
    (g) Subsequent notification. Within five business days after 
learning of a personal conflict of interest, the retained entity shall 
notify Treasury of the conflict and describe the steps it has taken and 
will take in the future to neutralize the conflict.
    (h) Retention of information. A retained entity shall retain the 
information needed to comply with this section and to support the 
certifications required by this section for three years following 
termination or expiration of the arrangement, and shall make that 
information available to Treasury upon request.



Sec. 31.213  General standards.

    (a) During the time period in which a retained entity is seeking an 
arrangement and during the term of any arrangement, a retained entity, 
its officers and partners, and its employees shall not:
    (1) Accept or solicit favors, gifts, or other items of monetary 
value from any individual or entity whom the retained entity, officer, 
partner, or employee knows is seeking official action from the Treasury 
in connection with the arrangement or has interests which may be 
substantially affected by the performance or nonperformance of duties to 
the Treasury under the arrangement.
    (2) Improperly use or allow the improper use of Treasury property 
for the personal benefit of any individual or entity other than the 
Treasury.
    (3) Make any unauthorized promise or commitment on behalf of the 
Treasury.
    (b) Any individual who acts for or on behalf of the Treasury 
pursuant to an arrangement shall comply with 18 U.S.C. 201, which 
generally prohibits the direct or indirect acceptance by a public 
official of anything of value in return for being influenced in, or 
because of, an official act. Violators are subject to criminal 
penalties.
    (c) Any individual or entity who provides information or makes a 
certification to the Treasury that is relating to services under EESA or 
required pursuant to 31 CFR Part 31 is subject to 18 U.S.C. 1001, which 
generally prohibits the making of any false or fraudulent statement to a 
federal officer. Upon receipt of information indicating that any 
individual or entity has violated any provision of title 18 of the U.S. 
Code or other provision of criminal law, Treasury shall refer such 
information to the Department of Justice and the Special Inspector 
General provided for under EESA.
    (d) A retained entity shall disclose to the Special Inspector 
General provided for the TARP, or the Treasury Office of

[[Page 355]]

the Inspector General, any credible evidence, in connection with the 
designation, services, or closeout of the arrangement, that a management 
official, employee, or contractor of the retained entity has committed a 
violation of Federal criminal law involving fraud, conflict of interest, 
bribery, or gratuity violations found in Title 18 of the United States 
Code, or a violation of the civil False Claims Act (31 U.S.C. 3729-
3733).



Sec. 31.214  Limitations on concurrent activities.

    Treasury has determined that certain market activities by a retained 
entity during the arrangement are likely to cause impermissible 
conflicts of interest. Accordingly, the following restrictions shall 
apply unless waived pursuant to Sec. 31.215, or Treasury agrees in 
writing to specific mitigation measures.
    (a) If the retained entity assists Treasury in the acquisition, 
valuation, management, or disposition of specific troubled assets, the 
retained entity, management officials performing work under the 
arrangement, and key individuals shall not purchase or offer to purchase 
such assets from Treasury, or assist anyone else in purchasing or 
offering to purchase such troubled assets from the Treasury, during the 
term of its arrangement.
    (b) If the retained entity advises Treasury with respect to a 
program for the purchase of troubled assets, the retained entity, 
management officials performing work under the arrangement, and key 
individuals shall not, during the term of the arrangement, sell or offer 
to sell, or act on behalf of anyone with respect to a sale or offer to 
sell, any asset to Treasury under the terms of that program.



Sec. 31.215  Grant of waivers.

    The TARP Chief Compliance Officer may waive a requirement under this 
Part that is not otherwise imposed by law when it is clear from the 
totality of the circumstances that a waiver is in the government's 
interest.



Sec. 31.216  Communications with Treasury employees.

    (a) Prohibitions. During the course of any process for selecting a 
retained entity (including any process using non-competitive 
procedures), a retained entity participating in the process and its 
representatives shall not:
    (1) Directly or indirectly make any offer or promise of future 
employment or business opportunity to, or engage directly or indirectly 
in any discussion of future employment or business opportunity with, any 
Treasury employee with personal or direct responsibility for that 
procurement.
    (2) Offer, give, or promise to offer or give, directly or 
indirectly, any money, gratuity, or other thing of value to any Treasury 
employee, except as permitted by Government-Wide Ethics Rules, 5 CFR 
part 2635.
    (3) Solicit or obtain from any Treasury employee, directly or 
indirectly, any information that is not public and was prepared for use 
by Treasury for the purpose of evaluating an offer, quotation, or 
response to enter into an arrangement.
    (b) Certification. Before a retained entity enters a new 
arrangement, or accepts a modification to an existing arrangement, the 
retained entity must certify to the following:
    (1) The retained entity is aware of the prohibitions of paragraph 
(a) of this section and, to the best of its knowledge after making 
reasonable inquiry, the retained entity has no information concerning a 
violation or possible violation of paragraph (a) of this section.
    (2) Each officer, employee, and representative of the retained 
entity who participated personally and substantially in preparing and 
submitting a bid, offer, proposal, or request for modification of the 
arrangement has certified that he or she:
    (i) Is familiar with and will comply with the requirements of 
paragraph (a) of this section; and
    (ii) Has no information of any violations or possible violations of 
paragraph (a) of this section, and will report immediately to the 
retained entity any subsequently gained information concerning a 
violation or possible

[[Page 356]]

violation of paragraph (a) of this section.



Sec. 31.217  Confidentiality of information.

    (a) Nonpublic information defined. Any information that Treasury 
provides to a retained entity under an arrangement, or that the retained 
entity obtains or develops pursuant to the arrangement, shall be deemed 
nonpublic until the Treasury determines otherwise in writing, or the 
information becomes part of the body of public information from a source 
other than the retained entity.
    (b) Prohibitions. The retained entity shall not:
    (1) Disclose nonpublic information to anyone except as required to 
perform the retained entity's obligations pursuant to the arrangement, 
or pursuant to a lawful court order or valid subpoena after giving prior 
notice to Treasury.
    (2) Use or allow the use of any nonpublic information to further any 
private interest other than as contemplated by the arrangement.
    (c) Retained entity's responsibility. A retained entity shall take 
appropriate measures to ensure the confidentiality of nonpublic 
information and to prevent its inappropriate use. The retained entity 
shall document these measures in sufficient detail to demonstrate 
compliance, and shall maintain this documentation for three years after 
the arrangement has terminated. The retained entity shall notify the 
TARP Chief Compliance Officer in writing within five business days of 
detecting a violation of the prohibitions in paragraph (b), above. The 
security measures required by this paragraph shall include:
    (1) Security measures to prevent unauthorized access to facilities 
and storage containers where nonpublic information is stored.
    (2) Security measures to detect and prevent unauthorized access to 
computer equipment and data storage devices that store or transmit 
nonpublic information.
    (3) Periodic training to ensure that persons receiving nonpublic 
information know their obligation to maintain its confidentiality and to 
use it only for purposes contemplated by the arrangement.
    (4) Programs to ensure compliance with federal securities laws, 
including laws relating to insider trading, when the arrangement relates 
to the acquisition, valuation, management, or disposition of troubled 
assets.
    (5) A certification from each management official performing work 
under the arrangement and each key individual stating that he or she 
will comply with the requirements in section 31.217(b). The retained 
entity shall obtain this certification, in the form of a nondisclosure 
agreement, before a management official or key individual performs work 
under the arrangement, and then annually thereafter.



Sec. 31.218  Enforcement.

    (a) Compliance with these rules concerning conflicts of interest is 
of the utmost importance. In the event a retained entity or any 
individual or entity providing information pursuant to 31 U.S.C. Part 31 
violates any of these rules, Treasury may impose or pursue one or more 
of the following sanctions:
    (1) Rejection of work tainted by an organizational conflict of 
interest or a personal conflict of interest and denial of payment for 
that work.
    (2) Termination of the arrangement for default.
    (3) Debarment of the retained entity for Federal government 
contracting and/or disqualification of the retained entity from future 
financial agency agreements.
    (4) Imposition of any other remedy available under the terms of the 
arrangement or at law.
    (5) In the event of violation of a criminal statue, referral to the 
Department of Justice for prosecution of the retained entity and/or its 
officers or employees. In such cases, the Department of Justice may make 
direct and derivative use of any statements and information provided by 
any entity, its representatives and employees or any individual, to the 
extent permitted by law.
    (b) To the extent Treasury has discretion in selecting or imposing a 
remedy, it will give significant consideration to a retained entity's 
prompt disclosure of any violation of these rules.

[[Page 357]]



PART 50_TERRORISM RISK INSURANCE PROGRAM--Table of Contents




                      Subpart A_General Provisions

Sec.
50.1 Authority, purpose and scope.
50.2 Responsible office.
50.4 Mandatory participation in Program.
50.5 Definitions.
50.6 Rules of construction for dates.
50.7 Special rules for Interim Guidance Safe Harbors.
50.8 Procedure for requesting determinations of controlling influence.
50.9 Procedure for requesting general interpretations of statute.

         Subpart B_Disclosures as Conditions for Federal Payment

50.10 General disclosure requirements.
50.11 Definition.
50.12 Clear and conspicuous disclosure.
50.13 Offer, purchase, and renewal.
50.14 Separate line item.
50.15 Cap disclosure.
50.17 Use of model forms.
50.18 Notice required by reinstatement provision.
50.19 General disclosure requirements for State residual market 
          insurance entities and State workers' compensation funds.

                    Subpart C_Mandatory Availability

50.20 General mandatory availability requirements.
50.21 Make available.
50.23 No material difference from other coverage.
50.24 Applicability of State law requirements.

      Subpart D_State Residual Market Insurance Entities; Workers' 
                           Compensation Funds

50.30 General participation requirements.
50.33 Entities that do not share profits and losses with private sector 
          insurers.
50.35 Entities that share profits and losses with private sector 
          insurers.
50.36 Allocation of premium income associated with entities that do 
          share profits and losses with private sector insurers.

Subpart E--Self-Insurance Arrangements; Captives [Reserved]

                       Subpart F_Claims Procedures

50.50 Federal share of compensation.
50.51 Adjustments to the Federal share of compensation.
50.52 Initial Notice of Insured Loss.
50.53 Loss certifications.
50.54 Payment of Federal share of compensation.
50.55 Determination of Affiliations.

              Subpart G_Audit and Investigative Procedures

50.60 Audit Authority
50.61 Recordkeeping

Subpart H--Recoupment and Surcharge Procedures [Reserved]

Subpart I--Federal cause of action; Approval of settlements

50.80 Federal cause of action and remedy.
50.81 State causes of action preempted.
50.82 Advance approval of settlements.
50.83 Procedure for requesting approval of proposed settlements.
50.84 Subrogation.
50.85 Amendment related to settlement approval.

    Authority: 5 U.S.C. 301; 31 U.S.C. 321; Title I, Public Law 107-297, 
116 Stat. 2322, as amended by Public Law 109-144, 119 Stat. 2660 and 
Public Law 110-160, 121 Stat. 1839 (15 U.S.C. 6701 note).

    Source: 68 FR 9811, Feb. 28, 2003, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 50.1  Authority, purpose and scope.

    (a) Authority. This part is issued pursuant to authority in Title I 
of the Terrorism Risk Insurance Act of 2002, Public Law 107-297, 116 
Stat. 2322, as amended by the Terrorism Risk Insurance Extension Act of 
2005, Public Law 109-144, 119 Stat. 2660, and the Terrorism Risk 
Insurance Program Reauthorization Act of 2007, Public Law 110-160, 121 
Stat. 1839.
    (b) Purpose. This Part contains rules prescribed by the Department 
of the Treasury to implement and administer the Terrorism Risk Insurance 
Program.
    (c) Scope. This Part applies to insurers subject to the Act and 
their policyholders.

[68 FR 9811, Feb. 28, 2003, as amended at 71 FR 27569, May 11, 2006; 73 
FR 53363, Sept. 16, 2008]



Sec. 50.2  Responsible office.

    The office responsible for the administration of the Terrorism Risk 
Insurance Act in the Department of the

[[Page 358]]

Treasury is the Terrorism Risk Insurance Program Office. The Treasury 
Assistant Secretary for Financial Institutions prescribes the 
regulations under the Act.

[68 FR 41264, July 11, 2003.]



Sec. 50.4  Mandatory participation in Program.

    Any entity that meets the definition of an insurer under the Act is 
required to participate in the Program.



Sec. 50.5  Definitions.

    For purposes of this Part:
    (a) Act means the Terrorism Risk Insurance Act of 2002.
    (b) Act of terrorism--(1) In general. The term act of terrorism 
means any act that is certified by the Secretary, in concurrence with 
the Secretary of State and the Attorney General of the United States:
    (i) To be an act of terrorism;
    (ii) To be a violent act or an act that is dangerous to human life, 
property, or infrastructure;
    (iii) To have resulted in damage within the United States, or 
outside of the United States in the case of:
    (A) An air carrier (as defined in 49 U.S.C. 40102) or a United 
States flag vessel (or a vessel based principally in the United States, 
on which United States income tax is paid and whose insurance coverage 
is subject to regulation in the United States); or
    (B) The premises of a United States mission; and
    (iv) To have been committed by an individual or individuals as part 
of an effort to coerce the civilian population of the United States or 
to influence the policy or affect the conduct of the United States 
Government by coercion.
    (2) Limitations. The Secretary is not authorized to certify an act 
as an act of terrorism if:
    (i) The act is committed as part of the course of a war declared by 
the Congress (except with respect to any coverage for workers' 
compensation); or
    (ii) property and casualty losses resulting from the act, in the 
aggregate, do not exceed $5,000,000.
    (3) Judicial review precluded. The Secretary's certification of an 
act of terrorism, or determination not to certify an act as an act of 
terrorism, is final and is not subject to judicial review.
    (c)(1) Affiliate means, with respect to an insurer, any entity that 
controls, is controlled by, or is under common control with the insurer. 
An affiliate must itself meet the definition of insurer to participate 
in the Program.
    (2) For purposes of paragraph (c)(1) of this section, an insurer has 
control over another insurer for purposes of the Program if:
    (i) The insurer directly or indirectly or acting through one or more 
other persons owns, controls, or has power to vote 25 percent or more of 
any class of voting securities of the other insurer;
    (ii) The insurer controls in any manner the election of a majority 
of the directors or trustees of the other insurer; or
    (iii) The Secretary determines, after notice and opportunity for 
hearing, that an insurer directly or indirectly exercises a controlling 
influence over the management or policies of the other insurer, even if 
there is no control as defined in paragraph (c)(2)(i) or (c)(2)(ii) of 
this section.
    (3) An insurer described in paragraph (c)(2)(i) or (c)(2)(ii) of 
this section is conclusively deemed to have control.
    (4) For purposes of a determination of controlling influence under 
paragraph (c)(2)(iii) of this section, if an insurer is not described in 
paragraph (c)(2)(i) or (c)(2)(ii) of this section, the following 
rebuttable presumptions will apply:
    (i) If an insurer controls another insurer under any State law, and 
at least one of the factors listed in paragraph (c) (4)(iv) of this 
section applies, there is a rebuttable presumption that the insurer that 
has control under State law exercises a controlling influence over the 
management or policies of the other insurer for purposes of paragraph 
(c)(2)(iii) of this section.
    (ii) If an insurer provides 25 percent or more of another insurer's 
capital (in the case of a stock insurer), policyholder surplus (in the 
case of a mutual insurer), or corporate capital (in the case of other 
entities that qualify as insurers), and at least one of the factors 
listed in paragraph (c)(4)(iv) of

[[Page 359]]

this section applies, there is a rebuttable presumption that the insurer 
providing such capital, policyholder surplus, or corporate capital 
exercises a controlling influence over the management or policies of the 
receiving insurer for purposes of paragraph (c)(2)(iii) of this section.
    (iii) If an insurer, at any time during a Program Year, supplies 25 
percent or more of the underwriting capacity for that year to an insurer 
that is a syndicate consisting of a group including incorporated and 
individual unincorporated underwriters, and at least one of the factors 
in paragraph (c)(4)(iv) of this section applies, there is a rebuttable 
presumption that the insurer exercises a controlling influence over the 
syndicate for purposes of paragraph (c)(2)(iii) of this section.
    (iv) If paragraphs (c)(4)(i) through (c)(4)(iii) of this section are 
not applicable, but two or more of the following factors apply to an 
insurer, with respect to another insurer, there is a rebuttable 
presumption that the insurer exercises a controlling influence over the 
management or policies of the other insurer for purposes of paragraph 
(c)(2)(iii) of this section:
    (A) The insurer is one of the two largest shareholders of any class 
of voting stock;
    (B) The insurer holds more than 35 percent of the combined debt 
securities and equity of the other insurer;
    (C) The insurer is party to an agreement pursuant to which the 
insurer possesses a material economic stake in the other insurer 
resulting from a profit-sharing arrangement, use of common names, 
facilities or personnel, or the provision of essential services to the 
other insurer;
    (D) The insurer is party to an agreement that enables the insurer to 
influence a material aspect of the management or policies of the other 
insurer;
    (E) The insurer would have the ability, other than through the 
holding of revocable proxies, to direct the votes of more than 25 
percent of the other insurer's voting stock in the future upon the 
occurrence of an event;
    (F) The insurer has the power to direct the disposition of more than 
25 percent of a class of voting stock of the other insurer in a manner 
other than a widely dispersed or public offering;
    (G) The insurer and/or the insurer's representative or nominee 
constitute more than one member of the other insurer's board of 
directors; or
    (H) The insurer or its nominee or an officer of the insurer serves 
as the chairman of the board, chairman of the executive committee, chief 
executive officer, chief operating officer, chief financial officer or 
in any position with similar policymaking authority in the other 
insurer.
    (5) An insurer that is not described in paragraph (c)(2)(i) or 
(c)(2)(ii) of this section may request a hearing in which the insurer 
may rebut a presumption of controlling influence under paragraph 
(c)(4)(i) through (c)(4)(iv) of this section or otherwise request a 
determination of controlling influence by presenting and supporting its 
position through written submissions to Treasury, and in Treasury's 
discretion, through informal oral presentations, in accordance with the 
procedure in Sec. 50.8.
    (6) See Sec. 50.55 of this part for determination of an insurer's 
affiliates for purposes of subpart F.
    (d) Direct earned premium means a direct earned premium for all 
commercial property and casualty insurance issued by any insurer for 
insurance against all losses, including losses from an act of terrorism, 
occurring at the locations described in section 102(5)(A) and (B) of the 
Act.
    (1) State licensed or admitted insurers. For a State licensed or 
admitted insurer that reports to the NAIC, direct earned premium is the 
premium information for commercial property and casualty insurance 
coverage reported by the insurer on column 2 of the NAIC Exhibit of 
Premiums and Losses of the NAIC Annual Statement (commonly known as 
Statutory Page 14). (See definition of property and casualty insurance.)
    (i) Premium information as reported to the NAIC should be included 
in the calculation of direct earned premiums for purposes of the Program 
only to the extent of commercial property and casualty coverage issued 
by the insurer against losses occurring at the locations described in 
section 102(5)(A) and (B) of the Act.

[[Page 360]]

    (ii) Premiums for personal property and casualty insurance coverage 
(coverage primarily designed to cover personal, family or household risk 
exposures, with the exception of coverage written to insure 1 to 4 
family rental dwellings owned for the business purpose of generating 
income for the property owner), or premiums for any other insurance 
coverage that does not meet the definition of commercial property and 
casualty insurance, should be excluded in the calculation of direct 
earned premiums for purposes of the Program.
    (iii) Personal property and casualty insurance coverage that 
includes incidental coverage for commercial purposes is primarily 
personal coverage, and therefore premiums may be fully excluded by an 
insurer from the calculation of direct earned premium. For purposes of 
the Program, commercial coverage is incidental if less than 25 percent 
of the total direct earned premium is attributable to commercial 
coverage. Commercial property and casualty insurance coverage insuring 
against losses occurring at locations other than the locations described 
in section 102(5)(A) and (B) of the Act, or other insurance coverage 
that does not meet the definition of commercial property and casualty 
insurance, but that includes incidental coverage for commercial property 
and casualty insurance insuring against losses occurring at such 
locations, is primarily non-Program coverage, and therefore premiums 
also may be fully excluded by an insurer from the calculation of direct 
earned premium. For purposes of the Program, commercial property and 
casualty insurance coverage insuring against losses at the locations 
described in section 102(5)(A) and (B) of the Act is incidental if less 
than 25 percent of the total direct earned premium is attributable to 
such coverage. For purposes of the Program, commercial coverage combined 
with coverages that otherwise do not meet the definition of commercial 
property and casualty insurance is incidental if less than 25 percent of 
the total direct earned premium is for such coverage.
    (iv) If a property and casualty insurance policy covers both 
commercial and personal risk exposures, insurers may allocate the 
premiums in accordance with the proportion of risk between commercial 
and personal components in order to ascertain direct earned premium. If 
a policy includes insurance coverage that meets the definition of 
commercial property and casualty insurance for losses occurring at the 
locations described in section 102(5)(A) and (B) of the Act, but also 
includes other coverage, insurers may allocate the premiums in 
accordance with the proportion of risk attributable to the components, 
in order to ascertain direct earned premium.
    (2) Insurers that do not report to NAIC. An insurer that does not 
report to the NAIC, but that is licensed or admitted by any State (such 
as certain farm or county mutual insurers), should use the guidance 
provided in paragraph (d)(1) of this section to assist in ascertaining 
its direct earned premium.
    (i) Direct earned premium may be ascertained by adjusting data 
maintained by such insurer or reported by such insurer to its State 
regulator to reflect a breakdown of premiums for commercial and personal 
property and casualty exposure risk as described in paragraph (d)(1) of 
this section and, if necessary, re-stated to reflect the accrual method 
of determining direct earned premium versus direct premium.
    (ii) Such an insurer should consider other types of payments that 
compensate the insurer for risk of loss (contributions, assessments, 
etc.) as part of its direct earned premium.
    (3) Certain eligible surplus line carrier insurers. An eligible 
surplus line carrier insurer listed on the NAIC Quarterly Listing of 
Alien Insurers must ascertain its direct earned premium as follows:
    (i) For policies that were in-force as of November 26, 2002, or 
entered into prior to January 1, 2003, direct earned premiums are to be 
determined with reference to the definition of property and casualty 
insurance and the locations described in section 102(5)(A) and (B) of 
the Act by allocating the appropriate portion of premium income for 
losses for property and casualty insurance at such locations. The same 
allocation methodologies contained within

[[Page 361]]

the NAIC's ``Allocation of Surplus Lines and Independently Procured 
Insurance Premium Tax on Multi-State Risks Model Regulation'' for 
allocating premium between coverage for property and casualty insurance 
for losses occurring at the locations described in section 102(5)(A) and 
(B) of the Act and all other coverage, to ascertain the appropriate 
percentage of premium income to be included in direct earned premium, 
may be used.
    (ii) For policies issued after January 1, 2003, premium for 
insurance that meets the definition of property and casualty insurance 
for losses occurring at the locations described in section 102(5)(A) and 
(B) of the Act, must be priced separately by such eligible surplus line 
carriers.
    (4) Federally approved insurers. A federally approved insurer under 
section 102(6)(A)(iii) of the Act should use a methodology similar to 
that specified for eligible surplus line carrier insurers in paragraph 
(d)(3) of this section to calculate its direct earned premium. Such 
calculation should be adjusted to reflect the limitations on scope of 
insurance coverage under the Program (i.e. to the extent of federal 
approval of commercial property and casualty insurance in connection 
with maritime, energy or aviation activities).
    (e) Insured loss. (1) The term insured loss means any loss resulting 
from an act of terrorism (including an act of war, in the case of 
workers' compensation) that is covered by primary or excess property and 
casualty insurance issued by an insurer if the loss:
    (i) Occurs within the United States;
    (ii) Occurs to an air carrier (as defined in 49 U.S.C. 40102), to a 
United States flag vessel (or a vessel based principally in the United 
States, on which United States income tax is paid and whose insurance 
coverage is subject to regulation in the United States), regardless of 
where the loss occurs; or
    (iii) Occurs at the premises of any United States mission.
    (2)(i) A loss that occurs to an air carrier (as defined in 49 U.S.C. 
40102), to a United States flag vessel, or a vessel based principally in 
the United States, on which United States income tax is paid and whose 
insurance coverage is subject to regulation in the United States, is not 
an insured loss under section 102(5)(B) of the Act unless it is incurred 
by the air carrier or vessel outside the United States.
    (ii) An insured loss to an air carrier or vessel outside the United 
States under section 102(5)(B) of the Act does not include losses 
covered by third party insurance contracts that are separate from the 
insurance coverage provided to the air carrier or vessel.
    (3) The term insured loss includes reasonable loss adjustment 
expenses, incurred by an insurer in connection with insured losses, that 
are allocated and identified by claim file in insurer records, including 
expenses incurred in the investigation, adjustment and defense of 
claims, but excluding staff salaries, overhead, and other insurer 
expenses that would have been incurred notwithstanding the insured loss.
    (4) The term insured loss does not include:
    (i) Punitive or exemplary damages awarded or paid in connection with 
the Federal cause of action specified in section 107(a)(1) of the Act. 
The term ``punitive or exemplary damages'' means damages that are not 
compensatory but are an award of money made to a claimant solely to 
punish or deter; or
    (ii) Extra contractual damages awarded against, or paid by, an 
insurer; or
    (iii) Payments by an insurer in excess of policy limits.
    (f) Insurer means any entity, including any affiliate of the entity, 
that meets the following requirements:
    (1)(i) The entity must fall within at least one of the following 
categories:
    (A) It is licensed or admitted to engage in the business of 
providing primary or excess insurance in any State, (including, but not 
limited to, State licensed captive insurance companies, State licensed 
or admitted risk retention groups, and State licensed or admitted farm 
and county mutuals), and, if a joint underwriting association, pooling 
arrangement, or other similar entity, then the entity must:
    (1) Have gone through a process of being licensed or admitted to 
engage in the business of providing primary or excess insurance that is 
administered by the State's insurance regulator,

[[Page 362]]

which process generally applies to insurance companies or is similar in 
scope and content to the process applicable to insurance companies;
    (2) Be generally subject to State insurance regulation, including 
financial reporting requirements, applicable to insurance companies 
within the State; and
    (3) Be managed independently from other insurers participating in 
the Program;
    (B) It is not licensed or admitted to engage in the business of 
providing primary or excess insurance in any State, but is an eligible 
surplus line carrier listed on the Quarterly Listing of Alien Insurers 
of the NAIC, or any successor to the NAIC;
    (C) It is approved or accepted for the purpose of offering property 
and casualty insurance by a Federal agency in connection with maritime, 
energy, or aviation activity, but only to the extent of such federal 
approval of commercial property and casualty insurance coverage offered 
by the insurer in connection with maritime, energy, or aviation 
activity;
    (D) It is a State residual market insurance entity or State workers' 
compensation fund; or
    (E) As determined by the Secretary, it falls within any other class 
or type of captive insurer or other self-insurance arrangement by a 
municipality or other entity, to the extent provided in Treasury 
regulations issued under section 103(f) of the Act.
    (ii) If an entity falls within more than one category described in 
paragraph (f)(1)(i) of this section, the entity is considered to fall 
within the first category within which it falls for purposes of the 
Program.
    (2) The entity must receive direct earned premiums for any type of 
commercial property and casualty insurance coverage, except in the case 
of:
    (i) State residual market insurance entities and State workers' 
compensation funds, to the extent provided in Treasury regulations; and
    (ii) Other classes or types of captive insurers and other self-
insurance arrangements by municipalities and other entities, if such 
entities are included in the Program by Treasury under regulations in 
this Part.
    (3) The entity must meet any other criteria as prescribed by 
Treasury.
    (g) Insurer deductible means:
    (1) For an insurer that has had a full year of operations during the 
calendar year immediately preceding the applicable Program Year:
    (i) For the Transition Period (November 26, 2002 through December 
31, 2002), the value of an insurer's direct earned premiums over 
calendar 2001, multiplied by 1 percent;
    (ii) For Program Year 1 (January 1, 2003 through December 31, 2003), 
the value of an insurer's direct earned premiums over calendar year 
2002, multiplied by 7 percent;
    (iii) For Program Year 2 (January 1, 2004 through December 31, 
2004), the value of an insurer's direct earned premiums over calendar 
year 2003, multiplied by 10 percent;
    (iv) For Program Year 3 (January 1, 2005 through December 31, 2005), 
the value of an insurer's direct earned premiums over calendar year 
2004, multiplied by 15 percent;
    (v) For Program Year 4 (January 1, 2006 through December 31, 2006), 
the value of an insurer's direct earned premiums over calendar year 
2005, multiplied by 17.5 percent;
    (vi) For Program Year 5 (January 1, 2007 through December 31, 2007), 
or any Program Year thereafter, the value of an insurer's direct earned 
premiums over the calendar year immediately preceding that Program Year, 
multiplied by 20 percent; and
    (2) For an insurer that has not had a full year of operations during 
the calendar year immediately preceding the applicable Program Year, the 
insurer deductible will be based on data for direct earned premiums for 
the applicable Program Year multiplied by the specified percentage for 
the insurer deductible for the applicable Program Year. If the insurer 
does not have a full year of operations during the applicable Program 
Year, the direct earned premiums for the applicable Program Year will be 
annualized to determine the insurer deductible.
    (h) NAIC means the National Association of Insurance Commissioners.
    (i) Person means any individual, business or nonprofit entity 
(including

[[Page 363]]

those organized in the form of a partnership, limited liability company, 
corporation, or association), trust or estate, or a State or political 
subdivision of a State or other governmental unit.
    (j) Professional liability insurance means insurance coverage for 
liability arising out of the performance of professional or business 
duties related to a specific occupation, with coverage being tailored to 
the needs of the specific occupation. Examples include abstracters, 
accountants, insurance adjusters, architects, engineers, insurance 
agents and brokers, lawyers, real estate agents, stockbrokers and 
veterinarians. For purposes of this definition, professional liability 
insurance does not include directors and officers liability insurance.
    (k) Program means the Terrorism Risk Insurance Program established 
by the Act.
    (l) Program Trigger event means a certified act of terrorism that 
occurs after March 31, 2006, for which the aggregate industry insured 
losses resulting from such act exceed $50,000,000 with respect to such 
insured losses occurring in 2006 or $100,000,000 with respect to such 
insured losses occurring in 2007 and any Program Year thereafter.
    (m) Program Years means the Transition Period (November 26, 2002 
through December 31, 2002), Program Year 1 (January 1, 2003 through 
December 31, 2003), Program Year 2 (January 1, 2004 though December 31, 
2004), Program Year 3 (January 1, 2005 through December 31, 2005), 
Program Year 4 (January 1, 2006 through December 31, 2006), Program Year 
5 (January 1, 2007 through December 31, 2007), and any Program Year 
thereafter (calendar years 2008 through 2014).
    (n) Property and casualty insurance means commercial lines of 
property and casualty insurance, including excess insurance, workers' 
compensation insurance, and directors and officers liability insurance, 
and:
    (1) Means commercial lines within only the following lines of 
insurance from the NAIC's Exhibit of Premiums and Losses (commonly known 
as Statutory Page 14): Line 1--Fire; Line 2.1--Allied Lines; Line 5.1--
Commercial Multiple Peril (non-liability portion); Line 5.2--Commercial 
Multiple Peril (liability portion); Line 8--Ocean Marine; Line 9--Inland 
Marine; Line 16--Workers' Compensation; Line 17--Other Liability; Line 
18--Products Liability; Line 22--Aircraft (all perils); and Line 27--
Boiler and Machinery; and
    (2) Does not include:
    (i) Federal crop insurance issued or reinsured under the Federal 
Crop Insurance Act (7 U.S.C. 1501 et seq.), or any other type of crop or 
livestock insurance that is privately issued or reinsured (including 
crop insurance reported under either Line 2.1--Allied Lines or Line 
2.2--Multiple Peril (Crop) of the NAIC's Exhibit of Premiums and Losses 
(commonly known as Statutory Page 14);
    (ii) Private mortgage insurance (as defined in section 2 of the 
Homeowners Protection Act of 1988) (12 U.S.C. 4901) or title insurance;
    (iii) Financial guaranty insurance issued by monoline financial 
guaranty insurance corporations;
    (iv) Insurance for medical malpractice;
    (v) Health or life insurance, including group life insurance;
    (vi) Flood insurance provided under the National Flood Insurance Act 
of 1968 (42 U.S.C. 4001 et seq.) or earthquake insurance reported under 
Line 12 of the NAIC's Exhibit of Premiums and Losses (commonly known as 
Statutory Page 14);
    (vii) Reinsurance or retrocessional reinsurance;
    (viii) Commercial automobile insurance, including insurance reported 
under Lines 19.3 (Commercial Auto No-Fault (personal injury 
protection)), 19.4 (Other Commercial Auto Liability) and 21.2 
(Commercial Auto Physical Damage) of the NAIC's Exhibit of Premiums and 
Losses (commonly known as Statutory Page 14);
    (ix) Burglary and theft insurance, including insurance reported 
under Line 26 (Burglary and Theft) of the NAIC's Exhibit of Premiums and 
Losses (commonly known as Statutory Page 14);
    (x) Surety insurance, including insurance reported under Line 24 
(Surety) of the NAIC's Exhibit of Premiums and Losses (commonly known as 
Statutory Page 14);
    (xi) Professional liability insurance as defined in section 50.5(j); 
or

[[Page 364]]

    (xii) Farmowners multiple peril insurance, including insurance 
reported under Line 3 (Farmowners Multiple Peril) of the NAIC's Exhibit 
of Premiums and Losses (commonly known as Statutory Page 14).
    (o) Secretary means the Secretary of the Treasury.
    (p) State means any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, American Samoa, Guam, each of the United 
States Virgin Islands, and any territory or possession of the United 
States.
    (q) Treasury means the United States Department of the Treasury.
    (r) United States means the several States, and includes the 
territorial sea and the continental shelf of the United States, as those 
terms are defined in the Violent Crime Control and Law Enforcement Act 
of 1994 (18 U.S.C. 2280 and 2281).

[68 FR 9811, Feb. 28, 2003, as amended at 68 FR 41264, July 11, 2003; 68 
FR 48281, Aug. 13, 2003; 69 FR 39306, June 29, 2004; 70 FR 7404, Feb. 
14, 2005; 70 FR 34351, June 14, 2005; 71 FR 27569, May 11, 2006; 73 FR 
53363, Sept. 16, 2008]



Sec. 50.6  Rule of construction for dates.

    Unless otherwise expressly provided in the regulation, any date in 
these regulations is intended to be applied so that the day begins at 
12:01 a.m. and ends at midnight on that date.



Sec. 50.7  Special Rules for Interim Guidance Safe Harbors.

    (a) An insurer will be deemed to be in compliance with the 
requirements of the Act to the extent the insurer reasonably relied on 
Interim Guidance prior to the effective date of applicable regulations.
    (b) For purposes of this section, Interim Guidance means the 
following documents, which are also available from the Department of the 
Treasury at http://www.treasury.gov/trip:
    (1) Interim Guidance I issued by Treasury on December 3, 2002, and 
published at 67 FR 76206 (December 11, 2002);
    (2) Interim Guidance II issued by Treasury on December 18, 2002, and 
published at 67 FR 78864 (December 26, 2002);
    (3) Interim Guidance III issued by Treasury on January 22, 2003, and 
published at 68 FR 4544 (January 29, 2003);
    (4) Interim Guidance IV issued by Treasury on December 29, 2005, and 
published at 71 FR 648 (January 5, 2006); and
    (5) Interim Guidance issued by Treasury on January 22, 2008, and 
published at 73 FR 5264 (January 29, 2008).

[71 FR 27570, May 11, 2006, as amended at 73 FR 53364, Sept. 16, 2008]



Sec. 50.8  Procedure for requesting determinations of controlling influence.

    (a) An insurer or insurers not having control over another insurer 
under Sec. 50.5(c)(2)(i) or (c)(2)(ii) may make a written submission to 
Treasury to rebut a presumption of controlling influence under Sec. 
50.5(c)(4)(i) through (iv) or otherwise to request a determination of 
controlling influence. Such submissions shall be made to the Terrorism 
Risk Insurance Program Office, Department of the Treasury, Suite 2110, 
1425 New York Ave NW, Washington, D.C. 20220. The submission should be 
entitled, ``Controlling Influence Submission,'' and should provide the 
full name and address of the submitting insurer(s) and the name, title, 
address and telephone number of the designated contact person(s) for 
such insurer(s).
    (b) Treasury will review submissions and determine whether Treasury 
needs additional written or orally presented information. In its 
discretion, Treasury may schedule a date, time and place for an oral 
presentation by the insurer(s).
    (c) An insurer or insurers must provide all relevant facts and 
circumstances concerning the relationship(s) between or among the 
affected insurers and the control factors in Sec. 50.5(c)(4)(i) through 
(iv); and must explain in detail any basis for why the insurer believes 
that no controlling influence exists (if a presumption is being 
rebutted) in light of the particular facts and circumstances, as well as 
the Act's language, structure and purpose. Any confidential business or 
trade secret information submitted to Treasury should be clearly marked. 
Treasury will handle any subsequent request for information designated 
by an insurer as confidential business or trade secret

[[Page 365]]

information in accordance with Treasury's Freedom of Information Act 
regulations at 31 C.F.R. Part 1.
    (d) Treasury will review and consider the insurer submission and 
other relevant facts and circumstances. Unless otherwise extended by 
Treasury, within 60 days after receipt of a complete submission, 
including any additional information requested by Treasury, and 
including any oral presentation, Treasury will issue a final 
determination of whether one insurer has a controlling influence over 
another insurer for purposes of the Program. The determination shall set 
forth Treasury's basis for its determination.
    (e) This Sec. 50.8 supersedes the Interim Guidance issued by 
Treasury in a notice published on March 27, 2003 (68 FR 15039).

(Approved by the Office of Management & Budget under control number 
1505-0190)

[68 FR 41266, July 11, 2003]



Sec. 50.9  Procedure for requesting general interpretations of statute.

    Persons actually or potentially affected by the Act or regulations 
in this Part may request an interpretation of the Act or regulations by 
writing to the Terrorism Risk Insurance Program Office, Suite 2110, 
Department of the Treasury, 1425 New York Ave NW, Washington, DC 20220, 
giving a detailed explanation of the facts and circumstances and the 
reason why an interpretation is needed. A requester should segregate and 
mark any confidential business or trade secret information clearly. 
Treasury in its discretion will provide written responses to requests 
for interpretation. Treasury reserves the right to decline to provide a 
response in any case. Except in the case of any confidential business or 
trade secret information, Treasury will make written requests for 
interpretations and responses publicly available at the Treasury 
Department Library, on the Treasury Web site, or through other means as 
soon as practicable after the response has been provided. Treasury will 
handle any subsequent request for information that had been designated 
by a requester as confidential business or trade secret information in 
accordance with Treasury's Freedom of Information Act regulations at 31 
CFR Part 1.

[68 FR 41266, July 11, 2003]



         Subpart B_Disclosures as Conditions for Federal Payment

    Source: 68 FR 19306, Apr. 18, 2003, unless otherwise noted.



Sec. 50.10  General disclosure requirements.

    (a) All policies. As a condition for federal payments under section 
103(b) of the Act, the Act requires that an insurer provide clear and 
conspicuous disclosure to the policyholder of:
    (1) The premium charged for insured losses covered by the Program; 
and
    (2) The federal share of compensation for insured losses under the 
Program.
    (b) Policies in force on the date of enactment. For policies issued 
before November 26, 2002, the disclosure required by the Act must be 
provided within 90 days of November 26, 2002 (no later than February 24, 
2003).
    (c) Policies issued within 90 days of the date of enactment. For 
policies issued within the 90-day period beginning on November 26, 2002 
through February 24, 2003, the disclosure required by the Act must be 
provided at the time of offer, purchase, and renewal of the policy.
    (d) Policies issued more than 90 days after the date of enactment. 
For policies issued on or after February 25, 2003, the disclosure 
required by the Act must be made on a separate line item in the policy, 
at the time of offer, purchase, and renewal of the policy. For policies 
issued in late 2005 with coverage extending into 2006, see Sec. 
50.12(e)(2).

[68 FR 19306, Apr. 18, 2003, as amended at 71 FR 27570, May 11, 2006]



Sec. 50.11  Definition.

    For purposes of this subpart, unless the context indicates 
otherwise, the term ``disclosure'' or ``disclosures'' refers to the 
disclosure described in section 103(b)(2) of the Act and Sec. 50.10. 
The term ``cap disclosure'' refers to the disclosure required by section 
103(b)(3) of the Act and Sec. 50.15.

[73 FR 53364, Sept. 16, 2008]

[[Page 366]]



Sec. 50.12  Clear and conspicuous disclosure.

    (a) General. Whether a disclosure is clear and conspicuous depends 
on the totality of the facts and circumstances of the disclosure. See 
Sec. 50.17 for model forms.
    (b)(1) Description of premium. An insurer may describe the premium 
charged for insured losses covered by the Program as a portion or 
percentage of an annual premium, if consistent with standard business 
practice. An insurer may not describe the premium in a manner that is 
misleading in the context of the Program, such as by characterizing the 
premium as a ``surcharge.''
    (2) Premium to reflect definition of act of terrorism. If an insurer 
makes an initial offer of coverage, or offers to renew an existing 
policy on or after December 26, 2007, the disclosure provided to the 
policyholder must reflect the premium charged for insured losses covered 
by the Act, consistent with the definition of an act of terrorism as 
amended by the Terrorism Risk Insurance Program Reauthorization Act of 
2007, Public Law 110-160, 121 Stat. 1839.
    (c) Method of disclosure. An insurer may provide disclosures using 
normal business practices, including forms and methods of communication 
used to communicate similar policyholder information to policyholders.
    (d) Use of producer. If an insurer normally communicates with a 
policyholder through an insurance producer or other intermediary, an 
insurer may provide disclosures through such producer or other 
intermediary. If an insurer elects to make the disclosures through an 
insurance producer or other intermediary, the insurer remains 
responsible for ensuring that the disclosures are provided by the 
insurance producer or other intermediary to policyholders in accordance 
with the Act.
    (e) Demonstration of compliance. (1) An insurer may demonstrate that 
it has satisfied the requirement to provide clear and conspicuous 
disclosure as described in Sec. 50.10 through use of appropriate 
systems and normal business practices that demonstrate a practice of 
compliance.
    (2) If an insurer made available coverage for insured losses in a 
new policy or policy renewal in Program Year 3 for coverage becoming 
effective in Program Year 4, but did not provide a disclosure at the 
time of offer, purchase or renewal, then the insurer must be able to 
demonstrate to Treasury's satisfaction that it has provided a disclosure 
as soon as possible following January 1, 2006.
    (3) If an insurer made available coverage for insured losses in a 
new policy or policy renewal in 2007 or in the first three months of 
2008 for coverage becoming effective in 2008, but did not provide a 
disclosure at the time of offer, purchase or renewal of the policy, then 
the insurer must be able to demonstrate to Treasury's satisfaction that 
it has provided a disclosure as soon as possible following January 1, 
2008.
    (f) Certification of compliance. An insurer must certify that it has 
complied with the requirement to provide disclosure to the policyholder 
on all policies that form the basis for any claim that is submitted by 
an insurer for federal payment under the Program.

[68 FR 19306, Apr. 18, 2003, as amended at 68 FR 59727, Oct. 17, 2003; 
71 FR 27570, May 11, 2006; 73 FR 53364, Sept. 16, 2008]



Sec. 50.13  Offer, purchase, and renewal.

    An insurer is deemed to be in compliance with the requirement of 
providing disclosure ``at the time of offer, purchase, and renewal of 
the policy'' under Sec. 50.10(c) and (d) if the insurer:
    (a) Makes the disclosure no later than the time the insurer first 
formally offers to provide insurance coverage or renew a policy for a 
current policyholder; and
    (b) Makes clear and conspicuous reference back to that disclosure, 
as well as the final terms of terrorism insurance coverage, at the time 
the transaction is completed.



Sec. 50.14  Separate line item.

    An insurer is deemed to be in compliance with the requirement of 
providing disclosure on a ``separate line item in the policy'' under 
Sec. 50.10(d) if the insurer makes the disclosure:
    (a) On the declarations page of the policy;
    (b) Elsewhere within the policy itself; or

[[Page 367]]

    (c) In any rider or endorsement, or other document that is made a 
part of the policy.

[68 FR 59727, Oct. 17, 2003]



Sec. 50.15  Cap disclosure.

    (a) General. Under section 103(e)(2) of the Act, if the aggregate 
insured losses exceed $100,000,000,000 during any Program Year, the 
Secretary shall not make any payment for any portion of the amount of 
such losses that exceeds $100,000,000,000, and no insurer that has met 
its insurer deductible shall be liable for the payment of any portion of 
the amount of such losses that exceeds $100,000,000,000.
    (b) Other requirements. As a condition for federal payments under 
section 103(b) of the Act, in the case of any policy that is issued 
after December 26, 2007, an insurer must provide clear and conspicuous 
disclosure to the policyholder of the existence of the $100,000,000,000 
cap under section 103(e)(2). The cap disclosure must be made at the time 
of offer, purchase, and renewal of the policy.
    (c) Demonstration of compliance. For policies issued after December 
26, 2007, if an insurer does not provide a cap disclosure by the time of 
the first offer, purchase or renewal of the policy after December 26, 
2007, then the insurer must be able to demonstrate to Treasury's 
satisfaction that it has provided the disclosure as soon as possible 
following December 26, 2007.
    (d) Other applicable rules. The rules in Sec. 50.12(a), (c), (d), 
(e)(1), and (f) (relating to clear and conspicuous disclosure) and in 
Sec. 50.13 (relating to offer, purchase, and renewal) apply to the cap 
disclosure.

[73 FR 53364, Sept. 16, 2008]



Sec. 50.17  Use of model forms.

    (a) Policies in force on the date of enactment. (1) An insurer that 
is required to make the disclosure under Sec. 50.10(b) and that makes 
no change in the existing premium, is deemed to be in compliance with 
the disclosure requirement if it uses NAIC Model Disclosure Form No. 2.
    (2) An insurer that is required to make the disclosure under Sec. 
50.10(b) and that makes a change in the existing premium, is deemed to 
be in compliance with the disclosure requirement if it uses NAIC Model 
Disclosure Form No. 1. Such an insurer may also use the same NAIC Model 
Disclosure Form No. 1 to comply with the notice requirement of section 
105(c) of the Act. See Sec. 50.18.
    (b) Policies issued within 90 days of the date of enactment. An 
insurer that is required to make the disclosure under Sec. 50.10(c) is 
deemed to be in compliance with the disclosure requirement if it uses 
either NAIC Model Disclosure Form No. 1 or NAIC Model Disclosure Form 
No. 2, as long as the form used is modified as appropriate for the 
particular policy.
    (c) Policies issued more than 90 days after the date of enactment. 
An insurer that is required to make the disclosure under Sec. 50.10(d) 
may continue to use NAIC Model Disclosure Form No. 1 or NAIC Model 
Disclosure Form No. 2 if appropriate, or other disclosures that meet the 
requirements of Sec. Sec. 50.10(a) and 50.14 may be developed.
    (d) Not exclusive means of compliance. An insurer is not required to 
use NAIC Model Disclosure Form No. 1 or NAIC Model Disclosure Form No. 2 
to satisfy the disclosure requirement. An insurer may use other means to 
comply with the disclosure requirement, as long as the disclosure 
comports with the requirements of the Act.
    (e) Cap disclosure. An insurer may use NAIC Model Disclosure Form 
No. 1 or NAIC Model Disclosure Form No. 2 dated December 19, 2007, or as 
subsequently modified in accordance with paragraph (f) of this section, 
to satisfy the cap disclosure requirement, or another disclosure that 
meets the requirements of Sec. 50.15 may be developed.
    (f) Definitions. For purposes of this section, references to NAIC 
Model Disclosure Form No. 1 and NAIC Model Disclosure Form No. 2 refer 
to such forms as were in existence on April 18, 2003, or as subsequently 
modified by the NAIC, provided Treasury has stated that usage by 
insurers of the subsequently modified forms is deemed to satisfy the 
disclosure requirements of the Act and the insurer uses the most current 
forms that are available at the time of disclosure. These forms may be

[[Page 368]]

found on the Treasury Web site at http://www.treasury.gov/trip.

[68 FR 19306, Apr. 18, 2003, as amended at 71 FR 27570, May 11, 2006; 73 
FR 53364, Sept. 16, 2008]



Sec. 50.18  Notice required by reinstatement provision.

    (a) Nullification of terrorism exclusion. Any terrorism exclusion in 
a contract for property and casualty insurance that was in force on 
November 26, 2002, is void to the extent it excludes losses that would 
otherwise be insured losses.
    (b) Reinstatement of terrorism exclusion. Notwithstanding paragraph 
(a) of this section, an insurer may reinstate a preexisting provision in 
a contract for property and casualty insurance that was in force on 
November 26, 2002, and that excludes coverage for an act of terrorism 
only if:
    (1) The insurer has received a written statement from the insured 
that affirmatively authorizes such reinstatement; or
    (2) The insurer provided notice at least 30 days before any such 
reinstatement of the increased premium for such terrorism coverage and 
the rights of the insured with respect to such coverage, including the 
date upon which the exclusion would be reinstated if no payment is 
received, and the insured fails to pay any increased premium charged by 
the insurer for providing such terrorism coverage.

[68 FR 19306, Apr. 18, 2003, as amended at 68 FR 59727, Oct. 17, 2003]



Sec. 50.19  General disclosure requirements for State residual market 

insurance entities and State worker's compensation funds.

    (a) Policies in force on October 17, 2003, or renewed or issued on 
or before January 15, 2004. For policies in force on October 17, 2003, 
or renewed or issued on or before January 15, 2004, the disclosure 
required by section 103(b) of the Act as a condition for Federal payment 
is waived for those State residual market insurance entities and State 
workers' compensation funds that since November 26, 2002, have not 
provided disclosures to policyholders, until January 15, 2004, after 
which disclosures are to be made to policyholders for policies then in 
force and subsequently issued.
    (b) Residual Market Mechanism Disclosure. A State residual market 
insurance entity or State workers' compensation fund may provide the 
disclosures required by this subpart B to policyholders using normal 
business practices, including forms and methods of communication used to 
communicate similar policyholder information to policyholders. The 
disclosures may be made by the State residual market insurance entity or 
State workers' compensation fund itself, the individual insurers that 
participate in the State residual market insurance entity or a State 
workers' compensation fund, or its servicing carriers. The ultimate 
responsibility for ensuring that the disclosure requirements have been 
met rests with the insurer filing a claim under the Program.
    (c) Other requirements. Except as provided in this section, all 
other disclosure requirements set out in this subpart B apply to State 
residual insurance market entities and State workers' compensation 
funds.
    (d) Prior safe harbor superseded. This section supersedes the 
disclosure safe harbor provisions found at paragraph C.4 of the Interim 
Guidance issued by Treasury in a notice published on December 18, 2002, 
and published at 67 FR 78864 (December 26, 2002).

[68 FR 59719, Oct. 17, 2003]



                    Subpart C_Mandatory Availability

    Source: 68 FR 19307, Apr. 18, 2003, unless otherwise noted.



Sec. 50.20  General mandatory availability requirements.

    (a) Transition Period and Program Years 1 and 2--period ending 
December 31, 2004. Under section 103(c) of the Act (unless the time is 
extended by the Secretary as provided in that section) during the period 
beginning on November 26, 2002 and ending on December 31, 2004 (the last 
day of Program Year 2), an insurer must:
    (1) Make available, in all of its property and casualty insurance 
policies, coverage for insured losses; and
    (2) Make available property and casualty insurance coverage for 
insured

[[Page 369]]

losses that does not differ materially from the terms, amounts, and 
other coverage limitations applicable to losses arising from events 
other than acts of terrorism.
    (b) Program Year 3--calendar year 2005. In accordance with the 
determination of the Secretary announced June 18, 2004, an insurer must 
comply with paragraphs (a)(1) and (a)(2) of this section during Program 
Year 3.
    (c) Program Years 4 and 5--calendar years 2006 and 2007. Under 
section 103(c) of the Act, an insurer must comply with paragraphs (a)(1) 
and (a)(2) of this section during Program Years 4 and 5.
    (d) Program Years thereafter. Under section 103(c) of the Act, an 
insurer must comply with paragraphs (a)(1) and (a)(2) of this section 
during Program Years 2008 through 2014.
    (e) Beyond 2014. Notwithstanding paragraph (a)(2) of this section 
and Sec. 50.23(a), property and casualty insurance coverage for insured 
losses does not have to be made available beyond December 31, 2014, even 
if the policy period of insurance coverage for losses from events other 
than acts of terrorism extends beyond that date.

[71 FR 27570, May 11, 2006, as amended at 73 FR 53364, Sept. 16, 2008]



Sec. 50.21  Make available.

    (a) General. The requirement to make available coverage as provided 
in Sec. 50.20 applies to policies in existence on November 26, 2002, 
and new policies issued and renewals of existing policies during the 
period beginning on November 26, 2002 and ending on December 31, 2002, 
and in any Program Year thereafter. Except as provided in paragraph (c) 
of this section, the requirement applies at the time an insurer makes 
the initial offer of coverage as well as at the time an insurer makes an 
initial offer of renewal of an existing policy.
    (b) Offer consistent with amended definition of act of terrorism. An 
insurer must make available coverage for insured losses in a policy of 
property and casualty insurance consistent with the definition of an act 
of terrorism as amended by the Terrorism Risk Insurance Program 
Reauthorization Act of 2007 beginning with the first initial offer of 
coverage or offer of renewal of the policy made on or after December 26, 
2007. Notwithstanding this requirement, if an insurer makes an offer of 
coverage on or after December 26, 2007 on a policy that is in mid term, 
then the insurer must make available coverage for insured losses 
consistent with the definition of an act of terrorism.
    (c) Rules concerning extension of Program. (1) Special Program Year 
4 requirement for certain new policies issued and renewals of existing 
policies in Program Year 3. If coverage for insured losses under a 
policy of property and casualty insurance (as defined by the Act, as 
amended) expired as of December 31, 2005, but the remainder of coverage 
under the policy continued in force in Program Year 4, then an insurer 
must make available coverage as provided in Sec. 50.20 for insured 
losses for the remaining portion of the policy term in the manner 
specified in paragraphs (e)(1) and (e)(2) of this section. This 
requirement does not apply if during Program Year 3 a policyholder 
declined an offer of coverage for insured losses made at the time of the 
initial offer of coverage or offer of renewal of the existing policy.
    (2) Special 2008 requirement for certain policies where coverage 
expired. If coverage for insured losses under a policy of property and 
casualty insurance expired as of December 31, 2007, but the remainder of 
coverage under the policy continued in force in 2008, then an insurer 
must make available coverage as provided in Sec. 50.20 for insured 
losses for the remaining portion of the policy term in the manner 
specified in paragraphs (e)(1) and (e)(4) of this section. However, if a 
policyholder declined an offer made by an insurer for such coverage 
expiring as of December 31, 2007, then the insurer is not required to 
make a new offer of coverage for insured losses before any offer of 
renewal.
    (d) Changes negotiated subsequent to initial offer. If an insurer 
satisfies the requirement to ``make available'' coverage as described in 
Sec. 50.20 by first making an offer with coverage for insured losses 
that does not differ materially from the terms, amounts, and other 
coverage limitations applicable to losses arising from events other

[[Page 370]]

than acts of terrorism, which the policyholder declines, the insurer may 
negotiate with the policyholder an option of partial coverage for 
insured losses at a lower amount of coverage if permitted by any 
applicable State law. An insurer is not required by the Act to offer 
partial coverage if the policyholder declines full coverage. See Sec. 
50.24.
    (e) Demonstrations of compliance. (1) No contract. If an insurer 
makes an offer of insurance but no contract of insurance is concluded, 
the insurer may demonstrate that it has satisfied the requirement to 
make available coverage as described in Sec. 50.20 through use of 
appropriate systems and normal business practices that demonstrate a 
practice of compliance.
    (2) Policy periods beginning in Program Year 3. If an insurer must 
make available coverage for insured losses as required by paragraph 
(c)(1) of this section for a policy whose coverage period began in 
Program Year 3 but extends into Program Year 4, then the insurer must be 
able to demonstrate to Treasury's satisfaction that it has offered such 
coverage by January 1, 2006, or as soon as possible following that date.
    (3) Coverage becoming effective in Program Year 4. If an insurer 
processed a new policy or policy renewal in Program Year 3 for coverage 
becoming effective in Program Year 4, but did not make available 
coverage for insured losses as required by Sec. 50.20 by January 1, 
2006, then the insurer must be able to demonstrate to Treasury's 
satisfaction that it has provided an offer of coverage for insured 
losses as soon as possible following that date.
    (4) Coverage expired as of December 31, 2007. If an insurer must 
make available coverage for insured losses under the circumstances 
described in paragraph (c)(2) of this section, the insurer must be able 
to demonstrate to Treasury's satisfaction that it has offered such 
coverage as soon as possible following January 1, 2008.
    (5) Coverage becoming effective in 2008. (i) No coverage. If an 
insurer processed a new policy or policy renewal in 2007 or in the first 
three months of 2008 for coverage becoming effective in 2008, but did 
not make available coverage for insured losses as required by Sec. 
50.20(a), then the insurer must be able to demonstrate to Treasury's 
satisfaction that it has provided an offer of coverage for insured 
losses as soon as possible following January 1, 2008.
    (ii) Not consistent with amended definition of act of terrorism. If 
an insurer made an initial offer of coverage or offer of renewal on or 
after December 26, 2007 for a policy term becoming effective in 2008, 
and made available coverage for insured losses, but the scope of the 
coverage for insured losses in the offer was not consistent with the 
definition of an act of terrorism as amended by the Terrorism Risk 
Insurance Program Reauthorization Act of 2007, then the insurer must be 
able to demonstrate to Treasury's satisfaction that it has provided a 
new offer of coverage as soon as possible following January 1, 2008. If 
an insurer made an initial offer of coverage or offer of renewal before 
December 26, 2007, for a policy term becoming effective in 2008, and the 
insurer made available coverage for insured losses in compliance with 
the Act and the definition of an act of terrorism in effect at the time 
of the offer, then the insurer is not required to make a new offer of 
coverage before the policy is due to be renewed by its terms, regardless 
of whether the offer was accepted or rejected.

[73 FR 53364, Sept. 16, 2008]



Sec. 50.23  No material difference from other coverage.

    (a) Terms, amounts, and other coverage limitations. As provided in 
Sec. 50.20(a)(2), an insurer must offer coverage for insured losses 
resulting from an act of terrorism that does not differ materially from 
the terms, amounts, and other coverage limitations (including 
deductibles) applicable to losses from other perils. For purposes of 
this requirement, ``terms'' excludes price.
    (b) Limitations on types of risk. If an insurer does not cover all 
types of risks, then it is not required to cover the excluded risks in 
satisfying the requirement to make available coverage for losses 
resulting from an act of terrorism that does not differ materially from 
the terms, amounts, and other coverage limitations applicable to losses 
arising from events other than acts of terrorism. For example, if an

[[Page 371]]

insurer does not cover all types of risks, either because the insurer is 
outside of direct State regulatory oversight, or because a State permits 
certain exclusions for certain types of losses, such as nuclear, 
biological, or chemical events, then the insurer is not required to make 
such coverage available.



Sec. 50.24  Applicability of State law requirements.

    (a) General. After satisfying the requirement to make available 
coverage for insured losses that does not differ materially from the 
terms, amounts, and other coverage limitations applicable to losses 
arising from events other than acts of terrorism, if coverage is 
rejected an insurer may then offer coverage that is on different terms, 
amounts, or coverage limitations, as long as such an offer does not 
violate any applicable State law requirements.
    (b) Examples. (1) If an insurer subject to State regulation first 
makes available coverage in accordance with Sec. 50.20 and the State 
has a requirement that an insurer offer full coverage without any 
exclusion, then the requirement would continue to apply and the insurer 
may not subsequently offer less than full coverage or coverage with 
exclusions.
    (2) If an insurer subject to State regulation first makes available 
coverage in accordance with Sec. 50.20 and the State permits certain 
exclusions or allows for other limitations, or an insurance policy is 
not governed by State law requirements, then the insurer may 
subsequently offer limited coverage or coverage with exclusions.



      Subpart D_State Residual Market Insurance Entities; Workers' 
                           Compensation Funds



Sec. 50.30  General participation requirements.

    (a) Insurers. As defined in Sec. 50.5(f), all State residual market 
insurance entities and State workers' compensation funds are insurers 
under the Program even if such entities do not receive direct earned 
premiums.
    (b) Mandatory Participation. State residual market insurance 
entities and State workers' compensation funds that meet the 
requirements of Sec. 50.5(f) are mandatory participants in the Program 
subject to the rules issued in this Subpart.
    (c) Identification. Treasury will release and maintain a list of 
State residual market insurance entities and State workers' compensation 
funds at www.treasury.gov/trip. Procedures for providing comments and 
updates to that list will be posted with the list.

[68 FR 59720, Oct. 17, 2003]



Sec. 50.33  Entities that do not share profits and losses with private sector 

insurers.

    (a) Treatment. A State residual market insurance entity or a State 
workers' compensation fund that does not share profits and losses with a 
private sector insurer is deemed to be a separate insurer under the 
Program.
    (b) Premium calculation. A State residual market insurance entity or 
a State workers' compensation fund that is deemed to be a separate 
insurer should follow the guidelines specified in Sec. 50.5(d)(1) or 
50.5(d)(2) for the purposes of calculating the appropriate measure of 
direct earned premium.

[68 FR 59720, Oct. 17, 2003]



Sec. 50.35  Entities that share profits and losses with private sector 

insurers.

    (a) Treatment. A State residual market insurance entity or a State 
workers' compensation fund that shares profits and losses with a private 
sector insurer is not deemed to be a separate insurer under the Program.
    (b) Premium and loss calculation. A State residual market insurance 
entity or a State workers' compensation fund that is not deemed to be a 
separate insurer should continue to report, in accordance with normal 
business practices, to each participant insurer its share of premium 
income and insured losses, which shall then be included respectively in 
the participant insurer's direct earned premium or insured loss 
calculations.

[68 FR 59720, Oct. 17, 2003]

[[Page 372]]



Sec. 50.36  Allocation of premium income associated with entities that do 

share profits and losses with private sector insurers.

    (a) Servicing Carriers. For purposes of this Subpart, a servicing 
carrier is an insurer that enters into an agreement to place and service 
insurance contracts for a State residual market insurance entity or a 
State workers' compensation fund and to cede premiums associated with 
such insurance contracts to the State residual market insurance entity 
or State workers' compensation fund. Premiums written by a servicing 
carrier on behalf of a State residual market insurance entity or State 
workers' compensation fund that are ceded to such an entity or fund 
shall not be included as direct earned premium (as described in Sec. 
50.5(d)(1) or 50.5(d)(2)) of the servicing carrier.
    (b) Participant Insurers. For purposes of this Subpart, a 
participant insurer is an insurer that shares in the profits and losses 
of a State residual market insurance entity or a State workers' 
compensation fund. Premium income that is distributed to or assumed by 
participant insurers in a State residual market insurance entity or 
State workers' compensation fund (whether directly or as quota share 
insurers of risks written by servicing carriers), shall be included in 
direct earned premium (as described in Sec. 50.5(d)(1) or 50.5(d)(2)) 
of the participant insurer.

Subpart E--Self-Insurance Arrangements; Captives [Reserved]



                       Subpart F_Claims Procedures



Sec. 50.50  Federal share of compensation.

    (a) General. (1) The Treasury will pay the Federal share of 
compensation for insured losses as provided in section 103 of the Act 
once a Certification of Loss required by Sec. 50.53 is deemed 
sufficient. The Federal share of compensation under the Program shall 
be:
    (i) 90 percent of that portion of the insurer's aggregate insured 
losses that exceed its insurer deductible during each Program Year 
through Program Year 4, and
    (ii) 85 percent of that portion of the insurer's aggregate insured 
losses that exceed its insurer deductible during Program Year 5 and any 
Program Year thereafter.
    (2) The percentages in paragraphs (a)(1)(i) and (ii) are both 
subject to any adjustments in Sec. 50.51 and the cap of $100 billion as 
provided in section 103(e)(2) of the Act.
    (b) Program Trigger amounts. Notwithstanding paragraph (a) or 
anything in this Subpart to the contrary, no Federal share of 
compensation will be paid by Treasury unless the aggregate industry 
insured losses resulting from a certified act of terrorism occurring 
after March 31, 2006 exceed the following amounts:
    (1) For a certified act of terrorism occurring after March 31, 2006 
and before January 1, 2007: $50 million;
    (2) For a certified act of terrorism occurring in 2007 and any 
Program Year thereafter: $100 million.
    (c) Insured losses after March 31, 2006. For all purposes of subpart 
F, insured loss or insured losses or aggregate insured losses resulting 
from acts of terrorism after March 31, 2006 shall be limited to those 
insured losses resulting from Program Trigger events.
    (d) Conditions for payment of Federal share. Subject to paragraph 
(e) of this section, Treasury shall pay the appropriate amount of the 
Federal share of compensation to an insurer upon a determination that:
    (1) The insurer is an entity, including an affiliate thereof, that 
meets the requirements of Sec. 50.5(f);
    (2) The insurer's insured losses, as defined in Sec. 50.5(e) and 
limited by Sec. 50.50(c) (including the allocated dollar value of the 
insurer's proportionate share of insured losses from a State residual 
market insurance entity or State workers' compensation fund as described 
in Sec. 50.35), have exceeded its insurer deductible as defined in 
Sec. 50.5(g);
    (3) The insurer has paid or is prepared to pay an underlying insured 
loss, based on a filed claim for the insured loss;
    (4) Neither the insurer's claim for Federal payment nor any 
underlying claim for an insured loss is fraudulent, collusive, made in 
bad faith, dishonest or otherwise designed to circumvent

[[Page 373]]

the purposes of the Act and regulations;
    (5) The insurer had provided a clear and conspicuous disclosure as 
required by Sec. Sec. 50.10 through 50.19 and a cap disclosure as 
required by Sec. 50.15;
    (6) The insurer offered coverage for insured losses and the offer 
was accepted by the insured prior to the occurrence of the loss;
    (7) The insurer took all steps reasonably necessary to properly and 
carefully investigate the underlying insured loss and otherwise 
processed the underlying insured loss using appropriate insurance 
business practices;
    (8) The insured losses submitted for payment are within the scope of 
coverage issued by the insurer under the terms and conditions of the 
policies for commercial property and casualty insurance as defined in 
Sec. 50.5(n); and
    (9) The procedures specified in this Subpart have been followed and 
all conditions for payment have been met.
    (e) Adjustments. Treasury may subsequently adjust, including 
requiring repayment of, any payment made under paragraph (d) of this 
section in accordance with its authority under the Act.
    (f) Suspension of payment for other insured losses. Upon a 
determination by Treasury that an insurer has failed to meet any of the 
requirements for payment specified in paragraph (d) of this section for 
a particular insured loss, Treasury may suspend payment of the Federal 
share of compensation for all other insured losses of the insurer 
pending investigation and audit of the insurer's insured losses.
    (g) Aggregate industry losses. Treasury will determine the amount of 
aggregate industry insured losses resulting from a certified act of 
terrorism. If such aggregate industry insured losses exceed the 
applicable Program Trigger amounts specified in paragraph (b) of this 
section, Treasury will publish notice in the Federal Register that the 
act of terrorism is a Program Trigger event.

[71 FR 27571, May 11, 2006, as amended at 73 FR 53365, Sept. 16, 2008]



Sec. 50.51  Adjustments to the Federal share of compensation.

    (a) Aggregate amount of insured losses. The aggregate amount of 
insured losses of an insurer in a Program Year used to calculate the 
Federal share of compensation shall be reduced by any amounts recovered 
by the insurer as salvage or subrogation for its insured losses in the 
Program Year.
    (b) Amount of Federal share of compensation. The Federal share of 
compensation shall be adjusted as follows:
    (1) No excess recoveries. For any Program Year, the sum of the 
Federal share of compensation paid by Treasury to an insurer and the 
insurer's recoveries for insured losses from other sources shall not be 
greater than the insurer's aggregate amount of insured losses for acts 
of terrorism in that Program Year. Amounts recovered for insured losses 
in excess of an insurer's aggregate amount of insured losses in a 
Program Year shall be repaid to Treasury within 45 days after the end of 
the month in which total recoveries of the insurer, from all sources, 
become excess. For purposes of this paragraph, amounts recovered from a 
reinsurer pursuant to an agreement whereby the reinsurer's right to any 
excess recovery has priority over the rights of Treasury shall not be 
considered a recovery subject to repayment to Treasury.
    (2) Reduction of amount payable. The Federal share of compensation 
for insured losses under the Program shall be reduced by the amount of 
other compensation provided by other Federal programs to an insured or a 
third party to the extent such other compensation duplicates the 
insurance indemnification for those insured losses.
    (i) Other Federal program compensation. For purposes of this 
section, compensation provided by other Federal programs for insured 
losses means compensation that is provided by Federal programs 
established for the purpose of compensating persons for losses in the 
event of emergencies, disasters, acts of terrorism, or similar events. 
Compensation provided by Federal programs for insured losses excludes 
benefit or entitlement payments, such as those made under the Social 
Security Act, under laws administered by the Secretary of Veteran 
Affairs, railroad retirement benefit payments, and other similar types 
of benefit payments.

[[Page 374]]

    (ii) Insurer due diligence. Each insurer shall inquire of each of 
its policyholders, insureds, and claimants whether the person receiving 
insurance proceeds for an insured loss has received, expects to receive, 
or is entitled to receive compensation from another Federal program for 
the insured loss, and if so, the source and the amount of the 
compensation received or expected. The response, source, and such 
amounts shall be reported with each underlying claim on the bordereau 
specified in Sec. 50.53(b)(1).



Sec. 50.52  Initial Notice of Insured Loss.

    Each insurer shall submit to Treasury an Initial Notice of Insured 
Loss, on a form prescribed by Treasury, whenever the insurer's aggregate 
insured losses (including reserves for ``incurred but not reported'' 
losses) within a Program Year exceed an amount equal to 50 percent of 
the insurer's deductible as specified in Sec. 50.5(g). Insurers are 
advised the form for the Initial Notice of Insured Loss will include an 
initial estimate of aggregate losses for the Program Year, the amount of 
the insurer deductible and an estimate of the Federal share of 
compensation for the insurer's aggregate insured losses. In the case of 
an affiliated group of insurers, the form for the Initial Notice of 
Insured Loss will include the name and address of a single designated 
insurer within the affiliated group that will serve as the single point 
of contact for the purpose of providing loss and compliance 
certifications as required in Sec. 50.53 and for receiving, disbursing, 
and distributing payments of the Federal share of compensation in 
accordance with Sec. 50.54. An insurer, at its option, may elect to 
include with its Initial Notice of Insured Loss the certification of 
direct earned premium required by Sec. 50.53(b)(3).



Sec. 50.53  Loss certifications.

    (a) General. When an insurer has paid aggregate insured losses that 
exceed its insurer deductible, the insurer may make claim upon Treasury 
for the payment of the Federal share of compensation for its insured 
losses. The insurer shall file an Initial Certification of Loss, on a 
form prescribed by Treasury, and thereafter such Supplementary 
Certifications of Loss, on a form prescribed by Treasury, as may be 
necessary to receive payment for the Federal share of compensation for 
its insured losses.
    (b) Initial Certification of Loss. An insurer shall use its best 
efforts to file with the Program the Initial Certification of Loss 
within 45 days following the last calendar day of the month when an 
insurer has paid aggregate insured losses that exceed its insurer 
deductible. The Initial Certification of Loss will include the 
following:
    (1) A bordereau, on a form prescribed by Treasury, that includes 
basic information about each underlying insured loss. For purposes of 
this section, a ``bordereau'' is a report of basic information about an 
insurer's underlying claims that, in the aggregate, constitute the 
insured losses of the insurer. The bordereau will include, but may not 
be limited to:
    (i) A listing of each underlying insured loss by catastrophe code 
and line of business;
    (ii) The total amount of reinsurance recovered from other sources;
    (iii) A calculation of the aggregate insured losses sustained by the 
insurer above its insurer deductible for the Program Year; and
    (iv) The amount the insurer claims as the Federal share of 
compensation for its aggregate insured losses.
    (2) A certification that the insurer is in compliance with the 
provisions of section 103(b) of the Act and this part, including 
certifications that:
    (i) The underlying insured losses listed on the bordereau filed 
pursuant to Sec. 50.53(b)(1) either: Have been paid by the insurer; or 
will be paid by the insurer upon receipt of an advance payment of the 
Federal share of compensation as soon as possible, consistent with the 
insurer's normal business practices, but not longer than five business 
days after receipt of the Federal share of compensation;
    (ii) The underlying claims for insured losses were filed by persons 
who suffered an insured loss, or by persons acting on behalf of such 
persons;

[[Page 375]]

    (iii) The underlying claims for insured losses were processed in 
accordance with appropriate business practices and the procedures 
specified in this subpart;
    (iv) The insurer has complied with the disclosure requirements of 
Sec. Sec. 50.10 through 50.19, and the cap disclosure requirement of 
Sec. 50.15, for each underlying insured loss that is included in the 
amount of the insurer's aggregate insured losses; and
    (v) The insurer has complied with the mandatory availability 
requirements of Sec. Sec. 50.20 through 50.24.
    (3) A certification of the amount of the insurer's ``direct earned 
premium'' as defined in Sec. 50.5(d), together with the calculation of 
its ``insurer deductible'' as defined in Sec. 50.5(g) (provided this 
certification was not submitted previously with the Initial Notice of 
Insured Loss specified in Sec. 50.52).
    (4) A certification that the insurer will disburse payment of the 
Federal share of compensation in accordance with this subpart.
    (c) Supplementary Certification of Loss. If the total amount of the 
Federal share of compensation due an insurer for insured losses under 
the Act has not been determined at the time an Initial Certification of 
Loss has been filed, the insurer shall file monthly, or on a schedule 
otherwise determined by Treasury, Supplementary Certifications of Loss 
updating the amount of the Federal share of compensation owed for the 
insurer's insured losses. Supplementary Certifications of Loss will 
include the following:
    (1) A bordereau described in Sec. 50.53(b)(1); and
    (2) A certification as described in Sec. 50.53(b)(2).
    (d) Supplementary information. In addition to the information 
required in paragraphs (b) and (c) of this section, Treasury may require 
such additional supporting documentation as required to ascertain the 
Federal share of compensation for the insured losses of any insurer.
    (e) State Residual Market Insurance Entities and State Workers' 
Compensation Funds. A State residual market insurance entity or State 
workers' compensation fund described in Sec. 50.35 shall provide the 
Certifications of Loss described in Sec. Sec. 50.53(b) and 50.53(c) for 
all its insured losses to each participating insurer at the time it 
provides the allocated dollar value of the participating insurer's 
proportionate share of insured losses. In addition, at such time the 
State residual market insurance entity or State workers' compensation 
fund shall provide the certification described in Sec. 50.53(b)(2) to 
Treasury. Participating insurers shall treat the allocated dollar value 
of their proportionate share of insured losses from a State residual 
market insurance entity or State workers' compensation fund as an 
insured loss for the purpose of their own reporting to Treasury in 
seeking the Federal share of compensation.

[68 FR 9811, Feb. 28, 2003, as amended at 73 FR 53365, Sept. 16, 2008]



Sec. 50.54  Payment of Federal share of compensation.

    (a) Timing. Treasury will promptly pay to an insurer the Federal 
share of compensation due the insurer for its insured losses. Payment 
shall be made in such installments and on such conditions as determined 
by the Treasury to be appropriate. Any overpayments by Treasury of the 
Federal share of compensation will be offset from future payments to the 
insurer or returned to Treasury within 45 days.
    (b) Payment process. Payment of the Federal share of compensation 
for insured losses will be made to the insurer designated on the Initial 
Notice of Loss required by Sec. 50.52. An insurer that requests payment 
of the Federal share of compensation for insured losses must receive 
payment through electronic funds transfer. The insurer must establish 
either an account for reimbursement as described in paragraph (c) of 
this section (if the insurer only seeks reimbursement) or a segregated 
account as described in paragraph (d) of this section (if the insurer 
seeks advance payments or a combination of advance payments and 
reimbursement). Applicable procedures will be posted at 
www.treasury.gov/trip or otherwise will be made publicly available.
    (c) Account for reimbursement. An insurer shall designate an account 
for the receipt of reimbursement of the Federal share of compensation at 
an

[[Page 376]]

institution eligible to receive payments through the Automated Clearing 
House (ACH) network.
    (d) Segregated account for advance payments. An insurer that seeks 
advance payments of the Federal share of compensation as certified 
according to Sec. 50.53(b)(2)(i)(B) shall establish an interest-bearing 
segregated account into which Treasury will make advance payments as 
well as reimbursements to the insurer.
    (1) Definition of segregated account. For purposes of this section, 
a segregated account is an interest-bearing separate account established 
by an insurer at a financial institution eligible to receive payments 
through the ACH network. Such an account is limited to the purposes of:
    (i) Receiving payments of the Federal share of compensation;
    (ii) Disbursing payments to insureds and claimants; and
    (iii) Transferring payments to the insurer or affiliated insurers 
for insured losses reported on the bordereau as already paid.
    (2) Remittance of interest. All interest earned on advance payments 
in the segregated account must be remitted at least quarterly to 
Treasury's Office of Financial Management or as otherwise prescribed in 
applicable procedures.
    (e) Denial or withholding of advance payment. Treasury may deny or 
withhold advance payments of the Federal share of compensation to an 
insurer if Treasury determines that the insurer has not properly 
disbursed previous advances of the Federal share of compensation or 
otherwise has not complied with the requirements for advance payment as 
provided in this subpart.
    (f) Affiliated group. In the case of an affiliated group of 
insurers, Treasury will make payment of the Federal share of 
compensation for the insured losses of the affiliated group to the 
insurer designated in the Initial Notice of Insured Loss to receive 
payment on behalf of the affiliated group. The designated insurer 
receiving payment from Treasury must distribute payment to affiliated 
insurers in a manner that ensures that each insurer in the affiliated 
group is compensated for its share of insured losses, taking into 
account a reasonable and fair allocation of the group deductible among 
affiliated insurers. Upon payment of the Federal share of compensation 
to the designated insurer, Treasury's payment obligation to the insurers 
in the affiliated group with respect to any insured losses covered on 
the applicable bordereau is discharged to the extent of the payment.



Sec. 50.55  Determination of Affiliations.

    For the purposes of subpart F, an insurer's affiliates for any 
Program Year shall be determined by the circumstances existing on the 
date of occurrence of the act of terrorism that is the first act of 
terrorism in a Program Year to be certified by the Secretary for that 
Program Year. Provided, however, if such act of terrorism occurs after 
March 31, 2006, the act of terrorism must also be a Program Trigger 
event to determine affiliations as provided in this section.

[71 FR 27572, May 11, 2006]



              Subpart G_Audit and Investigative Procedures



Sec. 50.60  Audit authority.

    The Secretary of the Treasury, or an authorized representative, 
shall have, upon reasonable notice, access to all books, documents, 
papers and records of an insurer that are pertinent to amounts paid to 
the insurer as the Federal share of compensation for insured losses for 
the purpose of investigation, confirmation, audit and examination.



Sec. 50.61  Recordkeeping.

    Each insurer that seeks payment of a Federal share of compensation 
under subpart F of this part shall retain such records as are necessary 
to fully disclose all material matters pertinent to insured losses and 
the Federal share of compensation sought under the Program, including, 
but not limited to, records regarding premiums and insured losses for 
all commercial property and casualty insurance issued by the insurer and 
information relating to any adjustment in the amount of the Federal 
share of compensation payable. Insurers shall maintain detailed

[[Page 377]]

records for not less than 5 years from the termination dates of all 
reinsurance agreements involving commercial property and casualty 
insurance subject to the Act. Records relating to premiums shall be 
retained and available for review for not less than 3 years following 
the conclusion of the policy year. Records relating to underlying claims 
shall be retained for not less than 5 years following the final 
adjustment of the claim.

[68 FR 59720, Oct. 17, 2003, as amended at 69 FR 39307, June 29, 2004]

Subpart H--Recoupment and Surcharge Procedures [Reserved]



       Subpart I_Federal Cause of Action; Approval of Settlements

    Source: 69 FR 44941, July 28, 2004, unless otherwise noted.



Sec. 50.80  Federal cause of action and remedy.

    (a) General. If the Secretary certifies an act as an act of 
terrorism pursuant to section 102 of the Act, there shall exist a 
Federal cause of action for property damage, personal injury, or death 
arising out of or resulting from such act of terrorism, pursuant to 
section 107 of the Act, which shall be the exclusive cause of action and 
remedy for claims for property damage, personal injury, or death arising 
out of or relating to such act of terrorism, except as provided in 
paragraph (c) of this section.
    (b) Effective period. The exclusive Federal cause of action and 
remedy described in paragraph (a) of this section shall exist only for 
causes of action for property damage, personal injury, or death that 
arise out of or result from acts of terrorism that occur or occurred 
during the effective period of the Program.
    (c) Rights not affected. Nothing in section 107 of the Act or this 
Subpart shall in any way:
    (1) Limit the liability of any government, organization, or person 
who knowingly participates in, conspires to commit, aids and abets, or 
commits any act of terrorism;
    (2) Affect any party's contractual right to arbitrate a dispute; or
    (3) Affect any provision of the Air Transportation Safety and System 
Stabilization Act (Pub. L. 107-42; 49 U.S.C. 40101 note).



Sec. 50.81  State causes of action preempted.

    All State causes of action of any kind for property damage, personal 
injury, or death arising out of or resulting from an act of terrorism 
that are otherwise available under State law are preempted, except that, 
pursuant to section 107(b) of the Act, nothing in this section shall 
limit in any way the liability of any government, organization, or 
person who knowingly participates in, conspires to commit, aids and 
abets, or commits the act of terrorism certified by the Secretary.



Sec. 50.82  Advance approval of settlements.

    (a) Mandatory submission of settlements for advance approval. An 
insurer shall submit to Treasury for advance approval any proposed 
agreement to settle or compromise any Federal cause of action for 
property damage, personal injury, or death, asserted by a third-party or 
parties against an insured, involving an insured loss, all or part of 
the payment of which the insurer intends to submit as part of its claim 
for Federal payment under the Program, when:
    (1) Any portion of the proposed settlement amount that is 
attributable to an insured loss or losses involving personal injury or 
death in the aggregate is $2 million or more per third-party claimant, 
regardless of the number of causes of action or insured losses being 
settled; or
    (2) Any portion of the proposed settlement amount that is 
attributable to an insured loss or losses involving property damage 
(including loss of use) in the aggregate is $10 million or more per 
third-party claimant, regardless of the number of causes of action or 
insured losses being settled.
    (b) Discretionary review of other settlements. Notwithstanding 
paragraph (a), Treasury may require that an insurer

[[Page 378]]

submit for review and advance approval any proposed agreement to settle 
or compromise any Federal cause of action for property damage, personal 
injury, or death, asserted by a third-party or parties against an 
insured, involving an insured loss, all or part of the payment of which 
the insurer intends to submit as part of its claim for Federal payment 
under the Program where the settlement amounts are below the applicable 
monetary thresholds identified in paragraphs (a)(1) and (2) of this 
section.
    (c) Factors. In determining whether to approve a proposed 
settlement, Treasury will consider the nature of the loss, the facts and 
circumstances surrounding the loss, and other factors such as whether:
    (1) The proposed settlement compensates for a third-party's loss, 
the liability for which is an insured loss under the terms and 
conditions of the underlying commercial property and casualty insurance 
policy, as certified by the insurer pursuant to Sec. 50.83(d)(2);
    (2) Any amount of the proposed settlement is attributable to 
punitive or exemplary damages intended to punish or deter (whether or 
not specifically so described as such damages);
    (3) The settlement amount offsets amounts received from the United 
States pursuant to any other Federal program;
    (4) The settlement amount does not include any items such as fees 
and expenses of attorneys, experts, and other professionals that have 
caused the insured losses under the underlying commercial property and 
casualty insurance policy to be overstated; and
    (5) Any other criteria that Treasury may consider appropriate, 
depending on the facts and circumstances surrounding the settlement, 
including the information contained in Sec. 50.83.
    (d) Settlement without seeking advance approval or despite 
disapproval. If an insurer settles a cause of action or agrees to the 
settlement of a cause of action without submitting the proposed 
settlement for Treasury's advance approval in accordance with paragraph 
(a) or (b) of this section, and in accordance with Sec. 50.83 or 
despite Treasury's disapproval of the proposed settlement, the insurer 
will not be entitled to include the paid settlement amount (or portion 
of the settlement amount, to the extent partially disapproved) in its 
aggregate insured losses for purposes of calculating the Federal share 
of compensation of its insured losses, unless the insurer can 
demonstrate, to the satisfaction of Treasury, extenuating circumstances.



Sec. 50.83  Procedure for requesting approval of proposed settlements.

    (a) Submission of notice. Insurers must request advance approval of 
a proposed settlement by submitting a notice of the proposed settlement 
and other required information in writing to the Terrorism Risk 
Insurance Program Office or its designated representative. The address 
where notices are to be submitted will be available at http://
www.treasury.gov/trip following any certification of an act of terrorism 
pursuant to section 102(1) of the Act.
    (b) Complete notice. Treasury will review requests for advance 
approval and determine whether additional information is needed to 
complete the notice.
    (c) Treasury response or deemed approval. Within 30 days after 
Treasury's receipt of a complete notice, or as extended in writing by 
Treasury, Treasury may issue a written response and indicate its partial 
or full approval or rejection of the proposed settlement. If Treasury 
does not issue a response within 30 days after Treasury's receipt of a 
complete notice, unless extended in writing by Treasury, the request for 
advance approval is deemed approved by Treasury. Any settlement is still 
subject to review under the claim procedures pursuant to Sec. 50.50.
    (d) Notice format. A notice of a proposed settlement should be 
entitled, ``Notice of Proposed Settlement--Request for Approval,'' and 
should provide the full name and address of the submitting insurer and 
the name, title, address, and telephone number of the designated contact 
person. An insurer must provide all relevant information, including the 
following, as applicable:
    (1) A brief description of the insured's underlying claim, the 
insured's loss, the amount of the claim, the operative policy terms, 
defenses to coverage, and all damages sustained;

[[Page 379]]

    (2) A certification by the insurer that the settlement is for a 
third-party's loss the liability for which is an insured loss under the 
terms and conditions of the underlying commercial property and casualty 
insurance policy;
    (3) An itemized statement of all damages by category (i.e., actual, 
economic and non-economic loss, punitive damages, etc.);
    (4) A statement from the insurer or its attorney in support of the 
settlement.;
    (5) The total dollar amount of the proposed settlement;
    (6) Indication as to whether the settlement was negotiated by 
counsel;
    (7) The amount to be paid that will compensate for any items such as 
fees and expenses of attorneys, experts, and other professionals for 
their services and expenses related to the insured loss and/or 
settlement and the net amount to be received by the third-party after 
such payment;
    (8) The amount received from the United States pursuant to any other 
Federal program for compensation of insured losses related to an act of 
terrorism;
    (9) The proposed terms of the written settlement agreement, 
including release language and subrogation terms;
    (10) If requested by Treasury, other relevant agreements, including:
    (i) Admissions of liability or insurance coverage;
    (ii) Determinations of the number of occurrences under a commercial 
property and casualty insurance policy;
    (iii) The allocation of paid amounts or amounts to be paid to 
certain policies, or to specific policy, coverage and/or aggregate 
limits; and
    (iv) Any other agreement that may affect the payment or amount of 
the Federal share of compensation to be paid to the insurer;
    (11) A statement indicating whether the proposed settlement has been 
approved by the Federal court or is subject to such approval and whether 
such approval is expected or likely; and
    (12) Such other information that is related to the insured loss as 
may be requested by Treasury that it deems necessary to evaluate the 
proposed settlement.



Sec. 50.84  Subrogation.

    An insurer shall not waive its rights of subrogation under its 
property and casualty insurance policy and preserve the subrogation 
right of the United States as provided by section 107(c) of the Act by 
not taking any action that would prejudice the United States' right of 
subrogation.



Sec. 50.85  Amendment related to settlement approval.

    Section 107(a)(6) of the Act, added December 22, 2005, provides that 
procedures and requirements established by the Secretary under Sec. 
50.82 (as in effect on the date of issuance of that section in final 
form) shall apply to any cause of action described in section 107(a)(1) 
of the Act.

[71 FR 27572, May 11, 2006]

[[Page 381]]

          Subtitle B--Regulations Relating to Money and Finance

[[Page 383]]



         CHAPTER I--MONETARY OFFICES, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
56              Domestic gold and silver operations sale of 
                    silver..................................         385
82              5-Cent and one-cent coin regulations........         385
91              Regulations governing conduct in or on the 
                    Bureau of the Mint buildings and grounds         386
92              United States Mint operations and procedures         388
100             Exchange of paper currency and coin.........         395
101             Mitigation of forfeiture of counterfeit gold 
                    coins...................................         399
103             Financial recordkeeping and reporting of 
                    currency and foreign transactions.......         400
123

[Reserved]

128             Reporting of international capital and 
                    foreign-currency transactions and 
                    positions...............................         532
129             Portfolio investment survey reporting.......         536
130-131

[Reserved]

132             Prohibition on funding of unlawful internet 
                    gambling................................         537
133-199         [Reserved]

[[Page 385]]



PART 56_DOMESTIC GOLD AND SILVER OPERATIONS SALE OF SILVER--Table of Contents




Sec.
56.1 Conditions upon which silver will be sold.
56.2 Sales price.

    Authority: Sec. 209, 79 Stat. 257; 31 U.S.C. 405a-1.



Sec. 56.1  Conditions upon which silver will be sold.

    The General Services Administration, as agent for the Treasury 
Department, will conduct periodic sales of silver as agreed upon between 
GSA and the Treasury Department. Sales will be under competitive bidding 
procedures established by agreement between GSA and the Treasury 
Department. Details of the bidding and selling procedures are obtainable 
by telephone or by writing to General Services Administration, Property 
Management and Disposal Service, Industry Materials Division, Metals 
Project, Washington, DC 20405.

[32 FR 13380, Sept. 22, 1967]



Sec. 56.2  Sales price.

    Sales of silver will be at prices offered through the competitive 
bidding procedures referred to in Sec. 56.1, and accepted by the GSA.

[32 FR 13380, Sept. 22, 1967]



PART 82_5-CENT AND ONE-CENT COIN REGULATIONS--Table of Contents




Sec.
82.1 Prohibitions.
82.2 Exceptions.
82.3 Definitions.
82.4 Penalties.

    Authority: 31 U.S.C. 5111(d).

    Source: 72 FR 61055, Oct. 29, 2007, unless otherwise noted.



Sec. 82.1  Prohibitions.

    Except as specifically authorized by the Secretary of the Treasury 
(or designee) or as otherwise provided in this part, no person shall 
export, melt, or treat:
    (a) Any 5-cent coin of the United States; or
    (b) Any one-cent coin of the United States.



Sec. 82.2  Exceptions.

    (a) The prohibition contained in Sec. 82.1 against the exportation 
of 5-cent coins and one-cent coins of the United States shall not apply 
to:
    (1) The exportation in any one shipment of 5-cent coins and one-cent 
coins having an aggregate face value of not more than $100 that are to 
be legitimately used as money or for numismatic purposes. Nothing in 
this paragraph shall be construed to authorize export for the purpose of 
sale or resale of coins for melting or treatment by any person.
    (2) The exportation of 5-cent coins and one-cent coins carried on an 
individual, or in the personal effects of an individual, departing from 
a place subject to the jurisdiction of the United States, when the 
aggregate face value is not more than $5, or when the aggregate face 
value is not more than $25 and it is clear that the purpose for 
exporting such coins is for legitimate personal numismatic, amusement, 
or recreational use.
    (b) The prohibition contained in Sec. 82.1 against the treatment of 
5-cent coins and one-cent coins shall not apply to the treatment of 
these coins for educational, amusement, novelty, jewelry, and similar 
purposes as long as the volumes treated and the nature of the treatment 
makes it clear that such treatment is not intended as a means by which 
to profit solely from the value of the metal content of the coins.
    (c) The prohibition contained in Sec. 82.1 against the exportation, 
melting, or treatment of 5-cent and one-cent coins of the United States 
shall not apply to coins exported, melted, or treated incidental to the 
recycling of other materials so long as--
    (1) Such 5-cent and one-cent coins were not added to the other 
materials for their metallurgical value;
    (2) The volumes of the 5-cent coins and one-cent coins, relative to 
the volumes of the other materials recycled, makes it clear that the 
presence of such coins is merely incidental; and

[[Page 386]]

    (3) The separation of the 5-cent and one-cent coins from the other 
materials would be impracticable or cost prohibitive.
    (d) The prohibition contained in Sec. 82.1 against the exportation, 
melting, or treatment of 5-cent coins shall not apply to 5-cent coins 
inscribed with the years 1942, 1943, 1944, or 1945 that are composed of 
an alloy comprising copper, silver and manganese.
    (e) The prohibition contained in Sec. 82.1 against the exportation 
of 5-cent coins and one-cent coins shall not apply to 5-cent coins and 
one-cent coins exported by a Federal Reserve Bank or a domestic 
depository institution, or to a foreign central bank, when the 
exportation of such 5-cent coins and one-cent coins is for use as 
circulating money.
    (f)(1) The prohibition contained in Sec. 82.1 against exportation, 
melting, or treatment of 5-cent coins and one-cent coins of the United 
States shall not apply to coins exported, melted, or treated under a 
written license issued by the Secretary of the Treasury (or designee).
    (2) Applications for licenses should be transmitted to the Director, 
United States Mint, 801 9th Street, NW., Washington, DC 20220.



Sec. 82.3  Definitions.

    (a) 5-cent coin of the United States means a 5-cent coin minted and 
issued by the Secretary of the Treasury pursuant to 31 U.S.C. 
5112(a)(5).
    (b) One-cent coin of the United States means a one-cent coin minted 
and issued by the Secretary of the Treasury pursuant to 31 U.S.C. 
5112(a)(6).
    (c) Export means to remove, send, ship, or carry, or to take any 
action with the intent to facilitate a person's removing, sending, 
shipping, or carrying, from the United States or any place subject to 
the jurisdiction thereof, to any place outside of the United States or 
to any place not subject to the jurisdiction thereof.
    (d) Person means any individual, partnership, association, 
corporation, or other organization, but does not include an agency of 
the Government of the United States.
    (e) Treat or treatment means to smelt, refine, or otherwise treat by 
heating, or by a chemical, electrical, or mechanical process.



Sec. 82.4  Penalties.

    (a) Any person who exports, melts, or treats 5-cent coins or one-
cent coins of the United States in violation of Sec. 82.1 shall be 
subject to the penalties specified in 31 U.S.C. 5111(d), including a 
fine of not more than $10,000 and/or imprisonment of not more than 5 
years.
    (b) In addition to the penalties prescribed by 31 U.S.C. 5111(d), a 
person violating the prohibitions of this part may be subject to other 
penalties provided by law, including 18 U.S.C. 1001(a).



PART 91_REGULATIONS GOVERNING CONDUCT IN OR ON THE BUREAU OF THE MINT 

BUILDINGS AND GROUNDS--Table of Contents




Sec.
91.1 Authority.
91.2 Applicability.
91.3 Recording presence.
91.4 Preservation of property.
91.5 Compliance with signs and directions.
91.6 Nuisances.
91.7 Gambling.
91.8 Alcoholic beverages, narcotics, hallucinogenic and dangerous drugs.
91.9 Soliciting, vending, debt collection, and distribution of 
          handbills.
91.10 Photographs.
91.11 Dogs and other animals.
91.12 Vehicular and pedestrian traffic.
91.13 Weapons and explosives.
91.14 Penalties and other law.

    Authority: 5 U.S.C. 301, by delegation from the Administrator of 
General Services, 35 FR 14426, and Treasury Department Order 177-25 
(Revision 2), 38 FR 21947.

    Source: 34 FR 503, Jan. 14, 1969, unless otherwise noted.



Sec. 91.1  Authority.

    The regulations in this part governing conduct in and on the Bureau 
of the Mint buildings and grounds located as follows: U.S. Mint, Colfax, 
and Delaware Streets, Denver, Colorado; U.S. Bullion Depository, Fort 
Knox, Kentucky; U.S. Assay Office, 32 Old Slip New York, New York; U.S. 
Mint, 5th and Arch Streets, Philadelphia, Pennsylvania; U.S. Assay 
Office, 155 Hermann Street, and the Old U.S. Mint

[[Page 387]]

Building, 88 Fifth Street, San Francisco, California; and U.S. Bullion 
Depository, West Point, New York; are promulgated pursuant to the 
authority vested in the Secretary of the Treasury, including 5 U.S.C. 
301, and that vested in him by delegation from the Administrator of 
General Services, 38 FR 20650 (1973), and in accordance with the 
authority vested in the Director of the Mint by Treasury Department 
Order No. 177-25 Revision 2), dated August 8, 1973, 38 FR 21947 (1973).

[38 FR 24897, Sept. 11, 1973]



Sec. 91.2  Applicability.

    The regulations in this part apply to the buildings and grounds of 
the Bureau of the Mint located as follows: U.S. Mint, Colfax and 
Delaware Streets, Denver, Colorado; U.S. Bullion Depository, Fort Knox, 
Kentucky; U.S. Assay Office, 32 Old Slip, New York, New York; U.S. Mint, 
Fifth and Arch Streets, Philadelphia, Pennsylvania; U.S. Assay Office, 
155 Hermann Street, and the Old U.S. Mint Building, 88 Fifth Street, San 
Francisco, California; and U.S. Bullion Depository, West Point, New 
York; and to all persons entering in or on such property. Unless 
otherwise stated herein, the Bureau of the Mint buildings and grounds 
shall be referred to in these regulations as the ``property''.

[38 FR 24897, Sept. 11, 1973]



Sec. 91.3  Recording presence.

    Except as otherwise ordered, the property shall be closed to the 
public during other than normal working hours. The property shall also 
be closed to the public when, in the opinion of the senior supervising 
official of any Bureau of the Mint establishment covered by these 
regulations, or his delegate, an emergency situation exists, and at such 
other times as may be necessary for the orderly conduct of the 
Government's business. Admission to the property during periods when 
such property is closed to the public will be limited to authorized 
individuals who will be required to sign the register and/or display 
identification documents when requested by the guard.



Sec. 91.4  Preservation of property.

    It shall be unlawful for any person without proper authority to 
wilfully destroy, damage, deface, or remove property or any part thereof 
or any furnishings therein.



Sec. 91.5  Compliance with signs and directions.

    Persons in and on the property shall comply with the instructions of 
uniformed Bureau of the Mint guards (U.S. Special Policemen), other 
authorized officials, and official signs of a prohibitory or directory 
nature.



Sec. 91.6  Nuisances.

    The use of loud, abusive, or profane language, unwarranted 
loitering, unauthorized assembly, the creation of any hazard to persons 
or things, improper disposal of rubbish, spitting, prurient prying, the 
commission of any obscene or indecent act, or any other disorderly 
conduct on the property is prohibited. The throwing of any articles of 
any kind in, upon, or from the property and climbing upon any part 
thereof, is prohibited. The entry, without specific permission, upon any 
part of the property to which the public does not customarily have 
access, is prohibited.



Sec. 91.7  Gambling.

    (a) Participating in games for money or other property, the 
operation of gambling devices, the conduct of a lottery or pool, the 
selling or purchasing of numbers tickets, or any other gambling in or on 
the property, is prohibited.
    (b) Possession in or on the property of any numbers slip or ticket, 
record, notation, receipt, or other writing of a type ordinarily used in 
any illegal form of gambling such as a tip sheet or dream book, unless 
explained to the satisfaction of the head of the bureau or his delegate, 
shall be prima facie evidence that there is participation in an illegal 
form of gambling in or on such property.

[34 FR 503, Jan. 14, 1969, as amended at 36 FR 3523, Feb. 26, 1971]

[[Page 388]]



Sec. 91.8  Alcoholic beverages, narcotics, hallucinogenic and dangerous drugs.

    Entering or being on the property, or operating a motor vehicle 
thereon by a person under the influence of alcoholic beverages, 
narcotics, hallucinogenic or dangerous drugs is prohibited. The use of 
any narcotic, hallucinogenic or dangerous drug in or on the property is 
prohibited. The use of alcoholic beverages in or on the property is 
prohibited except on occasions and on property upon which the Director 
of the Mint has for appropriate official uses granted and exemption 
permit in writing.

[38 FR 24898, Sept. 11, 1973]



Sec. 91.9  Soliciting, vending, debt collection, and distribution of 

handbills.

    The unauthorized soliciting of alms and contributions, the 
commercial soliciting and vending of all kinds, the display or 
distribution of commercial advertising, or the collecting of private 
debts, in or on the property, is prohibited. This rule does not apply to 
Bureau of the Mint concessions or notices posted by authorized employees 
on the bulletin boards. Distribution of material such as pamphlets, 
handbills, and flyers is prohibited without prior approval from the 
Director of the Mint, or the delegate of the Director.



Sec. 91.10  Photographs.

    The taking of photographs on the property is prohibited, without the 
written permission of the Director of the Mint.



Sec. 91.11  Dogs and other animals.

    Dogs and other animals, except seeing-eye dogs, shall not be brought 
upon the property for other than official purposes.



Sec. 91.12  Vehicular and pedestrian traffic.

    (a) Drivers of all vehicles in or on the property shall drive in a 
careful and safe manner at all times and shall comply with the signals 
and directions of guards and all posted traffic signs.
    (b) The blocking of entrances, driveways, walks, loading platforms, 
or fire hydrants in or on the property is prohibited.
    (c) Parking in or on the property is not allowed without a permit or 
specific authority. Parking without authority, parking in unauthorized 
locations or in locations reserved for other persons or continuously in 
excess of 8 hours without permission, or contrary to the direction of a 
uniformed Bureau of the Mint guard, or of posted signs, is prohibited.
    (d) This paragraph may be supplemented from time to time with the 
approval of the Director of the Mint, or the delegate of the Director, 
by the issuance and posting of such specific traffic directives as may 
be required and when so issued and posted such directives shall have the 
same force and effect as if made a part hereof.



Sec. 91.13  Weapons and explosives.

    No person while on the property shall carry firearms, other 
dangerous or deadly weapons, or explosives, either openly or concealed, 
except for official purposes.



Sec. 91.14  Penalties and other law.

    Whoever shall be found guilty of violating any of the regulations in 
this part while on the property is subject to a fine of not more than 
$50, or imprisonment of not more than 30 days, or both (40 U.S.C. 318c). 
Nothing contained in the regulations in this part shall be construed to 
abrogate any other Federal laws or regulations or those of any State or 
municipality applicable to the property referred to in Sec. 91.2 and 
governed by the regulations in this part.



PART 92_UNITED STATES MINT OPERATIONS AND PROCEDURES--Table of Contents




Sec.

                     Subpart A_Numismatic Operations

92.1 Manufacture of medals.
92.2 Sale of ``list'' medals.
92.3 Manufacture and sale of ``proof'' coins.
92.4 Uncirculated Mint Sets.

                    Subpart B_Availability of Records

92.5 Procedure governing availability of Bureau of the Mint records.

[[Page 389]]

92.6 Appeal.

 Subpart C_Assessment of Civil Penalties for Misuse of Words, Letters, 
              Symbols, or Emblems of the United States Mint

92.11 Purpose.
92.12 Definitions.
92.13 Assessment of civil penalties.
92.14 Initiation of action.
92.15 Initial notice of assessment.
92.16 Written response.
92.17 Final action.
92.18 Judicial review.

    Authority: 5 U.S.C. 301, 31 U.S.C. 321 and 333.

    Source: 47 FR 56353, Dec. 16, 1982, unless otherwise noted.



                     Subpart A_Numismatic Operations



Sec. 92.1  Manufacture of medals.

    With the approval of the Director of the Mint, dies for medals of a 
national character designated by Congress may be executed at the 
Philadelphia Mint, and struck in such field office of the Mints and 
Assay Offices as the Director shall designate.



Sec. 92.2  Sale of ``list'' medals.

    Medals on the regular Mint list, when available, are sold to the 
public at a charge sufficient to cover their cost, and to include 
mailing cost when mailed. Copies of the list of medals available for 
sale and their selling prices may be obtained from the Director of the 
Mint, Washington, DC.



Sec. 92.3  Manufacture and sale of ``proof'' coins.

    ``Proof'' coins, i.e., coins prepared from blanks specially polished 
and struck, are made as authorized by the Director of the Mint and are 
sold at a price sufficient to cover their face value plus the additional 
expense of their manufacture and sale. Their manufacture and issuance 
are contingent upon the demands of regular operations. Information 
concerning availability and price may be obtained from the Director of 
the Mint, Treasury Department, Washington, DC 20220.



Sec. 92.4  Uncirculated Mint Sets.

    Uncirculated Mint Sets, i.e., specially packaged coin sets 
containing one coin of each denomination struck at the Mints at 
Philadelphia and Denver, and the Assay Office at San Francisco, will be 
made as authorized by the Director of the Mint and will be sold at a 
price sufficient to cover their face value plus the additional expense 
of their processing and sale. Their manufacture and issuance are 
contingent upon demands of regular operations. Information concerning 
availability and price may be obtained from the Director of the Mint, 
Treasury Department, Washington, DC 20220.



                    Subpart B_Availability of Records



Sec. 92.5  Procedure governing availability of Bureau of the Mint records.

    (a) Regulations of the Office of the Secretary adopted. The 
regulations on the Disclosure of Records of the Office of the Secretary 
and other bureaus and offices of the Department issued under 5 U.S.C. 
301 and 552 and published as part 1 of this title, 32 FR No. 127, July 
1, 1967, except for Sec. 1.7 of this title entitled ``Appeal,'' shall 
govern the availability of Bureau of the Mint records.
    (b) Determination of availability. The Director of the Mint 
delegates authority to the following Mint officials to determine, in 
accordance with part 1 of this title, which of the records or 
information requested is available, subject to the appeal provided in 
Sec. 92.6: The Deputy Director of the Mint, Division Heads in the 
Office of the Director, and the Superintendent or Officer in Charge of 
the field office where the record is located.
    (c) Requests for identifiable records. A written request for an 
identifiable record shall be addressed to the Director of the Mint, 
Washington, DC 20220. A request presented in person shall be made in the 
public reading room of the Treasury Department, 15th Street and 
Pennsylvania Avenue, NW, Washington, DC, or in such other office 
designated by the Director of the Mint.



Sec. 92.6  Appeal.

    Any person denied access to records requested under Sec. 92.5 may 
file an appeal to the Director of the Mint within 30 days after 
notification of such denial. The appeal shall provide the name

[[Page 390]]

and address of the appellant, the identification of the record denied, 
and the date of the original request and its denial.



 Subpart C_Assessment of Civil Penalties for Misuse of Words, Letters, 
              Symbols, or Emblems of the United States Mint

    Source: 72 FR 60776, Oct. 26, 2007, unless otherwise noted.



Sec. 92.11  Purpose.

    (a) The procedures in this subpart implement the provisions of 31 
U.S.C. 333(c), which authorize the Secretary of the Treasury to assess a 
civil penalty against any person who has misused the words, titles, 
abbreviations, initials, symbols, emblems, seals, or badges of the 
United States Mint in violation of 31 U.S.C. 333(a).
    (b) The procedures in this subpart do not apply to the extent that 
the Secretary of the Treasury, the Director of the United States Mint, 
or their authorized designees have specifically granted to the person 
express permission, in writing, to manufacture, produce, sell, possess, 
or use the words, titles, abbreviations, initials, symbols, emblems, 
seals, or badges in a contract, agreement, license, letter, memorandum, 
or similar document.
    (c) The procedures in this subpart are limited to actions initiated 
by the United States Mint to enforce the provisions of 31 U.S.C. 333. 
The procedures herein do not affect the provisions of 31 CFR Part 27. 
Therefore, this subpart shall not be construed as the exclusive means 
for the Secretary of the Treasury to enforce 31 U.S.C. 333 insofar as a 
covered misuse affects the United States Mint.



Sec. 92.12  Definitions.

    (a) Assessing official means the Director of the United States Mint 
or his designee.
    (b) Examining official means an employee of the United States Mint 
appointed by the Director of the United States Mint (or an employee of 
the Treasury Department appointed by the Director of the United States 
Mint with the concurrence of the head of that employee's organization), 
to administer the procedures in this subpart in a particular case and to 
propose findings and recommendations in that case to the assessing 
official. The examining official must be:
    (1) An employee of the Treasury Department in the grade of GS-15 or 
higher; and
    (2) Capable of examining the matter without actual or apparent 
conflict of interest.
    (c) Broadcast or telecast means widespread dissemination by 
electronic transmission or method, whether audio and/or visual.
    (d) Civil penalty means a civil monetary penalty
    (e) Date of offense means the later of:
    (1) The date that the misuse occurred;
    (2) The date that the misuse had the effect of conveying the false 
impression that the activity was associated with or approved, endorsed, 
sponsored or authorized by the United States Mint or its officers or 
employees; or
    (3) If the violation is a continuing one, the date on which the 
misuse of the words, titles, abbreviations, initials, symbols, emblems, 
seals, or badges protected by 31 U.S.C. 333 or the procedures in this 
subpart last occurred.
    (f) Days means calendar days, unless otherwise stated.
    (g) Person means an individual, partnership, association, 
corporation, company, business, firm, manufacturer, or any other 
organization, entity, or institution.
    (h) Respondent means a person named in an Initial Notice of 
Assessment.
    (i) Symbol means any design or graphic used by the United States 
Mint or the Treasury Department to represent themselves or their 
products. A design or graphic may include
    (1) A trademark, designation of origin, or mark of identification, 
or
    (2) A stylized depiction comprising letters, words, or numbers.



Sec. 92.13  Assessment of civil penalties.

    (a) General rule. The assessing official may impose a civil penalty 
on any person when the following two conditions are met:

[[Page 391]]

    (1) That person uses in connection with, or as a part of, any 
advertisement, solicitation, business activity, or product, whether 
alone or with other words, letters, symbols, or emblems--
    (i) The words ``Department of the Treasury,'' ``United States 
Mint,'' or ``U.S. Mint'';
    (ii) The titles ``Secretary of the Treasury,'' ``Treasurer of the 
United States,'' ``Director of the United States Mint,'' or ``Director 
of the U.S. Mint'';
    (iii) The abbreviations or initials of any entity or title referred 
to in paragraph (a)(1)(i) or (a)(1)(ii) of this section;
    (iv) Any symbol, emblem, seal, or badge of an entity referred to in 
paragraph (a)(1)(i) of this section (including the design of any 
envelope, stationery, or identification card used by such an entity); or
    (v) Any colorable imitation of any such words, titles, 
abbreviations, initials, symbols, emblems, seals, or badges; and
    (2) That person's use is in a manner that could reasonably be 
interpreted or construed as conveying the false impression that such 
advertisement, solicitation, business activity, or product is in any 
manner approved, endorsed, sponsored, authorized by, or associated with 
the United States Mint, or any officer, or employee thereof.
    (b) Disclaimers. Any determination of whether a person has violated 
the provisions of paragraph (a) of this section shall be made without 
regard to any use of a disclaimer of affiliation with the United States 
Government or any particular agency or instrumentality thereof.
    (c) Civil penalty. The assessing official may impose a civil penalty 
on any person who violates the provisions of paragraph (a) of this 
section. The amount of a civil penalty shall not exceed $5,000 for each 
and every use of any material in violation of paragraph (a) of this 
section, except that such penalty shall not exceed $25,000 for each and 
every use if such use is in a broadcast or telecast.
    (d) Time limitations. (1) Civil penalties imposed under the 
procedures in this subpart must be assessed before the end of the three-
year period beginning on the date of offense.
    (2) The assessing official may commence a civil action to recover or 
enforce any civil penalty imposed in a Final Notice of Assessment issued 
pursuant to Sec. 92.17 at any time before the end of the two-year 
period beginning on the date of the Final Notice of Assessment. If 
judicial review of the Final Notice of Assessment is sought, the two-
year period begins to run from the date that a final and unappealable 
court order is issued.
    (e) Criminal Proceeding. No civil penalty may be imposed under the 
procedures in this subpart with respect to any violation of paragraph 
(a) of this section after a criminal proceeding on the same violation 
has been commenced by indictment or information under 31 U.S.C. 333(d).



Sec. 92.14  Initiation of action.

    (a) When an employee of the United States Mint learns of or 
discovers a potential violation of 31 U.S.C. 333 or this subpart, he or 
she will refer the matter, with all available evidence, to the assessing 
official.
    (b) The assessing official will consider relevant factors when 
determining whether to initiate an action to impose a civil penalty 
under the procedures in this subpart. Those factors may include, but are 
not limited to, the following:
    (1) The scope of the misuse;
    (2) The purpose and/or nature of the misuse;
    (3) The extent of the harm caused by the misuse;
    (4) The circumstances of the misuse;
    (5) The commercial benefit intended to be derived from the misuse; 
and
    (6) The repeated nature of the misuse.
    (c) If the assessing official decides to initiate an action to 
impose a civil penalty under the procedures in this subpart, he or she 
will, in writing:
    (1) Appoint an examining official; and
    (2) Delegate to the examining official the authority to prepare, 
sign, and serve an Initial Notice of Assessment on behalf of the 
assessing official.



Sec. 92.15  Initial notice of assessment.

    The examining official shall review all immediately available 
evidence on

[[Page 392]]

the matter; determine a proposed civil penalty based on the factors 
listed under Sec. 92.16(d)(2)(iii); and prepare and serve an Initial 
Notice of Assessment by United States mail or other means upon the 
person believed to be in violation of Sec. 92.13 and otherwise subject 
to a civil penalty. The notice shall provide the name and telephone 
number of the examining official, who can provide information concerning 
the notice and the procedures in this subpart. The notice shall include 
the following:
    (a) A specific reference to the provisions of Sec. 92.13 violated;
    (b) A concise statement of the facts that support the conclusion 
that such a violation occurred;
    (c) The amount of the civil penalty proposed and the maximum amount 
of the potential civil penalty that the assessing official could impose;
    (d) A notice informing the person alleged to be in violation of 
Sec. 92.13 that he or she:
    (1) May, within 30 days of the date of the notice, pay the proposed 
civil penalty, thereby waiving the right to make a written response 
under Sec. 92.16 and to seek judicial review under Sec. 92.18:
    (i) By electronic funds transfer (EFT) in accordance with 
instructions provided by the examining official in the Initial Notice of 
Assessment; or
    (ii) By means other than EFT only with the written approval of the 
assessing official;
    (2) May make a written response in accordance with Sec. 92.16 
within 30 days of the date of the notice addressing, as appropriate:
    (i) Why a civil penalty should not be imposed; and
    (ii) Why a civil penalty should be in a lesser amount than proposed.
    (3) May be represented by an attorney or other representative, 
provided that a designation of representative signed by the person 
alleged to be in violation is received by the examining official; and
    (4) May request, within 20 days of the date of the notice, a copy of 
or opportunity to review any documents and/or other evidence that the 
United States Mint compiled and relied on in determining to issue the 
notice (the assessing official reserves the right to assert privileges 
available under law and may decline to disclose certain documents and/or 
other evidence protected by such privileges; however, any documents or 
other evidence withheld from disclosure shall be expunged from the 
record and shall not be considered by the examining and assessing 
officials in arriving at their respective recommendations and 
decisions); and
    (e) An advisement of the following:
    (1) If no written response is received within the time allowed in 
Sec. 92.16(b), a Final Notice of Assessment may be issued without a 
presentation by the person;
    (2) If a written response has been made and the examining official 
deems it necessary, the examining official may request, orally or in 
writing, additional information from the respondent;
    (3) A Final Notice of Assessment may be issued in accordance with 
Sec. 92.17 requiring that the proposed civil penalty be paid;
    (4) A Final Notice of Assessment is subject to judicial review in 
accordance with 5 U.S.C. 701 et seq.; and
    (5) All submissions sent in response to the Initial Notice of 
Assessment must be transmitted to the address specified in the notice 
and include the name, address, and telephone number of the respondent.



Sec. 92.16  Written response.

    (a) Form and contents. (1) The written response submitted by a 
person pursuant to Sec. 92.15(d)(2) must provide the following:
    (i) A reference to and specific identification of the Initial Notice 
of Assessment involved;
    (ii) The full name of the person against whom the Initial Notice of 
Assessment has been made;
    (iii) If the respondent is not a natural person, the name and title 
of the officer authorized to act on behalf of the respondent; and
    (iv) If a representative of the person named in the Initial Notice 
of Assessment is filing the written response, a copy of the duly 
executed designation as representative.
    (2) The written response must admit or deny each violation of Sec. 
92.13 set

[[Page 393]]

forth in the Initial Notice of Assessment. Any violation not 
specifically denied will be presumed to be admitted. Where a violation 
is denied, the respondent shall specifically set forth the legal or 
factual basis upon which the allegation is denied. If the basis of the 
written response is that the respondent is not the person responsible 
for the alleged violation, the written response must set forth 
sufficient information to allow the examining and assessing officials to 
determine the truth of such an assertion. The written response should 
include any and all documents and other information that the respondent 
believes should be a part of the administrative record on the matter.
    (b) Time. (1) Except as provided in paragraph (b)(2) of this 
section, any written response made under this section must be submitted 
not later than 30 days after the date of the Initial Notice of 
Assessment.
    (2) If a request for documents or other evidence is made pursuant to 
Sec. 92.15(d)(4), the written response must be submitted not later than 
20 days after the date of the United States Mint's response to the 
request.
    (3)(i) In computing the number of days allowed for filing a written 
response under this paragraph, the first day counted is the day after 
the date of the Initial Notice of Assessment is issued. If the last date 
on which the response is required to be filed by this paragraph is a 
Saturday, Sunday or Federal holiday, the response will be due on the 
next business day after that date.
    (ii) If a response is transmitted by United States mail, it will be 
deemed timely filed if postmarked on or before the due date.
    (4) The examining official may extend the period for making a 
written response under paragraphs (b)(1) and (b)(2) of this section for 
up to ten days for good cause shown. Requests for extensions beyond ten 
days must be approved by the assessing official and must be based on 
good cause shown. Generally, failure to obtain representation in a 
timely manner will not be considered good cause.
    (c) Filing. The response may be sent by personal delivery, United 
States mail or commercial delivery. A written response transmitted by 
means other than United States mail will be considered filed on the date 
received at the address specified in the Initial Notice of Assessment.
    (d) Review and Recommendation. The examining official will fully 
consider the facts and arguments submitted by the respondent in the 
written response, any other documents filed by the respondent pursuant 
to this subpart, and the evidence in the United States Mint's record on 
the matter. If the respondent waives the right to submit a written 
response in accordance with Sec. 92.15(d)(1), or declines to submit a 
written response by the end of the 30-day response period, the examining 
official will fully consider the evidence in the United States Mint's 
record on the matter.
    (1) In fully considering the matter, the examining official will not 
consider any evidence introduced into the record by the United States 
Mint after the date of the Initial Notice of Assessment unless and until 
the respondent has been notified that such additional evidence will be 
considered, and has had an opportunity to request, review and comment on 
such evidence.
    (2) The examining official will prepare a concise report, addressed 
to the assessing official, which will contain the following:
    (i) The entire administrative record on the matter, including all 
information provided in or with a written response timely filed by the 
respondent and any additional information provided pursuant to Sec. 
92.15(e)(2), as well as all evidence upon which the Initial Notice of 
Assessment was based, and any additional evidence as provided for in 
Sec. 92.16(d)(1).
    (ii) A finding, based on the preponderance of the evidence, as to 
each alleged violation specified in the Initial Notice of Assessment;
    (iii) For each violation that the examining official determines to 
have occurred, a recommendation as to the appropriate amount of a civil 
penalty to be imposed which, upon additional consideration of the 
evidence, may be the same as, more than, or less than the amount 
initially proposed by the examining official pursuant to Sec. 92.15. In

[[Page 394]]

making this recommendation, the examining official will consider all 
relevant factors including, but not limited to, the following:
    (A) The scope of the misuse;
    (B) The purpose and/or nature of the misuse;
    (C) The extent of the harm caused by the misuse;
    (D) The circumstances of the misuse;
    (E) The commercial benefit intended to be derived from the misuse; 
and
    (F) The repeated nature of the misuse.
    (iv) If the examining official determines that a violation has 
occurred, a proposed Final Notice of Assessment that incorporates his or 
her findings and recommendations.
    (v) Any additional information or considerations that the assessing 
officer should consider in a decision whether to issue a Final Notice of 
Assessment under Sec. 92.17.



Sec. 92.17  Final action.

    (a) In making a final determination whether to impose a penalty, the 
assessing official shall take into consideration the entire report 
prepared by the examining official. Although the assessing official 
should accord appropriate weight to the findings and recommendations of 
the examining official, the assessing official is not bound by them. The 
assessing official may approve, disapprove, modify, or substitute any or 
all of the examining official's findings and recommendations if, in his 
or her judgment, the evidence in the record supports such a decision. 
The assessing official will determine whether:
    (1) The facts warrant a conclusion that no violation has occurred; 
or
    (2)(i) The facts warrant a conclusion that one or more violations 
have occurred; and
    (ii) The facts and violations found justify the conclusion that a 
civil penalty should be imposed.
    (b) If the assessing official determines that no violation has 
occurred, the official shall promptly send a letter indicating that 
determination to the person served with an Initial Notice of Assessment 
and to any designated representative of such person.
    (c) If the assessing official determines that a violation has 
occurred:
    (1) The assessing official shall issue a Final Notice of Assessment 
to the person served with an Initial Notice of Assessment and to any 
designated representative of such person.
    (2) The assessing official may, in his or her discretion:
    (i) Impose a civil penalty;
    (ii) Not impose a civil penalty; or
    (iii) Impose a civil penalty and suspend the payment of all or some 
of the civil penalty, conditioned on the violator's future compliance 
with 31 U.S.C. 333.
    (3) If a civil penalty is imposed under Sec. 92.17(c)(2)(i) or 
(iii), the assessing official shall determine the appropriate amount of 
the penalty in accordance with 31 U.S.C. 333(c)(2). In determining the 
amount of a civil penalty, the assessing official will consider relevant 
factors including, but not limited to, the following:
    (i) The scope of the misuse;
    (ii) The purpose and/or nature of the misuse;
    (iii) The extent of the harm caused by the misuse;
    (iv) The circumstances of the misuse;
    (v) The commercial benefit intended to be derived from the misuse; 
and
    (vi) The repeated nature of the misuse.
    (4) The Final Notice of Assessment shall:
    (i) Include the following:
    (A) A specific reference to each provision of Sec. 92.13 found to 
have been violated;
    (B) A concise statement of the facts supporting a conclusion that 
each violation has occurred;
    (C) An analysis of how the facts and each violation justifies the 
conclusion that a civil penalty should be imposed; and
    (D) The amount of each civil penalty imposed and a statement as to 
how the amount of each penalty was determined; and
    (ii) Inform the person of the following:
    (A) Payment of a civil penalty imposed by the Final Notice of 
Assessment must be made within 30 days of the date of the notice;

[[Page 395]]

    (B) Payment of a civil penalty imposed by the Final Notice of 
Assessment shall be paid by EFT in accordance with instructions provided 
in the notice, unless the assessing official has given written approval 
to have payment made by other means;
    (C) If payment of a civil penalty imposed by the Final Notice of 
Assessment has been suspended on the condition that the person comply in 
the future with 31 U.S.C. 333 and this subpart, the failure by the 
person to so comply will make the civil penalty payable on demand;
    (D) If a civil penalty is not paid within 30 days of the date of the 
Final Notice of Assessment (or on demand under paragraph (c)(3)(ii)(D) 
of this section), a civil action to collect the penalty or enforce 
compliance may be commenced at any time within two years of the date of 
the Final Notice of Assessment; and
    (E) Any civil penalty imposed by the Final Notice of Assessment may 
be subject to judicial review in accordance with 5 U.S.C. 701 et seq.



Sec. 92.18  Judicial review.

    A Final Notice of Assessment issued under the procedures in this 
subpart may be subject to judicial review pursuant to 5 U.S.C. 701 et 
seq.



PART 100_EXCHANGE OF PAPER CURRENCY AND COIN--Table of Contents




Sec.
100.2 Scope of regulations; transactions effected through Federal 
          Reserve banks and branches; distribution of coin and 
          currencies.

                          Subpart A_In General

100.3 Lawfully held coins and currencies in general.
100.4 Gold coin and gold certificates in general.

             Subpart B_Exchange of Mutilated Paper Currency

100.5 Mutilated paper currency.
100.6 Destroyed paper currency.
100.7 Treasury's liability.
100.8 Packaging of mutilated currency.
100.9 Where mutilated currency should be transmitted.

                       Subpart C_Exchange of Coin

100.10 Exchange of uncurrent coins.
100.11 Exchange of bent and partial coins.
100.12 Exchange of fused and mixed coins.
100.13 Criminal penalties.

                       Subpart D_Other Information

100.16 Exchange of paper and coin to be handled through Federal Reserve 
          banks and branches.
100.17 Location of Federal Reserve banks and branches.
100.18 Counterfeit notes to be marked; ``redemption'' of notes 
          wrongfully so marked.
100.19 Disposition of counterfeit notes and coins.

    Authority: 31 U.S.C. 321.

    Source: 47 FR 32044, July 23, 1982, unless otherwise noted.



Sec. 100.2  Scope of regulations; transactions effected through Federal 

Reserve banks and branches; distribution of coin and currencies.

    The regulations in this part govern the exchange of the coin and 
paper currency of the United States (including national bank notes and 
Federal Reserve bank notes in process of retirement and Federal Reserve 
notes). Under authorization in the Act approved May 29, 1920, 41 Stat. 
655 (31 U.S.C. 476), the Secretary of the Treasury transferred to the 
Federal Reserve banks and branches the duties and functions performed by 
the former Assistant Treasurers of the United States in connection with 
the exchange of paper currency and coin of the United States. Except for 
the duties in this respect to be performed by the Treasurer of the 
United States and the Director of the Mint, as may be indicated from 
time to time by the Secretary of the Treasury, exchanges of the paper 
currency and coin of the United States and the distribution and 
replacement thereof will, so far as practicable, be effected through the 
Federal Reserve banks and branches. The Federal Reserve banks and 
branches are authorized to distribute available supplies of coin and 
currency to depository institutions, as that term is defined in section 
103 of the Monetary Control Act of 1980 (Pub. L. 96-221). As authorized 
by section 107 of the Act, transportation of coin and currency and coin 
wrapping

[[Page 396]]

services will be provided according to a schedule of fees established by 
the Board of Governors of the Federal Reserve System. Inquiries by 
depository institutions regarding distribution and related services 
should be addressed to the Federal Reserve bank of the district where 
the institution is located.



                          Subpart A_In General



Sec. 100.3  Lawfully held coin and currencies in general.

    The official agencies of the Department of the Treasury will 
continue to exchange lawfully held coins and currencies of the United 
States, dollar for dollar, for other coins and currencies which may be 
lawfully acquired and are legal tender for public and private debts. 
Paper currency of the United States which has been falsely altered and 
coins altered to render them for use as other denominations will not be 
redeemed since such currency and coins are subject to forfeiture under 
Title 18, United States Code, section 492. Persons receiving such 
currency and coins should notify immediately the nearest local office of 
the U.S. Secret Service of the Department of the Treasury, and hold the 
same pending advice from the Service.



Sec. 100.4  Gold coin and gold certificates in general.

    Gold coins, and gold certificates of the type issued before January 
30, 1934, are exchangeable, as provided in this part, into other 
currency or coin which may be lawfully issued.



             Subpart B_Exchange of Mutilated Paper Currency



Sec. 100.5  Mutilated paper currency.

    (a) Lawfully held paper currency of the United States which has been 
mutilated will be exchanged at face amount if clearly more than one-half 
of the original whole note remains. Fragments of such mutilated currency 
which are not clearly more than one-half of the original whole note will 
be exchanged at face value only if the Director, Bureau of Engraving and 
Printing, Department of the Treasury, is satisfied that the missing 
portions have been totally destroyed. The Director's judgment shall be 
based on such evidence of total destruction as is necessary and shall be 
final.

                               Definitions

    (1) Mutilated currency is currency which has been damaged to the 
extent that (i) one-half or less of the original note remains or (ii) 
its condition is such that its value is questionable and the currency 
must be forwarded to the Treasury Department for examination by trained 
experts before any exchange is made.
    (2) Unfit currency is currency which is unfit for further 
circulation because of its physical condition such as torn, dirty, limp, 
worn or defaced. Unfit currency should not be forwarded to the Treasury, 
but may be exchanged at commercial banks.

[47 FR 32044, July 23, 1982, as amended at 56 FR 10170, Mar. 11, 1991]



Sec. 100.6  Destroyed paper currency.

    No relief will be granted on account of lawfully held paper currency 
of the United States which has been totally destroyed.



Sec. 100.7  Treasury's liability.

    (a) Payment will be made to lawful holders of mutilated currency at 
full value when:
    (1) Clearly more than 50% of a note identifiable as United States 
currency is present; or
    (2) Fifty percent or less of a note identifiable as United States 
currency is present and the method of mutilation and supporting evidence 
demonstrate to the satisfaction of the Treasury that the missing 
portions have been totally destroyed.
    (b) No payments will be made when:
    (1) Fragments and remnants presented are not identifiable as United 
States currency; or
    (2) Fragments and remnants presented which represent 50% or less of 
a note are identifiable as United States currency but the method of 
destruction and supporting evidence do not satisfy the Treasury that the 
missing portion has been totally destroyed.
    (c) All cases will be handled under proper procedures to safeguard 
the funds and interests of the claimant. In

[[Page 397]]

some cases, the amount repaid will be less than the amount claimed. In 
other cases, the amount repaid may be greater. The amount paid will be 
determined by an examination made by trained mutilated currency 
examiners and governed by the above criteria.
    (d) The Director of the Bureau of Engraving and Printing shall have 
final authority with respect to settlements for mutilated currency 
claims.

[47 FR 32044, July 23, 1982, as amended at 56 FR 10170, Mar. 11, 1991]



Sec. 100.8  Packaging of mutilated currency.

    Mutilated currency examiners are normally able to determine the 
value of mutilated currency when it has been carefully packed and boxed 
as described below:
    (a) Regardless of the condition of the currency, do not disturb the 
fragments more than is absolutely necessary.
    (b) If the currency is brittle or inclined to fall apart, pack it 
carefully in cotton and box it as found, without disturbing the 
fragments, if possible.
    (c) If the money was in a purse, box, or other container when 
mutilated, it should be left therein, if possible, in order to prevent 
further deterioration of the fragments or from their being lost.
    (d) If it is absolutely necessary to remove the fragments from the 
container, send the container with the currency and any other contents 
found, except as noted in paragraph (h) of this section.
    (e) If the money was flat when mutilated, do not roll or fold.
    (f) If the money was in a roll when mutilated, do not attempt to 
unroll or straighten.
    (g) If coin or any other metal is mixed with the currency, remove 
carefully. Do not send coin or other metal in the same package with 
mutilated paper currency, as the metal will break up the currency. Coin 
should be forwarded as provided in Sec. 100.12 (c) and (d).
    (h) Any fused or melted coin should be sent to: Superintendent, 
United States Mint, P.O. Box 400, Philadelphia, PA 19105.



Sec. 100.9  Where mutilated currency should be transmitted.

    Mutilated currency shipments must be addressed as follows: 
Department of the Treasury, Bureau of Engraving and Printing, OCS, Room 
344A, Post Office Box 37048, Washington, DC 20013.

[47 FR 32044, July 23, 1982, as amended at 56 FR 10170, Mar. 11, 1991]



                       Subpart C_Exchange of Coin



Sec. 100.10  Exchange of uncurrent coins.

    (a) Definition. Uncurrent coins are whole U.S. coins which are 
merely worn or reduced in weight by natural abrasion yet are readily and 
clearly recognizable as to genuineness and denomination and which are 
machine countable.
    (b) Redemption basis. Uncurrent coins will be redeemed at face 
value.
    (c) Criteria for acceptance. Uncurrent coins, forwarded for 
redemption at face value, must be shipped at the expense and risk of the 
owner. Shipments of subsidiary or minor coins for redemption at face 
value should be sorted by denomination into packages in sums of 
multiples of $20. Not more than $1,000 in any silver or clad coin, $200 
in 5-cent pieces, or $50 in 1-cent pieces should be shipped in one bag 
or package.
    (d) Redemption sites. Uncurrent coins will be redeemed only at the 
Federal Reserve banks and branches listed in Sec. 100.17.



Sec. 100.11  Exchange of bent and partial coins.

    (a) Definitions. (1) Bent coins are U.S. coins which are bent or 
deformed so as to preclude normal machine counting but which are readily 
and clearly identifiable as to genuineness and denomination.
    (2) Partial coins are U.S. coins which are not whole; partial coins 
must be readily and clearly identifiable as to genuineness and 
denomination.
    (b) Redemption basis. Bent and partial coins shall be presented 
separately by denomination category in lots of at least one pound for 
each category. Bent and partial coins shall be redeemed on the basis of 
their weight and denomination category rates (which is the weight 
equivalent of face value). If not

[[Page 398]]

presented separately by denomination category, bent and partial coins 
will not be accepted for redemption. Denomination categories and rates 
are Cents, @ $1.4585 per pound; Nickels, @ $4.5359 per pound; Dimes, 
Quarters, Halves, and Eisenhower Dollars @ $20.00 per pound; and Anthony 
Dollars @ $56.00 per pound. Copper plated zinc cents shall be redeemed 
at the face value equivalent of copper one cent coins.
    (c) Redemption site. Bent and partial coins will be redeemed only at 
the United States Mint, P.O. Box 400, Philadelphia, PA 19105. Coins are 
shipped at sender's risk and expense.

[47 FR 32044, July 23, 1982, as amended at 64 FR 39920, July 23, 1999]



Sec. 100.12  Exchange of fused and mixed coins.

    (a) Definitions. (1) Fused coins are U.S. coins which are melted to 
the extent that they are bonded together and the majority of which are 
readily and clearly identifiable as U.S. coins.
    (2) Mixed coins are U.S. coins of several alloy categories which are 
presented together, but are readily and clearly identifiable as U.S. 
coins.
    (b) The United States Mint will not accept fused or mixed coins for 
redemption.
    (c) Criteria for acceptance. (1) A minimum of two pounds of fused 
and mixed coins is required for redemption.
    (2) Fused and mixed coins containing lead, solder, or other 
substance which will render them unsuitable for coinage metal will not 
be accepted.
    (d) Redemption site. Fused and mixed coins will be redeemed only at 
the United States Mint, P.O. Box 400, Philadelphia, PA 19105. Coins are 
shipped at sender's risk and expense.

[47 FR 32044, July 23, 1982, as amended at 64 FR 39920, July 23, 1999]



Sec. 100.13  Criminal penalties.

    Criminal penalties connected with the defacement or mutilation of 
U.S. coins are provided in the United States Code, Title 18, section 
331.



                       Subpart D_Other Information



Sec. 100.16  Exchange of paper and coin to be handled through Federal Reserve 

banks and branches.

    Other than as provided in this document all transactions including 
the exchange of paper currency and coin shall be handled through the 
Federal Reserve banks and branches.



Sec. 100.17  Location of Federal Reserve banks and branches.

                    Federal Reserve Bank and Address

Boston--600 Atlantic Avenue, Boston, MA 02106
New York--33 Liberty Street (Federal Reserve P.O. Station), New York, NY 
10045
Buffalo Branch--160 Delaware Avenue (P.O. Box 961), Buffalo, NY 14240
Philadelphia--Ten Independence Mall (P.O. Box 66), Philadelphia, PA 
19105
Cleveland--1455 East Sixth Street (P.O. Box 6387), Cleveland, OH 44101
Cincinnati Branch--150 East Fourth Street (P.O. Box 999), Cincinnati, OH 
45201
Pittsburgh Branch--717 Grant Street (P.O. Box 867), Pittsburgh, PA 15230
Richmond--701 East Byrd Avenue (P.O. Box 27622), Richmond, VA 23261
Baltimore Branch--114-120 East Lexington Street (P.O. Box 1378), 
Baltimore, MD 21203
Charlotte Branch--530 East Trade Street (P.O. Box 30248), Charlotte, NC 
28230
Atlanta--104 Marietta Street, NW., Atlanta, GA 30303
Birmingham Branch--1801 Fifth Avenue, North (P.O. Box 830447), 
Birmingham, AL 35283-0447
Jacksonville Branch--800 Water Street (P.O. Box 929) Jacksonville, FL 
32231-0044
Miami Branch--9100 NW., 36th Street (P.O. Box 520847), Miami, FL 33152
Nashville Branch--301 Eighth Avenue, North, Nashville, TN 37203
New Orleans Branch--525 St. Charles Avenue (P.O. Box 61630), New 
Orleans, LA 70161
Chicago--230 South LaSalle Street (P.O. Box 834), Chicago, IL 60690
Detroit Branch--160 Fort Street, West (P.O. Box 1059), Detroit, MI 48231
St. Louis--411 Locust Street (P.O. Box 442), St. Louis, MO 63166
Little Rock Branch--325 West Capitol Avenue (P.O. Box 1261), Little 
Rock, AR 72203
Louisville Branch--410 South Fifth Street (P.O. Box 32710), Louisville, 
KY 40232
Memphis Branch--200 North Main Street (P.O. Box 407), Memphis, TN 38101
Minneapolis--250 Marquette Avenue, Minneapolis, MN 55480
Helena Branch--400 North Park Avenue, Helena, MT 59601

[[Page 399]]

Kansas City--925 Grand Avenue (Federal Reserve Station), Kansas City, MO 
64198
Denver Branch--1020 16th Street (P.O. Box 5228, Terminal Annex), Denver, 
CO 80217
Oklahoma City Branch--226 Dean A. McGee Street (P.O. Box 25129), 
Oklahoma City, OK 73125
Omaha Branch--2201 Farnam Street (P.O. Box 3958), Omaha, NB 68103
Dallas--400 South Akard Street (Station K), Dallas, TX 75222
El Paso Branch--301 East Main Street (P.O. Box 100), El Paso, TX 79999
Houston Branch--1701 San Jacinto Street (P.O. Box 2578), Houston, TX 
77001
San Antonio Branch--126 East Nueva Street (P.O. Box 1471), San Antonio, 
TX 78295
San Francisco--400 Sansome Street (P.O. Box 7702), San Francisco, CA 
94120
Los Angeles Branch--950 South Grand Avenue (Terminal Annex, P.O. Box 
2077), Los Angeles CA 90051
Portland Branch--915 SW Stark Street (P.O. Box 3436), Portland, OR 97208
Salt Lake City Branch--120 South State Street (P.O. Box 30780), Salt 
Lake City, UT 84125
Seattle Branch--1015 Second Avenue (P.O. Box 3567), Seattle, WA 98124

[47 FR 32044, July 23, 1982, as amended at 56 FR 10170, Mar. 11, 1991]



Sec. 100.18  Counterfeit notes to be marked; ``redemption'' of notes 

wrongfully so marked.

    The Act of June 30, 1876 (19 Stat. 4; 31 U.S.C. 424), provides that 
all U.S. Officers charged with the receipt or disbursement of public 
moneys, and all officers of national banks, shall stamp or write in 
plain letters the word ``counterfeit,'' ``altered,'' or ``worthless'' 
upon all fraudulent notes issued in the form of, and intended to 
circulate as money, which shall be presented at their places of 
business; and if such officers shall wrongfully stamp any genuine note 
of the United States, or of the national bank, they shall, upon 
presentation, ``redeem'' such notes at the face amount thereof.



Sec. 100.19  Disposition of counterfeit notes and coins.

    All counterfeit notes and coin found in remittances are cancelled 
and delivered to the U.S. Secret Service of the Department of the 
Treasury or to the nearest local office of that Service, a receipt for 
the same being forwarded to the sender. Communications with respect 
thereto should be addressed to the Director, U.S. Secret Service, 
Department of the Treasury, Washington, DC 20223.



PART 101_MITIGATION OF FORFEITURE OF COUNTERFEIT GOLD COINS--Table of Contents




Sec.
101.1 Purpose and scope.
101.2 Petitions for mitigation.
101.3 Petitions reviewed by Assistant Secretary, Enforcement, 
          Operations, Tariff Affairs.
101.4 Extraction of gold bullion from the counterfeit coins.
101.5 Payment of smelting costs.
101.6 Return of the bullion.
101.7 Exceptions.
101.8 Discretion of the Secretary.

    Authority: 18 U.S.C. 492.

    Source: 42 FR 1472, Jan. 7, 1977, unless otherwise noted.



Sec. 101.1  Purpose and scope.

    The purpose of this part is to establish a policy whereby certain 
purchasers or holders of gold coins who have forfeited them to the 
United States because they were counterfeit may, in the discretion of 
the Secretary of the Treasury, recover the gold bullion from the coins. 
This part sets forth the procedures to be followed in implementing this 
policy.



Sec. 101.2  Petitions for mitigation.

    (a) Who may file. Any person may petition the Secretary of the 
Treasury for return of the gold bullion of counterfeit gold coins 
forfeited to the United States, if:
    (1) The petitioner innocently purchased or received the coins and 
held them without the knowledge that they were counterfeit; and,
    (2) The petitioner voluntarily submitted the coins to the Treasury 
Department for a determination of whether they were legitimate or 
counterfeit; and,
    (3) The coins were determined to be counterfeit and were seized by 
the Treasury Department and forfeited to the United States.
    (b) To whom addressed. Petitions for mitigation of the forfeiture of 
counterfeit gold coins should be addressed to the Assistant Secretary, 
Enforcement,

[[Page 400]]

Operations, Tariff Affairs, Department of Treasury, 15th and 
Pennsylvania Avenue, NW., Washington, DC 20220.
    (c) Form. The petition need not be in any particular form, but must 
be under oath, and set forth at least the following:
    (1) The full name and address of the petitioner;
    (2) A description of the coin or coins involved;
    (3) The name and address of the person from whom the coins were 
received or purchased by the petitioner;
    (4) The date and place where they were voluntarily submitted for 
examination;
    (5) Any other circumstances relied upon by the petitioner to justify 
the mitigation;
    (6) A statement that the petitioner purchased or received and held 
the coins without the knowledge that they were counterfeit.



Sec. 101.3  Petitions reviewed by Assistant Secretary, Enforcement, 

Operations, Tariff Affairs.

    (a) The Assistant Secretary will receive and review all petitions 
for mitigation of the forfeiture of counterfeit gold coins. He shall 
conduct such further investigation, and may request such further 
information from the petitioner as he deems necessary. Petitions will be 
approved if the Assistant Secretary determines that:
    (1) The gold coins have not been previously disposed of by normal 
procedures;
    (2) The petitioner was an innocent purchaser or holder of the gold 
coins and is not under investigation in connection with the coins at the 
time of submission or thereafter;
    (3) The coins are not needed and will not be needed in the future in 
any investigation or as evidence in legal proceedings; and
    (4) Mitigation of the forfeiture is in the best interest of the 
Government.



Sec. 101.4  Extraction of gold bullion from the counterfeit coins.

    If the petition is approved, the Assistant Secretary shall then 
forward the gold coins to the Bureau of the Mint where, if economically 
feasible, the gold bullion will be extracted from the counterfeit coins. 
The Bureau of the Mint will then return the bullion to the Assistant 
Secretary.



Sec. 101.5  Payment of smelting costs.

    The petitioner shall be required to pay all reasonable costs 
incurred in extracting the bullion from the counterfeit coins, as shall 
be determined by the Assistant Secretary. Payment must be made prior to 
the return of the gold bullion to the petitioner.



Sec. 101.6  Return of the bullion.

    After receiving the gold bullion from the Bureau of the Mint, the 
Assistant Secretary shall notify the petitioner that his petition has 
been approved and that payment of the smelting costs in an amount set 
forth in such notice must be made prior to the return of the bullion.



Sec. 101.7  Exceptions.

    The provisions of this part shall not apply where the cost of 
smelting the gold coins exceeds the value of the gold bullion to be 
returned.



Sec. 101.8  Discretion of the Secretary.

    The Secretary of the Treasury retains complete discretion to deny 
any claim of any petitioner when the Secretary believes it is not in the 
best interest of the Government to return the bullion to the petitioner 
or when the Secretary is not convinced that the petitoner was an 
innocent purchaser or holder without knowledge that the gold coins were 
counterfeit.



PART 103_FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND FOREIGN 

TRANSACTIONS--Table of Contents




                          Subpart A_Definitions

Sec.
103.11 Meaning of terms.

                  Subpart B_Reports Required To Be Made

103.12 Determination by the Secretary.
103.15 Reports by mutual funds of suspicious transactions.
103.16 Reports by insurance companies of suspicious transactions.

[[Page 401]]

103.17 Reports by futures commission merchants and introducing brokers 
          in commodities of suspicious transactions.
103.18 Reports by banks of suspicious transactions.
103.19 Reports by brokers or dealers in securities of suspicious 
          transactions.
103.20 Reports by money services businesses of suspicious transactions.
103.21 Reports by casinos of suspicious transactions.
103.22 Reports of transactions in currency.
103.23 Reports of transportation of currency or monetary instruments.
103.24 Reports of foreign financial accounts.
103.25 Reports of transactions with foreign financial agencies.
103.26 Reports of certain domestic coin and currency transactions.
103.27 Filing of reports.
103.28 Identification required.
103.29 Purchases of bank checks and drafts, cashier's checks, money 
          orders and traveler's checks.
103.30 Reports relating to currency in excess of $10,000 received in a 
          trade or business.

               Subpart C_Records Required To Be Maintained

103.31 Determination by the Secretary.
103.32 Records to be made and retained by persons having financial 
          interests in foreign financial accounts.
103.33 Records to be made and retained by financial institutions.
103.34 Additional records to be made and retained by banks.
103.35 Additional records to be made and retained by brokers or dealers 
          in securities.
103.36 Additional records to be made and retained by casinos.
103.37 Additional records to be made and retained by currency dealers or 
          exchangers.
103.38 Nature of records and retention period.
103.39 Person outside the United States.

          Subpart D_Special Rules for Money Services Businesses

103.41 Registration of money services businesses.

                      Subpart E_General Provisions

103.51 Dollars as including foreign currency.
103.52 Photographic or other reproductions of Government obligations.
103.53 Availability of information.
103.54 Disclosure.
103.55 Exceptions, exemptions, and reports.
103.56 Enforcement.
103.57 Civil penalty.
103.58 Forfeiture of currency or monetary instruments.
103.59 Criminal penalty.
103.60 Enforcement authority with respect to transportation of currency 
          or monetary instruments.
103.61 Access to records.
103.62 Rewards for informants.
103.63 Structured transactions.
103.64 Special rules for casinos.

                            Subpart F_Summons

103.71 General.
103.72 Persons who may issue summons.
103.73 Contents of summons.
103.74 Service of summons.
103.75 Examination of witnesses and records.
103.76 Enforcement of summons.
103.77 Payment of expenses.

                    Subpart G_Administrative Rulings

103.80 Scope.
103.81 Submitting requests.
103.82 Nonconforming requests.
103.83 Oral communications.
103.84 Withdrawing requests.
103.85 Issuing rulings.
103.86 Modifying or rescinding rulings.
103.87 Disclosing information.

    Subpart H_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

103.90 Definitions.
103.100 Information sharing between Federal law enforcement agencies and 
          financial institutions.
103.110 Voluntary information sharing among financial institutions.

                Subpart I_Anti-Money Laundering Programs

                     Anti-Money Laundering Programs

103.120 Anti-money laundering program requirements for financial 
          institutions regulated by a Federal functional regulator or a 
          self-regulatory organization, and casinos.
103.121 Customer Identification Programs for banks, savings 
          associations, credit unions, and certain non-Federally 
          regulated banks.
103.122 Customer identification programs for broker-dealers.
103.123 Customer identification programs for futures commission 
          merchants and introducing brokers.
103.125 Anti-money laundering programs for money services businesses.
103.130 Anti-money laundering programs for mutual funds.

[[Page 402]]

103.131 Customer identification program for mutual funds.
103.135 Anti-money laundering programs for operators of credit card 
          systems.
103.137 Anti-money laundering programs for insurance companies.
103.140 Anti-money laundering programs for dealers in precious metals, 
          precious stones, or jewels.
103.170 Exempted anti-money laundering programs for certain financial 
          institutions.

  Special Due Diligence for Correspondent Accounts and Private Banking 
                                Accounts

103.175 Definitions.
103.176 Due diligence programs for correspondent accounts for foreign 
          financial institutions.
103.177 Prohibition on correspondent accounts for foreign shell banks; 
          records concerning owners of foreign banks and agents for 
          service of legal process.
103.178 Due diligence programs for private banking accounts.

             Law Enforcement Access to Foreign Bank Records

103.185 Summons or subpoena of foreign bank records; Termination of 
          correspondent relationship.
103.186 Special measures against Burma.
103.187 Special measures against Myanmar Mayflower Bank and Asia Wealth 
          Bank.
103.188 Special measures against Commercial Bank of Syria.
103.192 Special measures against VEF Bank.
103.193 Special measures against Banco Delta Asia.

Appendix A to Subpart I--Certification Regarding Correspondent Accounts 
          for Foreign Banks
Appendix B to Subpart I--Recertification Regarding Correspodent Accounts 
          for Foreign Banks
Appendix A to Part 103--Administrative Rulings
Appendix B to Part 103--Certification for Purposes of Section 314(b) of 
          the USA Patriot Act and 31 CFR 103.110
Appendix C to Part 103--Interpretive Rules

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314, 5316-
5332; title III, secs. 311, 312, 313, 314, 319, 326, 352, Pub. L. 107-
56, 115 Stat. 307.

    Source: 37 FR 6912, Apr. 5, 1972, unless otherwise noted.



                          Subpart A_Definitions



Sec. 103.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, 
where not otherwise distinctly expressed or manifestly incompatible with 
the intent thereof, terms shall have the meanings ascribed in this 
section.
    (a) Accept. A receiving financial institution, other than the 
recipient's financial institution, accepts a transmittal order by 
executing the transmittal order. A recipient's financial institution 
accepts a transmittal order by paying the recipient, by notifying the 
recipient of the receipt of the order or by otherwise becoming obligated 
to carry out the order.
    (b) At one time. For purposes of Sec. 103.23 of this part, a person 
who transports, mails, ships or receives; is about to or attempts to 
transport, mail or ship; or causes the transportation, mailing, shipment 
or receipt of monetary instruments, is deemed to do so ``at one time'' 
if:
    (1) That person either alone, in conjunction with or on behalf of 
others;
    (2) Transports, mails, ships or receives in any manner; is about to 
transport, mail or ship in any manner; or causes the transportation, 
mailing, shipment or receipt in any manner of;
    (3) Monetary instruments;
    (4) Into the United States or out of the United States;
    (5) Totaling more than $10,000;
    (6)(i) On one calendar day or (ii) if for the purpose of evading the 
reporting requirements of Sec. 103.23, on one or more days.
    (c) Bank. Each agent, agency, branch or office within the United 
States of any person doing business in one or more of the capacities 
listed below:
    (1) A commercial bank or trust company organized under the laws of 
any State or of the United States;
    (2) A private bank;
    (3) A savings and loan association or a building and loan 
association organized under the laws of any State or of the United 
States;
    (4) An insured institution as defined in section 401 of the National 
Housing Act;
    (5) A savings bank, industrial bank or other thrift institution;
    (6) A credit union organized under the law of any State or of the 
United States;
    (7) Any other organization (except a money services business) 
chartered

[[Page 403]]

under the banking laws of any state and subject to the supervision of 
the bank supervisory authorities of a State;
    (8) A bank organized under foreign law;
    (9) Any national banking association or corporation acting under the 
provisions of section 25(a) of the Act of Dec. 23, 1913, as added by the 
Act of Dec. 24, 1919, ch. 18, 41 Stat. 378, as amended (12 U.S.C. 611-
32).
    (d) Beneficiary. The person to be paid by the beneficiary's bank.
    (e) Beneficiary's bank. The bank or foreign bank identified in a 
payment order in which an account of the beneficiary is to be credited 
pursuant to the order or which otherwise is to make payment to the 
beneficiary if the order does not provide for payment to an account.
    (f) Broker or dealer in securities. A broker or dealer in 
securities, registered or required to be registered with the Securities 
and Exchange Commission under the Securities Exchange Act of 1934, 
except persons who register pursuant to section 15(b)(11) of the 
Securities Exchange Act of 1934.
    (g) Common carrier. Any person engaged in the business of 
transporting individuals or goods for a fee who holds himself out as 
ready to engage in such transportation for hire and who undertakes to do 
so indiscriminately for all persons who are prepared to pay the fee for 
the particular service offered.
    (h) Currency. The coin and paper money of the United States or of 
any other country that is designated as legal tender and that circulates 
and is customarily used and accepted as a medium of exchange in the 
country of issuance. Currency includes U.S. silver certificates, U.S. 
notes and Federal Reserve notes. Currency also includes official foreign 
bank notes that are customarily used and accepted as a medium of 
exchange in a foreign country.
    (i) [Reserved]
    (j) Deposit account. Deposit accounts include transaction accounts 
described in paragraph (hh) of this section, savings accounts, and other 
time deposits.
    (k) Domestic. When used herein, refers to the doing of business 
within the United States, and limits the applicability of the provision 
where it appears to the performance by such institutions or agencies of 
functions within the United States.
    (l) Established customer. A person with an account with the 
financial institution, including a loan account or deposit or other 
asset account, or a person with respect to which the financial 
institution has obtained and maintains on file the person's name and 
address, as well as taxpayer identification number (e.g., social 
security or employer identification number) or, if none, alien 
identification number or passport number and country of issuance, and to 
which the financial institution provides financial services relying on 
that information.
    (m) Execution date. The day on which the receiving financial 
institution may properly issue a transmittal order in execution of the 
sender's order. The execution date may be determined by instruction of 
the sender but cannot be earlier than the day the order is received, 
and, unless otherwise determined, is the day the order is received. If 
the sender's instruction states a payment date, the execution date is 
the payment date or an earlier date on which execution is reasonably 
necessary to allow payment to the recipient on the payment date.
    (n) Financial institution. Each agent, agency, branch, or office 
within the United States of any person doing business, whether or not on 
a regular basis or as an organized business concern, in one or more of 
the capacities listed below:
    (1) A bank (except bank credit card systems);
    (2) A broker or dealer in securities;
    (3) A money services business as defined in paragraph (uu) of this 
section;
    (4) A telegraph company;
    (5)(i) Casino. A casino or gambling casino that: Is duly licensed or 
authorized to do business as such in the United States, whether under 
the laws of a State or of a Territory or Insular Possession of the 
United States, or under the Indian Gaming Regulatory Act or other 
federal, state, or tribal law or arrangement affecting Indian lands 
(including, without limitation, a casino operating on the assumption or 
under the view that no such authorization is required for casino 
operation on

[[Page 404]]

Indian lands); and has gross annual gaming revenue in excess of $1 
million. The term includes the principal headquarters and every domestic 
branch or place of business of the casino.
    (ii) For purposes of this paragraph (n)(5), ``gross annual gaming 
revenue'' means the gross gaming revenue received by a casino, during 
either the previous business year or the current business year of the 
casino. A casino or gambling casino which is a casino for purposes of 
this part solely because its gross annual gaming revenue exceeds 
$1,000,000 during its current business year, shall not be considered a 
casino for purposes of this part prior to the time in its current 
business year that its gross annual gaming revenue exceeds $1,000,000.
    (iii) Any reference in this part, other than in this paragraph 
(n)(5) and in paragraph (n)(6) of this section, to a casino shall also 
include a reference to a card club, unless the provision in question 
contains specific language varying its application to card clubs or 
excluding card clubs from its application;
    (6)(i) Card club. A card club, gaming club, card room, gaming room, 
or similar gaming establishment that is duly licensed or authorized to 
do business as such in the United States, whether under the laws of a 
State, of a Territory or Insular Possession of the United States, or of 
a political subdivision of any of the foregoing, or under the Indian 
Gaming Regulatory Act or other federal, state, or tribal law or 
arrangement affecting Indian lands (including, without limitation, an 
establishment operating on the assumption or under the view that no such 
authorization is required for operation on Indian lands for an 
establishment of such type), and that has gross annual gaming revenue in 
excess of $1,000,000. The term includes the principal headquarters and 
every domestic branch or place of business of the establishment. The 
term ``casino,'' as used in this Part shall include a reference to 
``card club'' to the extent provided in paragraph (n)(5)(iii) of this 
section.
    (ii) For purposes of this paragraph (n)(6), gross annual gaming 
revenue means the gross revenue derived from or generated by customer 
gaming activity (whether in the form of per-game or per-table fees, 
however computed, rentals, or otherwise) and received by an 
establishment, during either the establishment's previous business year 
or its current business year. A card club that is a financial 
institution for purposes of this Part solely because its gross annual 
revenue exceeds $1,000,000 during its current business year, shall not 
be considered a financial institution for purposes of this Part prior to 
the time in its current business year when its gross annual revenue 
exceeds $1,000,000;
    (7) A person subject to supervision by any state or federal bank 
supervisory authority.
    (8) A futures commission merchant;
    (9) An introducing broker in commodities.
    (o) Foreign bank. A bank organized under foreign law, or an agency, 
branch or office located outside the United States of a bank. The term 
does not include an agent, agency, branch or office within the United 
States of a bank organized under foreign law.
    (p) Foreign financial agency. A person acting outside the United 
States for a person (except for a country, a monetary or financial 
authority acting as a monetary or financial authority, or an 
international financial institution of which the United States 
Government is a member) as a financial institution, bailee, depository 
trustee, or agent, or acting in a similar way related to money, credit, 
securities, gold, or a transaction in money, credit, securities, or 
gold.
    (q) Funds transfer. The series of transactions, beginning with the 
originator's payment order, made for the purpose of making payment to 
the beneficiary of the order. The term includes any payment order issued 
by the originator's bank or an intermediary bank intended to carry out 
the originator's payment order. A funds transfer is completed by 
acceptance by the beneficiary's bank of a payment order for the benefit 
of the beneficiary of the originator's payment order. Funds transfers 
governed by the Electronic Fund Transfer Act of 1978 (Title XX, Pub. L. 
95-630, 92 Stat. 3728, 15 U.S.C. 1693, et seq.), as well as any other 
funds transfers that are made through an

[[Page 405]]

automated clearinghouse, an automated teller machine, or a point-of-sale 
system, are excluded from this definition.
    (r) Intermediary bank. A receiving bank other than the originator's 
bank or the beneficiary's bank.
    (s) Intermediary financial institution. A receiving financial 
institution, other than the transmittor's financial institution or the 
recipient's financial institution. The term intermediary financial 
institution includes an intermediary bank.
    (t) Investment security. An instrument which:
    (1) Is issued in bearer or registered form;
    (2) Is of a type commonly dealt in upon securities exchanges or 
markets or commonly recognized in any area in which it is issued or 
dealt in as a medium for investment;
    (3) Is either one of a class or series or by its terms is divisible 
into a class or series of instruments; and
    (4) Evidences a share, participation or other interest in property 
or in an enterprise or evidences an obligation of the issuer.
    (u) Monetary instruments. (1) Monetary instruments include:
    (i) Currency;
    (ii) Traveler's checks in any form;
    (iii) All negotiable instruments (including personal checks, 
business checks, official bank checks, cashier's checks, third-party 
checks, promissory notes (as that term is defined in the Uniform 
Commercial Code), and money orders) that are either in bearer form, 
endorsed without restriction, made out to a fictitious payee (for the 
purposes of Sec. 103.23), or otherwise in such form that title thereto 
passes upon delivery;
    (iv) Incomplete instruments (including personal checks, business 
checks, official bank checks, cashier's checks, third-party checks, 
promissory notes (as that term is defined in the Uniform Commercial 
Code), and money orders) signed but with the payee's name omitted; and
    (v) Securities or stock in bearer form or otherwise in such form 
that title thereto passes upon delivery.
    (2) Monetary instruments do not include warehouse receipts or bills 
of lading.
    (v) Originator. The sender of the first payment order in a funds 
transfer.
    (w) Originator's bank. The receiving bank to which the payment order 
of the originator is issued if the originator is not a bank or foreign 
bank, or the originator if the originator is a bank or foreign bank.
    (x) Payment date. The day on which the amount of the transmittal 
order is payable to the recipient by the recipient's financial 
institution. The payment date may be determined by instruction of the 
sender, but cannot be earlier than the day the order is received by the 
recipient's financial institution and, unless otherwise prescribed by 
instruction, is the date the order is received by the recipient's 
financial institution.
    (y) Payment order. An instruction of a sender to a receiving bank, 
transmitted orally, electronically, or in writing, to pay, or to cause 
another bank or foreign bank to pay, a fixed or determinable amount of 
money to a beneficiary if:
    (1) The instruction does not state a condition to payment to the 
beneficiary other than time of payment;
    (2) The receiving bank is to be reimbursed by debiting an account 
of, or otherwise receiving payment from, the sender; and
    (3) The instruction is transmitted by the sender directly to the 
receiving bank or to an agent, funds transfer system, or communication 
system for transmittal to the receiving bank.
    (z) Person. An individual, a corporation, a partnership, a trust or 
estate, a joint stock company, an association, a syndicate, joint 
venture, or other unincorporated organization or group, an Indian Tribe 
(as that term is defined in the Indian Gaming Regulatory Act), and all 
entities cognizable as legal personalities.
    (aa) Receiving bank. The bank or foreign bank to which the sender's 
instruction is addressed.
    (bb) Receiving financial institution. The financial institution or 
foreign financial agency to which the sender's instruction is addressed. 
The term receiving financial institution includes a receiving bank.
    (cc) Recipient. The person to be paid by the recipient's financial 
institution.

[[Page 406]]

The term recipient includes a beneficiary, except where the recipient's 
financial institution is a financial institution other than a bank.
    (dd) Recipient's financial institution. The financial institution or 
foreign financial agency identified in a transmittal order in which an 
account of the recipient is to be credited pursuant to the transmittal 
order or which otherwise is to make payment to the recipient if the 
order does not provide for payment to an account. The term recipient's 
financial institution includes a beneficiary's bank, except where the 
beneficiary is a recipient's financial institution.
    (ee) Secretary. The Secretary of the Treasury or any person duly 
authorized by the Secretary to perform the function mentioned.
    (ff) Sender. The person giving the instruction to the receiving 
financial institution.
    (gg) Structure (structuring). For purposes of section 103.53, a 
person structures a transaction if that person, acting alone, or in 
conjunction with, or on behalf of, other persons, conducts or attempts 
to conduct one or more transactions in currency, in any amount, at one 
or more financial institutions, on one or more days, in any manner, for 
the purpose of evading the reporting requirements under section 103.22 
of this part. ``In any manner'' includes, but is not limited to, the 
breaking down of a single sum of currency exceeding $10,000 into smaller 
sums, including sums at or below $10,000, or the conduct of a 
transaction, or series of currency transactions, including transactions 
at or below $10,000. The transaction or transactions need not exceed the 
$10,000 reporting threshold at any single financial institution on any 
single day in order to constitute structuring within the meaning of this 
definition.
    (hh) Transaction account. Transaction accounts include those 
accounts described in 12 U.S.C. 461(b)(1)(C), money market accounts and 
similar accounts that take deposits and are subject to withdrawal by 
check or other negotiable order.
    (ii) Transaction. (1) Except as provided in paragraph (ii)(2) of 
this section, transaction means a purchase, sale, loan, pledge, gift, 
transfer, delivery, or other disposition, and with respect to a 
financial institution includes a deposit, withdrawal, transfer between 
accounts, exchange of currency, loan, extension of credit, purchase or 
sale of any stock, bond, certificate of deposit, or other monetary 
instrument, security, contract of sale of a commodity for future 
delivery, option on any contract of sale of a commodity for future 
delivery, option on a commodity, purchase or redemption of any money 
order, payment or order for any money remittance or transfer, purchase 
or redemption of casino chips or tokens, or other gaming instruments or 
any other payment, transfer, or delivery by, through, or to a financial 
institution, by whatever means effected.
    (2) For purposes of Sec. 103.22, and other provisions of this part 
relating solely to the report required by that section, the term 
``transaction in currency'' shall mean a transaction involving the 
physical transfer of currency from one person to another. A transaction 
which is a transfer of funds by means of bank check, bank draft, wire 
transfer, or other written order, and which does not include the 
physical transfer of currency, is not a transaction in currency for this 
purpose.
    (jj) Transmittal of funds. A series of transactions beginning with 
the transmittor's transmittal order, made for the purpose of making 
payment to the recipient of the order. The term includes any transmittal 
order issued by the transmittor's financial institution or an 
intermediary financial institution intended to carry out the 
transmittor's transmittal order. The term transmittal of funds includes 
a funds transfer. A transmittal of funds is completed by acceptance by 
the recipient's financial institution of a transmittal order for the 
benefit of the recipient of the transmittor's transmittal order. Funds 
transfers governed by the Electronic Fund Transfer Act of 1978 (Title 
XX, Pub. L. 95-630, 92 Stat. 3728, 15 U.S.C. 1693, et seq.), as well as 
any other funds transfers that are made through an automated 
clearinghouse, an automated teller machine, or a point-of-sale system, 
are excluded from this definition.

[[Page 407]]

    (kk) Transmittal order. The term transmittal order includes a 
payment order and is an instruction of a sender to a receiving financial 
institution, transmitted orally, electronically, or in writing, to pay, 
or cause another financial institution or foreign financial agency to 
pay, a fixed or determinable amount of money to a recipient if:
    (1) The instruction does not state a condition to payment to the 
recipient other than time of payment;
    (2) The receiving financial institution is to be reimbursed by 
debiting an account of, or otherwise receiving payment from, the sender; 
and
    (3) The instruction is transmitted by the sender directly to the 
receiving financial institution or to an agent or communication system 
for transmittal to the receiving financial institution.
    (ll) Transmittor. The sender of the first transmittal order in a 
transmittal of funds. The term transmittor includes an originator, 
except where the transmittor's financial institution is a financial 
institution or foreign financial agency other than a bank or foreign 
bank.
    (mm) Transmittor's financial institution. The receiving financial 
institution to which the transmittal order of the transmittor is issued 
if the transmittor is not a financial institution or foreign financial 
agency, or the transmittor if the transmittor is a financial institution 
or foreign financial agency. The term transmittor's financial 
institution includes an originator's bank, except where the originator 
is a transmittor's financial institution other than a bank or foreign 
bank.
    (nn) United States. The States of the United States, the District of 
Columbia, the Indian lands (as that term is defined in the Indian Gaming 
Regulatory Act), and the Territories and Insular Possessions of the 
United States.
    (oo) Business day. Business day, as used in this part with respect 
to banks, means that day, as normally communicated to its depository 
customers, on which a bank routinely posts a particular transaction to 
its customer's account.
    (pp) Postal Service. The United States Postal Service.
    (qq) FinCEN. FinCEN means the Financial Crimes Enforcement Network, 
an office within the Office of the Under Secretary (Enforcement) of the 
Department of the Treasury.
    (rr) Indian Gaming Regulatory Act. The Indian Gaming Regulatory Act 
of 1988, codified at 25 U.S.C. 2701-2721 and 18 U.S.C. 1166-68.
    (ss) State. The States of the United States and, wherever necessary 
to carry out the provisions of this part, the District of Columbia.
    (tt) Territories and Insular Possessions. The Commonwealth of Puerto 
Rico, the United States Virgin Islands, Guam, the Commonwealth of the 
Northern Mariana Islands, and all other territories and possessions of 
the United States other than the Indian lands and the District of 
Columbia.
    (uu) Money services business. Each agent, agency, branch, or office 
within the United States of any person doing business, whether or not on 
a regular basis or as an organized business concern, in one or more of 
the capacities listed in paragraphs (uu)(1) through (uu)(6) of this 
section. Notwithstanding the preceding sentence, the term ``money 
services business'' shall not include a bank, nor shall it include a 
person registered with, and regulated or examined by, the Securities and 
Exchange Commission or the Commodity Futures Trading Commission.
    (1) Currency dealer or exchanger. A currency dealer or exchanger 
(other than a person who does not exchange currency in an amount greater 
than $1,000 in currency or monetary or other instruments for any person 
on any day in one or more transactions).
    (2) Check casher. A person engaged in the business of a check casher 
(other than a person who does not cash checks in an amount greater than 
$1,000 in currency or monetary or other instruments for any person on 
any day in one or more transactions).
    (3) Issuer of traveler's checks, money orders, or stored value. An 
issuer of traveler's checks, money orders, or, stored value (other than 
a person who does not issue such checks or money orders or stored value 
in an amount greater than $1,000 in currency or monetary or other 
instruments to any person on any day in one or more transactions).
    (4) Seller or redeemer of traveler's checks, money orders, or stored 
value. A

[[Page 408]]

seller or redeemer of traveler's checks, money orders, or stored value 
(other than a person who does not sell such checks or money orders or 
stored value in an amount greater than $1,000 in currency or monetary or 
other instruments to or redeem such instruments for an amount greater 
than $1,000 in currency or monetary or other instruments from, any 
person on any day in one or more transactions).
    (5) Money transmitter--(i) In general. Money transmitter:
    (A) Any person, whether or not licensed or required to be licensed, 
who engages as a business in accepting currency, or funds denominated in 
currency, and transmits the currency or funds, or the value of the 
currency or funds, by any means through a financial agency or 
institution, a Federal Reserve Bank or other facility of one or more 
Federal Reserve Banks, the Board of Governors of the Federal Reserve 
System, or both, or an electronic funds transfer network; or
    (B) Any other person engaged as a business in the transfer of funds.
    (ii) Facts and circumstances; Limitation. Whether a person ``engages 
as a business'' in the activities described in paragraph (uu)(5)(i) of 
this section is a matter of facts and circumstances. Generally, the 
acceptance and transmission of funds as an integral part of the 
execution and settlement of a transaction other than the funds 
transmission itself (for example, in connection with a bona fide sale of 
securities or other property), will not cause a person to be a money 
transmitter within the meaning of paragraph (uu)(5)(i) of this section.
    (6) United States Postal Service. The United States Postal Service, 
except with respect to the sale of postage or philatelic products.
    (vv) Stored value. Funds or monetary value represented in digital 
electronics format (whether or not specially encrypted) and stored or 
capable of storage on electronic media in such a way as to be 
retrievable and transferable electronically.
    (ww) Security. Security means any instrument or interest described 
in section 3(a)(10) of the Securities Exchange Act of 1934, 15 U.S.C. 
78c(a)(10).
    (xx) Commodity. Any good, article, service, right, or interest 
described in section 1a(4) of the Commodity Exchange Act (``CEA''), 7 
U.S.C. 1a(4).
    (yy) Contract of sale. Any sale, agreement of sale, or agreement to 
sell as described in section 1a(7) of the CEA, 7 U.S.C. 1a(7).
    (zz) Futures commission merchant. Any person registered or required 
to be registered as a futures commission merchant with the Commodity 
Futures Trading Commission (``CFTC'') under the CEA, except persons who 
register pursuant to section 4f(a)(2) of the CEA, 7 U.S.C. 6f(a)(2).
    (aaa) Introducing broker-commodities. Any person registered or 
required to be registered as an introducing broker with the CFTC under 
the CEA, except persons who register pursuant to section 4f(a)(2) of the 
CEA, 7 U.S.C. 6f(a)(2).
    (bbb) Option on a commodity. Any agreement, contract, or transaction 
described in section 1a(26) of the CEA, 7 U.S.C. 1a(26).

[52 FR 11441, Apr. 8, 1987; 52 FR 12641, Apr. 17, 1987, as amended at 53 
FR 777, Jan. 13, 1988; 53 FR 4138, Feb. 12, 1988; 54 FR 3027, Jan. 23, 
1989; 54 FR 28418, July 6, 1989; 55 FR 20143, May 15, 1990; 58 FR 13546, 
Mar. 12, 1993; 60 FR 228, Jan. 3, 1995; 61 FR 4331, Feb. 5, 1996; 61 FR 
7055, Feb. 23, 1996; 61 FR 14249, 14385, Apr. 1, 1996; 63 FR 1923, Jan. 
13, 1998; 64 FR 45450, Aug. 20, 1999; 65 FR 13692, Mar. 14, 2000; 67 FR 
44055, July 1, 2002; 67 FR 60729, Sept. 28, 2002; 68 FR 25109, May 9, 
2003; 68 FR 65398, Nov. 20, 2003; 69 FR 4237, Jan. 29, 2004]



                  Subpart B_Reports Required To Be Made



Sec. 103.12  Determination by the Secretary.

    The Secretary hereby determines that the reports required by this 
subpart have a high degree of usefulness in criminal, tax, or regulatory 
investigations or proceedings.

[37 FR 6912, Apr. 5, 1972. Redesignated at 61 FR 4331, Feb. 5, 1996 and 
further redesignated at 65 FR 13692, Mar. 14, 2000. Redesignated at 71 
FR 26219, May 4, 2006]



Sec. 103.15  Reports by mutual funds of suspicious transactions.

    (a) General. (1) Every investment company (as defined in section 3 
of the Investment Company Act of 1940 (15

[[Page 409]]

U.S.C. 80a-3) (``Investment Company Act'') that is an open-end company 
(as defined in section 5 of the Investment Company Act (15 U.S.C. 80a-
5)) and that is registered, or is required to register, with the 
Securities and Exchange Commission pursuant to that Act (for purposes of 
this section, a ``mutual fund''), shall file with the Financial Crimes 
Enforcement Network, to the extent and in the manner required by this 
section, a report of any suspicious transaction relevant to a possible 
violation of law or regulation. A mutual fund may also file with the 
Financial Crimes Enforcement Network a report of any suspicious 
transaction that it believes is relevant to the possible violation of 
any law or regulation, but whose reporting is not required by this 
section. Filing a report of a suspicious transaction does not relieve a 
mutual fund from the responsibility of complying with any other 
reporting requirements imposed by the Securities and Exchange 
Commission.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through a mutual fund, it involves or 
aggregates funds or other assets of at least $5,000, and the mutual fund 
knows, suspects, or has reason to suspect that the transaction (or a 
pattern of transactions of which the transaction is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any Federal law or regulation or to avoid any 
transaction reporting requirement under Federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or any other regulations promulgated 
under the Bank Secrecy Act, Public Law 91-508, as amended, codified at 
12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5314, 5316-
5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the mutual fund knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the mutual fund to facilitate criminal 
activity.
    (3) More than one mutual fund may have an obligation to report the 
same transaction under this section, and other financial institutions 
may have separate obligations to report suspicious activity with respect 
to the same transaction pursuant to other provisions of this part. In 
those instances, no more than one report is required to be filed by the 
mutual fund(s) and other financial institution(s) involved in the 
transaction, provided that the report filed contains all relevant facts, 
including the name of each financial institution and the words ``joint 
filing'' in the narrative section, and each institution maintains a copy 
of the report filed, along with any supporting documentation.
    (b) Filing and notification procedures--(1) What to file. A 
suspicious transaction shall be reported by completing a Suspicious 
Activity Report by Securities and Futures Industries (``SAR-SF''), and 
collecting and maintaining supporting documentation as required by 
paragraph (c) of this section.
    (2) Where to file. Form SAR-SF shall be filed with the Financial 
Crimes Enforcement Network in accordance with the instructions to the 
Form SAR-SF.
    (3) When to file. A Form SAR-SF shall be filed no later than 30 
calendar days after the date of the initial detection by the reporting 
mutual fund of facts that may constitute a basis for filing a Form SAR-
SF under this section. If no suspect is identified on the date of such 
initial detection, a mutual fund may delay filing a Form SAR-SF for an 
additional 30 calendar days to identify a suspect, but in no case shall 
reporting be delayed more than 60 calendar days after the date of such 
initial detection.
    (4) Mandatory notification to law enforcement. In situations 
involving violations that require immediate attention, such as suspected 
terrorist financing or ongoing money laundering schemes, a mutual fund 
shall immediately notify by telephone an appropriate law enforcement 
authority in

[[Page 410]]

addition to filing timely a Form SAR-SF.
    (5) Voluntary notification to the Financial Crimes Enforcement 
Network or the Securities and Exchange Commission. Mutual funds wishing 
voluntarily to report suspicious transactions that may relate to 
terrorist activity may call the Financial Crimes Enforcement Network's 
Financial Institutions Hotline at 1-866-556-3974 in addition to filing 
timely a Form SAR-SF if required by this section. The mutual fund may 
also, but is not required to, contact the Securities and Exchange 
Commission to report in such situations.
    (c) Retention of records. A mutual fund shall maintain a copy of any 
Form SAR-SF filed by the fund or on its behalf (including joint 
reports), and the original (or business record equivalent) of any 
supporting documentation concerning any Form SAR-SF that it files (or is 
filed on its behalf), for a period of five years from the date of filing 
the Form SAR-SF. Supporting documentation shall be identified as such 
and maintained by the mutual fund, and shall be deemed to have been 
filed with the Form SAR-SF. The mutual fund shall make all supporting 
documentation available to the Financial Crimes Enforcement Network, any 
other appropriate law enforcement agencies or federal or state 
securities regulators, and for purposes of an examination of a broker-
dealer pursuant to Sec. 103.19(g) regarding a joint report, to a self-
regulatory organization (as defined in section 3(a)(26) of the 
Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(26)) registered with 
the Securities and Exchange Commission, upon request.
    (d) Confidentiality of reports. No mutual fund, and no director, 
officer, employee, or agent of any mutual fund, who reports a suspicious 
transaction under this part (whether such a report is required by this 
section or made voluntarily), may notify any person involved in the 
transaction that the transaction has been reported, except to the extent 
permitted by paragraph (a)(3) of this section. Any person subpoenaed or 
otherwise required to disclose a Form SAR-SF or the information 
contained in a Form SAR-SF, including a Form SAR-SF filed jointly with 
another financial institution involved in the same transaction (except 
where such disclosure is requested by the Financial Crimes Enforcement 
Network, the Securities and Exchange Commission, another appropriate law 
enforcement or regulatory agency, or, in the case of a joint report 
involving a broker-dealer, a self-regulatory organization registered 
with the Securities and Exchange Commission conducting an examination of 
such broker-dealer pursuant to Sec. 103.19(g)), shall decline to 
produce Form SAR-SF or to provide any information that would disclose 
that a Form SAR-SF has been prepared or filed, citing this paragraph (d) 
and 31 U.S.C. 5318(g)(2), and shall notify the Financial Crimes 
Enforcement Network of any such request and its response thereto.
    (e) Limitation of liability. A mutual fund, and any director, 
officer, employee, or agent of such mutual fund, that makes a report of 
any possible violation of law or regulation pursuant to this section, 
including a joint report (whether such report is required by this 
section or made voluntarily) shall be protected from liability for any 
disclosure contained in, or for failure to disclose the fact of, such 
report, or both, to the extent provided in 31 U.S.C. 5318(g)(3).
    (f) Examinations and enforcement. Compliance with this section shall 
be examined by the Department of the Treasury, through the Financial 
Crimes Enforcement Network or its delegees, under the terms of the Bank 
Secrecy Act. Failure to satisfy the requirements of this section may 
constitute a violation of the reporting rules of the Bank Secrecy Act 
and of this part.
    (g) Effective date. This section applies to transactions occurring 
after October 31, 2006.

[71 FR 26219, May 4, 2006]



Sec. 103.16  Reports by insurance companies of suspicious transactions.

    (a) Definitions. For purposes of this section:
    (1) Annuity contract means any agreement between the insurer and the 
contract owner whereby the insurer promises to pay out a fixed or 
variable income stream for a period of time.

[[Page 411]]

    (2) Bank has the same meaning as provided in Sec. 103.11(c).
    (3) Broker-dealer in securities has the same meaning as provided in 
Sec. 103.11(f).
    (4) Covered product means:
    (i) A permanent life insurance policy, other than a group life 
insurance policy;
    (ii) An annuity contract, other than a group annuity contract; or
    (iii) Any other insurance product with features of cash value or 
investment.
    (5) Group annuity contract means a master contract providing 
annuities to a group of persons under a single contract.
    (6) Group life insurance policy means any life insurance policy 
under which a number of persons and their dependents, if appropriate, 
are insured under a single policy.
    (7) Insurance agent means a sales and/or service representative of 
an insurance company. The term ``insurance agent'' encompasses any 
person that sells, markets, distributes, or services an insurance 
company's covered products, including, but not limited to, a person who 
represents only one insurance company, a person who represents more than 
one insurance company, and a bank or broker-dealer in securities that 
sells any covered product of an insurance company.
    (8) Insurance broker means a person who, by acting as the customer's 
representative, arranges and/or services covered products on behalf of 
the customer.
    (9) Insurance company or insurer. (i) Except as provided in 
paragraph (a)(9)(ii) of this section, the term ``insurance company'' or 
``insurer'' means any person engaged within the United States as a 
business in the issuing or underwriting of any covered product.
    (ii) The term ``insurance company'' or ``insurer'' does not include 
an insurance agent or insurance broker.
    (10) Permanent life insurance policy means an agreement that 
contains a cash value or investment element and that obligates the 
insurer to indemnify or to confer a benefit upon the insured or 
beneficiary to the agreement contingent upon the death of the insured.
    (11) Person has the same meaning as provided in Sec. 103.11(z).
    (12) United States has the same meaning as provided in Sec. 
103.11(nn).
    (b) General. (1) Each insurance company shall file with the 
Financial Crimes Enforcement Network, to the extent and in the manner 
required by this section, a report of any suspicious transaction 
involving a covered product that is relevant to a possible violation of 
law or regulation. An insurance company may also file with the Financial 
Crimes Enforcement Network by using the form specified in paragraph 
(c)(1) of this section or otherwise, a report of any suspicious 
transaction that it believes is relevant to the possible violation of 
any law or regulation but the reporting of which is not required by this 
section.
    (2) A transaction requires reporting under this section if it is 
conducted or attempted by, at, or through an insurance company, and 
involves or aggregates at least $5,000 in funds or other assets, and the 
insurance company knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any federal law or regulation or to avoid any 
transaction reporting requirement under federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or of any other regulations 
promulgated under the Bank Secrecy Act, Public Law 91-508, as amended, 
codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-
5314; 5316-5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the insurance company knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or

[[Page 412]]

    (iv) Involves use of the insurance company to facilitate criminal 
activity.
    (3) (i) An insurance company is responsible for reporting suspicious 
transactions conducted through its insurance agents and insurance 
brokers. Accordingly, an insurance company shall establish and implement 
policies and procedures reasonably designed to obtain customer-related 
information necessary to detect suspicious activity from all relevant 
sources, including from its insurance agents and insurance brokers, and 
shall report suspicious activity based on such information.
    (ii) Certain insurance agents may have a separate obligation to 
report suspicious activity pursuant to other provisions of this part. In 
those instances, no more than one report is required to be filed by the 
financial institutions involved in the transaction, as long as the 
report filed contains all relevant facts, including the names of both 
institutions and the words ``joint filing'' in the narrative section, 
and both institutions maintain a copy of the report filed, along with 
any supporting documentation.
    (iii) An insurance company that issues variable insurance products 
funded by separate accounts that meet the definition of a mutual fund in 
Sec. 103.15(a)(1) shall file reports of suspicious transactions 
pursuant to Sec. 103.15.
    (c) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by 
Insurance Companies (SAR-IC), and collecting and maintaining supporting 
documentation as required by paragraph (e) of this section.
    (2) Where to file. The SAR-IC shall be filed with the Financial 
Crimes Enforcement Network as indicated in the instructions to the SAR-
IC.
    (3) When to file. A SAR-IC shall be filed no later than 30 calendar 
days after the date of the initial detection by the insurance company of 
facts that may constitute a basis for filing a SAR-IC under this 
section. If no suspect is identified on the date of such initial 
detection, an insurance company may delay filing a SAR-IC for an 
additional 30 calendar days to identify a suspect, but in no case shall 
reporting be delayed more than 60 calendar days after the date of such 
initial detection. In situations that require immediate attention, such 
as terrorist financing or ongoing money laundering schemes, the 
insurance company shall immediately notify by telephone an appropriate 
law enforcement authority in addition to filing timely a SAR-IC. 
Insurance companies wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity may call the 
Financial Crimes Enforcement Network's Financial Institutions Hotline at 
1-866-556-3974 in addition to filing timely a SAR-IC if required by this 
section.
    (d) Exception. An insurance company is not required to file a SAR-IC 
to report the submission to it of false or fraudulent information to 
obtain a policy or make a claim, unless the company has reason to 
believe that the false or fraudulent submission relates to money 
laundering or terrorist financing.
    (e) Retention of records. An insurance company shall maintain a copy 
of any SAR-IC filed and the original or business record equivalent of 
any supporting documentation for a period of five years from the date of 
filing the SAR-IC. Supporting documentation shall be identified as such 
and maintained by the insurance company and shall be deemed to have been 
filed with the SAR-IC. When an insurance company has filed or is 
identified as a filer in a joint Suspicious Activity Report, the 
insurance company shall maintain a copy of such joint report (together 
with copies of any supporting documentation) for a period of five years 
from the date of filing. An insurance company shall make all supporting 
documentation available to the Financial Crimes Enforcement Network and 
any other appropriate law enforcement agencies or supervisory agencies 
upon request.
    (f) Confidentiality of reports; limitation of liability. No 
insurance company, and no director, officer, employee, agent, or broker 
of any insurance company, who reports a suspicious transaction under 
this part (whether such a report

[[Page 413]]

is required by this section or made voluntarily), may notify any person 
involved in the transaction that the transaction has been reported, 
except to the extent permitted by paragraph (b)(3) of this section. 
Thus, any insurance company subpoenaed or otherwise requested to 
disclose a SAR-IC or the information contained in a SAR-IC (or a copy of 
a joint Suspicious Activity Report filed with another financial 
institution involved in the same transaction, including an insurance 
agent), except where such disclosure is requested by the Financial 
Crimes Enforcement Network or another appropriate law enforcement or 
supervisory agency, shall decline to produce the Suspicious Activity 
Report or to provide any information that would disclose that a 
Suspicious Activity Report has been prepared or filed, citing as 
authority 31 CFR 103.16 and 31 U.S.C. 5318(g)(2), and shall notify the 
Financial Crimes Enforcement Network of any such request and its 
response thereto. An insurance company, and any director, officer, 
employee, agent, or broker of such insurance company, that makes a 
report pursuant to this section, including a joint report (whether such 
report is required by this section or made voluntarily) shall be 
protected from liability for any disclosure contained in, or for failure 
to disclose the fact of, such report, or both, to the extent provided by 
31 U.S.C. 5318(g)(3).
    (g) Compliance. Compliance with this section shall be examined by 
the Department of the Treasury, through the Financial Crimes Enforcement 
Network or its delegees, under the terms of the Bank Secrecy Act. 
Failure to comply with the requirements of this section may constitute a 
violation of the reporting rules of the Bank Secrecy Act and of this 
part.
    (h) Suspicious transaction reporting requirements for insurance 
companies registered or required to register with the Securities and 
Exchange Commission as broker-dealers in securities. An insurance 
company that is registered or required to register with the Securities 
and Exchange Commission as a broker-dealer in securities shall be deemed 
to have satisfied the requirements of this section for its broker-dealer 
activities to the extent that the company complies with the reporting 
requirements applicable to such activities pursuant to Sec. 103.19.
    (i) Applicability date. This section applies to transactions 
occurring after May 2, 2006.

[70 FR 66767, Nov. 3, 2005, as amended at 71 FR 26220, May 4, 2006]



Sec. 103.17  Reports by futures commission merchants and introducing brokers 

in commodities of suspicious transactions.

    (a) General--(1) Every futures commission merchant (``FCM'') and 
introducing broker in commodities (``IB-C'') within the United States 
shall file with FinCEN, to the extent and in the manner required by this 
section, a report of any suspicious transaction relevant to a possible 
violation of law or regulation. An FCM or IB-C may also file with FinCEN 
a report of any suspicious transaction that it believes is relevant to 
the possible violation of any law or regulation but whose reporting is 
not required by this section. Filing a report of a suspicious 
transaction does not relieve an FCM or IB-C from the responsibility of 
complying with any other reporting requirements imposed by the Commodity 
Futures Trading Commission (``CFTC'') or any registered futures 
association or registered entity as those terms are defined in the 
Commodity Exchange Act (``CEA''), 7 U.S.C. 21 and 7 U.S.C. 1a(29).
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through an FCM or IB-C, it 
involves or aggregates funds or other assets of at least $5,000, and the 
FCM or IB-C knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any federal law or regulation or to avoid any 
transaction reporting requirement under federal law or regulation;

[[Page 414]]

    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or of any other regulations 
promulgated under the Bank Secrecy Act (``BSA''), Public Law 91-508, as 
amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 
5311-5314, 5316-5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the FCM or IB-C knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the FCM or IB-C to facilitate criminal 
activity.
    (3) The obligation to identify and properly and timely to report a 
suspicious transaction rests with each FCM and IB-C involved in the 
transaction, provided that no more than one report is required to be 
filed by any of the FCMs or IB-Cs involved in a particular transaction, 
so long as the report filed contains all relevant facts.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report-Securities 
and Futures Industry (``SAR-SF''), and collecting and maintaining 
supporting documentation as required by paragraph (d) of this section.
    (2) Where to file. The SAR-SF shall be filed with FinCEN in a 
central location, to be determined by FinCEN, as indicated in the 
instructions to the SAR-SF.
    (3) When to file. A SAR-SF shall be filed no later than 30 calendar 
days after the date of the initial detection by the reporting FCM or IB-
C of facts that may constitute a basis for filing a SAR-SF under this 
section. If no suspect is identified on the date of such initial 
detection, an FCM or IB-C may delay filing a SAR-SF for an additional 30 
calendar days to identify a suspect, but in no case shall reporting be 
delayed more than 60 calendar days after the date of such initial 
detection. In situations involving violations that require immediate 
attention, such as terrorist financing or ongoing money laundering 
schemes, the FCM or IB-C shall immediately notify by telephone an 
appropriate law enforcement authority in addition to filing timely a 
SAR-SF. FCMs and IB-Cs wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity may call FinCEN's 
Financial Institutions Hotline at 1-866-556-3974 in addition to filing 
timely a SAR-SF if required by this section. The FCM or IB-C may also, 
but is not required to, contact the CFTC to report in such situations.
    (c) Exceptions--(1) An FCM or IB-C is not required to file a SAR-SF 
to report--
    (i) A robbery or burglary committed or attempted of the FCM or IB-C 
that is reported to appropriate law enforcement authorities;
    (ii) A violation otherwise required to be reported under the CEA (7 
U.S.C. 1 et seq.), the regulations of the CFTC (17 CFR chapter I), or 
the rules of any registered futures association or registered entity as 
those terms are defined in the CEA, 7 U.S.C. 21 and 7 U.S.C. 1a(29), by 
the FCM or IB-C or any of its officers, directors, employees, or 
associated persons, other than a violation of 17 CFR 42.2, as long as 
such violation is appropriately reported to the CFTC or a registered 
futures association or registered entity.
    (2) An FCM or IB-C may be required to demonstrate that it has relied 
on an exception in paragraph (c)(1) of this section, and must maintain 
records of its determinations to do so for the period specified in 
paragraph (d) of this section. To the extent that a Form 8-R, 8-T, U-5, 
or any other similar form concerning the transaction is filed consistent 
with CFTC, registered futures association, or registered entity rules, a 
copy of that form will be a sufficient record for the purposes of this 
paragraph (c)(2).
    (d) Retention of records. An FCM or IB-C shall maintain a copy of 
any SAR-SF filed and the original or business record equivalent of any 
supporting documentation for a period of five years from the date of 
filing the SAR-SF. Supporting documentation shall be identified as such 
and maintained by the FCM or IB-C, and shall be deemed to have been 
filed with the SAR-SF. An FCM or IB-C shall make all supporting 
documentation available to FinCEN,

[[Page 415]]

the CFTC, or any other appropriate law enforcement agency or regulatory 
agency, and, for purposes of paragraph (g) of this section, to any 
registered futures association, registered entity, or self-regulatory 
organization (``SRO'') (as defined in section 3(a)(26) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78c(a)(26)), upon request.
    (e) Confidentiality of reports. No financial institution, and no 
director, officer, employee, or agent of any financial institution, who 
reports a suspicious transaction under this part, may notify any person 
involved in the transaction that the transaction has been reported, 
except to the extent permitted by paragraph (a)(3) of this section. 
Thus, any person subpoenaed or otherwise requested to disclose a SAR-SF 
or the information contained in a SAR-SF, except where such disclosure 
is requested by FinCEN, the CFTC, another appropriate law enforcement or 
regulatory agency, or for purposes of paragraph (g) of this section, a 
registered futures association, registered entity, or SRO shall decline 
to produce the SAR-SF or to provide any information that would disclose 
that a SAR-SF has been prepared or filed, citing this paragraph and 31 
U.S.C. 5318(g)(2), and shall notify FinCEN of any such request and its 
response thereto.
    (f) Limitation of liability. An FCM or IB-C, and any director, 
officer, employee, or agent of such FCM or IB-C, that makes a report of 
any possible violation of law or regulation pursuant to this section or 
any other authority (or voluntarily) shall not be liable to any person 
under any law or regulation of the United States (or otherwise to the 
extent also provided in 31 U.S.C. 5318(g)(3), including in any 
arbitration or reparations proceeding) for any disclosure contained in, 
or for failure to disclose the fact of, such report.
    (g) Examination and enforcement. Compliance with this section shall 
be examined by the Department of the Treasury, through FinCEN or its 
delegates, under the terms of the BSA. Reports filed under this section 
or Sec. 103.19 (including any supporting documentation), and 
documentation demonstrating reliance on an exception under paragraph (c) 
of this section or Sec. 103.19, shall be made available, upon request, 
to the CFTC, Securities and Exchange Commission, and any registered 
futures association, registered entity, or SRO, examining an FCM, IB-C, 
or broker or dealer in securities for compliance with the requirements 
of this section or Sec. 103.19. Failure to satisfy the requirements of 
this section may constitute a violation of the reporting rules of the 
BSA or of this part.
    (h) Effective date. This section applies to transactions occurring 
after May 18, 2004.

[68 FR 65398, Nov. 20, 2003]



Sec. 103.18  Reports by banks of suspicious transactions.

    (a) General. (1) Every bank shall file with the Treasury Department, 
to the extent and in the manner required by this section, a report of 
any suspicious transaction relevant to a possible violation of law or 
regulation. A bank may also file with the Treasury Department by using 
the Suspicious Activity Report specified in paragraph (b)(1) of this 
section or otherwise, a report of any suspicious transaction that it 
believes is relevant to the possible violation of any law or regulation 
but whose reporting is not required by this section.
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through the bank, it involves 
or aggregates at least $5,000 in funds or other assets, and the bank 
knows, suspects, or has reason to suspect that:
    (i) The transaction involves funds derived from illegal activities 
or is intended or conducted in order to hide or disguise funds or assets 
derived from illegal activities (including, without limitation, the 
ownership, nature, source, location, or control of such funds or assets) 
as part of a plan to violate or evade any federal law or regulation or 
to avoid any transaction reporting requirement under federal law or 
regulation;
    (ii) The transaction is designed to evade any requirements of this 
part or of any other regulations promulgated under the Bank Secrecy Act, 
Pub. L. 91-508, as amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-
1959, and 31 U.S.C. 5311-5330; or

[[Page 416]]

    (iii) The transaction has no business or apparent lawful purpose or 
is not the sort in which the particular customer would normally be 
expected to engage, and the bank knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report (``SAR''), 
and collecting and maintaining supporting documentation as required by 
paragraph (d) of this section.
    (2) Where to file. The SAR shall be filed with FinCEN in a central 
location, to be determined by FinCEN, as indicated in the instructions 
to the SAR.
    (3) When to file. A bank is required to file a SAR no later than 30 
calendar days after the date of initial detection by the bank of facts 
that may constitute a basis for filing a SAR. If no suspect was 
identified on the date of the detection of the incident requiring the 
filing, a bank may delay filing a SAR for an additional 30 calendar days 
to identify a suspect. In no case shall reporting be delayed more than 
60 calendar days after the date of initial detection of a reportable 
transaction. In situations involving violations that require immediate 
attention, such as, for example, ongoing money laundering schemes, the 
bank shall immediately notify, by telephone, an appropriate law 
enforcement authority in addition to filing timely a SAR.
    (c) Exceptions. A bank is not required to file a SAR for a robbery 
or burglary committed or attempted that is reported to appropriate law 
enforcement authorities, or for lost, missing, counterfeit, or stolen 
securities with respect to which the bank files a report pursuant to the 
reporting requirements of 17 CFR 240.17f-1.
    (d) Retention of records. A bank shall maintain a copy of any SAR 
filed and the original or business record equivalent of any supporting 
documentation for a period of five years from the date of filing the 
SAR. Supporting documentation shall be identified, and maintained by the 
bank as such, and shall be deemed to have been filed with the SAR. A 
bank shall make all supporting documentation available to FinCEN and any 
appropriate law enforcement agencies or bank supervisory agencies upon 
request.
    (e) Confidentiality of reports; limitation of liability. No bank or 
other financial institution, and no director, officer, employee, or 
agent of any bank or other financial institution, who reports a 
suspicious transaction under this part, may notify any person involved 
in the transaction that the transaction has been reported. Thus, any 
person subpoenaed or otherwise requested to disclose a SAR or the 
information contained in a SAR, except where such disclosure is 
requested by FinCEN or an appropriate law enforcement or bank 
supervisory agency, shall decline to produce the SAR or to provide any 
information that would disclose that a SAR has been prepared or filed, 
citing this paragraph (e) and 31 U.S.C. 5318(g)(2), and shall notify 
FinCEN of any such request and its response thereto. A bank, and any 
director, officer, employee, or agent of such bank, that makes a report 
pursuant to this section (whether such report is required by this 
section or is made voluntarily) shall be protected from liability for 
any disclosure contained in, or for failure to disclose the fact of such 
report, or both, to the full extent provided by 31 U.S.C. 5318(g)(3).
    (f) Compliance. Compliance with this section shall be audited by the 
Department of the Treasury, through FinCEN or its delegees under the 
terms of the Bank Secrecy Act. Failure to satisfy the requirements of 
this section may be a violation of the reporting rules of the Bank 
Secrecy Act and of this part. Such failure may also violate provisions 
of Title 12 of the Code of Federal Regulations.

[61 FR 4331, Feb. 5, 1996, as amended at 61 FR 14249, Apr. 1, 1996; 61 
FR 18250, Apr. 25, 1996. Redesignated at 65 FR 13692, Mar. 14, 2000]



Sec. 103.19  Reports by brokers or dealers in securities of suspicious 

transactions.

    (a) General. (1) Every broker or dealer in securities within the 
United States (for purposes of this section, a ``broker-dealer'') shall 
file with FinCEN, to the extent and in the manner required by

[[Page 417]]

this section, a report of any suspicious transaction relevant to a 
possible violation of law or regulation. A broker-dealer may also file 
with FinCEN a report of any suspicious transaction that it believes is 
relevant to the possible violation of any law or regulation but whose 
reporting is not required by this section. Filing a report of a 
suspicious transaction does not relieve a broker-dealer from the 
responsibility of complying with any other reporting requirements 
imposed by the Securities and Exchange Commission or a self-regulatory 
organization (``SRO'') (as defined in section 3(a)(26) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78c(a)(26)).
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through a broker-dealer, it 
involves or aggregates funds or other assets of at least $5,000, and the 
broker-dealer knows, suspects, or has reason to suspect that the 
transaction (or a pattern of transactions of which the transaction is a 
part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any federal law or regulation or to avoid any 
transaction reporting requirement under federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or of any other regulations 
promulgated under the Bank Secrecy Act, Public Law 91-508, as amended, 
codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-
5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the broker-dealer knows of no reasonable explanation for the 
transaction after examining the available facts, including the 
background and possible purpose of the transaction; or
    (iv) Involves use of the broker-dealer to facilitate criminal 
activity.
    (3) The obligation to identify and properly and timely to report a 
suspicious transaction rests with each broker-dealer involved in the 
transaction, provided that no more than one report is required to be 
filed by the broker-dealers involved in a particular transaction (so 
long as the report filed contains all relevant facts).
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report--Brokers or 
Dealers in Securities (``SAR-S-F''), and collecting and maintaining 
supporting documentation as required by paragraph (d) of this section.
    (2) Where to file. The SAR-BD shall be filed with FinCEN in a 
central location, to be determined by FinCEN, as indicated in the 
instructions to the SAR-S-F.
    (3) When to file. A SAR-S-F shall be filed no later than 30 calendar 
days after the date of the initial detection by the reporting broker-
dealer of facts that may constitute a basis for filing a SAR-S-F under 
this section. If no suspect is identified on the date of such initial 
detection, a broker-dealer may delay filing a SAR-S-F for an additional 
30 calendar days to identify a suspect, but in no case shall reporting 
be delayed more than 60 calendar days after the date of such initial 
detection. In situations involving violations that require immediate 
attention, such as terrorist financing or ongoing money laundering 
schemes, the broker-dealer shall immediately notify by telephone an 
appropriate law enforcement authority in addition to filing timely a 
SAR-S-F. Broker-dealers wishing voluntarily to report suspicious 
transactions that may relate to terrorist activity may call FinCEN's 
Financial Institutions Hotline at 1-866-556-3974 in addition to filing 
timely a SAR-S-F if required by this section. The broker-dealer may 
also, but is not required to, contact the Securities and Exchange 
Commission to report in such situations.
    (c) Exceptions. (1) A broker-dealer is not required to file a SAR-S-
F to report:
    (i) A robbery or burglary committed or attempted of the broker-
dealer that

[[Page 418]]

is reported to appropriate law enforcement authorities, or for lost, 
missing, counterfeit, or stolen securities with respect to which the 
broker-dealer files a report pursuant to the reporting requirements of 
17 CFR 240.17f-1;
    (ii) A violation otherwise required to be reported under this 
section of any of the federal securities laws or rules of an SRO by the 
broker-dealer or any of its officers, directors, employees, or other 
registered representatives, other than a violation of 17 CFR 240.17a-8 
or 17 CFR 405.4, so long as such violation is appropriately reported to 
the SEC or an SRO.
    (2) A broker-dealer may be required to demonstrate that it has 
relied on an exception in paragraph (c)(1) of this section, and must 
maintain records of its determinations to do so for the period specified 
in paragraph (d) of this section. To the extent that a Form RE-3, Form 
U-4, or Form U-5 concerning the transaction is filed consistent with the 
SRO rules, a copy of that form will be a sufficient record for purposes 
of this paragraph (c)(2).
    (3) For the purposes of this paragraph (c) the term ``federal 
securities laws'' means the ``securities laws,'' as that term is defined 
in section 3(a)(47) of the Securities Exchange Act of 1934, 15 U.S.C. 
78c(a)(47), and the rules and regulations promulgated by the Securities 
and Exchange Commission under such laws.
    (d) Retention of records. A broker-dealer shall maintain a copy of 
any SAR-S-F filed and the original or business record equivalent of any 
supporting documentation for a period of five years from the date of 
filing the SAR-S-F. Supporting documentation shall be identified as such 
and maintained by the broker-dealer, and shall be deemed to have been 
filed with the SAR-S-F. A broker-dealer shall make all supporting 
documentation available to FinCEN, any other appropriate law enforcement 
agencies or federal or state securities regulators, and for purposes of 
paragraph (g) of this section, to an SRO registered with the Securities 
and Exchange Commission, upon request.
    (e) Confidentiality of reports. No financial institution, and no 
director, officer, employee, or agent of any financial institution, who 
reports a suspicious transaction under this part, may notify any person 
involved in the transaction that the transaction has been reported, 
except to the extent permitted by paragraph (a)(3) of this section. 
Thus, any person subpoenaed or otherwise requested to disclose a SAR-S-F 
or the information contained in a SAR-S-F, except where such disclosure 
is requested by FinCEN, the Securities and Exchange Commission, or 
another appropriate law enforcement or regulatory agency, or for 
purposes of paragraph (g) of this section, an SRO registered with the 
Securities and Exchange Commission, shall decline to produce the SAR-S-F 
or to provide any information that would disclose that a SAR-S-F has 
been prepared or filed, citing this paragraph (e) and 31 U.S.C. 
5318(g)(2), and shall notify FinCEN of any such request and its response 
thereto.
    (f) Limitation of liability. A broker-dealer, and any director, 
officer, employee, or agent of such broker-dealer, that makes a report 
of any possible violation of law or regulation pursuant to this section 
or any other authority (or voluntarily) shall not be liable to any 
person under any law or regulation of the United States (or otherwise to 
the extent also provided in 31 U.S.C. 5318(g)(3), including in any 
arbitration proceeding) for any disclosure contained in, or for failure 
to disclose the fact of, such report.
    (g) Examination and enforcement. Compliance with this section shall 
be examined by the Department of the Treasury, through FinCEN or its 
delegees, under the terms of the Bank Secrecy Act. Reports filed under 
this section shall be made available to an SRO registered with the 
Securities and Exchange Commission examining a broker-dealer for 
compliance with the requirements of this section. Failure to satisfy the 
requirements of this section may constitute a violation of the reporting 
rules of the Bank Secrecy Act and of this part.
    (h) Effective date. This section applies to transactions occurring 
after December 30, 2002.

[67 FR 44056, July 1, 2002, as amended at 68 FR 6617, Feb. 10, 2003]

[[Page 419]]



Sec. 103.20  Reports by money services businesses of suspicious transactions.

    (a) General. (1) Every money services business, described in Sec. 
103.11(uu) (1), (3), (4), (5), or (6), shall file with the Treasury 
Department, to the extent and in the manner required by this section, a 
report of any suspicious transaction relevant to a possible violation of 
law or regulation. Any money services business may also file with the 
Treasury Department, by using the form specified in paragraph (b)(1) of 
this section, or otherwise, a report of any suspicious transaction that 
it believes is relevant to the possible violation of any law or 
regulation but whose reporting is not required by this section.
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through a money services 
business, involves or aggregates funds or other assets of at least 
$2,000 (except as provided in paragraph (a)(3) of this section), and the 
money services business knows, suspects, or has reason to suspect that 
the transaction (or a pattern of transactions of which the transaction 
is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any federal law or regulation or to avoid any 
transaction reporting requirement under federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or of any other regulations 
promulgated under the Bank Secrecy Act, Public Law 91-508, as amended, 
codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-
5330; or
    (iii) Serves no business or apparent lawful purpose, and the 
reporting money services business knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction.
    (iv) Involves use of the money services business to facilitate 
criminal activity.
    (3) To the extent that the identification of transactions required 
to be reported is derived from a review of clearance records or other 
similar records of money orders or traveler's checks that have been sold 
or processed, an issuer of money orders or traveler's checks shall only 
be required to report a transaction or pattern of transactions that 
involves or aggregates funds or other assets of at least $5,000.
    (4) The obligation to identify and properly and timely to report a 
suspicious transaction rests with each money services business involved 
in the transaction, provided that no more than one report is required to 
be filed by the money services businesses involved in a particular 
transaction (so long as the report filed contains all relevant facts). 
Whether, in addition to any liability on its own for failure to report, 
a money services business that issues the instrument or provides the 
funds transfer service involved in the transaction may be liable for the 
failure of another money services business involved in the transaction 
to report that transaction depends upon the nature of the contractual or 
other relationship between the businesses, and the legal effect of the 
facts and circumstances of the relationship and transaction involved, 
under general principles of the law of agency.
    (5) Notwithstanding the provisions of this section, a transaction 
that involves solely the issuance, or facilitation of the transfer of 
stored value, or the issuance, sale, or redemption of stored value, 
shall not be subject to reporting under this paragraph (a), until the 
promulgation of rules specifically relating to such reporting.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report-MSB (``SAR-
MSB''), and collecting and maintaining supporting documentation as 
required by paragraph (c) of this section.
    (2) Where to file. The SAR-MSB shall be filed in a central location 
to be determined by FinCEN, as indicated in the instructions to the SAR-
MSB.

[[Page 420]]

    (3) When to file. A money services business subject to this section 
is required to file each SAR-MSB no later than 30 calendar days after 
the date of the initial detection by the money services business of 
facts that may constitute a basis for filing a SAR-MSB under this 
section. In situations involving violations that require immediate 
attention, such as ongoing money laundering schemes, the money services 
business shall immediately notify by telephone an appropriate law 
enforcement authority in addition to filing a SAR-MSB. Money services 
businesses wishing voluntarily to report suspicious transactions that 
may relate to terrorist activity may call FinCEN's Financial 
Institutions Hotline at 1-866-556-3974 in addition to filing timely a 
SAR-MSB if required by this section.
    (c) Retention of records. A money services business shall maintain a 
copy of any SAR-MSB filed and the original or business record equivalent 
of any supporting documentation for a period of five years from the date 
of filing the SAR-MSB. Supporting documentation shall be identified as 
such and maintained by the money services business, and shall be deemed 
to have been filed with the SAR-MSB. A money services business shall 
make all supporting documentation available to FinCEN and any other 
appropriate law enforcement agencies or supervisory agencies upon 
request.
    (d) Confidentiality of reports; limitation of liability. No 
financial institution, and no director, officer, employee, or agent of 
any financial institution, who reports a suspicious transaction under 
this part, may notify any person involved in the transaction that the 
transaction has been reported. Thus, any person subpoenaed or otherwise 
requested to disclose a SAR-MSB or the information contained in a SAR-
MSB, except where such disclosure is requested by FinCEN or an 
appropriate law enforcement or supervisory agency, shall decline to 
produce the SAR-MSB or to provide any information that would disclose 
that a SAR-MSB has been prepared or filed, citing this paragraph (d) and 
31 U.S.C. 5318(g)(2), and shall notify FinCEN of any such request and 
its response thereto. A reporting money services business, and any 
director, officer, employee, or agent of such reporting money services 
business, that makes a report pursuant to this section (whether such 
report is required by this section or made voluntarily) shall be 
protected from liability for any disclosure contained in, or for failure 
to disclose the fact of, such report, or both, to the extent provided by 
31 U.S.C. 5318(g)(3).
    (e) Compliance. Compliance with this section shall be audited by the 
Department of the Treasury, through FinCEN or its delegees under the 
terms of the Bank Secrecy Act. Failure to satisfy the requirements of 
this section may constitute a violation of the reporting rules of the 
Bank Secrecy Act and of this part.
    (f) Effective date. This section applies to transactions occurring 
after December 31, 2001.

[65 FR 13692, Mar. 14, 2000, as amended at 68 FR 6617, Feb. 10, 2003]



Sec. 103.21  Reports by casinos of suspicious transactions.

    (a) General. (1) Every casino shall file with FinCEN, to the extent 
and in the manner required by this section, a report of any suspicious 
transaction relevant to a possible violation of law or regulation. A 
casino may also file with FinCEN, by using the form specified in 
paragraph (b)(1) of this section, or otherwise, a report of any 
suspicious transaction that it believes is relevant to the possible 
violation of any law or regulation but whose reporting is not required 
by this section.
    (2) A transaction requires reporting under the terms of this section 
if it is conducted or attempted by, at, or through a casino, and 
involves or aggregates at least $5,000 in funds or other assets, and the 
casino knows, suspects, or has reason to suspect that the transaction 
(or a pattern of transactions of which the transaction is a part):
    (i) Involves funds derived from illegal activity or is intended or 
conducted in order to hide or disguise funds or assets derived from 
illegal activity (including, without limitation, the ownership, nature, 
source, location, or control of such funds or assets) as part of a plan 
to violate or evade any federal law or

[[Page 421]]

regulation or to avoid any transaction reporting requirement under 
federal law or regulation;
    (ii) Is designed, whether through structuring or other means, to 
evade any requirements of this part or of any other regulations 
promulgated under the Bank Secrecy Act, Public Law 91-508, as amended, 
codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-
5332;
    (iii) Has no business or apparent lawful purpose or is not the sort 
in which the particular customer would normally be expected to engage, 
and the casino knows of no reasonable explanation for the transaction 
after examining the available facts, including the background and 
possible purpose of the transaction; or
    (iv) Involves use of the casino to facilitate criminal activity.
    (b) Filing procedures--(1) What to file. A suspicious transaction 
shall be reported by completing a Suspicious Activity Report by Casinos 
(``SARC''), and collecting and maintaining supporting documentation as 
required by paragraph (d) of this section.
    (2) Where to file. The SARC shall be filed with FinCEN in a central 
location, to be determined by FinCEN, as indicated in the instructions 
to the SARC.
    (3) When to file. A SARC shall be filed no later than 30 calendar 
days after the date of the initial detection by the casino of facts that 
may constitute a basis for filing a SARC under this section. If no 
suspect is identified on the date of such initial detection, a casino 
may delay filing a SARC for an additional 30 calendar days to identify a 
suspect, but in no case shall reporting be delayed more than 60 calendar 
days after the date of such initial detection. In situations involving 
violations that require immediate attention, such as ongoing money 
laundering schemes, the casino shall immediately notify by telephone an 
appropriate law enforcement authority in addition to filing timely a 
SARC. Casinos wishing voluntarily to report suspicious transactions that 
may relate to terrorist activity may call FinCEN's Financial 
Institutions Hotline at 1-866-556-3974 in addition to filing timely a 
SARC if required by this section.
    (c) Exceptions. A casino is not required to file a SARC for a 
robbery or burglary committed or attempted that is reported to 
appropriate law enforcement authorities.
    (d) Retention of records. A casino shall maintain a copy of any SARC 
filed and the original or business record equivalent of any supporting 
documentation for a period of five years from the date of filing the 
SARC. Supporting documentation shall be identified as such and 
maintained by the casino, and shall be deemed to have been filed with 
the SARC. A casino shall make all supporting documentation available to 
FinCEN, any other appropriate law enforcement agencies or federal, 
state, local, or tribal gaming regulators upon request.
    (e) Confidentiality of reports; limitation of liability. No casino, 
and no director, officer, employee, or agent of any casino, who reports 
a suspicious transaction under this part, may notify any person involved 
in the transaction that the transaction has been reported. Thus, any 
person subpoenaed or otherwise requested to disclose a SARC or the 
information contained in a SARC, except where such disclosure is 
requested by FinCEN or another appropriate law enforcement or regulatory 
agency, shall decline to produce the SARC or to provide any information 
that would disclose that a SARC has been prepared or filed, citing this 
paragraph (e) and 31 U.S.C. 5318(g)(2), and shall notify FinCEN of any 
such request and its response thereto. A casino, and any director, 
officer, employee, or agent of such casino, that makes a report pursuant 
to this section (whether such report is required by this section or made 
voluntarily) shall be protected from liability for any disclosure 
contained in, or for failure to disclose the fact of, such report, or 
both, to the extent provided by 31 U.S.C. 5318(g)(3).
    (f) Compliance. Compliance with this section shall be audited by the 
Department of the Treasury, through FinCEN or its delegees, under the 
terms of the Bank Secrecy Act. Failure to satisfy the requirements of 
this section may constitute a violation of the reporting rules of the 
Bank Secrecy Act and of this part.

[[Page 422]]

    (g) Effective date. This section applies to transactions occurring 
after March 25, 2003.

[67 FR 60729, Sept. 26, 2002]



Sec. 103.22  Reports of transactions in currency.

    (a) General. This section sets forth the rules for the reporting by 
financial institutions of transactions in currency. The reporting 
obligations themselves are stated in paragraph (b) of this section. The 
reporting rules relating to aggregation are stated in paragraph (c) of 
this section. Rules permitting banks to exempt certain transactions from 
the reporting obligations appear in paragraph (d) of this section.
    (b) Filing obligations--(1) Financial institutions other than 
casinos. Each financial institution other than a casino shall file a 
report of each deposit, withdrawal, exchange of currency or other 
payment or transfer, by, through, or to such financial institution which 
involves a transaction in currency of more than $10,000, except as 
otherwise provided in this section. In the case of the Postal Service, 
the obligation contained in the preceding sentence shall not apply to 
payments or transfers made solely in connection with the purchase of 
postage or philatelic products.
    (2) Casinos. Each casino shall file a report of each transaction in 
currency, involving either cash in or cash out, of more than $10,000.
    (i) Transactions in currency involving cash in include, but are not 
limited to:
    (A) Purchases of chips, tokens, and other gaming instruments;
    (B) Front money deposits;
    (C) Safekeeping deposits;
    (D) Payments on any form of credit, including markers and counter 
checks;
    (E) Bets of currency, including money plays;
    (F) Currency received by a casino for transmittal of funds through 
wire transfer for a customer;
    (G) Purchases of a casino's check;
    (H) Exchanges of currency for currency, including foreign currency; 
and
    (I) Bills inserted into electronic gaming devices.
    (ii) Transactions in currency involving cash out include, but are 
not limited to:
    (A) Redemptions of chips, tokens, tickets, and other gaming 
instruments;
    (B) Front money withdrawals;
    (C) Safekeeping withdrawals;
    (D) Advances on any form of credit, including markers and counter 
checks;
    (E) Payments on bets;
    (F) Payments by a casino to a customer based on receipt of funds 
through wire transfers;
    (G) Cashing of checks or other negotiable instruments;
    (H) Exchanges of currency for currency, including foreign currency;
    (I) Travel and complimentary expenses and gaming incentives; and
    (J) Payment for tournament, contests, and other promotions.
    (iii) Other provisions of this part notwithstanding, casinos are 
exempted from the reporting obligations found in Sec. Sec. 103.22(b)(2) 
and (c)(3) for the following transactions in currency or currency 
transactions:
    (A) Transactions between a casino and a currency dealer or 
exchanger, or between a casino and a check casher, as those terms are 
defined in Sec. 103.11(uu), so long as such transactions are conducted 
pursuant to a contractual or other arrangement with a casino covering 
the financial services in Sec. Sec. 103.22(b)(2)(i)(H), 
103.22(b)(2)(ii)(G), and 103.22(b)(2)(ii)(H);
    (B) Cash out transactions to the extent the currency is won in a 
money play and is the same currency the customer wagered in the money 
play, or cash in transactions to the extent the currency is the same 
currency the customer previously wagered in a money play on the same 
table game without leaving the table;
    (C) Bills inserted into electronic gaming devices in multiple 
transactions (unless a casino has knowledge pursuant to Sec. 
103.22(c)(3) in which case this exemption would not apply); and
    (D) Jackpots from slot machines or video lottery terminals.
    (c) Aggregation--(1) Multiple branches. A financial institution 
includes all of its domestic branch offices, and any recordkeeping 
facility, wherever located, that contains records relating to the 
transactions of the institution's

[[Page 423]]

domestic offices, for purposes of this section's reporting requirements.
    (2) Multiple transactions--general. In the case of financial 
institutions other than casinos, for purposes of this section, multiple 
currency transactions shall be treated as a single transaction if the 
financial institution has knowledge that they are by or on behalf of any 
person and result in either cash in or cash out totaling more than 
$10,000 during any one business day (or in the case of the Postal 
Service, any one day). Deposits made at night or over a weekend or 
holiday shall be treated as if received on the next business day 
following the deposit.
    (3) Multiple transactions--casinos. In the case of a casino, 
multiple currency transactions shall be treated as a single transaction 
if the casino has knowledge that they are by or on behalf of any person 
and result in either cash in or cash out totaling more than $10,000 
during any gaming day. For purposes of this paragraph (c)(3), a casino 
shall be deemed to have the knowledge described in the preceding 
sentence, if: any sole proprietor, partner, officer, director, or 
employee of the casino, acting within the scope of his or her 
employment, has knowledge that such multiple currency transactions have 
occurred, including knowledge from examining the books, records, logs, 
information retained on magnetic disk, tape or other machine-readable 
media, or in any manual system, and similar documents and information, 
which the casino maintains pursuant to any law or regulation or within 
the ordinary course of its business, and which contain information that 
such multiple currency transactions have occurred.
    (d) Transactions of exempt persons-- (1) General. No bank is 
required to file a report otherwise required by paragraph (b) of this 
section with respect to any transaction in currency between an exempt 
person and such bank, or, to the extent provided in paragraph (d)(5)(vi) 
of this section, between such exempt person and other banks affiliated 
with such bank. In addition, a non-bank financial institution is not 
required to file a report otherwise required by paragraph (b) of this 
section with respect to a transaction in currency between the 
institution and a commercial bank. (A limitation on the exemption 
described in this paragraph (d)(1) is set forth in paragraph (d)(6) of 
this section.)
    (2) Exempt person. For purposes of this section, an exempt person 
is:
    (i) A bank, to the extent of such bank's domestic operations;
    (ii) A department or agency of the United States, of any State, or 
of any political subdivision of any State;
    (iii) Any entity established under the laws of the United States, of 
any State, or of any political subdivision of any State, or under an 
interstate compact between two or more States, that exercises 
governmental authority on behalf of the United States or any such State 
or political subdivision;
    (iv) Any entity, other than a bank, whose common stock or analogous 
equity interests are listed on the New York Stock Exchange or the 
American Stock Exchange or whose common stock or analogous equity 
interests have been designated as a NASDAQ National Market Security 
listed on the NASDAQ Stock Market (except stock or interests listed 
under the separate ``NASDAQ Capital Markets Companies'' heading), 
provided that, for purposes of this paragraph (d)(2)(iv), a person that 
is a financial institution, other than a bank, is an exempt person only 
to the extent of its domestic operations;
    (v) Any subsidiary, other than a bank, of any entity described in 
paragraph (d)(2)(iv) of this section (a ``listed entity'') that is 
organized under the laws of the United States or of any State and at 
least 51 percent of whose common stock or analogous equity interest is 
owned by the listed entity, provided that, for purposes of this 
paragraph (d)(2)(v), a person that is a financial institution, other 
than a bank, is an exempt person only to the extent of its domestic 
operations;
    (vi) To the extent of its domestic operations and only with respect 
to transactions conducted through its exemptible accounts, any other 
commercial enterprise (for purposes of this paragraph (d), a ``non-
listed business''), other than an enterprise specified in paragraph 
(d)(5)(viii) of this section, that:

[[Page 424]]

    (A) Maintains a transaction account, as defined in paragraph 
(d)(5)(ix) of this section, at the bank for at least two months, except 
as provided in paragraph (d)(3)(ii)(B) of this section;
    (B) Frequently engages in transactions in currency with the bank in 
excess of $10,000; and
    (C) Is incorporated or organized under the laws of the United States 
or a State, or is registered as and eligible to do business within the 
United States or a State; or
    (vii) With respect solely to withdrawals for payroll purposes from 
existing exemptible accounts, any other person (for purposes of this 
paragraph (d), a ``payroll customer'') that:
    (A) Maintains a transaction account, as defined in paragraph 
(d)(5)(ix) of this section, at the bank for at least two months, except 
as provided in paragraph (d)(3)(ii)(B) of this section;
    (B) Operates a firm that regularly withdraws more than $10,000 in 
order to pay its United States employees in currency; and
    (C) Is incorporated or organized under the laws of the United States 
or a State, or is registered as and eligible to do business within the 
United States or a State.
    (3) Designation of certain exempt persons--(i) General. Except as 
provided in paragraph (d)(3)(ii) of this section, a bank must designate 
an exempt person by filing FinCEN Form 110. Such designation must occur 
by the close of the 30-calendar day period beginning after the day of 
the first reportable transaction in currency with that person sought to 
be exempted from reporting under the terms of this paragraph (d). The 
designation must be made separately by each bank that treats the 
customer as an exempt person, except as provided in paragraph (d)(5)(vi) 
of this section.
    (ii) Special rules.--(A) A bank is not required to file a FinCEN 
Form 110 with respect to the transfer of currency to or from:
    (1) Any of the twelve Federal Reserve Banks; or
    (2) Any exempt person as described in paragraphs (d)(2)(i) to (iii) 
of this section.
    (B) Notwithstanding subparagraphs (d)(2)(vi)(A) and (d)(2)(vii)(A) 
of this section, and if the requirements under this paragraph (d) of 
this section are otherwise satisfied, a bank may designate a non-listed 
business or a payroll customer, as described in paragraphs (d)(2)(vi) 
and (vii) of this section, as an exempt person before the customer has 
maintained a transaction account at the bank for at least two months if 
the bank conducts and documents a risk-based assessment of the customer 
and forms a reasonable belief that the customer has a legitimate 
business purpose for conducting frequent transactions in currency.
    (4) Annual review. At least once each year, a bank must review the 
eligibility of an exempt person described in paragraphs (d)(2)(iv) to 
(vii) of this section to determine whether such person remains eligible 
for an exemption. As part of its annual review, a bank must review the 
application of the monitoring system required to be maintained by 
paragraph (d)(8)(ii) of this section to each existing account of an 
exempt person described in paragraphs (d)(2)(vi) or (d)(2)(vii) of this 
section.
    (5) Operating rules--(i) General rule. Subject to the specific rules 
of this paragraph (d), a bank must take such steps to assure itself that 
a person is an exempt person (within the meaning of the applicable 
provision of paragraph (d)(2) of this section), to document the basis 
for its conclusions, and document its compliance, with the terms of this 
paragraph (d), that a reasonable and prudent bank would take and 
document to protect itself from loan or other fraud or loss based on 
misidentification of a person's status, and in the case of the 
monitoring system requirement set forth in paragraph (d)(8)(ii) of this 
section, such steps that a reasonable and prudent bank would take and 
document to identify suspicious transactions as required by paragraph 
(d)(8)(ii) of this section.
    (ii) Governmental departments and agencies. A bank may treat a 
person as a governmental department, agency, or entity if the name of 
such person reasonably indicates that it is described in paragraph 
(d)(2)(ii) or (d)(2)(iii) of this section, or if such person is known 
generally in the community to be a State,

[[Page 425]]

the District of Columbia, a tribal government, a Territory or Insular 
Possession of the United States, or a political subdivision or a wholly-
owned agency or instrumentality of any of the foregoing. An entity 
generally exercises governmental authority on behalf of the United 
States, a State, or a political subdivision, for purposes of paragraph 
(d)(2)(iii) of this section, only if its authorities include one or more 
of the powers to tax, to exercise the authority of eminent domain, or to 
exercise police powers with respect to matters within its jurisdiction. 
Examples of entities that exercise governmental authority include, but 
are not limited to, the New Jersey Turnpike Authority and the Port 
Authority of New York and New Jersey.
    (iii) Stock exchange listings. In determining whether a person is 
described in paragraph (d)(2)(iv) of this section, a bank may rely on 
any New York, American, or NASDAQ Stock Market listing published in a 
newspaper of general circulation, on any commonly accepted or published 
stock symbol guide, on any information contained in the Securities and 
Exchange Commission ``EDGAR'' System, or on any information contained on 
an Internet site or sites maintained by the New York Stock Exchange, the 
American Stock Exchange, or the NASDAQ.
    (iv) Listed company subsidiaries. In determining whether a person is 
described in paragraph (d)(2)(v) of this section, a bank may rely upon:
    (A) Any reasonably authenticated corporate officer's certificate;
    (B) Any reasonably authenticated photocopy of Internal Revenue 
Service Form 851 (Affiliation Schedule) or the equivalent thereof for 
the appropriate tax year; or
    (C) A person's Annual Report or Form 10-K, as filed in each case 
with the Securities and Exchange Commission.
    (v) Aggregated accounts. In determining the qualification of a 
customer as a non-listed business or a payroll customer, a bank may 
treat all exemptible accounts of the customer as a single account. If a 
bank elects to treat all exemptible accounts of a customer as a single 
account, the bank must continue to treat such accounts consistently as a 
single account for purposes of determining the qualification of the 
customer as a non-listed business or payroll customer.
    (vi) Affiliated banks. The designation required by paragraph (d)(3) 
of this section may be made by a parent bank holding company or one of 
its bank subsidiaries on behalf of all bank subsidiaries of the holding 
company, so long as the designation lists each bank subsidiary to which 
the designation shall apply.
    (vii) Sole proprietorships. A sole proprietorship may be treated as 
a non-listed business if it otherwise meets the requirements of 
paragraph (d)(2)(vi) of this section, as applicable. In addition, a sole 
proprietorship may be treated as a payroll customer if it otherwise 
meets the requirements of paragraph (d)(2)(vii) of this section, as 
applicable.
    (viii) Ineligible businesses. A business engaged primarily in one or 
more of the following activities may not be treated as a non-listed 
business for purposes of this paragraph (d): serving as financial 
institutions or agents of financial institutions of any type; purchase 
or sale to customers of motor vehicles of any kind, vessels, aircraft, 
farm equipment or mobile homes; the practice of law, accountancy, or 
medicine; auctioning of goods; chartering or operation of ships, buses, 
or aircraft; gaming of any kind (other than licensed parimutuel betting 
at race tracks); investment advisory services or investment banking 
services; real estate brokerage; pawn brokerage; title insurance and 
real estate closing; trade union activities; and any other activities 
that may be specified by FinCEN. A business that engages in multiple 
business activities may be treated as a non-listed business so long as 
no more than 50% of its gross revenues are derived from one or more of 
the ineligible business activities listed in this paragraph 
(d)(5)(viii).
    (ix) Exemptible accounts of a non-listed business or payroll 
customer. The exemptible accounts of a non-listed business or payroll 
customer include transaction accounts and money market deposit accounts. 
However, money market deposit accounts maintained other than in 
connection with a commercial

[[Page 426]]

enterprise are not exemptible accounts. A transaction account, for 
purposes of this paragraph (d), is any account described in section 
19(b)(1)(C) of the Federal Reserve Act, 12 U.S.C. 461(b)(1)(C), and its 
implementing regulations (12 CFR part 204). A money market deposit 
account, for purposes of this paragraph (d), is any interest-bearing 
account that is described as a money market deposit account in 12 CFR 
204.2(d)(2).
    (x) Documentation. The records maintained by a bank to document its 
compliance with and administration of the rules of this paragraph (d) 
shall be maintained in accordance with the provisions of Sec. 103.38.
    (6) Limitation on exemption. A transaction carried out by an exempt 
person as an agent for another person who is the beneficial owner of the 
funds that are the subject of a transaction in currency is not subject 
to the exemption from reporting contained in paragraph (d)(1) of this 
section.
    (7) Limitation on liability. (i) No bank shall be subject to penalty 
under this part for failure to file a report required by paragraph (b) 
of this section with respect to a transaction in currency by an exempt 
person with respect to which the requirements of this paragraph (d) have 
been satisfied, unless the bank:
    (A) Knowingly files false or incomplete information with respect to 
the transaction or the customer engaging in the transaction; or
    (B) Has reason to believe that the customer does not meet the 
criteria established by this paragraph (d) for treatment of the 
transactor as an exempt person or that the transaction is not a 
transaction of the exempt person.
    (ii) Subject to the specific terms of this paragraph (d), and absent 
any specific knowledge of information indicating that a customer no 
longer meets the requirements of an exempt person, a bank satisfies the 
requirements of this paragraph (d) to the extent it continues to treat 
that customer as an exempt person until the completion of that 
customer's next required periodic review, which as required by paragraph 
(d)(4) of this section for an exempt person described in paragraph 
(d)(2)(iv) to (vii) of this section, shall occur no less than once each 
year.
    (iii) A bank that files a report with respect to a currency 
transaction by an exempt person rather than treating such person as 
exempt shall remain subject, with respect to each such report, to the 
rules for filing reports, and the penalties for filing false or 
incomplete reports that are applicable to reporting of transactions in 
currency by persons other than exempt persons.
    (8) Obligations to file suspicious activity reports and maintain 
system for monitoring transactions in currency. (i) Nothing in this 
paragraph (d) relieves a bank of the obligation, or reduces in any way 
such bank's obligation, to file a report required by Sec. 103.18 with 
respect to any transaction, including any transaction in currency that a 
bank knows, suspects, or has reason to suspect is a transaction or 
attempted transaction that is described in Sec. 103.18(a)(2)(i), (ii), 
or (iii), or relieves a bank of any reporting or recordkeeping 
obligation imposed by this part (except the obligation to report 
transactions in currency pursuant to this section to the extent provided 
in this paragraph (d)). Thus, for example, a sharp increase from one 
year to the next in the gross total of currency transactions made by an 
exempt customer, or similarly anomalous transactions trends or patterns, 
may trigger the obligation of a bank under Sec. 103.18.
    (ii) Consistent with its annual review obligations under paragraph 
(d)(4)of this section, a bank shall establish and maintain a monitoring 
system that is reasonably designed to detect, for each account of a non-
listed business or payroll customer, those transactions in currency 
involving such account that would require a bank to file a suspicious 
transaction report. The statement in the preceding sentence with respect 
to accounts of non-listed business and payroll customers does not limit 
the obligation of banks generally to take the steps necessary to satisfy 
the terms of paragraph (d)(8)(i) of this section and Sec. 103.18 with 
respect to all exempt persons.
    (9) Revocation. Without any action on the part of the Department of 
the Treasury and subject to the limitation on liability contained in 
paragraph (d)(7)(ii) of this section:

[[Page 427]]

    (i) The status of an entity as an exempt person under paragraph 
(d)(2)(iv) of this section ceases once such entity ceases to be listed 
on the applicable stock exchange; and
    (ii) The status of a subsidiary as an exempt person under paragraph 
(d)(2)(v) of this section ceases once such subsidiary ceases to have at 
least 51 per cent of its common stock or analogous equity interest owned 
by a listed entity.

(Approved by the Office of Management and Budget under control number 
1506-0009)

[63 FR 50156, Sept. 21, 1998, as amended at 65 FR 46360, July 28, 2000; 
72 FR 35013, June 26, 2007; 73 FR 74016, Dec. 5, 2008]



Sec. 103.23  Reports of transportation of currency or monetary instruments.

    (a) Each person who physically transports, mails, or ships, or 
causes to be physically transported, mailed, or shipped, or attempts to 
physically transport, mail or ship, or attempts to cause to be 
physically transported, mailed or shipped, currency or other monetary 
instruments in an aggregate amount exceeding $10,000 at one time from 
the United States to any place outside the United States, or into the 
United States from any place outside the United States, shall make a 
report thereof. A person is deemed to have caused such transportation, 
mailing or shipping when he aids, abets, counsels, commands, procures, 
or requests it to be done by a financial institution or any other 
person.
    (b) Each person who receives in the U.S. currency or other monetary 
instruments in an aggregate amount exceeding $10,000 at one time which 
have been transported, mailed, or shipped to such person from any place 
outside the United States with respect to which a report has not been 
filed under paragraph (a) of this section, whether or not required to be 
filed thereunder, shall make a report thereof, stating the amount, the 
date of receipt, the form of monetary instruments, and the person from 
whom received.
    (c) This section shall not require reports by:
    (1) A Federal Reserve;
    (2) A bank, a foreign bank, or a broker or dealer in securities, in 
respect to currency or other monetary instruments mailed or shipped 
through the postal service or by common carrier;
    (3) A commercial bank or trust company organized under the laws of 
any State or of the United States with respect to overland shipments of 
currency or monetary instruments shipped to or received from an 
established customer maintaining a deposit relationship with the bank, 
in amounts which the bank may reasonably conclude do not exceed amounts 
commensurate with the customary conduct of the business, industry or 
profession of the customer concerned;
    (4) A person who is not a citizen or resident of the United States 
in respect to currency or other monetary instruments mailed or shipped 
from abroad to a bank or broker or dealer in securities through the 
postal service or by common carrier;
    (5) A common carrier of passengers in respect to currency or other 
monetary instruments in the possession of its passengers;
    (6) A common carrier of goods in respect to shipments of currency or 
monetary instruments not declared to be such by the shipper;
    (7) A travelers' check issuer or its agent in respect to the 
transportation of travelers' checks prior to their delivery to selling 
agents for eventual sale to the public;
    (8) By a person with respect to a restrictively endorsed traveler's 
check that is in the collection and reconciliation process after the 
traveler's check has been negotiated,
    (9) Nor by a person engaged as a business in the transportation of 
currency, monetary instruments and other commercial papers with respect 
to the transportation of currency or other monetary instruments overland 
between established offices of banks or brokers or dealers in securities 
and foreign persons.
    (d) A transfer of funds through normal banking procedures which does 
not involve the physical transportation of currency or monetary 
instruments is not required to be reported by this section. This section 
does not require that more than one report be filed covering a 
particular transportation, mailing or shipping of currency or other 
monetary

[[Page 428]]

instruments with respect to which a complete and truthful report has 
been filed by a person. However, no person required by paragraph (a) or 
(b) of this section to file a report shall be excused from liability for 
failure to do so if, in fact, a complete and truthful report has not 
been filed.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[37 FR 26517, Dec. 13, 1972, as amended at 50 FR 18479, May 1, 1985; 50 
FR 42693, Oct. 22, 1985; 53 FR 4138, Feb. 12, 1988; 54 FR 28418, July 6, 
1989]



Sec. 103.24  Reports of foreign financial accounts.

    (a) Each person subject to the jurisdiction of the United States 
(except a foreign subsidiary of a U.S. person) having a financial 
interest in, or signature or other authority over, a bank, securities or 
other financial account in a foreign country shall report such 
relationship to the Commissioner of the Internal Revenue for each year 
in which such relationship exists, and shall provide such information as 
shall be specified in a reporting form prescribed by the Secretary to be 
filed by such persons. Persons having a financial interest in 25 or more 
foreign financial accounts need only note that fact on the form. Such 
persons will be required to provide detailed information concerning each 
account when so requested by the Secretary or his delegate.

[42 FR 63774, Dec. 20, 1977, as amended at 52 FR 11443, Apr. 8, 1987; 52 
FR 12641, Apr. 17, 1987]



Sec. 103.25  Reports of transactions with foreign financial agencies.

    (a) Promulgation of reporting requirements. The Secretary, when he 
deems appropriate, may promulgate regulations requiring specified 
financial institutions to file reports of certain transactions with 
designated foreign financial agencies. If any such regulation is issued 
as a final rule without notice and opportunity for public comment, then 
a finding of good cause for dispensing with notice and comment in 
accordance with 5 U.S.C. 553(b) will be included in the regulation. If 
any such regulation is not published in the Federal Register, then any 
financial institution subject to the regulation will be named and 
personally served or otherwise given actual notice in accordance with 5 
U.S.C. 553(b). If a financial institution is given notice of a reporting 
requirement under this section by means other than publication in the 
Federal Register, the Secretary may prohibit disclosure of the existence 
or provisions of that reporting requirement to the designated foreign 
financial agency or agencies and to any other party.
    (b) Information subject to reporting requirements. A regulation 
promulgated pursuant to paragraph (a) of this section shall designate 
one or more of the following categories of information to be reported:
    (1) Checks or drafts, including traveler's checks, received by 
respondent financial institution for collection or credit to the account 
of a foreign financial agency, sent by respondent financial institution 
to a foreign country for collection or payment, drawn by respondent 
financial institution on a foreign financial agency, drawn by a foreign 
financial agency on respondent financial institution--including the 
following information.
    (i) Name of maker or drawer;
    (ii) Name of drawee or drawee financial institution;
    (iii) Name of payee;
    (iv) Date and amount of instrument;
    (v) Names of all endorsers.
    (2) Transmittal orders received by a respondent financial 
institution from a foreign financial agency or sent by respondent 
financial institution to a foreign financial agency, including all 
information maintained by that institution pursuant to Sec. 103.33.
    (3) Loans made by respondent financial institution to or through a 
foreign financial agency--including the following information:
    (i) Name of borrower;
    (ii) Name of person acting for borrower;
    (iii) Date and amount of loan;
    (iv) Terms of repayment;
    (v) Name of guarantor;
    (vi) Rate of interest;
    (vii) Method of disbursing proceeds;
    (viii) Collateral for loan.

[[Page 429]]

    (4) Commercial paper received or shipped by the respondent financial 
institution--including the following information:
    (i) Name of maker;
    (ii) Date and amount of paper;
    (iii) Due date;
    (iv) Certificate number;
    (v) Amount of transaction.
    (5) Stocks received or shipped by respondent financial institution--
including the following information:
    (i) Name of corporation;
    (ii) Type of stock;
    (iii) Certificate number;
    (iv) Number of shares;
    (v) Date of certificate;
    (vi) Name of registered holder;
    (vii) Amount of transaction.
    (6) Bonds received or shipped by respondent financial institution--
including the following information:
    (i) Name of issuer;
    (ii) Bond number;
    (iii) Type of bond series;
    (iv) Date issued;
    (v) Due date;
    (vi) Rate of interest;
    (vii) Amount of transaction;
    (viii) Name of registered holder.
    (7) Certificates of deposit received or shipped by respondent 
financial institution--including the following information:
    (i) Name and address of issuer;
    (ii) Date issued;
    (iii) Dollar amount;
    (iv) Name of registered holder;
    (v) Due date;
    (vi) Rate of interest;
    (vii) Certificate number;
    (viii) Name and address of issuing agent.
    (c) Scope of reports. In issuing regulations as provided in 
paragraph (a) of this section, the Secretary will prescribe:
    (1) A reasonable classification of financial institutions subject to 
or exempt from a reporting requirement;
    (2) A foreign country to which a reporting requirement applies if 
the Secretary decides that applying the requirement to all foreign 
countries is unnecessary or undesirable;
    (3) The magnitude of transactions subject to a reporting 
requirement; and
    (4) The kind of transaction subject to or exempt from a reporting 
requirement.
    (d) Form of reports. Regulations issued pursuant to paragraph (a) of 
this section may prescribe the manner in which the information is to be 
reported. However, the Secretary may authorize a designated financial 
institution to report in a different manner if the institution 
demonstrates to the Secretary that the form of the required report is 
unnecessarily burdensome on the institution as prescribed; that a report 
in a different form will provide all the information the Secretary deems 
necessary; and that submission of the information in a different manner 
will not unduly hinder the effective administration of this part.
    (e) Limitations. (1) In issuing regulations under paragraph (a) of 
this section, the Secretary shall consider the need to avoid impeding or 
controlling the export or import of monetary instruments and the need to 
avoid burdening unreasonably a person making a transaction with a 
foreign financial agency.
    (2) The Secretary shall not issue a regulation under paragraph (a) 
of this section for the purpose of obtaining individually identifiable 
account information concerning a customer, as defined by the Right to 
Financial Privacy Act (12 U.S.C. 3401 et seq.), where that customer is 
already the subject of an ongoing investigation for possible violation 
of the Currency and Foreign Transactions Reporting Act, or is known by 
the Secretary to be the subject of an investigation for possible 
violation of any other Federal law.
    (3) The Secretary may issue a regulation pursuant to paragraph (a) 
of this section requiring a financial institution to report transactions 
completed prior to the date it received notice of the reporting 
requirement. However, with respect to completed transactions, a 
financial institution may be required to provide information only from 
records required to be maintained pursuant to Subpart C of this part, or 
any other provision of state or Federal law, or otherwise maintained in 
the regular course of business.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[50 FR 27824, July 8, 1985, as amended at 53 FR 10073, Mar. 29, 1988; 60 
FR 229, Jan. 3, 1995]

[[Page 430]]



Sec. 103.26  Reports of certain domestic coin and currency transactions.

    (a) If the Secretary of the Treasury finds, upon the Secretary's own 
initiative or at the request of an appropriate Federal or State law 
enforcement official, that reasonable grounds exist for concluding that 
additional recordkeeping and/or reporting requirements are necessary to 
carry out the purposes of this part and to prevent persons from evading 
the reporting/recordkeeping requirements of this part, the Secretary may 
issue an order requiring any domestic financial institution or group of 
domestic financial institutions in a geographic area and any other 
person participating in the type of transaction to file a report in the 
manner and to the extent specified in such order. The order shall 
contain such information as the Secretary may describe concerning any 
transaction in which such financial institution is involved for the 
payment, receipt, or transfer of United States coins or currency (or 
such other monetary instruments as the Secretary may describe in such 
order) the total amounts or denominations of which are equal to or 
greater than an amount which the Secretary may prescribe.
    (b) An order issued under paragraph (a) of this section shall be 
directed to the Chief Executive Officer of the financial institution and 
shall designate one or more of the following categories of information 
to be reported: Each deposit, withdrawal, exchange of currency or other 
payment or transfer, by, through or to such financial institution 
specified in the order, which involves all or any class of transactions 
in currency and/or monetary instruments equal to or exceeding an amount 
to be specified in the order.
    (c) In issuing an order under paragraph (a) of this section, the 
Secretary will prescribe:
    (1) The dollar amount of transactions subject to the reporting 
requirement in the order;
    (2) The type of transaction or transactions subject to or exempt 
from a reporting requirement in the order;
    (3) The appropriate form for reporting the transactions required in 
the order;
    (4) The address to which reports required in the order are to be 
sent or from which they will be picked up;
    (5) The starting and ending dates by which such transactions 
specified in the order are to be reported;
    (6) The name of a Treasury official to be contacted for any 
additional information or questions;
    (7) The amount of time the reports and records of reports generated 
in response to the order will have to be retained by the financial 
institution; and
    (8) Any other information deemed necessary to carry out the purposes 
of the order.
    (d)(1) No order issued pursuant to paragraph (a) of this section 
shall prescribe a reporting period of more than 60 days unless renewed 
pursuant to the requirements of paragraph (a).
    (2) Any revisions to an order issued under this section will not be 
effective until made in writing by the Secretary.
    (3) Unless otherwise specified in the order, a bank receiving an 
order under this section may continue to use the exemptions granted 
under Sec. 103.22 of this part prior to the receipt of the order, but 
may not grant additional exemptions.
    (4) For purposes of this section, the term geographic area means any 
area in one or more States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, the Commonwealth of the Northern Mariana Islands, 
American Samoa, the Trust Territory of the Pacific Islands, the 
territories and possessions of the United States, and/or political 
subdivision or subdivisions thereof, as specified in an order issued 
pursuant to paragraph (a) of this section.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[54 FR 33679, Aug. 16, 1989]



Sec. 103.27  Filing of reports.

    (a)(1) A report required by Sec. 103.22(a) shall be filed by the 
financial institution within 15 days following the day on which the 
reportable transaction occurred.
    (2) A report required by Sec. 103.22(g) shall be filed by the bank 
within 15 days after receiving a request for the report.

[[Page 431]]

    (3) A copy of each report filed pursuant to Sec. 103.22 shall be 
retained by the financial institution for a period of five years from 
the date of the report.
    (4) All reports required to be filed by Sec. 103.22 shall be filed 
with the Commissioner of Internal Revenue, unless otherwise specified.
    (b)(1) A report required by Sec. 103.23(a) shall be filed at the 
time of entry into the United States or at the time of departure, 
mailing or shipping from the United States, unless otherwise specified 
by the Commissioner of Customs.
    (2) A report required by Sec. 103.23(b) shall be filed within 15 
days after receipt of the currency or other monetary instruments.
    (3) All reports required by Sec. 103.23 shall be filed with the 
Customs officer in charge at any port of entry or departure, or as 
otherwise specified by the Commissioner of Customs. Reports required by 
Sec. 103.23(a) for currency or other monetary instruments not 
physically accompanying a person entering or departing from the United 
States, may be filed by mail on or before the date of entry, departure, 
mailing or shipping. All reports required by Sec. 103.23(b) may also be 
filed by mail. Reports filed by mail shall be addressed to the 
Commissioner of Customs, Attention: Currency Transportation Reports, 
Washington, DC 20229.
    (c) Reports required to be filed by Sec. 103.24 shall be filed with 
the Commissioner of Internal Revenue on or before June 30 of each 
calendar year with respect to foreign financial accounts exceeding 
$10,000 maintained during the previous calendar year.
    (d) Reports required by Sec. 103.22, Sec. 103.23 or Sec. 103.24 
shall be filed on forms prescribed by the Secretary. All information 
called for in such forms shall be furnished.
    (e) Forms to be used in making the reports required by Sec. Sec. 
103.22 and 103.24 may be obtained from the Internal Revenue Service. 
Forms to be used in making the reports required by Sec. 103.23 may be 
obtained from the U.S. Customs Service.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[52 FR 11443, Apr. 8, 1987; 52 FR 12641, Apr. 17, 1987, as amended at 53 
FR 4138, Feb. 12, 1988. Redesignated at 54 FR 33678, Aug. 16, 1989]



Sec. 103.28  Identification required.

    Before concluding any transaction with respect to which a report is 
required under Sec. 103.22, a financial institution shall verify and 
record the name and address of the individual presenting a transaction, 
as well as record the identity, account number, and the social security 
or taxpayer identification number, if any, of any person or entity on 
whose behalf such transaction is to be effected. Verification of the 
identity of an individual who indicates that he or she is an alien or is 
not a resident of the United States must be made by passport, alien 
identification card, or other official document evidencing nationality 
or residence (e.g., a Provincial driver's license with indication of 
home address). Verification of identity in any other case shall be made 
by examination of a document, other than a bank signature card, that is 
normally acceptable within the banking community as a means of 
identification when cashing checks for nondepositors (e.g., a drivers 
license or credit card). A bank signature card may be relied upon only 
if it was issued after documents establishing the identity of the 
individual were examined and notation of the specific information was 
made on the signature card. In each instance, the specific identifying 
information (i.e., the account number of the credit card, the driver's 
license number, etc.) used in verifying the identity of the customer 
shall be recorded on the report, and the mere notation of ``known 
customer'' or ``bank signature card on file'' on the report is 
prohibited.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[52 FR 11443, Apr. 8, 1987; 52 FR 12641, Apr. 17, 1987, as amended at 54 
FR 3027, Jan. 23, 1989. Redesignated at 54 FR 33678, Aug. 16, 1989; 59 
FR 61662, Dec. 1, 1994]



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

[[Page 432]]

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.

[59 FR 52252, Oct. 17, 1994]



Sec. 103.30  Reports relating to currency in excess of $10,000 received in a 

trade or business.

    (a) Reporting requirement--(1) Reportable transactions--(i) In 
general. Any person (solely for purposes of section 5331 of title 31, 
United States Code and this section, ``person'' shall have the same 
meaning as under 26 U.S.C. 7701 (a)(1)) who, in the course of a trade or 
business in which such person is engaged, receives currency in excess of 
$10,000 in 1 transaction (or 2 or more related transactions) shall, 
except as otherwise provided, make a report of information with respect 
to the receipt of currency. This section does not apply to amounts 
received in a transaction reported under 31 U.S.C. 5313 and Sec. 
103.22.
    (ii) Certain financial transactions. Section 6050I of title 26 of 
the United States Code requires persons to report information about 
financial transactions to the IRS, and 31 U.S.C. 5331

[[Page 433]]

requires persons to report similar information about certain 
transactions to the Financial Crimes Enforcement Network. This 
information shall be reported on the same form as prescribed by the 
Secretary.
    (2) Currency received for the account of another. Currency in excess 
of $10,000 received by a person for the account of another must be 
reported under this section. Thus, for example, a person who collects 
delinquent accounts receivable for an automobile dealer must report with 
respect to the receipt of currency in excess of $10,000 from the 
collection of a particular account even though the proceeds of the 
collection are credited to the account of the automobile dealer (i.e., 
where the rights to the proceeds from the account are retained by the 
automobile dealer and the collection is made on a fee-for-service 
basis).
    (3) Currency received by agents--(i) General rule. Except as 
provided in paragraph (a)(3)(ii) of this section, a person who in the 
course of a trade or business acts as an agent (or in some other similar 
capacity) and receives currency in excess of $10,000 from a principal 
must report the receipt of currency under this section.
    (ii) Exception. An agent who receives currency from a principal and 
uses all of the currency within 15 days in a currency transaction (the 
``second currency transaction'') which is reportable under section 5312 
of title 31, or 31 U.S.C. 5331 and this section, and who discloses the 
name, address, and taxpayer identification number of the principal to 
the recipient in the second currency transaction need not report the 
initial receipt of currency under this section. An agent will be deemed 
to have met the disclosure requirements of this paragraph (a)(3)(ii) if 
the agent discloses only the name of the principal and the agent knows 
that the recipient has the principal's address and taxpayer 
identification number.
    (iii) Example. The following example illustrates the application of 
the rules in paragraphs (a)(3)(i) and (ii) of this section:

    Example. B, the principal, gives D, an attorney, $75,000 in currency 
to purchase real property on behalf of B. Within 15 days D purchases 
real property for currency from E, a real estate developer, and 
discloses to E, B's name, address, and taxpayer identification number. 
Because the transaction qualifies for the exception provided in 
paragraph (a)(3)(ii) of this section, D need not report with respect to 
the initial receipt of currency under this section. The exception does 
not apply, however, if D pays E by means other than currency, or effects 
the purchase more than 15 days following receipt of the currency from B, 
or fails to disclose B's name, address, and taxpayer identification 
number (assuming D does not know that E already has B's address and 
taxpayer identification number), or purchases the property from a person 
whose sale of the property is not in the course of that person's trade 
or business. In any such case, D is required to report the receipt of 
currency from B under this section.

    (b) Multiple payments. The receipt of multiple currency deposits or 
currency installment payments (or other similar payments or prepayments) 
relating to a single transaction (or two or more related transactions), 
is reported as set forth in paragraphs (b)(1) through (b)(3) of this 
section.
    (1) Initial payment in excess of $10,000. If the initial payment 
exceeds $10,000, the recipient must report the initial payment within 15 
days of its receipt.
    (2) Initial payment of $10,000 or less. If the initial payment does 
not exceed $10,000, the recipient must aggregate the initial payment and 
subsequent payments made within one year of the initial payment until 
the aggregate amount exceeds $10,000, and report with respect to the 
aggregate amount within 15 days after receiving the payment that causes 
the aggregate amount to exceed $10,000.
    (3) Subsequent payments. In addition to any other required report, a 
report must be made each time that previously unreportable payments made 
within a 12-month period with respect to a single transaction (or two or 
more related transactions), individually or in the aggregate, exceed 
$10,000. The report must be made within 15 days after receiving the 
payment in excess of $10,000 or the payment that causes the aggregate 
amount received in the 12-month period to exceed $10,000. (If more than 
one report would otherwise be required for multiple currency payments 
within a 15-day period that relate to a single transaction (or two or 
more related transactions), the recipient may

[[Page 434]]

make a single combined report with respect to the payments. The combined 
report must be made no later than the date by which the first of the 
separate reports would otherwise be required to be made.)
    (4) Example. The following example illustrates the application of 
the rules in paragraphs (b)(1) through (b)(3) of this section:

    Example. On January 10, Year 1, M receives an initial payment in 
currency of $11,000 with respect to a transaction. M receives subsequent 
payments in currency with respect to the same transaction of $4,000 on 
February 15, Year 1, $6,000 on March 20, Year 1, and $12,000 on May 15, 
Year 1. M must make a report with respect to the payment received on 
January 10, Year 1, by January 25, Year 1. M must also make a report 
with respect to the payments totaling $22,000 received from February 15, 
Year 1, through May 15, Year 1. This report must be made by May 30, Year 
1, that is, within 15 days of the date that the subsequent payments, all 
of which were received within a 12-month period, exceeded $10,000.

    (c) Meaning of terms. The following definitions apply for purposes 
of this section--
    (1) Currency. Solely for purposes of 31 U.S.C. 5331 and this 
section, currency means--
    (i) The coin and currency of the United States or of any other 
country, which circulate in and are customarily used and accepted as 
money in the country in which issued; and
    (ii) A cashier's check (by whatever name called, including 
``treasurer's check'' and ``bank check''), bank draft, traveler's check, 
or money order having a face amount of not more than $10,000--
    (A) Received in a designated reporting transaction as defined in 
paragraph (c)(2) of this section (except as provided in paragraphs 
(c)(3), (4), and (5) of this section), or
    (B) Received in any transaction in which the recipient knows that 
such instrument is being used in an attempt to avoid the reporting of 
the transaction under section 5331 and this section.
    (2) Designated reporting transaction. A designated reporting 
transaction is a retail sale (or the receipt of funds by a broker or 
other intermediary in connection with a retail sale) of--
    (i) A consumer durable, (ii) A collectible, or
    (iii) A travel or entertainment activity.
    (3) Exception for certain loans. A cashier's check, bank draft, 
traveler's check, or money order received in a designated reporting 
transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument constitutes the proceeds 
of a loan from a bank. The recipient may rely on a copy of the loan 
document, a written statement from the bank, or similar documentation 
(such as a written lien instruction from the issuer of the instrument) 
to substantiate that the instrument constitutes loan proceeds.
    (4) Exception for certain installment sales. A cashier's check, bank 
draft, traveler's check, or money order received in a designated 
reporting transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument is received in payment 
on a promissory note or an installment sales contract (including a lease 
that is considered to be a sale for Federal income tax purposes). 
However, the preceding sentence applies only if--
    (i) Promissory notes or installment sales contracts with the same or 
substantially similar terms are used in the ordinary course of the 
recipient's trade or business in connection with sales to ultimate 
consumers; and
    (ii) The total amount of payments with respect to the sale that are 
received on or before the 60th day after the date of the sale does not 
exceed 50 percent of the purchase price of the sale.
    (5) Exception for certain down payment plans. A cashier's check, 
bank draft, traveler's check, or money order received in a designated 
reporting transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument is received pursuant to 
a payment plan requiring one or more down payments and the payment of 
the balance of the purchase price by a date no later than the date of 
the sale (in the case of an item of travel or entertainment, a date no 
later than the earliest date that any

[[Page 435]]

item of travel or entertainment pertaining to the same trip or event is 
furnished). However, the preceding sentence applies only if--
    (i) The recipient uses payment plans with the same or substantially 
similar terms in the ordinary course of its trade or business in 
connection with sales to ultimate consumers; and
    (ii) The instrument is received more than 60 days prior to the date 
of the sale (in the case of an item of travel or entertainment, the date 
on which the final payment is due).
    (6) Examples. The following examples illustrate the definition of 
``currency'' set forth in paragraphs (c)(1) through (c)(5) of this 
section:

    Example 1. D, an individual, purchases gold coins from M, a coin 
dealer, for $13,200. D tenders to M in payment United States currency in 
the amount of $6,200 and a cashier's check in the face amount of $7,000 
which D had purchased. Because the sale is a designated reporting 
transaction, the cashier's check is treated as currency for purposes of 
31 U.S.C. 5331 and this section. Therefore, because M has received more 
than $10,000 in currency with respect to the transaction, M must make 
the report required by 31 U.S.C. 5331 and this section.
    Example 2. E, an individual, purchases an automobile from Q, an 
automobile dealer, for $11,500. E tenders to Q in payment United States 
currency in the amount of $2,000 and a cashier's check payable to E and 
Q in the amount of $9,500. The cashier's check constitutes the proceeds 
of a loan from the bank issuing the check. The origin of the proceeds is 
evident from provisions inserted by the bank on the check that instruct 
the dealer to cause a lien to be placed on the vehicle as security for 
the loan. The sale of the automobile is a designated reporting 
transaction. However, under paragraph (c)(3) of this section, because E 
has furnished Q documentary information establishing that the cashier's 
check constitutes the proceeds of a loan from the bank issuing the 
check, the cashier's check is not treated as currency pursuant to 
paragraph (c)(1)(ii)(A) of this section.
    Example 3. F, an individual, purchases an item of jewelry from S, a 
retail jeweler, for $12,000. F gives S traveler's checks totaling $2,400 
and pays the balance with a personal check payable to S in the amount of 
$9,600. Because the sale is a designated reporting transaction, the 
traveler's checks are treated as currency for purposes of section 5331 
and this section. However, because the personal check is not treated as 
currency for purposes of section 5331 and this section, S has not 
received more than $10,000 in currency in the transaction and no report 
is required to be filed under section 5331 and this section.
    Example 4. G, an individual, purchases a boat from T, a boat dealer, 
for $16,500. G pays T with a cashier's check payable to T in the amount 
of $16,500. The cashier's check is not treated as currency because the 
face amount of the check is more than $10,000. Thus, no report is 
required to be made by T under section 5331 and this section.
    Example 5. H, an individual, arranges with W, a travel agent, for 
the chartering of a passenger aircraft to transport a group of 
individuals to a sports event in another city. H also arranges with W 
for hotel accommodations for the group and for admission tickets to the 
sports event. In payment, H tenders to W money orders which H had 
previously purchased. The total amount of the money orders, none of 
which individually exceeds $10,000 in face amount, exceeds $10,000. 
Because the transaction is a designated reporting transaction, the money 
orders are treated as currency for purposes of section 5331 and this 
section. Therefore, because W has received more than $10,000 in currency 
with respect to the transaction, W must make the report required by 
section 5331 and this section.

    (7) Consumer durable. The term consumer durable means an item of 
tangible personal property of a type that is suitable under ordinary 
usage for personal consumption or use, that can reasonably be expected 
to be useful for at least 1 year under ordinary usage, and that has a 
sales price of more than $10,000. Thus, for example, a $20,000 
automobile is a consumer durable (whether or not it is sold for business 
use), but a $20,000 dump truck or a $20,000 factory machine is not.
    (8) Collectible. The term collectible means an item described in 
paragraphs (A) through (D) of section 408 (m)(2) of title 26 of the 
United States Code (determined without regard to section 408 (m)(3) of 
title 26 of the United States Code).
    (9) Travel or entertainment activity. The term travel or 
entertainment activity means an item of travel or entertainment (within 
the meaning of 26 CFR 1.274-2(b)(1)) pertaining to a single trip or 
event where the aggregate sales price of the item and all other items 
pertaining to the same trip or event that are sold in the same 
transaction (or related transactions) exceeds $10,000.
    (10) Retail sale. The term retail sale means any sale (whether for 
resale or

[[Page 436]]

for any other purpose) made in the course of a trade or business if that 
trade or business principally consists of making sales to ultimate 
consumers.
    (11) Trade or business. The term trade or business has the same 
meaning as under section 162 of title 26, United States Code.
    (12) Transaction. (i) Solely for purposes of 31 U.S.C. 5331 and this 
section, the term transaction means the underlying event precipitating 
the payer's transfer of currency to the recipient. In this context, 
transactions include (but are not limited to) a sale of goods or 
services; a sale of real property; a sale of intangible property; a 
rental of real or personal property; an exchange of currency for other 
currency; the establishment or maintenance of or contribution to a 
custodial, trust, or escrow arrangement; a payment of a preexisting 
debt; a conversion of currency to a negotiable instrument; a 
reimbursement for expenses paid; or the making or repayment of a loan. A 
transaction may not be divided into multiple transactions in order to 
avoid reporting under this section.
    (ii) The term related transactions means any transaction conducted 
between a payer (or its agent) and a recipient of currency in a 24-hour 
period. Additionally, transactions conducted between a payer (or its 
agent) and a currency recipient during a period of more than 24 hours 
are related if the recipient knows or has reason to know that each 
transaction is one of a series of connected transactions.
    (iii) The following examples illustrate the definition of paragraphs 
(c)(12) (i) and (ii) of this section:

    Example 1. A person has a tacit agreement with a gold dealer to 
purchase $36,000 in gold bullion. The $36,000 purchase represents a 
single transaction under paragraph (c)(12)(i) of this section and the 
reporting requirements of this section cannot be avoided by recasting 
the single sales transaction into 4 separate $9,000 sales transactions.
    Example 2. An attorney agrees to represent a client in a criminal 
case with the attorney's fee to be determined on an hourly basis. In the 
first month in which the attorney represents the client, the bill for 
the attorney's services comes to $8,000 which the client pays in 
currency. In the second month in which the attorney represents the 
client, the bill for the attorney's services comes to $4,000, which the 
client again pays in currency. The aggregate amount of currency paid 
($12,000) relates to a single transaction as defined in paragraph 
(c)(12)(i) of this section, the sale of legal services relating to the 
criminal case, and the receipt of currency must be reported under this 
section.
    Example 3. A person intends to contribute a total of $45,000 to a 
trust fund, and the trustee of the fund knows or has reason to know of 
that intention. The $45,000 contribution is a single transaction under 
paragraph (c)(12)(i) of this section and the reporting requirement of 
this section cannot be avoided by the grantor's making five separate 
$9,000 contributions of currency to a single fund or by making five 
$9,000 contributions of currency to five separate funds administered by 
a common trustee.
    Example 4. K, an individual, attends a one day auction and purchases 
for currency two items, at a cost of $9,240 and $1,732.50 respectively 
(tax and buyer's premium included). Because the transactions are related 
transactions as defined in paragraph (c)(12)(ii) of this section, the 
auction house is required to report the aggregate amount of currency 
received from the related sales ($10,972.50), even though the auction 
house accounts separately on its books for each item sold and presents 
the purchaser with separate bills for each item purchased.
    Example 5. F, a coin dealer, sells for currency $9,000 worth of gold 
coins to an individual on three successive days. Under paragraph 
(c)(12)(ii) of this section the three $9,000 transactions are related 
transactions aggregating $27,000 if F knows, or has reason to know, that 
each transaction is one of a series of connected transactions.

    (13) Recipient. (i) The term recipient means the person receiving 
the currency. Except as provided in paragraph (c)(13)(ii) of this 
section, each store, division, branch, department, headquarters, or 
office (``branch'') (regardless of physical location) comprising a 
portion of a person's trade or business shall for purposes of this 
section be deemed a separate recipient.
    (ii) A branch that receives currency payments will not be deemed a 
separate recipient if the branch (or a central unit linking such branch 
with other branches) would in the ordinary course of business have 
reason to know the identity of payers making currency payments to other 
branches of such person.
    (iii) Examples. The following examples illustrate the application of 
the rules in paragraphs (c)(13)(i) and (ii) of this section:


[[Page 437]]


    Example 1. N, an individual, purchases regulated futures contracts 
at a cost of $7,500 and $5,000, respectively, through two different 
branches of Commodities Broker X on the same day. N pays for each 
purchase with currency. Each branch of Commodities Broker X transmits 
the sales information regarding each of N's purchases to a central unit 
of Commodities Broker X (which settles the transactions against N's 
account). Under paragraph (c)(13)(ii) of this section the separate 
branches of Commodities Broker X are not deemed to be separate 
recipients; therefore, Commodities Broker X must report with respect to 
the two related regulated futures contracts sales in accordance with 
this section.
    Example 2. P, a corporation, owns and operates a racetrack. P's 
racetrack contains 100 betting windows at which pari-mutuel wagers may 
be made. R, an individual, places currency wagers of $3,000 each at five 
separate betting windows. Assuming that in the ordinary course of 
business each betting window (or a central unit linking windows) does 
not have reason to know the identity of persons making wagers at other 
betting windows, each betting window would be deemed to be a separate 
currency recipient under paragraph (c)(13)(i) of this section. As no 
individual recipient received currency in excess of $10,000, no report 
need be made by P under this section.

    (d) Exceptions to the reporting requirements of 31 U.S.C. 5331--(1) 
Receipt of currency by certain casinos having gross annual gaming 
revenue in excess of $1,000,000--(i) In general. If a casino receives 
currency in excess of $10,000 and is required to report the receipt of 
such currency directly to the Treasury Department under Sec. Sec. 
103.22 (a)(2) and 103.25 and is subject to the recordkeeping 
requirements of Sec. 103.36, then the casino is not required to make a 
report with respect to the receipt of such currency under 31 U.S.C. 5331 
and this section.
    (ii) Casinos exempt under Sec. 103.55(c). Pursuant to Sec. 103.55, 
the Secretary may exempt from the reporting and recordkeeping 
requirements under Sec. Sec. 103.22, 103.25 and 103.36 casinos in any 
state whose regulatory system substantially meets the reporting and 
recordkeeping requirements of this part. Such casinos shall not be 
required to report receipt of currency under 31 U.S.C. 5331 and this 
section.
    (iii) Reporting of currency received in a nongaming business. 
Nongaming businesses (such as shops, restaurants, entertainment, and 
hotels) at casino hotels and resorts are separate trades or businesses 
in which the receipt of currency in excess of $10,000 is reportable 
under section 5331 and these regulations. Thus, a casino exempt under 
paragraph (d)(1)(i) or (ii) of this section must report with respect to 
currency in excess of $10,000 received in its nongaming businesses.
    (iv) Example. The following example illustrates the application of 
the rules in paragraphs (d)(2) (i) and (iii) of this section:

    Example. A and B are casinos having gross annual gaming revenue in 
excess of $1,000,000. C is a casino with gross annual gaming revenue of 
less than $1,000,000. Casino A receives $15,000 in currency from a 
customer with respect to a gaming transaction which the casino reports 
to the Treasury Department under Sec. Sec. 103.22(a)(2) and 103.25. 
Casino B receives $15,000 in currency from a customer in payment for 
accommodations provided to that customer at Casino B's hotel. Casino C 
receives $15,000 in currency from a customer with respect to a gaming 
transaction. Casino A is not required to report the transaction under 31 
U.S.C. 5331 or this section because the exception for certain casinos 
provided in paragraph (d)(1)(i) of this section (``the casino 
exception'') applies. Casino B is required to report under 31 U.S.C. 
5331 and this section because the casino exception does not apply to the 
receipt of currency from a nongaming activity. Casino C is required to 
report under 31 U.S.C. 5331 and this section because the casino 
exception does not apply to casinos having gross annual gaming revenue 
of $1,000,000 or less which do not have to report to the Treasury 
Department under Sec. Sec. 103.22(a)(2) and 103.25.

    (2) Receipt of currency not in the course of the recipient's trade 
or business. The receipt of currency in excess of $10,000 by a person 
other than in the course of the person's trade or business is not 
reportable under 31 U.S.C. 5331. Thus, for example, F, an individual in 
the trade or business of selling real estate, sells a motorboat for 
$12,000, the purchase price of which is paid in currency. F did not use 
the motorboat in any trade or business in which F was engaged. F is not 
required to report under 31 U.S.C. 5331 or this section because the 
exception provided in this paragraph (d)(2) applies.
    (3) Receipt is made with respect to a foreign currency transaction--
(i) In general. Generally, there is no requirement to report with 
respect to a currency

[[Page 438]]

transaction if the entire transaction occurs outside the United States 
(the fifty states and the District of Columbia). An entire transaction 
consists of both the transaction as defined in paragraph (c)(12)(i) of 
this section and the receipt of currency by the recipient. If, however, 
any part of an entire transaction occurs in the Commonwealth of Puerto 
Rico or a possession or territory of the United States and the recipient 
of currency in that transaction is subject to the general jurisdiction 
of the Internal Revenue Service under title 26 of the United States 
Code, the recipient is required to report the transaction under this 
section.
    (ii) Example. The following example illustrates the application of 
the rules in paragraph (d)(3)(i) of this section:

    Example. W, an individual engaged in the trade or business of 
selling aircraft, reaches an agreement to sell an airplane to a U.S. 
citizen living in Mexico. The agreement, no portion of which is 
formulated in the United States, calls for a purchase price of $125,000 
and requires delivery of and payment for the airplane to be made in 
Mexico. Upon delivery of the airplane in Mexico, W receives $125,000 in 
currency. W is not required to report under 31 U.S.C. 5331 or this 
section because the exception provided in paragraph (d)(3)(i) of this 
section (``foreign transaction exception'') applies. If, however, any 
part of the agreement to sell had been formulated in the United States, 
the foreign transaction exception would not apply and W would be 
required to report the receipt of currency under 31 U.S.C. 5331 and this 
section.

    (e) Time, manner, and form of reporting--(1) In general. The reports 
required by paragraph (a) of this section must be made by filing a Form 
8300, as specified in 26 CFR 1.6050I-1(e)(2). The reports must be filed 
at the time and in the manner specified in 26 CFR 1.6050I-1(e)(1) and 
(3) respectively.
    (2) Verification. A person making a report of information under this 
section must verify the identity of the person from whom the reportable 
currency is received. Verification of the identity of a person who 
purports to be an alien must be made by examination of such person's 
passport, alien identification card, or other official document 
evidencing nationality or residence. Verification of the identity of any 
other person may be made by examination of a document normally 
acceptable as a means of identification when cashing or accepting checks 
(for example, a driver's license or a credit card). In addition, a 
report will be considered incomplete if the person required to make a 
report knows (or has reason to know) that an agent is conducting the 
transaction for a principal, and the return does not identify both the 
principal and the agent.
    (3) Retention of reports. A person required to make a report under 
this section must keep a copy of each report filed for five years from 
the date of filing.

[66 FR 67681, Dec. 31, 2001]



               Subpart C_Records Required To Be Maintained



Sec. 103.31  Determination by the Secretary.

    The Secretary hereby determines that the records required to be kept 
by this subpart have a high degree of usefulness in criminal, tax, or 
regulatory investigations or proceedings.



Sec. 103.32  Records to be made and retained by persons having financial 

interests in foreign financial accounts.

    Records of accounts required by Sec. 103.24 to be reported to the 
Commissioner of Internal Revenue shall be retained by each person having 
a financial interest in or signature or other authority over any such 
account. Such records shall contain the name in which each such account 
is maintained, the number or other designation of such account, the name 
and address of the foreign bank or other person with whom such account 
is maintained, the type of such account, and the maximum value of each 
such account during the reporting period. Such records shall be retained 
for a period of 5 years and shall be kept at all times available for 
inspection as authorized by law. In the computation of the period of 5 
years, there shall be disregarded any period beginning with a date on 
which the taxpayer is indicted or information instituted on account of 
the filing of a false or fraudulent Federal income tax return or failing 
to file

[[Page 439]]

a Federal income tax return, and ending with the date on which final 
disposition is made of the criminal proceeding.

[37 FR 6912, Apr. 5, 1972, as amended at 52 FR 11444, Apr. 8, 1987]



Sec. 103.33  Records to be made and retained by financial institutions.

    Each financial institution shall retain either the original or a 
microfilm or other copy or reproduction of each of the following:
    (a) A record of each extension of credit in an amount in excess of 
$10,000, except an extension of credit secured by an interest in real 
property, which record shall contain the name and address of the person 
to whom the extension of credit is made, the amount thereof, the nature 
or purpose thereof, and the date thereof;
    (b) A record of each advice, request, or instruction received or 
given regarding any transaction resulting (or intended to result and 
later canceled if such a record is normally made) in the transfer of 
currency or other monetary instruments, funds, checks, investment 
securities, or credit, of more than $10,000 to or from any person, 
account, or place outside the United States.
    (c) A record of each advice, request, or instruction given to 
another financial institution or other person located within or without 
the United States, regarding a transaction intended to result in the 
transfer of funds, or of currency, other monetary instruments, checks, 
investment securities, or credit, of more than $10,000 to a person, 
account or place outside the United States.
    (d) A record of such information for such period of time as the 
Secretary may require in an order issued under Sec. 103.26(a), not to 
exceed five years.
    (e) Banks. Each agent, agency, branch, or office located within the 
United States of a bank is subject to the requirements of this paragraph 
(e) with respect to a funds transfer in the amount of $3,000 or more:
    (1) Recordkeeping requirements. (i) For each payment order that it 
accepts as an originator's bank, a bank shall obtain and retain either 
the original or a microfilm, other copy, or electronic record of the 
following information relating to the payment order:
    (A) The name and address of the originator;
    (B) The amount of the payment order;
    (C) The execution date of the payment order;
    (D) Any payment instructions received from the originator with the 
payment order;
    (E) The identity of the beneficiary's bank; and
    (F) As many of the following items as are received with the payment 
order: \1\
---------------------------------------------------------------------------

    \1\ For funds transfers effected through the Federal Reserve's 
Fedwire funds transfer system, only one of the items is required to be 
retained, if received with the payment order, until such time as the 
bank that sends the order to the Federal Reserve Bank completes its 
conversion to the expanded Fedwire message format.
---------------------------------------------------------------------------

    (1) The name and address of the beneficiary;
    (2) The account number of the beneficiary; and
    (3) Any other specific identifier of the beneficiary.
    (ii) For each payment order that it accepts as an intermediary bank, 
a bank shall retain either the original or a microfilm, other copy, or 
electronic record of the payment order.
    (iii) For each payment order that it accepts as a beneficiary's 
bank, a bank shall retain either the original or a microfilm, other 
copy, or electronic record of the payment order.
    (2) Originators other than established customers. In the case of a 
payment order from an originator that is not an established customer, in 
addition to obtaining and retaining the information required in 
paragraph (e)(1)(i) of this section:
    (i) If the payment order is made in person, prior to acceptance the 
originator's bank shall verify the identity of the person placing the 
payment order. If it accepts the payment order, the originator's bank 
shall obtain and retain a record of the name and address, the type of 
identification reviewed, the number of the identification document 
(e.g., driver's license), as well as a record of the person's taxpayer 
identification number (e.g., social security or employer identification 
number) or, if

[[Page 440]]

none, alien identification number or passport number and country of 
issuance, or a notation in the record of the lack thereof. If the 
originator's bank has knowledge that the person placing the payment 
order is not the originator, the originator's bank shall obtain and 
retain a record of the originator's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person placing the order, or a notation in the record of 
the lack thereof.
    (ii) If the payment order accepted by the originator's bank is not 
made in person, the originator's bank shall obtain and retain a record 
of name and address of the person placing the payment order, as well as 
the person's taxpayer identification number (e.g., social security or 
employer identification number) or, if none, alien identification number 
or passport number and country of issuance, or a notation in the record 
of the lack thereof, and a copy or record of the method of payment 
(e.g., check or credit card transaction) for the funds transfer. If the 
originator's bank has knowledge that the person placing the payment 
order is not the originator, the originator's bank shall obtain and 
retain a record of the originator's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person placing the order, or a notation in the record of 
the lack thereof.
    (3) Beneficiaries other than established customers. For each payment 
order that it accepts as a beneficiary's bank for a beneficiary that is 
not an established customer, in addition to obtaining and retaining the 
information required in paragraph (e)(1)(iii) of this section:
    (i) if the proceeds are delivered in person to the beneficiary or 
its representative or agent, the beneficiary's bank shall verify the 
identity of the person receiving the proceeds and shall obtain and 
retain a record of the name and address, the type of identification 
reviewed, and the number of the identification document (e.g., driver's 
license), as well as a record of the person's taxpayer identification 
number (e.g., social security or employer identification number) or, if 
none, alien identification number or passport number and country of 
issuance, or a notation in the record of the lack thereof. If the 
beneficiary's bank has knowledge that the person receiving the proceeds 
is not the beneficiary, the beneficiary's bank shall obtain and retain a 
record of the beneficiary's name and address, as well as the 
beneficiary's taxpayer identification number (e.g., social security or 
employer identification number) or, if none, alien identification number 
or passport number and country of issuance, if known by the person 
receiving the proceeds, or a notation in the record of the lack thereof.
    (ii) if the proceeds are delivered other than in person, the 
beneficiary's bank shall retain a copy of the check or other instrument 
used to effect payment, or the information contained thereon, as well as 
the name and address of the person to which it was sent.
    (4) Retrievability. The information that an originator's bank must 
retain under paragraphs (e)(1)(i) and (e)(2) of this section shall be 
retrievable by the originator's bank by reference to the name of the 
originator. If the originator is an established customer of the 
originator's bank and has an account used for funds transfers, then the 
information also shall be retrievable by account number. The information 
that a beneficiary's bank must retain under paragraphs (e)(1)(iii) and 
(e)(3) of this section shall be retrievable by the beneficiary's bank by 
reference to the name of the beneficiary. If the beneficiary is an 
established customer of the beneficiary's bank and has an account used 
for funds transfers, then the information also shall be retrievable by 
account number. This information need not be retained in any particular 
manner, so long as the bank is able to retrieve the information required 
by this paragraph, either by accessing funds transfer records directly 
or through reference to some other record maintained by the bank.
    (5) Verification. Where verification is required under paragraphs 
(e)(2) and (e)(3) of this section, a bank shall

[[Page 441]]

verify a person's identity by examination of a document (other than a 
bank signature card), preferably one that contains the person's name, 
address, and photograph, that is normally acceptable by financial 
institutions as a means of identification when cashing checks for 
persons other than established customers. Verification of the identity 
of an individual who indicates that he or she is an alien or is not a 
resident of the United States may be made by passport, alien 
identification card, or other official document evidencing nationality 
or residence (e.g., a foreign driver's license with indication of home 
address).
    (6) Exceptions. The following funds transfers are not subject to the 
requirements of this section:
    (i) Funds transfers where the originator and beneficiary are any of 
the following:
    (A) A bank;
    (B) A wholly-owned domestic subsidiary of a bank chartered in the 
United States;
    (C) A broker or dealer in securities;
    (D) A wholly-owned domestic subsidiary of a broker or dealer in 
securities;
    (E) A futures commission merchant or an introducing broker in 
commodities;
    (F) A wholly-owned domestic subsidiary of a futures commission 
merchant or an introducing broker in commodities;
    (G) The United States;
    (H) A state or local government; or
    (I) A federal, state or local government agency or instrumentality; 
and
    (ii) Funds transfers where both the originator and the beneficiary 
are the same person and the originator's bank and the beneficiary's bank 
are the same bank.
    (f) Nonbank financial institutions. Each agent, agency, branch, or 
office located within the United States of a financial institution other 
than a bank is subject to the requirements of this paragraph (f) with 
respect to a transmittal of funds in the amount of $3,000 or more:
    (1) Recordkeeping requirements. (i) For each transmittal order that 
it accepts as a transmittor's financial institution, a financial 
institution shall obtain and retain either the original or a microfilm, 
other copy, or electronic record of the following information relating 
to the transmittal order:
    (A) The name and address of the transmittor;
    (B) The amount of the transmittal order;
    (C) The execution date of the transmittal order;
    (D) Any payment instructions received from the transmittor with the 
transmittal order;
    (E) The identity of the recipient's financial institution;
    (F) As many of the following items as are received with the 
transmittal order: \2\
---------------------------------------------------------------------------

    \2\ For transmittals of funds effected through the Federal Reserve's 
Fedwire funds transfer system by a domestic broker or dealers in 
securities, only one of the items is required to be retained, if 
received with the transmittal order, until such time as the bank that 
sends the order to the Federal Reserve Bank completes its conversion to 
the expanded Fedwire message format.
---------------------------------------------------------------------------

    (1) The name and address of the recipient;
    (2) The account number of the recipient; and
    (3) Any other specific identifier of the recipient; and
    (G) Any form relating to the transmittal of funds that is completed 
or signed by the person placing the transmittal order.
    (ii) For each transmittal order that it accepts as an intermediary 
financial institution, a financial institution shall retain either the 
original or a microfilm, other copy, or electronic record of the 
transmittal order.
    (iii) for each transmittal order that it accepts as a recipient's 
financial institution, a financial institution shall retain either the 
original or a microfilm, other copy, or electronic record of the 
transmittal order.
    (2) Transmittors other than established customers. In the case of a 
transmittal order from a transmittor that is not an established 
customer, in addition to obtaining and retaining the information 
required in paragraph (f)(1)(i) of this section:
    (i) If the transmittal order is made in person, prior to acceptance 
the transmittor's financial institution

[[Page 442]]

shall verify the identity of the person placing the transmittal order. 
If it accepts the transmittal order, the transmittor's financial 
institution shall obtain and retain a record of the name and address, 
the type of identification reviewed, and the number of the 
identification document (e.g., driver's license), as well as a record of 
the person's taxpayer identification number (e.g., social security or 
employer identification number) or, if none, alien identification number 
or passport number and country of issuance, or a notation in the record 
the lack thereof. If the transmittor's financial institution has 
knowledge that the person placing the transmittal order is not the 
transmittor, the transmittor's financial institution shall obtain and 
retain a record of the transmittor's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person placing the order, or a notation in the record 
the lack thereof.
    (ii) If the transmittal order accepted by the transmittor's 
financial institution is not made in person, the transmittor's financial 
institution shall obtain and retain a record of the name and address of 
the person placing the transmittal order, as well as the person's 
taxpayer identification number (e.g., social security or employer 
identification number) or, if none, alien identification number or 
passport number and country of issuance, or a notation in the record of 
the lack thereof, and a copy or record of the method of payment (e.g., 
check or credit card transaction) for the transmittal of funds. If the 
transmittor's financial institution has knowledge that the person 
placing the transmittal order is not the transmittor, the transmittor's 
financial institution shall obtain and retain a record of the 
transmittor's taxpayer identification number (e.g., social security or 
employer identification number) or, if none, alien identification number 
or passport number and country of issuance, if known by the person 
placing the order, or a notation in the record the lack thereof.
    (3) Recipients other than established customers. For each 
transmittal order that it accepts as a recipient's financial institution 
for a recipient that is not an established customer, in addition to 
obtaining and retaining the information required in paragraph 
(f)(1)(iii) of this section:
    (i) If the proceeds are delivered in person to the recipient or its 
representative or agent, the recipient's financial institution shall 
verify the identity of the person receiving the proceeds and shall 
obtain and retain a record of the name and address, the type of 
identification reviewed, and the number of the identification document 
(e.g., driver's license), as well as a record of the person's taxpayer 
identification number (e.g., social security or employer identification 
number) or, if none, alien identification number or passport number and 
country of issuance, or a notation in the record of the lack thereof. If 
the recipient's financial institution has knowledge that the person 
receiving the proceeds is not the recipient, the recipient's financial 
institution shall obtain and retain a record of the recipient's name and 
address, as well as the recipient's taxpayer identification number 
(e.g., social security or employer identification number) or, if none, 
alien identification number or passport number and country of issuance, 
if known by the person receiving the proceeds, or a notation in the 
record of the lack thereof.
    (ii) If the proceeds are delivered other than in person, the 
recipient's financial institution shall retain a copy of the check or 
other instrument used to effect payment, or the information contained 
thereon, as well as the name and address of the person to which it was 
sent.
    (4) Retrievability. The information that a transmittor's financial 
institution must retain under paragraphs (f)(1)(i) and (f)(2) of this 
section shall be retrievable by the transmittor's financial institution 
by reference to the name of the transmittor. If the transmittor is an 
established customer of the transmittor's financial institution and has 
an account used for transmittals of funds, then the information also 
shall be retrievable by account number. The information that a 
recipient's financial institution must retain under paragraphs 
(f)(1)(iii) and (f)(3) of

[[Page 443]]

this section shall be retrievable by the recipient's financial 
institution by reference to the name of the recipient. If the recipient 
is an established customer of the recipient's financial institution and 
has an account used for transmittals of funds, then the information also 
shall be retrievable by account number. This information need not be 
retained in any particular manner, so long as the financial institution 
is able to retrieve the information required by this paragraph, either 
by accessing transmittal of funds records directly or through reference 
to some other record maintained by the financial institution.
    (5) Verification. Where verification is required under paragraphs 
(f)(2) and (f)(3) of this section, a financial institution shall verify 
a person's identity by examination of a document (other than a customer 
signature card), preferably one that contains the person's name, 
address, and photograph, that is normally acceptable by financial 
institutions as a means of identification when cashing checks for 
persons other than established customers. Verification of the identity 
of an individual who indicates that he or she is an alien or is not a 
resident of the United States may be made by passport, alien 
identification card, or other official document evidencing nationality 
or residence (e.g., a foreign driver's license with indication of home 
address).
    (6) Exceptions. The following transmittals of funds are not subject 
to the requirements of this section:
    (i) Transmittals of funds where the transmittor and the recipient 
are any of the following:
    (A) A bank;
    (B) A wholly-owned domestic subsidiary of a bank chartered in the 
United States;
    (C) A broker or dealer in securities;
    (D) A wholly-owned domestic subsidiary of a broker or dealer in 
securities;
    (E) A futures commission merchant or an introducing broker in 
commodities;
    (F) A wholly-owned domestic subsidiary of a futures commission 
merchant or an introducing broker in commodities;
    (G) The United States;
    (H) A state or local government; or
    (I) A federal, state or local government agency or instrumentality; 
and
    (ii) Transmittals of funds where both the transmittor and the 
recipient are the same person and the transmittor's financial 
institution and the recipient's financial institution are the same 
broker or dealer in securities.
    (g) Any transmittor's financial institution or intermediary 
financial institution located within the United States shall include in 
any transmittal order for a transmittal of funds in the amount of $3,000 
or more, information as required in this paragraph (g):
    (1) A transmittor's financial institution shall include in a 
transmittal order, at the time it is sent to a receiving financial 
institution, the following information:
    (i) The name and, if the payment is ordered from an account, the 
account number of the transmittor;
    (ii) The address of the transmittor, except for a transmittal order 
through Fedwire until such time as the bank that sends the order to the 
Federal Reserve Bank completes its conversion to the expanded Fedwire 
format;
    (iii) The amount of the transmittal order;
    (iv) The execution date of the transmittal order;
    (v) The identity of the recipient's financial institution;
    (vi) As many of the following items as are received with the 
transmittal order: \3\
---------------------------------------------------------------------------

    \3\ For transmittals of funds effected through the Federal Reserve's 
Fedwire funds transfer system by a financial institution, only one of 
the items is required to be included in the transmittal order, if 
received with the sender's transmittal order, until such time as the 
bank that sends the order to the Federal Reserve Bank completes its 
conversion to the expanded Fedwire message format.
---------------------------------------------------------------------------

    (A) The name and address of the recipient;
    (B) The account number of the recipient;
    (C) Any other specific identifier of the recipient; and
    (vii) Either the name and address or numerical identifier of the 
transmittor's financial institution.

[[Page 444]]

    (2) A receiving financial institution that acts as an intermediary 
financial institution, if it accepts a transmittal order, shall include 
in a corresponding transmittal order at the time it is sent to the next 
receiving financial institution, the following information, if received 
from the sender:
    (i) The name and the account number of the transmittor;
    (ii) The address of the transmittor, except for a transmittal order 
through Fedwire until such time as the bank that sends the order to the 
Federal Reserve Bank completes its conversion to the expanded Fedwire 
format;
    (iii) The amount of the transmittal order;
    (iv) The execution date of the transmittal order;
    (v) The identity of the recipient's financial institution;
    (vi) As many of the following items as are received with the 
transmittal order: \4\
---------------------------------------------------------------------------

    \4\ For transmittals of funds effected through the Federal Reserve's 
Fedwire funds transfer system by a financial institution, only one of 
the items is required to be included in the transmittal order, if 
received with the sender's transmittal order, until such time as the 
bank that sends the order to the Federal Reserve Bank completes its 
conversion to the expanded Fedwire message format.
---------------------------------------------------------------------------

    (A) The name and address of the recipient;
    (B) The account number of the recipient;
    (C) Any other specific identifier of the recipient; and
    (vii) Either the name and address or numerical identifier of the 
transmittor's financial institution.
    (3) Safe harbor for transmittals of funds prior to conversion to the 
expanded Fedwire message format. The following provisions apply to 
transmittals of funds effected through the Federal Reserve's Fedwire 
funds transfer system or otherwise by a financial institution before the 
bank that sends the order to the Federal Reserve Bank or otherwise 
completes its conversion to the expanded Fedwire message format.
    (i) Transmittor's financial institution. A transmittor's financial 
institution will be deemed to be in compliance with the provisions of 
paragraph (g)(1) of this section if it:
    (A) Includes in the transmittal order, at the time it is sent to the 
receiving financial institution, the information specified in paragraphs 
(g)(1)(iii) through (v), and the information specified in paragraph 
(g)(1)(vi) of this section to the extent that such information has been 
received by the financial institution, and
    (B) Provides the information specified in paragraphs (g)(1)(i), (ii) 
and (vii) of this section to a financial institution that acted as an 
intermediary financial institution or recipient's financial institution 
in connection with the transmittal order, within a reasonable time after 
any such financial institution makes a request therefor in connection 
with the requesting financial institution's receipt of a lawful request 
for such information from a federal, state, or local law enforcement or 
financial regulatory agency, or in connection with the requesting 
financial institution's own Bank Secrecy Act compliance program.
    (ii) Intermediary financial institution. An intermediary financial 
institution will be deemed to be in compliance with the provisions of 
paragraph (g)(2) of this section if it:
    (A) Includes in the transmittal order, at the time it is sent to the 
receiving financial institution, the information specified in paragraphs 
(g)(2)(iii) through (g)(2)(vi) of this section, to the extent that such 
information has been received by the intermediary financial institution; 
and
    (B) Provides the information specified in paragraphs (g)(2)(i), (ii) 
and (vii) of this section, to the extent that such information has been 
received by the intermediary financial institution, to a financial 
institution that acted as an intermediary financial institution or 
recipient's financial institution in connection with the transmittal 
order, within a reasonable time after any such financial institution 
makes a request therefor in connection with the requesting financial 
institution's receipt of a lawful request for such information from a 
federal, state, or local law enforcement or regulatory agency,

[[Page 445]]

or in connection with the requesting financial institution's own Bank 
Secrecy Act compliance program.
    (iii) Obligation of requesting financial institution. Any 
information requested under paragraph (g)(3)(i)(B) or (g)(3)(ii)(B) of 
this section shall be treated by the requesting institution, once 
received, as if it had been included in the transmittal order to which 
such information relates.
    (4) Exceptions. The requirements of this paragraph (g) shall not 
apply to transmittals of funds that are listed in paragraph (e)(6) or 
(f)(6) of this section.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[37 FR 6912, Apr. 5, 1972, as amended at 52 FR 11444, Apr. 8, 1987; 54 
FR 33679, Aug. 16, 1989; 60 FR 229, 238, Jan. 3, 1995; 61 FR 14385, 
14388, Apr. 1, 1996; 61 FR 18250, Apr. 25, 1996; 68 FR 65399, Nov. 20, 
2003]



Sec. 103.34  Additional records to be made and retained by banks.

    (a)(1) With respect to each certificate of deposit sold or redeemed 
after May 31, 1978, and before October 1, 2003, or each deposit or share 
account opened with a bank after June 30, 1972, and before October 1, 
2003, a bank shall, within 30 days from the date such a transaction 
occurs or an account is opened, secure and maintain a record of the 
taxpayer identification number of the customer involved; or where the 
account or certificate is in the names of two or more persons, the bank 
shall secure the taxpayer identification number of a person having a 
financial interest in the certificate or account. In the event that a 
bank has been unable to secure, within the 30-day period specified, the 
required identification, it shall nevertheless not be deemed to be in 
violation of this section if (i) it has made a reasonable effort to 
secure such identification, and (ii) it maintains a list containing the 
names, addresses, and account numbers of those persons from whom it has 
been unable to secure such identification, and makes the names, 
addresses, and account numbers of those persons available to the 
Secretary as directed by him. A bank acting as an agent for another 
person in the purchase or redemption of a certificate of deposit issued 
by another bank is responsible for obtaining and recording the required 
taxpayer identification, as well as for maintaining the records referred 
to in paragraphs (b) (11) and (12) of this section. The issuing bank can 
satisfy the recordkeeping requirement by recording the name and address 
of the agent together with a description of the instrument and the date 
of the transaction. Where a person is a non-resident alien, the bank 
shall also record the person's passport number or a description of some 
other government document used to verify his identity.
    (2) The 30-day period provided for in paragraph (a)(1) of this 
section shall be extended where the person opening the account has 
applied for a taxpayer identification or social security number on Form 
SS-4 or SS-5, until such time as the person maintaining the account has 
had a reasonable opportunity to secure such number and furnish it to the 
bank.
    (3) A taxpayer identification number required under paragraph (a)(1) 
of this section need not be secured for accounts or transactions with 
the following: (i) Agencies and instrumentalities of Federal, state, 
local or foreign governments; (ii) judges, public officials, or clerks 
of courts of record as custodians of funds in controversy or under the 
control of the court; (iii) aliens who are (A) ambassadors, ministers, 
career diplomatic or consular officers, or (B) naval, military or other 
attaches of foreign embassies and legations, and for the members of 
their immediate families; (iv) aliens who are accredited representatives 
of international organizations which are entitled to enjoy privileges, 
exemptions and immunities as an international organization under the 
International Organization Immunities Act of December 29, 1945 (22 
U.S.C. 288), and the members of their immediate families; (v) aliens 
temporarily residing in the United States for a period not to exceed 180 
days; (vi) aliens not engaged in a trade or business in the United 
States who are attending a recognized college or university or any 
training program, supervised or conducted by any agency of the Federal 
Government; (vii) unincorporated subordinate units of a tax exempt 
central organization

[[Page 446]]

which are covered by a group exemption letter, (viii) a person under 18 
years of age with respect to an account opened as a part of a school 
thrift savings program, provided the annual interest is less than $10; 
(ix) a person opening a Christmas club, vacation club and similar 
installment savings programs provided the annual interest is less than 
$10; and (x) non-resident aliens who are not engaged in a trade or 
business in the United States. In instances described in paragraphs 
(a)(3), (viii) and (ix) of this section, the bank shall, within 15 days 
following the end of any calendar year in which the interest accrued in 
that year is $10 or more use its best effort to secure and maintain the 
appropriate taxpayer identification number or application form therefor.
    (4) The rules and regulations issued by the Internal Revenue Service 
under section 6109 of the Internal Revenue Code of 1954 shall determine 
what constitutes a taxpayer identification number and whose number shall 
be obtained in the case of an account maintained by one or more persons.
    (b) Each bank shall, in addition, retain either the original or a 
microfilm or other copy or reproduction of each of the following:
    (1) Each document granting signature authority over each deposit or 
share account, including any notations, if such are normally made, of 
specific identifying information verifying the identity of the signer 
(such as a driver's license number or credit card number);
    (2) Each statement, ledger card or other record on each deposit or 
share account, showing each transaction in, or with respect to, that 
account;
    (3) Each check, clean draft, or money order drawn on the bank or 
issued and payable by it, except those drawn for $100 or less or those 
drawn on accounts which can be expected to have drawn on them an average 
of at least 100 checks per month over the calendar year or on each 
occasion on which such checks are issued, and which are (i) dividend 
checks, (ii) payroll checks, (iii) employee benefit checks, (iv) 
insurance claim checks, (v) medical benefit checks, (vi) checks drawn on 
government agency accounts, (vii) checks drawn by brokers or dealers in 
securities, (viii) checks drawn on fiduciary accounts, (ix) checks drawn 
on other financial institutions, or (x) pension or annuity checks;
    (4) Each item in excess of $100 (other than bank charges or periodic 
charges made pursuant to agreement with the customer), comprising a 
debit to a customer's deposit or share account, not required to be kept, 
and not specifically exempted, under paragraph (b)(3) of this section;
    (5) Each item, including checks, drafts, or transfers of credit, of 
more than $10,000 remitted or transferred to a person, account or place 
outside the United States;
    (6) A record of each remittance or transfer of funds, or of 
currency, other monetary instruments, checks, investment securities, or 
credit, of more than $10,000 to a person, account or place outside the 
United States;
    (7) Each check or draft in an amount in excess of $10,000 drawn on 
or issued by a foreign bank which the domestic bank has paid or 
presented to a nonbank drawee for payment;
    (8) Each item, including checks, drafts or transfers of credit, of 
more than $10,000 received directly and not through a domestic financial 
institution, by letter, cable or any other means, from a bank, broker or 
dealer in foreign exchange outside the United States;
    (9) A record of each receipt of currency, other monetary 
instruments, investment securities or checks, and of each transfer of 
funds or credit, of more than $10,000 received on any one occasion 
directly and not through a domestic financial institution, from a bank, 
broker or dealer in foreign exchange outside the United States; and
    (10) Records prepared or received by a bank in the ordinary course 
of business, which would be needed to reconstruct a transaction account 
and to trace a check in excess of $100 deposited in such account through 
its domestic processing system or to supply a description of a deposited 
check in excess of $100. This subparagraph shall be applicable only with 
respect to demand deposits.
    (11) A record containing the name, address, and taxpayer 
identification

[[Page 447]]

number as determined under section 6109 of the Internal Revenue Code of 
1986, if available, of the purchaser of each certificate of deposit, as 
well as a description of the instrument, a notation of the method of 
payment, and the date of the transaction.
    (12) A record containing the name, address and taxpayer 
identification number as determined under section 6109 of the Internal 
Revenue Code of 1986, if available, of any person presenting a 
certificate of deposit for payment, as well as a description of the 
instrument and the date of the transaction.
    (13) Each deposit slip or credit ticket reflecting a transaction in 
excess of $100 or the equivalent record for direct deposit or other wire 
transfer deposit transactions. The slip or ticket shall record the 
amount of any currency involved.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[38 FR 2175, Jan. 22, 1973, as amended at 38 FR 3509, Feb. 7, 1973; 43 
FR 21672, May 19, 1978; 52 FR 11444, Apr. 8, 1987; 68 FR 25109, May 9, 
2003]



Sec. 103.35  Additional records to be made and retained by brokers or dealers 

in securities.

    (a)(1) With respect to each brokerage account opened with a broker 
or dealer in securities after June 30, 1972, and before October 1, 2003, 
by a person residing or doing business in the United States or a citizen 
of the United States, such broker or dealer shall within 30 days from 
the date such account is opened, secure and maintain a record of the 
taxpayer identification number of the person maintaining the account; or 
in the case of an account of one or more individuals, such broker or 
dealer shall secure and maintain a record of the social security number 
of an individual having a financial interest in that account. In the 
event that a broker or dealer has been unable to secure the 
identification required within the 30-day period specified, it shall 
nevertheless not be deemed to be in violation of this section if: (i) It 
has made a reasonable effort to secure such identification, and (ii) it 
maintains a list containing the names, addresses, and account numbers of 
those persons from whom it has been unable to secure such 
identification, and makes the names, addresses, and account numbers of 
those persons available to the Secretary as directed by him. Where a 
person is a non-resident alien, the broker or dealer in securities shall 
also record the person's passport number or a description of some other 
government document used to verify his identity.
    (2) The 30-day period provided for in paragraph (a)(1) of this 
section shall be extended where the person opening the account has 
applied for a taxpayer identification or social security number on Form 
SS-4 or SS-5, until such time as the person maintaining the account has 
had a reasonable opportunity to secure such number and furnish it to the 
broker or dealer.
    (3) A taxpayer identification number for a deposit or share account 
required under paragraph (a)(1) of this section need not be secured in 
the following instances: (i) Accounts for public funds opened by 
agencies and instrumentalities of Federal, state, local, or foreign 
governments, (ii) accounts for aliens who are (a) ambassadors, 
ministers, career diplomatic or consular officers, or (b) naval, 
military or other attaches of foreign embassies, and legations, and for 
the members of their immediate families, (iii) accounts for aliens who 
are accredited representatives to international organizations which are 
entitled to enjoy privileges, exemptions, and immunities as an 
international organization under the International Organizations 
Immunities Act of December 29, 1945 (22 U.S.C. 288), and for the members 
of their immediate families, (iv) aliens temporarily residing in the 
United States for a period not to exceed 180 days, (v) aliens not 
engaged in a trade or business in the United States who are attending a 
recognized college or university or any training program, supervised or 
conducted by any agency of the Federal Government, and (vi) 
unincorporated subordinate units of a tax exempt central organization 
which are covered by a group exemption letter.
    (b) Every broker or dealer in securities shall, in addition, retain 
either the original or a microfilm or other copy or reproduction of each 
of the following:

[[Page 448]]

    (1) Each document granting signature or trading authority over each 
customer's account;
    (2) Each record described in Sec. 240.17a-3(a) (1), (2), (3), (5), 
(6), (7), (8), and (9) of Title 17, Code of Federal Regulations;
    (3) A record of each remittance or transfer of funds, or of 
currency, checks, other monetary instruments, investment securities, or 
credit, of more than $10,000 to a person, account, or place, outside the 
United States;
    (4) A record of each receipt of currency, other monetary 
instruments, checks, or investment securities and of each transfer of 
funds or credit, of more than $10,000 received on any one occasion 
directly and not through a domestic financial institution, from any 
person, account or place outside the United States.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[37 FR 26518, Dec. 13, 1972, as amended at 38 FR 2176, Jan. 22, 1973; 52 
FR 11444, Apr. 8, 1987; 68 FR 25129, May 9, 2003]



Sec. 103.36  Additional records to be made and retained by casinos.

    (a) With respect to each deposit of funds, account opened or line of 
credit extended after the effective date of these regulations, a casino 
shall, at the time the funds are deposited, the account is opened or 
credit is extended, secure and maintain a record of the name, permanent 
address, and social security number of the person involved. Where the 
deposit, account or credit is in the names of two or more persons, the 
casino shall secure the name, permanent address, and social security 
number of each person having a financial interest in the deposit, 
account or line of credit. The name and address of such person shall be 
verified by the casino at the time the deposit is made, account opened, 
or credit extended. The verification shall be made by examination of a 
document of the type described in Sec. 103.28, and the specific 
identifying information shall be recorded in the manner described in 
Sec. 103.28. In the event that a casino has been unable to secure the 
required social security number, it shall not be deemed to be in 
violation of this section if (1) it has made a reasonable effort to 
secure such number and (2) it maintains a list containing the names and 
permanent addresses of those persons from who it has been unable to 
obtain social security numbers and makes the names and addresses of 
those persons available to the Secretary upon request. Where a person is 
a nonresident alien, the casino shall also record the person's passport 
number or a description of some other government document used to verify 
his identity.
    (b) In addition, each casino shall retain either the original or a 
microfilm or other copy or reproduction of each of the following:
    (1) A record of each receipt (including but not limited to funds for 
safekeeping or front money) of funds by the casino for the account 
(credit or deposit) of any person. The record shall include the name, 
permanent address and social security number of the person from whom the 
funds were received, as well as the date and amount of the funds 
received. If the person from whom the funds were received is a non-
resident alien, the person's passport number or a description of some 
other government document used to verify the person's identity shall be 
obtained and recorded;
    (2) A record of each bookkeeping entry comprising a debit or credit 
to a customer's deposit account or credit account with the casino;
    (3) Each statement, ledger card or other record of each deposit 
account or credit account with the casino, showing each transaction 
(including deposits, receipts, withdrawals, disbursements or transfers) 
in or with respect to, a customer's deposit account or credit account 
with the casino;
    (4) A record of each extension of credit in excess of $2,500, the 
terms and conditions of such extension of credit, and repayments. The 
record shall include the customer's name, permanent address, social 
security number, and the date and amount of the transaction (including 
repayments). If the customer or person for whom the credit extended is a 
non-resident alien, his passport number or description of some other 
government document used to verify his identity shall be obtained and 
recorded;

[[Page 449]]

    (5) A record of each advice, request or instruction received or 
given by the casino for itself or another person with respect to a 
transaction involving a person, account or place outside the United 
States (including but not limited to communications by wire, letter, or 
telephone). If the transfer outside the United States is on behalf of a 
third party, the record shall include the third party's name, permanent 
address, social security number, signature, and the date and amount of 
the transaction. If the transfer is received from outside the United 
States on behalf of a third party, the record shall include the third 
party's name, permanent address, social security number, signature, and 
the date and amount of the transaction. If the person for whom the 
transaction is being made is a non-resident alien the record shall also 
include the person's name, his passport number or a description of some 
other government document used to verify his identity;
    (6) Records prepared or received by the casino in the ordinary 
course of business which would be needed to reconstruct a person's 
deposit account or credit account with the casino or to trace a check 
deposited with the casino through the casino's records to the bank of 
deposit;
    (7) All records, documents or manuals required to be maintained by a 
casino under state and local laws or regulations, regulations of any 
governing Indian tribe or tribal government, or terms of (or any 
regulations issued under) any Tribal-State compacts entered into 
pursuant to the Indian Gaming Regulatory Act, with respect to the casino 
in question.
    (8) All records which are prepared or used by a casino to monitor a 
customer's gaming activity.
    (9)(i) A separate record containing a list of each transaction 
between the casino and its customers involving the following types of 
instruments having a face value of $3,000 or more:
    (A) Personal checks (excluding instruments which evidence credit 
granted by a casino strictly for gaming, such as markers);
    (B) Business checks (including casino checks);
    (C) Official bank checks;
    (D) Cashier's checks;
    (E) Third-party checks;
    (F) Promissory notes;
    (G) Traveler's checks; and
    (H) Money orders.
    (ii) The list will contain the time, date, and amount of the 
transaction; the name and permanent address of the customer; the type of 
instrument; the name of the drawee or issuer of the instrument; all 
reference numbers (e.g., casino account number, personal check number, 
etc.); and the name or casino license number of the casino employee who 
conducted the transaction. Applicable transactions will be placed on the 
list in the chronological order in which they occur.
    (10) A copy of the compliance program described in Sec. 103.64(a).
    (11) In the case of card clubs only, records of all currency 
transactions by customers, including without limitation, records in the 
form of currency transaction logs and multiple currency transaction 
logs, and records of all activity at cages or similar facilities, 
including, without limitation, cage control logs.
    (c)(1) Casinos which input, store, or retain, in whole or in part, 
for any period of time, any record required to be maintained by Sec. 
103.33 or this section on computer disk, tape, or other machine-readable 
media shall retain the same on computer disk, tape, or machine-readable 
media.
    (2) All indexes, books, programs, record layouts, manuals, formats, 
instructions, file descriptions, and similar materials which would 
enable a person readily to access and review the records that are 
described in Sec. 103.33 and this section and that are input, stored, 
or retained on computer disk, tape, or other machine-readable media 
shall be retained for the period of time such records are required to be 
retained.

(Approved by the Office of Management and Budget under control numbers 
1505-0087 and 1505-0063)

[50 FR 5068, Feb. 6, 1985, as amended at 52 FR 11444, Apr. 8, 1987; 54 
FR 1167, Jan. 12, 1989; 58 FR 13547, Mar. 12, 1993; 59 FR 61662, Dec. 1, 
1994; 61 FR 7056, Feb. 23, 1996; 63 FR 1924, Jan. 13, 1998; 64 FR 45453, 
Aug. 20, 1999]

[[Page 450]]



Sec. 103.37  Additional records to be made and retained by currency dealers or 

exchangers.

    (a)(1) After July 7, 1987, each currency dealer or exchanger shall 
secure and maintain a record of the taxpayer identification number of 
each person for whom a transaction account is opened or a line of credit 
is extended within 30 days after such account is opened or credit line 
extended. Where a person is a non-resident alien, the currency dealer or 
exchanger shall also record the person's passport number or a 
description of some other government document used to verify his 
identity. Where the account or credit line is in the names of two or 
more persons, the currency dealer or exchanger shall secure the taxpayer 
identification number of a person having a financial interest in the 
account or credit line. In the event that a currency dealer or exchanger 
has been unable to secure the identification required within the 30-day 
period specified, it shall nevertheless not be deemed to be in violation 
of this section if:
    (i) It has made a reasonable effort to secure such identification, 
and
    (ii) It maintains a list containing the names, addresses, and 
account or credit line numbers of those persons from whom it has been 
unable to secure such identification, and makes the names, addresses, 
and account or credit line numbers of those persons available to the 
Secretary as directed by him.
    (2) The 30-day period provided for in paragraph (a)(1) of this 
section shall be extended where the person opening the account or credit 
line has applied for a taxpayer identification or social security number 
on Form SS-4 or SS-5, until such time as the person maintaining the 
account or credit line has had a reasonable opportunity to secure such 
number and furnish it to the currency dealer or exchanger.
    (3) A taxpayer identification number for an account or credit line 
required under paragraph (a)(1) of this section need not be secured in 
the following instances:
    (i) Accounts for public funds opened by agencies and 
instrumentalities of Federal, state, local or foreign governments,
    (ii) Accounts for aliens who are--
    (A) Ambassadors, ministers, career diplomatic or consular officers, 
or
    (B) Naval, military or other attaches of foreign embassies, and 
legations, and for members of their immediate families,
    (iii) Accounts for aliens who are accredited representatives to 
international organizations which are entitled to enjoy privileges, 
exemptions, and immunities as an international organization under the 
International Organizations Immunities Act of December 29, 1945 (22 
U.S.C. 288), and for the members of their immediate families,
    (iv) Aliens temporarily residing in the United States for a period 
not to exceed 180 days,
    (v) Aliens not engaged in a trade or business in the United States 
who are attending a recognized college or any training program, 
supervised or conducted by any agency of the Federal Government, and
    (vi) Unincorporated subordinate units of a tax exempt central 
organization which are covered by a group exemption letter.
    (b) Each currency dealer or exchanger shall retain either the 
original or a microfilm or other copy or reproduction of each of the 
following:
    (1) Statements of accounts from banks, including paid checks, 
charges or other debit entry memoranda, deposit slips and other credit 
memoranda representing the entries reflected on such statements;
    (2) Daily work records, including purchase and sales slips or other 
memoranda needed to identify and reconstruct currency transactions with 
customers and foreign banks;
    (3) A record of each exchange of currency involving transactions in 
excess of $1000, including the name and address of the customer (and 
passport number or taxpayer identification number unless received by 
mail or common carrier) date and amount of the transaction and currency 
name, country, and total amount of each foreign currency;
    (4) Signature cards or other documents evidencing signature 
authority over each deposit or security account, containing the name of 
the depositor, street address, taxpayer identification

[[Page 451]]

number (TIN) or employer identification number (EIN) and the signature 
of the depositor or of a person authorized to sign on the account (if 
customer accounts are maintained in a code name, a record of the actual 
owner of the account);
    (5) Each item, including checks, drafts, or transfers of credit, of 
more than $10,000 remitted or transferred to a person, account or place 
outside the United States;
    (6) A record of each receipt of currency, other monetary 
instruments, investment securities and checks, and of each transfer of 
funds or credit, or more than $10,000 received on any one occasion 
directly and not through a domestic financial institution, from any 
person, account or place outside the United States;
    (7) Records prepared or received by a dealer in the ordinary course 
of business, that would be needed to reconstruct an account and trace a 
check in excess of $100 deposited in such account through its internal 
recordkeeping system to its depository institution, or to supply a 
description of a deposited check in excess of $100;
    (8) A record maintaining the name, address and taxpayer 
identification number, if available, of any person presenting a 
certificate of deposit for payment, as well as a description of the 
instrument and date of transaction;
    (9) A system of books and records that will enable the currency 
dealer or exchanger to prepare an accurate balance sheet and income 
statement.
    (c) This section does not apply to banks that offer services in 
dealing or changing currency to their customers as an adjunct to their 
regular service.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[52 FR 11444, Apr. 8, 1987, as amended at 64 FR 45453, Aug. 20, 1999]



Sec. 103.38  Nature of records and retention period.

    (a) Wherever it is required that there be retained either the 
original or a microfilm or other copy or reproduction of a check, draft, 
monetary instrument, investment security, or other similar instrument, 
there shall be retained a copy of both front and back of each such 
instrument or document, except that no copy need be retained of the back 
of any instrument or document which is entirely blank or which contains 
only standardized printed information, a copy of which is on file.
    (b) Records required by this subpart to be retained by financial 
institutions may be those made in the ordinary course of business by a 
financial institution. If no record is made in the ordinary course of 
business of any transaction with respect to which records are required 
to be retained by this subpart, then such a record shall be prepared in 
writing by the financial institution.
    (c) The rules and regulations issued by the Internal Revenue Service 
under 26 U.S.C. 6109 determine what constitutes a taxpayer 
identification number and whose number shall be obtained in the case of 
an account maintained by one or more persons.
    (d) All records that are required to be retained by this part shall 
be retained for a period of five years. Records or reports required to 
be kept pursuant to an order issued under Sec. 103.26 of this part 
shall be retained for the period of time specified in such order, not to 
exceed five years. All such records shall be filed or stored in such a 
way as to 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.

(Approved by the Office of Management and Budget under control number 
1505-0063)

[37 FR 6912, Apr. 5, 1972. Redesignated at 50 FR 5068, Feb. 6, 1985, and 
further redesignated and amended at 52 FR 11444, 11445, Apr. 8, 1987; 54 
FR 33679, Aug. 16, 1989]



Sec. 103.39  Person outside the United States.

    For the purposes of this subpart, a remittance or transfer of funds, 
or of currency, other monetary instruments, checks, investment 
securities, or credit to the domestic account of a person whose address 
is known by the person making the remittance or transfer, to be outside 
the United States, shall be deemed to be a remittance or transfer to a 
person outside the United States, except that, unless otherwise directed 
by the Secretary, this section shall not apply to a transaction on the 
books of

[[Page 452]]

a domestic financial institution involving the account of a customer of 
such institution whose address is within approximately 50 miles of the 
location of the institution, or who is known to be temporarily outside 
the United States.

[37 FR 6912, Apr. 5, 1972. Redesignated at 50 FR 5068, Feb. 6, 1985 and 
52 FR 11444, Apr. 8, 1987]



          Subpart D_Special Rules for Money Services Businesses

    Source: 64 FR 45451, Aug. 20, 1999, unless otherwise noted.



Sec. 103.41  Registration of money services businesses.

    (a) Registration requirement--(1) In general. Except as provided in 
paragraph (a)(2) of this section, relating to agents, each money 
services business (whether or not licensed as a money services business 
by any State) must register with the Department of the Treasury and, as 
part of that registration, maintain a list of its agents as required by 
31 U.S.C. 5330 and this section. This section does not apply to the 
United States Postal Service, to agencies of the United States, of any 
State, or of any political subdivision of a State, or to a person to the 
extent that the person is an issuer, seller, or redeemer of stored 
value.
    (2) Agents. A person that is a money services business solely 
because that person serves as an agent of another money services 
business, see Sec. 103.11(uu), is not required to register under this 
section, but a money services business that engages in activities 
described in Sec. 103.11(uu) both on its own behalf and as an agent for 
others must register under this section. For example, a supermarket 
corporation that acts as an agent for an issuer of money orders and 
performs no other services of a nature and value that would cause the 
corporation to be a money services business, is not required to 
register; the answer would be the same if the supermarket corporation 
served as an agent both of a money order issuer and of a money 
transmitter. However, registration would be required if the supermarket 
corporation, in addition to acting as an agent of an issuer of money 
orders, cashed checks or exchanged currencies (other than as an agent 
for another business) in an amount greater than $1,000 in currency or 
monetary or other instruments for any person on any day, in one or more 
transactions.
    (3) Agency status. The determination whether a person is an agent 
depends on all the facts and circumstances.
    (b) Registration procedures--(1) In general. (i) A money services 
business must be registered by filing such form as FinCEN may specify 
with the Detroit Computing Center of the Internal Revenue Service (or 
such other location as the form may specify). The information required 
by 31 U.S.C. 5330(b) and any other information required by the form must 
be reported in the manner and to the extent required by the form.
    (ii) A branch office of a money services business is not required to 
file its own registration form. A money services business must, however, 
report information about its branch locations or offices as provided by 
the instructions to the registration form.
    (iii) A money services business must retain a copy of any 
registration form filed under this section and any registration number 
that may be assigned to the business at a location in the United States 
and for the period specified in Sec. 103.38(d).
    (2) Registration period. A money services business must be 
registered for the initial registration period and each renewal period. 
The initial registration period is the two-calendar-year period 
beginning with the calendar year in which the money services business is 
first required to be registered. However, the initial registration 
period for a money services business required to register by December 
31, 2001 (see paragraph (b)(3) of this section) is the two-calendar year 
period beginning 2002. Each two-calendar-year period following the 
initial registration period is a renewal period.
    (3) Due date. The registration form for the initial registration 
period must be filed on or before the later of December 31, 2001, and 
the end of the 180-day period beginning on the day following the date 
the business is established. The registration form for a renewal period 
must be filed on or before

[[Page 453]]

the last day of the calendar year preceding the renewal period.
    (4) Events requiring re-registration. If a money services business 
registered as such under the laws of any State experiences a change in 
ownership or control that requires the business to be re-registered 
under State law, the money services business must also be re-registered 
under this section. In addition, if there is a transfer of more than 10 
percent of the voting power or equity interests of a money services 
business (other than a money services business that must report such 
transfer to the Securities and Exchange Commission), the money services 
business must be re-registered under this section. Finally, if a money 
services business experiences a more than 50-per cent increase in the 
number of its agents during any registration period, the money services 
business must be re-registered under this section. The registration form 
must be filed not later than 180 days after such change in ownership, 
transfer of voting power or equity interests, or increase in agents. The 
calendar year in which the change, transfer, or increase occurs is 
treated as the first year of a new two-year registration period.
    (c) Persons required to file the registration form. Under 31 U.S.C. 
5330(a), any person who owns or controls a money services business is 
responsible for registering the business; however, only one registration 
form is required to be filed for each registration period. A person is 
treated as owning or controlling a money services business for purposes 
of filing the registration form only to the extent provided by the form. 
If more than one person owns or controls a money services business, the 
owning or controlling persons may enter into an agreement designating 
one of them to register the business. The failure of the designated 
person to register the money services business does not, however, 
relieve any of the other persons who own or control the business of 
liability for the failure to register the business. See paragraph (e) of 
this section, relating to consequences of the failure to comply with 31 
U.S.C. 5330 or this section.
    (d) List of agents--(1) In general. A money services business must 
prepare and maintain a list of its agents. The initial list of agents 
must be prepared by January 1, 2002, and must be revised each January 1, 
for the immediately preceding 12 month period; for money services 
businesses established after December 31, 2001, the initial agent list 
must be prepared by the due date of the initial registration form and 
must be revised each January 1 for the immediately preceding 12-month 
period. The list is not filed with the registration form but must be 
maintained at the location in the United States reported on the 
registration form under paragraph (b)(1) of this section. Upon request, 
a money services business must make its list of agents available to 
FinCEN and any other appropriate law enforcement agency (including, 
without limitation, the examination function of the Internal Revenue 
Service in its capacity as delegee of Bank Secrecy Act examination 
authority). Requests for information made pursuant to the preceding 
sentence shall be coordinated through FinCEN in the manner and to the 
extent determined by FinCEN. The original list of agents and any revised 
list must be retained for the period specified in Sec. 103.38(d).
    (2) Information included on the list of agents--(i) In general. 
Except as provided in paragraph (d)(2)(ii) of this section, a money 
services business must include the following information with respect to 
each agent on the list (including any revised list) of its agents--
    (A) The name of the agent, including any trade names or doing-
business-as names;
    (B) The address of the agent, including street address, city, state, 
and ZIP code;
    (C) The telephone number of the agent;
    (D) The type of service or services (money orders, traveler's 
checks, check sales, check cashing, currency exchange, and money 
transmitting) the agent provides;
    (E) A listing of the months in the 12 months immediately preceding 
the date of the most recent agent list in which the gross transaction 
amount of the agent with respect to financial products or services 
issued by the money services business maintaining the agent list 
exceeded $100,000. For

[[Page 454]]

this purpose, the money services gross transaction amount is the agent's 
gross amount (excluding fees and commissions) received from transactions 
of one or more businesses described in Sec. 103.11(uu);
    (F) The name and address of any depository institution at which the 
agent maintains a transaction account (as defined in 12 U.S.C. 
461(b)(1)(C)) for all or part of the funds received in or for the 
financial products or services issued by the money services business 
maintaining the list, whether in the agent's or the business principal's 
name;
    (G) The year in which the agent first became an agent of the money 
services business; and
    (H) The number of branches or subagents the agent has.
    (ii) Special rules. Information about agent volume must be current 
within 45 days of the due date of the agent list. The information 
described by paragraphs (d)(2)(i)(G) and (d)(2)(i)(H) of this section is 
not required to be included in an agent list with respect to any person 
that is an agent of the money services business maintaining the list 
before the first day of the month beginning after February 16, 2000 so 
long as the information described by paragraphs (d)(2)(i)(G) and 
(d)(2)(i)(H) of this section is made available upon the request of 
FinCEN and any other appropriate law enforcement agency (including, 
without limitation, the examination function of the Internal Revenue 
Service in its capacity as delegee of Bank Secrecy Act examination 
authority).
    (e) Consequences of failing to comply with 31 U.S.C. 5330 or the 
regulations thereunder. It is unlawful to do business without complying 
with 31 U.S.C. 5330 and this section. A failure to comply with the 
requirements of 31 U.S.C 5330 or this section includes the filing of 
false or materially incomplete information in connection with the 
registration of a money services business. Any person who fails to 
comply with any requirement of 31 U.S.C. 5330 or this section shall be 
liable for a civil penalty of $5,000 for each violation. Each day a 
violation of 31 U.S.C. 5330 or this section continues constitutes a 
separate violation. In addition, under 31 U.S.C. 5320, the Secretary of 
the Treasury may bring a civil action to enjoin the violation. See 18 
U.S.C. 1960 for a criminal penalty for failure to comply with the 
registration requirements of 31 U.S.C. 5330 or this section.
    (f) Effective date. This section is effective September 20, 1999. 
Registration of money services businesses under this section will not be 
required prior to December 31, 2001.



                      Subpart E_General Provisions

    Source: 37 FR 6912, Apr. 5, 1972, unless otherwise noted. 
Redesignated at 64 FR 45451, Aug. 20, 1999.



Sec. 103.51  Dollars as including foreign currency.

    Wherever in this part an amount is stated in dollars, it shall be 
deemed to mean also the equivalent amount in any foreign currency.



Sec. 103.52  Photographic or other reproductions of Government obligations.

    Nothing herein contained shall require or authorize the microfilming 
or other reproduction of
    (a) Currency or other obligation or security of the United States as 
defined in 18 U.S.C. 8, or
    (b) Any obligation or other security of any foreign government, the 
reproduction of which is prohibited by law.



Sec. 103.53  Availability of information.

    (a) The Secretary may within his discretion disclose information 
reported under this part for any reason consistent with the purposes of 
the Bank Secrecy Act, including those set forth in paragraphs (b) 
through (d) of this section.
    (b) The Secretary may make any information set forth in any report 
received pursuant to this part available to another agency of the United 
States, to an agency of a state or local government or to an agency of a 
foreign government, upon the request of the head of such department or 
agency made in writing and stating the particular information desired, 
the criminal, tax or regulatory purpose for which the information is 
sought, and the official need for the information.

[[Page 455]]

    (c) The Secretary may make any information set forth in any report 
received pursuant to this part available to the Congress, or any 
committee or subcommittee thereof, upon a written request stating the 
particular information desired, the criminal, tax or regulatory purpose 
for which the information is sought, and the official need for the 
information.
    (d) The Secretary may make any information set forth in any report 
received pursuant to this part available to any other department or 
agency of the United States that is a member of the Intelligence 
Community, as defined by Executive Order 12333 or any succeeding 
executive order, upon the request of the head of such department or 
agency made in writing and stating the particular information desired, 
the national security matter with which the information is sought and 
the official need therefor.
    (e) Any information made available under this section to other 
department or agencies of the United States, any state or local 
government, or any foreign government shall be received by them in 
confidence, and shall not be disclosed to any person except for official 
purposes relating to the investigation, proceeding or matter in 
connection with which the information is sought.
    (f) The Secretary may require that a state or local government 
department or agency requesting information under paragraph (b) of this 
section pay fees to reimburse the Department of the Treasury for costs 
incidental to such disclosure. The amount of such fees will be set in 
accordance with the statute on fees for government services, 31 U.S.C. 
9701.

(Approved by the Office of Management and Budget under control number 
1505-0104)

[50 FR 42693, Oct. 22, 1985, as amended at 50 FR 46283, Nov. 7, 1985; 52 
FR 35545, Sept. 22, 1987]



Sec. 103.54  Disclosure.

    All reports required under this part and all records of such reports 
are specifically exempted from disclosure under section 552 of Title 5, 
United States Code.



Sec. 103.55  Exceptions, exemptions, and reports.

    (a) The Secretary, in his sole discretion, may by written order or 
authorization make exceptions to or grant exemptions from the 
requirements of this part. Such exceptions or exemptions may be 
conditional or unconditional, may apply to particular persons or to 
classes of persons, and may apply to particular transactions or classes 
of transactions. They shall, however, be applicable only as expressly 
stated in the order of authorization, and they shall be revocable in the 
sole discretion of the Secretary.
    (b) The Secretary shall have authority to further define all terms 
used herein.
    (c)(1) The Secretary may, as an alternative to the reporting and 
recordkeeping requirements for casinos in Sec. Sec. 103.22(a)(2) and 
103.25(a)(2), and 103.36, grant exemptions to the casinos in any state 
whose regulatory system substantially meets the reporting and 
recordkeeping requirements of this part.
    (2) In order for a state regulatory system to qualify for an 
exemption on behalf of its casinos, the state must provide:
    (i) That the Treasury Department be allowed to evaluate the 
effectiveness of the state's regulatory system by periodic oversight 
review of that system;
    (ii) That the reports required under the state's regulatory system 
be submitted to the Treasury Department within 15 days of receipt by the 
state;
    (iii) That any records required to be maintained by the casinos 
relevant to any matter under this part and to which the state has access 
or maintains under its regulatory system be made available to the 
Treasury Department within 30 days of request;
    (iv) That the Treasury Department be provided with periodic status 
reports on the state's compliance efforts and findings;
    (v) That all but minor violations of the state requirements be 
reported to Treasury within 15 days of discovery; and
    (vi) That the state will initiate compliance examinations of 
specific institutions at the request of Treasury within a reasonable 
time, not to exceed 90 days where appropriate, and will

[[Page 456]]

provide reports of these examinations to Treasury within 15 days of 
completion or periodically during the course of the examination upon the 
request of the Secretary. If for any reason the state were not able to 
conduct an investigation within a reasonable time, the state will permit 
Treasury to conduct the investigation.
    (3) Revocation of any exemption under this subsection shall be in 
the sole discretion of the Secretary.

[38 FR 2176, Jan. 22, 1973, as amended at 50 FR 5069, Feb. 6, 1985; 50 
FR 36875, Sept. 10, 1985]



Sec. 103.56  Enforcement.

    (a) Overall authority for enforcement and compliance, including 
coordination and direction of procedures and activities of all other 
agencies exercising delegated authority under this part, is delegated to 
the Assistant Secretary (Enforcement).
    (b) Authority to examine institutions to determine compliance with 
the requirements of this part is delegated as follows:
    (1) To the Comptroller of the Currency with respect to those 
financial institutions regularly examined for safety and soundness by 
national bank examiners;
    (2) To the Board of Governors of the Federal Reserve System with 
respect to those financial institutions regularly examined for safety 
and soundness by Federal Reserve bank examiners;
    (3) To the Federal Deposit Insurance Corporation with respect to 
those financial institutions regularly examined for safety and soundness 
by FDIC bank examiners;
    (4) To the Federal Home Loan Bank Board with respect to those 
financial institutions regularly examined for safety and soundness by 
FHLBB bank examiners;
    (5) To the Chairman of the Board of the National Credit Union 
Administration with respect to those financial institutions regularly 
examined for safety and soundness by NCUA examiners.
    (6) To the Securities and Exchange Commission with respect to 
brokers and dealers in securities and investment companies as that term 
is defined in the Investment Company Act of 1940 (15 U.S.C. 80-1 et 
seq.);
    (7) To the Commissioner of Customs with respect to Sec. Sec. 103.23 
and 103.58;
    (8) To the Commissioner of Internal Revenue with respect to all 
financial institutions, except brokers or dealers in securities, futures 
commission merchants, introducing brokers in commodities, and commodity 
trading advisors, not currently examined by Federal bank supervisory 
agencies for soundness and safety; and
    (9) To the Commodity Futures Trading Commission with respect to 
futures commission merchants, introducing brokers in commodities, and 
commodity trading advisors.
    (c) Authority for investigating criminal violations of this part is 
delegated as follows:
    (1) To the Commissioner of Customs with respect to Sec. 103.23;
    (2) To the Commissioner of Internal Revenue except with respect to 
Sec. 103.23.
    (d) Authority for the imposition of civil penalties for violations 
of this part lies with the Assistant Secretary, and in the Assistant 
Secretary's absence, the Deputy Assistant Secretary (Law Enforcement).
    (e) Periodic reports shall be made to the Assistant Secretary by 
each agency to which compliance authority has been delegated under 
paragraph (b) of this section. These reports shall be in such a form and 
submitted at such intervals as the Assistant Secretary may direct. 
Evidence of specific violations of any of the requirements of this part 
may be submitted to the Assistant Secretary at any time.
    (f) The Assistant Secretary or his delegate, and any agency to which 
compliance has been delegated under paragraph (b) of this section, may 
examine any books, papers, records, or other data of domestic financial 
institutions relevant to the recordkeeping or reporting requirements of 
this part.
    (g) The authority to enforce the provisions of 31 U.S.C. 5314 and 
Sec. Sec. 103.24 and 103.32 of this part has been redelegated from 
FinCEN to the Commissioner of Internal Revenue by means of a Memorandum 
of Agreement between FinCEN and IRS. Such authority includes, with 
respect to 31 U.S.C. 5314 and Sec. Sec. 103.24 and 103.32 of this part, 
the authority to:

[[Page 457]]

assess and collect civil penalties under 31 U.S.C. 5321 and 31 CFR 
103.57; investigate possible civil violations of these provisions (in 
addition to the authority already provided at paragraph (c)(2)) of this 
section); employ the summons power of subpart F of part 103; issue 
administrative rulings under subpart G of part 103; and take any other 
action reasonably necessary for the enforcement of these and related 
provisions, including pursuit of injunctions.

(Sec. 21, Federal Deposit Insurance Act, 84 Stat. 1114, 12 U.S.C. 1829b; 
84 Stat. 1116, 12 U.S.C. 1951-1959; and the Currency and Foreign 
Transactions Reporting Act, 84 Stat. 1118, 31 U.S.C. 1051-1122)

[37 FR 6912, Apr. 5, 1972, as amended at 50 FR 42693, Oct. 22, 1985; 52 
FR 11445, Apr. 8, 1987. Redesignated and amended at 64 FR 45451, 45453, 
Aug. 20, 1999; 67 FR 21121, Apr. 29, 2002; 68 FR 26489, May 16, 2003; 68 
FR 65399, Nov. 20, 2003]



Sec. 103.57  Civil penalty.

    (a) For any willful violation, committed on or before October 12, 
1984, of any reporting requirement for financial institutions under this 
part or of any recordkeeping requirements of Sec. 103.22, the Secretary 
may assess upon any domestic financial institution, and upon any 
partner, director, officer, or employee thereof who willfully 
participates in the violation, a civil penalty not to exceed $1,000.
    (b) For any willful violation committed after October 12, 1984 and 
before October 28, 1986, of any reporting requirement for financial 
institutions under this part or of the recordkeeping requirements of 
Sec. 103.32, the Secretary may assess upon any domestic financial 
institution, and upon any partner, director, officer, or employee 
thereof who willfully participates in the violation, a civil penalty not 
to exceed $10,000.
    (c) For any willful violation of any recordkeeping requirement for 
financial institutions, except violations of Sec. 103.32, under this 
part, the Secretary may assess upon any domestic financial institution, 
and upon any partner, director, officer, or employee thereof who 
willfully participates in the violation, a civil penalty not to exceed 
$1,000.
    (d) For any failure to file a report required under Sec. 103.23 or 
for filing such a report containing any material omission or 
misstatement, the Secretary may assess a civil penalty up to the amount 
of the currency or monetary instruments transported, mailed or shipped, 
less any amount forfeited under Sec. 103.58.
    (e) For any willful violation of Sec. 103.63 committed after 
January 26, 1987, the Secretary may assess upon any person a civil 
penalty not to exceed the amount of coins and currency involved in the 
transaction with respect to which such penalty is imposed. The amount of 
any civil penalty assessed under this paragraph shall be reduced by the 
amount of any forfeiture to the United States in connection with the 
transaction for which the penalty was imposed.
    (f) For any willful violation committed after October 27, 1986, of 
any reporting requirement for financial institutions under this part 
(except Sec. 103.24, Sec. 103.25 or Sec. 103.32), the Secretary may 
assess upon any domestic financial institution, and upon any partner, 
director, officer, or employee thereof who willfully participates in the 
violation, a civil penalty not to exceed the greater of the amount (not 
to exceed $100,000) involved in the transaction or $25,000.
    (g) For any willful violation committed after October 27, 1986, of 
any requirement of Sec. 103.24, Sec. 103.25, or Sec. 103.32, the 
Secretary may assess upon any person, a civil penalty:
    (1) In the case of a violation of Sec. 103.25 involving a 
transaction, a civil penalty not to exceed the greater of the amount 
(not to exceed $100,000) of the transaction, or $25,000; and
    (2) In the case of a violation of Sec. 103.24 or Sec. 103.32 
involving a failure to report the existence of an account or any 
identifying information required to be provided with respect to such 
account, a civil penalty not to exceed the greater of the amount (not to 
exceed $100,000) equal to the balance in the account at the time of the 
violation, or $25,000.
    (h) For each negligent violation of any requirement of this part, 
committed after October 27, 1986, the Secretary may assess upon any 
financial

[[Page 458]]

institution a civil penalty not to exceed $500.

[37 FR 6912, Apr. 5, 1972, as amended at 52 FR 11445, Apr. 8, 1987; 52 
FR 12641, Apr. 17, 1987. Redesignated and amended at 64 FR 45451, 45453, 
Aug. 20, 1999]



Sec. 103.58  Forfeiture of currency or monetary instruments.

    Any currency or other monetary instruments which are in the process 
of any transportation with respect to which a report is required under 
Sec. 103.23 are subject to seizure and forfeiture to the United States 
if such report has not been filed as required in Sec. 103.25, or 
contains material omissions or misstatements. The Secretary may, in his 
sole discretion, remit or mitigate any such forfeiture in whole or in 
part upon such terms and conditions as he deems reasonable.



Sec. 103.59  Criminal penalty.

    (a) Any person who willfully violates any provision of Title I of 
Pub. L. 91-508, or of this part authorized thereby may, upon conviction 
thereof, be fined not more than $1,000 or be imprisoned not more than 1 
year, or both. Such person may in addition, if the violation is of any 
provision authorized by Title I of Pub. L. 91-508 and if the violation 
is committed in furtherance of the commission of any violation of 
Federal law punishable by imprisonment for more than 1 year, be fined 
not more than $10,000 or be imprisoned not more than 5 years, or both.
    (b) Any person who willfully violates any provision of Title II of 
Pub. L. 91-508, or of this part authorized thereby, may, upon conviction 
thereof, be fined not more than $250,000 or be imprisoned not more than 
5 years, or both.
    (c) Any person who willfully violates any provision of Title II of 
Pub. L. 91-508, or of this part authorized thereby, where the violation 
is either
    (1) Committed while violating another law of the United States, or
    (2) Committed as part of a pattern of any illegal activity involving 
more than $100,000 in any 12-month period, may, upon conviction thereof, 
be fined not more than $500,000 or be imprisoned not more than 10 years, 
or both.
    (d) Any person who knowingly makes any false, fictitious or 
fraudulent statement or representation in any report required by this 
part may, upon conviction thereof, be fined not more than $10,000 or be 
imprisoned not more than 5 years, or both.

[37 FR 6912, Apr. 5, 1972, as amended at 50 FR 18479, May 1, 1985; 53 FR 
4138, Feb. 12, 1988]



Sec. 103.60  Enforcement authority with respect to transportation of currency 

or monetary instruments.

    (a) If a customs officer has reasonable cause to believe that there 
is a monetary instrument being transported without the filing of the 
report required by Sec. Sec. 103.23 and 103.25 of this chapter, he may 
stop and search, without a search warrant, a vehicle, vessel, aircraft, 
or other conveyance, envelope or other container, or person entering or 
departing from the United States with respect to which or whom the 
officer reasonably believes is transporting such instrument.
    (b) If the Secretary has reason to believe that currency or monetary 
instruments are in the process of transportation and with respect to 
which a report required under Sec. 103.23 has not been filed or 
contains material omissions or misstatements, he may apply to any court 
of competent jurisdiction for a search warrant. Upon a showing of 
probable cause, the court may issue a warrant authorizing the search of 
any or all of the following:
    (1) One or more designated persons.
    (2) One or more designated or described places or premises.
    (3) One or more designated or described letters, parcels, packages, 
or other physical objects.
    (4) One or more designated or described vehicles. Any application 
for a search warrant pursuant to this section shall be accompanied by 
allegations of fact supporting the application.
    (c) This section is not in derogation of the authority of the 
Secretary under any other law or regulation.

[37 FR 6912, Apr. 5, 1972, as amended at 50 FR 18479, May 1, 1985]



Sec. 103.61  Access to records.

    Except as provided in Sec. Sec. 103.34(a)(1), 103.35(a)(1), and 
103.36(a) and except for the purpose of assuring compliance with the 
recordkeeping and reporting requirements of this part, this part

[[Page 459]]

does not authorize the Secretary or any other person to inspect or 
review the records required to be maintained by subpart C of this part. 
Other inspection, review or access to such records is governed by other 
applicable law.

[50 FR 5069, Feb. 6, 1985]



Sec. 103.62  Rewards for informants.

    (a) If an individual provides original information which leads to a 
recovery of a criminal fine, civil penalty, or forfeiture, which exceeds 
$50,000, for a violation of the provisions of the Act or of this part, 
the Secretary may pay a reward to that individual.
    (b) The Secretary shall determine the amount of the reward to be 
paid under this section; however, any reward paid may not be more than 
25 percent of the net amount of the fine, penalty or forfeiture 
collected, or $150,000, whichever is less.
    (c) An officer or employee of the United States, a State, or a local 
government who provides original information described in paragraph (a) 
in the performance of official duties is not eligible for a reward under 
this section.

[50 FR 18479, May 1, 1985]



Sec. 103.63  Structured transactions.

    No person shall for the purpose of evading the reporting 
requirements of Sec. 103.22 with respect to such transaction:
    (a) Cause or attempt to cause a domestic financial institution to 
fail to file a report required under Sec. 103.22;
    (b) Cause or attempt to cause a domestic financial institution to 
file a report required under Sec. 103.22 that contains a material 
omission or misstatement of fact; or
    (c) Structure (as that term is defined in Sec. 103.11(n) of this 
part) or assist in structuring, or attempt to structure or assist in 
structuring, any transaction with one or more domestic financial 
institutions.

[52 FR 11446, Apr. 8, 1987, as amended at 54 FR 3027, Jan. 23, 1989]



Sec. 103.64  Special rules for casinos.

    (a) Compliance programs. (1) Each casino shall develop and implement 
a written program reasonably designed to assure and monitor compliance 
with the requirements set forth in 31 U.S.C. chapter 53, subchapter II 
and the regulations contained in this part.
    (2) At a minimum, each compliance program shall provide for:
    (i) A system of internal controls to assure ongoing compliance;
    (ii) Internal and/or external independent testing for compliance. 
The scope and frequency of the testing shall be commensurate with the 
money laundering and terrorist financing risks posed by the products and 
services provided by the casino;
    (iii) Training of casino personnel, including training in the 
identification of unusual or suspicious transactions, to the extent that 
the reporting of such transactions is required by this part, by other 
applicable law or regulation, or by the casino's own administrative and 
compliance policies;
    (iv) An individual or individuals to assure day-to-day compliance;
    (v) Procedures for using all available information to determine:
    (A) When required by this part, the name, address, social security 
number, and other information, and verification of the same, of a 
person;
    (B) The occurrence of any transactions or patterns of transactions 
required to be reported pursuant to Sec. 103.21;
    (C) Whether any record as described in subpart C of this part must 
be made and retained; and
    (vi) For casinos that have automated data processing systems, the 
use of automated programs to aid in assuring compliance.
    (b) Special terms. As used in this part, as applied to casinos:
    (1) Business year means the annual accounting period, such as a 
calendar or fiscal year, by which a casino maintains its books and 
records for purposes of subtitle A of title 26 of the United States 
Code.
    (2) Casino account number means any and all numbers by which a 
casino identifies a customer.
    (3) Customer includes every person which is involved in a 
transaction to which this part applies with a casino, whether or not 
that person participates, or intends to participate, in the

[[Page 460]]

gaming activities offered by that casino.
    (4) Gaming day means the normal business day of a casino. For a 
casino that offers 24 hour gaming, the term means that 24 hour period by 
which the casino keeps its books and records for business, accounting, 
and tax purposes. For purposes of the regulations contained in this 
part, each casino may have only one gaming day, common to all of its 
divisions.
    (5) Machine-readable means capable of being read by an automated 
data processing system.

[58 FR 13549, Mar. 12, 1993, as amended at 59 FR 61662, Dec. 1, 1994; 60 
FR 33725, June 29, 1995; 67 FR 60730, Sept. 26, 2002]



                            Subpart F_Summons

    Source: 52 FR 23979, June 26, 1987, unless otherwise noted. 
Redesignated at 64 FR 45451, Aug. 20, 1999.



Sec. 103.71  General.

    For any investigation for the purpose of civil enforcement of 
violations of the Currency and Foreign Transactions Reporting Act, as 
amended (31 U.S.C. 5311 through 5324), section 21 of the Federal Deposit 
Insurance Act (12 U.S.C. 1829b), section 411 of the National Housing Act 
(12 U.S.C. 1730d), or Chapter 2 of Pub. L. 91-508 (12 U.S.C. 1951 et 
seq.), or any regulation under any such provision, the Secretary or 
delegate of the Secretary may summon a financial institution or an 
officer or employee of a financial institution (including a former 
officer or employee), or any person having possession, custody, or care 
of any of the records and reports required under the Currency and 
Foreign Transactions Reporting Act or this part to appear before the 
Secretary or his delegate, at a time and place named in the summons, and 
to give testimony, under oath, and be examined, and to produce such 
books, papers, records, or other data as may be relevant or material to 
such investigation.



Sec. 103.72  Persons who may issue summons.

    For purposes of this part, the following officials are hereby 
designated as delegates of the Secretary who are authorized to issue a 
summons under Sec. 103.71, solely for the purposes of civil enforcement 
of this part:
    (a) Office of the Secretary. The Assistant Secretary (Enforcement), 
the Deputy Assistant Secretary (Law Enforcement), and the Director, 
Office of Financial Enforcement.
    (b) Internal Revenue Service. Except with respect to Sec. 103.23 of 
this part, the Commissioner, the Deputy Commissioner, or a delegate of 
either official, and, for the purposes of perfecting seizures and 
forfeitures related to civil enforcement of this part, the Chief 
(Criminal Investigation) or a delegate.
    (c) Customs Service. With respect to Sec. 103.23 of this part, the 
Commissioner, the Deputy Commissioner, the Assistant Commissioner 
(Enforcement), Regional Commissioners, Assistant Regional Commissioners 
(Enforcement), and Special Agents in Charge.

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999; 68 FR 26489, May 16, 2003]



Sec. 103.73  Contents of summons.

    (a) Summons for testimony. Any summons issued under Sec. 103.71 of 
this part to compel the appearance and testimony of a person shall 
state:
    (1) The name, title, address, and telephone number of the person 
before whom the appearance shall take place (who may be a person other 
than the persons who are authorized to issue such a summons under Sec. 
103.72 of this part);
    (2) The address to which the person summoned shall report for the 
appearance;
    (3) The date and time of the appearance; and
    (4) The name, title, address, and telephone number of the person who 
has issued the summons.
    (b) Summons of books, papers, records, or data. Any summons issued 
under Sec. 103.71 of this part to require the production of books, 
papers, records, or other data shall describe the materials to be 
produced with reasonable specificity, and shall state:
    (1) The name, title, address, and telephone number of the person to 
whom the materials shall be produced (who may be a person other than the 
persons

[[Page 461]]

who are authorized to issue such a summons under Sec. 103.72 of this 
part);
    (2) The address at which the person summoned shall produce the 
materials, not to exceed 500 miles from any place where the financial 
institution operates or conducts business in the United States;
    (3) The specific manner of production, whether by personal delivery, 
by mail, or by messenger service;
    (4) The date and time for production; and
    (5) The name, title, address, and telephone number of the person who 
has issued the summons.

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.74  Service of summons.

    (a) Who may serve. Any delegate of the Secretary authorized under 
Sec. 103.72 of this part to issue a summons, or any other person 
authorized by law to serve summonses or other process, is hereby 
authorized to serve a summons issued under this part.
    (b) Manner of service. Service of a summons may be made--
    (1) Upon any person, by registered mail, return receipt requested, 
directed to the person summoned;
    (2) Upon a natural person by personal delivery; or
    (3) Upon any other person by delivery to an officer, managing or 
general agent, or any other agent authorized to receive service of 
process.
    (c) Certificate of service. The summons shall contain a certificate 
of service to be signed by the server of the summons. On the hearing of 
an application for enforcement of the summons, the certificate of 
service signed by the person serving the summons shall be evidence of 
the facts it states.

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.75  Examination of witnesses and records.

    (a) General. Any delegate of the Secretary authorized under Sec. 
103.72 of this part to issue a summons, or any officer or employee of 
the Treasury Department or any component thereof who is designated by 
that person (whether in the summons or otherwise), is hereby authorized 
to receive evidence and to examine witnesses pursuant to the summons. 
Any person authorized by law may administer any oaths and affirmations 
that may be required under this subpart.
    (b) Testimony taken under oath. Testimony of any person under this 
part may be taken under oath, and shall be taken down in writing by the 
person examining the person summoned or shall be otherwise transcribed. 
After the testimony of a witness has been transcribed, a copy of that 
transcript shall be made available to the witness upon request, unless 
for good cause the person issuing the summons determines, under 5 U.S.C. 
555, that a copy should not be provided. If such a determination has 
been made, the witness shall be limited to inspection of the official 
transcript of the testimony.
    (c) Disclosure of summons, testimony, or records. Unless the 
Secretary or a delegate of the Secretary listed under Sec. 103.72(a) of 
this part so authorizes in writing, or it is otherwise required by law, 
no delegate of the Secretary listed under Sec. 103.72 (b) or (c) of 
this part or other officer or employee of the Treasury Department or any 
component thereof shall--
    (1) Make public the name of any person to whom a summons has been 
issued under this part, or release any information to the public 
concerning that person or the issuance of a summons to that person prior 
to the time and date set for that person's appearance or production of 
records; or
    (2) Disclose any testimony taken (including the name of the witness) 
or material presented pursuant to the summons, to any person other than 
an officer or employee of the Treasury Department or of any component 
thereof.

Nothing in the preceding sentence shall preclude a delegate of the 
Secretary, or other officer or employee of the Treasury Department or 
any component thereof, from disclosing testimony taken, or material 
presented pursuant to a summons issued under this part, to any person in 
order to obtain necessary information for investigative purposes 
relating to the performance of official duties, or to any officer or 
employee of

[[Page 462]]

the Department of Justice in connection with a possible violation of 
Federal law.

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.76  Enforcement of summons.

    In the case of contumacy by, or refusal to obey a summons issued to, 
any person under this part, the Secretary or any delegate of the 
Secretary listed under Sec. 103.72 of this part shall refer the matter 
to the Attorney General or delegate of the Attorney General (including 
any United States Attorney or Assistant United States Attorney, as 
appropriate), who may bring an action to compel compliance with the 
summons in any court of the United States within the jurisdiction of 
which the investigation which gave rise to the summons being or has been 
carried on, the jurisdiction in which the person summoned is a resident, 
or the jurisdiction in which the person summoned carries on business or 
may be found. When a referral is made by a delegate of the Secretary 
other than a delegate named in Sec. 103.72(a) of this part, prompt 
notification of the referral must be made to the Director, Office of 
Financial Enforcement, Office of the Assistant Secretary (Enforcement). 
The court may issue an order requiring the person summoned to appear 
before the Secretary or delegate of the Secretary to produce books, 
papers, records, or other data, to give testimony as may be necessary in 
order to explain how such material was compiled and maintained, and to 
pay the costs of the proceeding. Any failure to obey the order of the 
court may be punished by the court as a contempt thereof. All process in 
any case under this section may be served in any judicial district in 
which such person may be found.

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.77  Payment of expenses.

    Persons summoned under this part shall be paid the same fees and 
mileage for travel in the United States that are paid witnesses in the 
courts of the United States. The United States shall not be liable for 
any other expense incurred in connection with the production of books, 
papers, records, or other data under this part.



                    Subpart G_Administrative Rulings

    Source: 52 FR 35546, Sept. 22, 1987, unless otherwise noted. 
Redesignated at 64 FR 45451, Aug. 20, 1999.



Sec. 103.80  Scope.

    This subpart provides that the Assistant Secretary (Enforcement), or 
his designee, either unilaterally or upon request, may issue 
administrative rulings interpreting the application of part 103.



Sec. 103.81  Submitting requests.

    (a) Each request for an administrative ruling must be in writing and 
contain the following information:
    (1) A complete description of the situation for which the ruling is 
requested,
    (2) A complete statement of all material facts related to the 
subject transaction,
    (3) A concise and unambiguous question to be answered,
    (4) A statement certifying, to the best of the requestor's knowledge 
and belief, that the question to be answered is not applicable to any 
ongoing state or federal investigation, litigation, grand jury 
proceeding, or proceeding before any other governmental body involving 
either the requestor, any other party to the subject transaction, or any 
other party with whom the requestor has an agency relationship,
    (5) A statement identifying any information in the request that the 
requestor considers to be exempt from disclosure under the Freedom of 
Information Act, 5 U.S.C. 552, and the reason therefor,
    (6) If the subject situation is hypothetical, a statement justifying 
why the particular situation described warrants the issuance of a 
ruling,
    (7) The signature of the person making the request, or
    (8) If an agent makes the request, the signature of the agent and a 
statement certifying the authority under which the request is made.
    (b) A request filed by a corporation shall be signed by a corporate 
officer

[[Page 463]]

and a request filed by a partnership shall be signed by a partner.
    (c) A request may advocate a particular proposed interpretation and 
may set forth the legal and factual basis for that interpretation.
    (d) Requests shall be addressed to: Director, Office of Financial 
Enforcement, Office of the Assistant Secretary (Enforcement), U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue NW., Room 4320, 
Washington, DC 20220.
    (e) The requester shall advise the Director, Office of Financial 
Enforcement, immediately in writing of any subsequent change in any 
material fact or statement submitted with a ruling request in conformity 
with paragraph (a) of this section.

(Approved by the Office of Management and Budget under control number 
1505-0105)



Sec. 103.82  Nonconforming requests.

    The Director, Office of Financial Enforcement, shall notify the 
requester if the ruling request does not conform with the requirements 
of Sec. 103.81. The notice shall be in writing and shall describe the 
requirements that have not been met. A request that is not brought into 
conformity with such requirements within 30 days from the date of such 
notice, unless extended for good cause by the Office of Financial 
Enforcement, shall be treated as though it were withdrawn.

(Approved by the Office of Management and Budget under control number 
1505-0105)

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.83  Oral communications.

    (a) The Office of the Assistant Secretary (Enforcement) will not 
issue administrative rulings in response to oral requests. Oral opinions 
or advice by Treasury, the Customs Service, the Internal Revenue 
Service, the Office of the Comptroller of the Currency, or any other 
bank supervisory agency personnel, regarding the interpretation and 
application of this part, do not bind the Treasury Department and carry 
no precedential value.
    (b) A person who has made a ruling request in conformity with Sec. 
103.81 may request an opportunity for oral discussion of the issues 
presented in the request. The request should be made to the Director, 
Office of Financial Enforcement, and any decision to grant such a 
conference is wholly within the discretion of the Director. Personal 
conferences or telephone conferences may be scheduled only for the 
purpose of affording the requester an opportunity to discuss freely and 
openly the matters set forth in the administrative ruling request. 
Accordingly, the conferees will not be bound by any argument or position 
advocated or agreed to, expressly or impliedly, during the conference. 
Any new arguments or facts put forth by the requester at the meeting 
must be reduced to writing by the requester and submitted in conformity 
with Sec. 103.81 before they may be considered in connection with the 
request.

(Approved by the Office of Management and Budget under control number 
1505-0105)

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.84  Withdrawing requests.

    A person may withdraw a request for an administrative ruling at any 
time before the ruling has been issued.



Sec. 103.85  Issuing rulings.

    The Assistant Secretary (Enforcement), or his designee may issue a 
written ruling interpreting the relationship between part 103 and each 
situation for which such a ruling has been requested in conformity with 
Sec. 103.81. A ruling issued under this section shall bind the Treasury 
Department only in the event that the request describes a specifically 
identified actual situation. A ruling issued under this section shall 
have precedential value, and hence may be relied upon by others 
similarly situated, only if it is published or will be published by the 
Office of Financial Enforcement in the Federal Register. Rulings with 
precedential value will be published periodically in the Federal 
Register and yearly in the Appendix to this part. All rulings with 
precedential value will be available by mail to any person upon written 
request specifically identifying the ruling sought.

[[Page 464]]

Treasury will make every effort to respond to each requestor within 90 
days of receiving a request.

(Approved by the Office of Management and Budget under control number 
1505-0105)

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.86  Modifying or rescinding rulings.

    (a) The Assistant Secretary (Enforcement), or his designee may 
modify or rescind any ruling made pursuant to Sec. 103.85:
    (1) When, in light of changes in the statute or regulations, the 
ruling no longer sets forth the interpretation of the Assistant 
Secretary (Enforcement) with respect to the described situation,
    (2) When any fact or statement submitted in the original ruling 
request is found to be materially inaccurate or incomplete, or
    (3) For other good cause.
    (b) Any person may submit to the Assistant Secretary (Enforcement) a 
written request that an administrative ruling be modified or rescinded. 
The request should conform to the requirements of Sec. 103.81, explain 
why rescission or modification is warranted, and refer to any reasons in 
paragraph (a) of this section that are relevant. The request may 
advocate an alternative interpretation and may set forth the legal and 
factual basis for that interpretation.
    (c) Treasury shall modify an existing administrative ruling by 
issuing a new ruling that rescinds the relevant prior ruling. Once 
rescinded, an administrative ruling shall no longer have any 
precedential value.
    (d) An administrative ruling may be modified or rescinded 
retroactively with respect to one or more parties to the original ruling 
request if the Assistant Secretary determines that:
    (1) A fact or statement in the original ruling request was 
materially inaccurate or incomplete,
    (2) The requestor failed to notify in writing the Office of 
Enforcement of a material change to any fact or statement in the 
original request, or
    (3) A party to the original request acted in bad faith when relying 
upon the ruling.

(Approved by the Office of Management and Budget under control number 
1505-0105)

[52 FR 23979, June 26, 1987. Redesignated and amended at 64 FR 45451, 
45453, Aug. 20, 1999]



Sec. 103.87  Disclosing information.

    (a) Any part of any administrative ruling, including names, 
addresses, or information related to the business transactions of 
private parties, may be disclosed pursuant to a request under the 
Freedom of Information Act, 5 U.S.C. 552. If the request for an 
administrative ruling contains information which the requestor wishes to 
be considered for exemption from disclosure under the Freedom of 
Information Act, the requestor should clearly identify such portions of 
the request and the reasons why such information should be exempt from 
disclosure.
    (b) A requestor claiming an exemption from disclosure will be 
notified, at least 10 days before the administrative ruling is issued, 
of a decision not to exempt any of such information from disclosure so 
that the underlying request for an administrative ruling can be 
withdrawn if the requestor so chooses.

(Approved by the Office of Management and Budget under control number 
1505-0105)



    Subpart H_Special Information Sharing Procedures To Deter Money 
                    Laundering and Terrorist Activity

    Source: 67 FR 9876, Mar. 4, 2002, unless otherwise noted.



Sec. 103.90  Definitions.

    For purposes of this subpart, the following definitions apply:
    (a) Money laundering means an activity criminalized by 18 U.S.C. 
1956 or 1957.
    (b) Terrorist activity means an act of domestic terrorism or 
international terrorism as those terms are defined in 18 U.S.C. 2331.
    (c) Account means a formal banking or business relationship 
established to provide regular services, dealings, and

[[Page 465]]

other financial transactions, and includes, but is not limited to, a 
demand deposit, savings deposit, or other transaction or asset account 
and a credit account or other extension of credit.
    (d) Transaction. (1) Except as provided in paragraph (d)(2) of this 
section, the term ``transaction'' shall have the same meaning as 
provided in Sec. 103.11(ii).
    (2) For purposes of Sec. 103.100, a transaction shall not mean any 
transaction conducted through an account.

[67 FR 60585, Sept. 26, 2002]



Sec. 103.100  Information sharing between Federal law enforcement agencies and 

financial institutions.

    (a) Definitions. For purposes of this section:
    (1) The definitions in Sec. 103.90 apply.
    (2) Financial institution means any financial institution described 
in 31 U.S.C. 5312(a)(2).
    (3) Transmittal of funds has the same meaning as provided in Sec. 
103.11(jj).
    (b) Information requests based on credible evidence concerning 
terrorist activity or money laundering--(1) In general. A Federal law 
enforcement agency investigating terrorist activity or money laundering 
may request that FinCEN solicit, on the investigating agency's behalf, 
certain information from a financial institution or a group of financial 
institutions. When submitting such a request to FinCEN, the Federal law 
enforcement agency shall provide FinCEN with a written certification, in 
such form and manner as FinCEN may prescribe. At a minimum, such 
certification must: state that each individual, entity, or organization 
about which the Federal law enforcement agency is seeking information is 
engaged in, or is reasonably suspected based on credible evidence of 
engaging in, terrorist activity or money laundering; include enough 
specific identifiers, such as date of birth, address, and social 
security number, that would permit a financial institution to 
differentiate between common or similar names; and identify one person 
at the agency who can be contacted with any questions relating to its 
request. Upon receiving the requisite certification from the requesting 
Federal law enforcement agency, FinCEN may require any financial 
institution to search its records to determine whether the financial 
institution maintains or has maintained accounts for, or has engaged in 
transactions with, any specified individual, entity, or organization.
    (2) Obligations of a financial institution receiving an information 
request--(i) Record search. Upon receiving an information request from 
FinCEN under this section, a financial institution shall expeditiously 
search its records to determine whether it maintains or has maintained 
any account for, or has engaged in any transaction with, each 
individual, entity, or organization named in FinCEN's request. A 
financial institution may contact the Federal law enforcement agency 
named in the information request provided to the institution by FinCEN 
with any questions relating to the scope or terms of the request. Except 
as otherwise provided in the information request, a financial 
institution shall only be required to search its records for:
    (A) Any current account maintained for a named suspect;
    (B) Any account maintained for a named suspect during the preceding 
twelve months; and
    (C) Any transaction, as defined by Sec. 103.90(d), conducted by or 
on behalf of a named suspect, or any transmittal of funds conducted in 
which a named suspect was either the transmittor or the recipient, 
during the preceding six months that is required under law or regulation 
to be recorded by the financial institution or is recorded and 
maintained electronically by the institution.
    (ii) Report to FinCEN. If a financial institution identifies an 
account or transaction identified with any individual, entity, or 
organization named in a request from FinCEN, it shall report to FinCEN, 
in the manner and in the time frame specified in FinCEN's request, the 
following information:
    (A) The name of such individual, entity, or organization;
    (B) The number of each such account, or in the case of a 
transaction, the date and type of each such transaction; and
    (C) Any Social Security number, taxpayer identification number, 
passport number, date of birth, address, or other

[[Page 466]]

similar identifying information provided by the individual, entity, or 
organization when each such account was opened or each such transaction 
was conducted.
    (iii) Designation of contact person. Upon receiving an information 
request under this section, a financial institution shall designate one 
person to be the point of contact at the institution regarding the 
request and to receive similar requests for information from FinCEN in 
the future. When requested by FinCEN, a financial institution shall 
provide FinCEN with the name, title, mailing address, e-mail address, 
telephone number, and facsimile number of such person, in such manner as 
FinCEN may prescribe. A financial institution that has provided FinCEN 
with contact information must promptly notify FinCEN of any changes to 
such information.
    (iv) Use and security of information request. (A) A financial 
institution shall not use information provided by FinCEN pursuant to 
this section for any purpose other than:
    (1) Reporting to FinCEN as provided in this section;
    (2) Determining whether to establish or maintain an account, or to 
engage in a transaction; or
    (3) Assisting the financial institution in complying with any 
requirement of this part.
    (B)(1) A financial institution shall not disclose to any person, 
other than FinCEN or the Federal law enforcement agency on whose behalf 
FinCEN is requesting information, the fact that FinCEN has requested or 
has obtained information under this section, except to the extent 
necessary to comply with such an information request.
    (2) Notwithstanding paragraph (b)(2)(iv)(B)(1) of this section, a 
financial institution authorized to share information under Sec. 
103.110 may share information concerning an individual, entity, or 
organization named in a request from FinCEN in accordance with the 
requirements of such section. However, such sharing shall not disclose 
the fact that FinCEN has requested information concerning such 
individual, entity, or organization.
    (C) Each financial institution shall maintain adequate procedures to 
protect the security and confidentiality of requests from FinCEN for 
information under this section. The requirements of this paragraph 
(b)(2)(iv)(C) shall be deemed satisfied to the extent that a financial 
institution applies to such information procedures that the institution 
has established to satisfy the requirements of section 501 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801), and applicable regulations issued 
thereunder, with regard to the protection of its customers' nonpublic 
personal information.
    (v) No other action required. Nothing in this section shall be 
construed to require a financial institution to take any action, or to 
decline to take any action, with respect to an account established for, 
or a transaction engaged in with, an individual, entity, or organization 
named in a request from FinCEN, or to decline to establish an account 
for, or to engage in a transaction with, any such individual, entity, or 
organization. Except as otherwise provided in an information request 
under this section, such a request shall not require a financial 
institution to report on future account opening activity or transactions 
or to treat a suspect list received under this section as a government 
list for purposes of section 326 of Public Law 107-56.
    (3) Relation to the Right to Financial Privacy Act and the Gramm-
Leach-Bliley Act. The information that a financial institution is 
required to report pursuant to paragraph (b)(2)(ii) of this section is 
information required to be reported in accordance with a Federal statute 
or rule promulgated thereunder, for purposes of subsection 3413(d) of 
the Right to Financial Privacy Act (12 U.S.C. 3413(d)) and subsection 
502(e)(8) of the Gramm-Leach-Bliley Act (15 U.S.C. 6802(e)(8)).
    (4) No effect on law enforcement or regulatory investigations. 
Nothing in this subpart affects the authority of a Federal agency or 
officer to obtain information directly from a financial institution.

[67 FR 60585, Sept. 26, 2002]



Sec. 103.110  Voluntary information sharing among financial institutions.

    (a) Definitions. For purposes of this section:

[[Page 467]]

    (1) The definitions in Sec. 103.90 apply.
    (2) Financial institution. (i) Except as provided in paragraph 
(a)(2)(ii) of this section, the term ``financial institution'' means any 
financial institution described in 31 U.S.C. 5312(a)(2) that is required 
under this part to establish and maintain an anti-money laundering 
program, or is treated under this part as having satisfied the 
requirements of 31 U.S.C. 5318(h)(1).
    (ii) For purposes of this section, a financial institution shall not 
mean any institution included within a class of financial institutions 
that FinCEN has designated as ineligible to share information under this 
section.
    (3) Association of financial institutions means a group or 
organization the membership of which is comprised entirely of financial 
institutions as defined in paragraph (a)(2) of this section.
    (b) Voluntary information sharing among financial institutions--(1) 
In general. Subject to paragraphs (b)(2), (b)(3), and (b)(4) of this 
section, a financial institution or an association of financial 
institutions may, under the protection of the safe harbor from liability 
described in paragraph (b)(5) of this section, transmit, receive, or 
otherwise share information with any other financial institution or 
association of financial institutions regarding individuals, entities, 
organizations, and countries for purposes of identifying and, where 
appropriate, reporting activities that the financial institution or 
association suspects may involve possible terrorist activity or money 
laundering.
    (2) Notice requirement. A financial institution or association of 
financial institutions that intends to share information as described in 
paragraph (b)(1) of this section shall submit to FinCEN a notice 
described in Appendix A to this subpart H. Each notice provided pursuant 
to this paragraph (b)(2) shall be effective for the one year period 
beginning on the date of the notice. In order to continue to engage in 
the sharing of information after the end of the one year period, a 
financial institution or association of financial institutions must 
submit a new notice. Completed notices may be submitted to FinCEN by 
accessing FinCEN's Internet Web site, http://www.treas.gov/fincen, and 
entering the appropriate information as directed, or, if a financial 
institution does not have Internet access, by mail to: FinCEN, P.O. Box 
39, Mail Stop 100, Vienna, VA 22183.
    (3) Verification requirement. Prior to sharing information as 
described in paragraph (b)(1) of this section, a financial institution 
or an association of financial institutions must take reasonable steps 
to verify that the other financial institution or association of 
financial institutions with which it intends to share information has 
submitted to FinCEN the notice required by paragraph (b)(2) of this 
section. A financial institution or an association of financial 
institutions may satisfy this paragraph (b)(3) by confirming that the 
other financial institution or association of financial institutions 
appears on a list that FinCEN will periodically make available to 
financial institutions or associations of financial institutions that 
have filed a notice with it, or by confirming directly with the other 
financial institution or association of financial institutions that the 
requisite notice has been filed.
    (4) Use and security of information. (i) Information received by a 
financial institution or an association of financial institutions 
pursuant to this section shall not be used for any purpose other than:
    (A) Identifying and, where appropriate, reporting on money 
laundering or terrorist activities;
    (B) Determining whether to establish or maintain an account, or to 
engage in a transaction; or
    (C) Assisting the financial institution in complying with any 
requirement of this part.
    (ii) Each financial institution or association of financial 
institutions that engages in the sharing of information pursuant to this 
section shall maintain adequate procedures to protect the security and 
confidentiality of such information. The requirements of this paragraph 
(b)(4)(ii) shall be deemed satisfied to the extent that a financial 
institution applies to such information procedures that the institution 
has established to satisfy the requirements of section 501 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801), and applicable regulations issued 
thereunder, with regard

[[Page 468]]

to the protection of its customers' nonpublic personal information.
    (5) Safe harbor from certain liability--(i) In general. A financial 
institution or association of financial institutions that shares 
information pursuant to paragraph (b) of this section shall be protected 
from liability for such sharing, or for any failure to provide notice of 
such sharing, to an individual, entity, or organization that is 
identified in such sharing, to the full extent provided in subsection 
314(b) of Public Law 107-56.
    (ii) Limitation. Paragraph (b)(5)(i) of this section shall not apply 
to a financial institution or association of financial institutions to 
the extent such institution or association fails to comply with 
paragraphs (b)(2), (b)(3), or (b)(4) of this section.
    (c) Information sharing between financial institutions and the 
Federal Government. If, as a result of information shared pursuant to 
this section, a financial institution knows, suspects, or has reason to 
suspect that an individual, entity, or organization is involved in, or 
may be involved in terrorist activity or money laundering, and such 
institution is subject to a suspicious activity reporting requirement 
under this part or other applicable regulations, the institution shall 
file a Suspicious Activity Report in accordance with those regulations. 
In situations involving violations requiring immediate attention, such 
as when a reportable violation involves terrorist activity or is 
ongoing, the financial institution shall immediately notify, by 
telephone, an appropriate law enforcement authority and financial 
institution supervisory authorities in addition to filing timely a 
Suspicious Activity Report. A financial institution that is not subject 
to a suspicious activity reporting requirement is not required to file a 
Suspicious Activity Report or otherwise to notify law enforcement of 
suspicious activity that is detected as a result of information shared 
pursuant to this section. Such a financial institution is encouraged, 
however, to voluntarily report such activity to FinCEN.
    (d) No effect on financial institution reporting obligations. 
Nothing in this subpart affects the obligation of a financial 
institution to file a Suspicious Activity Report pursuant to subpart B 
of this part or any other applicable regulations, or to otherwise 
contact directly a Federal agency concerning individuals or entities 
suspected of engaging in terrorist activity or money laundering.

[67 FR 60587, Sept. 26, 2002]

[[Page 469]]



    Sec. Appendix A to Subpart H of Part 103--Notice for Purposes of 
       Subsection 314(b) of the USA Patriot Act and 31 CFR 103.110

[GRAPHIC] [TIFF OMITTED] TR26SE02.014


[68 FR 60587, Sept. 26, 2002]

[[Page 470]]



                Subpart I_Anti-Money Laundering Programs

                     Anti-Money Laundering Programs



Sec. 103.120  Anti-money laundering program requirements for financial 

institutions regulated by a Federal functional regulator or a self-regulatory 

organization, and casinos.

    (a) Definitions. For purposes of this section:
    (1) Financial institution means a financial institution defined in 
31 U.S.C. 5312(a)(2) or (c)(1) that is subject to regulation by a 
Federal functional regulator or a self-regulatory organization.
    (2) Federal functional regulator means:
    (i) The Board of Governors of the Federal Reserve System;
    (ii) The Office of the Comptroller of the Currency;
    (iii) The Board of Directors of the Federal Deposit Insurance 
Corporation;
    (iv) The Office of Thrift Supervision;
    (v) The National Credit Union Administration;
    (vi) The Securities and Exchange Commission; or
    (vii) The Commodity Futures Trading Commission.
    (3) Self-regulatory organization:
    (i) Shall have the same meaning as provided in section 3(a)(26) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)); and
    (ii) Means a ``registered entity'' or a ``registered futures 
association'' as provided in section 1a(29) or 17, respectively, of the 
Commodity Exchange Act (7 U.S.C. 1a(29), 21).
    (4) Casino has the same meaning as provided in Sec. 103.11(n)(5).
    (b) Requirements for financial institutions regulated only by a 
Federal functional regulator, including banks, savings associations, and 
credit unions. A financial institution regulated by a Federal functional 
regulator that is not subject to the regulations of a self regulatory 
organization shall be deemed to satisfy the requirements of 31 U.S.C. 
5318(h)(1) if it implements and maintains an anti-money laundering 
program that complies with the requirements of Sec. Sec. 103.176 and 
103.178 and the regulation of its Federal functional regulator governing 
such programs.
    (c) Requirements for financial institutions regulated by a self-
regulatory organization, including registered securities broker-dealers 
and futures commission merchants. A financial institution regulated by a 
self-regulatory organization shall be deemed to satisfy the requirements 
of 31 U.S.C. 5318(h)(1) if:
    (1) The financial institution complies with the requirements of 
Sec. Sec. 103.176 and 103.178 and any applicable regulation of its 
Federal functional regulator governing the establishment and 
implementation of anti-money laundering programs; and
    (2)(i) The financial institution implements and maintains an anti-
money laundering program that complies with the rules, regulations, or 
requirements of its self-regulatory organization governing such 
programs; and
    (ii) The rules, regulations, or requirements of the self-regulatory 
organization have been approved, if required, by the appropriate Federal 
functional regulator.
    (d) Requirements for casinos. A casino shall be deemed to satisfy 
the requirements of 31 U.S.C. 5318(h)(1) if it implements and maintains 
a compliance program described in Sec. 103.64.

[67 FR 21113, Apr. 29, 2002, as amended at 71 FR 512, Jan. 4, 2006]



Sec. 103.121  Customer Identification Programs for banks, savings 

associations, credit unions, and certain non-Federally regulated banks.

    (a) Definitions. For purposes of this section:
    (1)(i) Account means a formal banking relationship established to 
provide or engage in services, dealings, or other financial transactions 
including a deposit account, a transaction or asset account, a credit 
account, or other extension of credit. Account also includes a 
relationship established to provide a safety deposit box or other 
safekeeping services, or cash management, custodian, and trust services.
    (ii) Account does not include:
    (A) A product or service where a formal banking relationship is not 
established with a person, such as check-cashing, wire transfer, or sale 
of a check or money order;
    (B) An account that the bank acquires through an acquisition, 
merger, purchase of assets, or assumption of liabilities; or

[[Page 471]]

    (C) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (2) Bank means:
    (i) A bank, as that term is defined in Sec. 103.11(c), that is 
subject to regulation by a Federal functional regulator; and
    (ii) A credit union, private bank, and trust company, as set forth 
in Sec. 103.11(c), that does not have a Federal functional regulator.
    (3)(i) Customer means:
    (A) A person that opens a new account; and
    (B) An individual who opens a new account for:
    (1) An individual who lacks legal capacity, such as a minor; or
    (2) An entity that is not a legal person, such as a civic club.
    (ii) Customer does not include:
    (A) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a state bank regulator;
    (B) A person described in Sec. 103.22(d)(2)(ii) through (iv); or
    (C) A person that has an existing account with the bank, provided 
that the bank has a reasonable belief that it knows the true identity of 
the person.
    (4) Federal functional regulator is defined at Sec. 103.120(a)(2).
    (5) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).
    (6) Taxpayer identification number is defined by section 6109 of the 
Internal Revenue Code of 1986 (26 U.S.C. 6109) and the Internal Revenue 
Service regulations implementing that section (e.g., social security 
number or employer identification number).
    (7) U.S. person means:
    (i) A United States citizen; or
    (ii) A person other than an individual (such as a corporation, 
partnership, or trust), that is established or organized under the laws 
of a State or the United States.
    (8) Non-U.S. person means a person that is not a U.S. person.
    (b) Customer Identification Program: minimum requirements--(1) In 
general. A bank must implement a written Customer Identification Program 
(CIP) appropriate for its size and type of business that, at a minimum, 
includes each of the requirements of paragraphs (b)(1) through (5) of 
this section. If a bank is required to have an anti-money laundering 
compliance program under the regulations implementing 31 U.S.C. 5318(h), 
12 U.S.C. 1818(s), or 12 U.S.C. 1786(q)(1), then the CIP must be a part 
of the anti-money laundering compliance program. Until such time as 
credit unions, private banks, and trust companies without a Federal 
functional regulator are subject to such a program, their CIPs must be 
approved by their boards of directors.
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable the bank 
to form a reasonable belief that it knows the true identity of each 
customer. These procedures must be based on the bank's assessment of the 
relevant risks, including those presented by the various types of 
accounts maintained by the bank, the various methods of opening accounts 
provided by the bank, the various types of identifying information 
available, and the bank's size, location, and customer base. At a 
minimum, these procedures must contain the elements described in this 
paragraph (b)(2).
    (i) Customer information required--(A) In general. The CIP must 
contain procedures for opening an account that specify the identifying 
information that will be obtained from each customer. Except as 
permitted by paragraphs (b)(2)(i)(B) and (C) of this section, the bank 
must obtain, at a minimum, the following information from the customer 
prior to opening an account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) For an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of next of kin or 
of another contact individual; or
    (iii) For a person other than an individual (such as a corporation, 
partnership, or trust), a principal place of

[[Page 472]]

business, local office, or other physical location; and
    (4) Identification number, which shall be:
    (i) For a U.S. person, a taxpayer identification number; or
    (ii) For a non-U.S. person, one or more of the following: a taxpayer 
identification number; passport number and country of issuance; alien 
identification card number; or number and country of issuance of any 
other government-issued document evidencing nationality or residence and 
bearing a photograph or similar safeguard.

    Note to paragraph (b)(2)(i)(A)(4)(ii):
    When opening an account for a foreign business or enterprise that 
does not have an identification number, the bank must request 
alternative government-issued documentation certifying the existence of 
the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening the account, the CIP may include procedures 
for opening an account for a customer that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
customer opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (C) Credit card accounts. In connection with a customer who opens a 
credit card account, a bank may obtain the identifying information about 
a customer required under paragraph (b)(2)(i)(A) by acquiring it from a 
third-party source prior to extending credit to the customer.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of the customer, using information obtained in 
accordance with paragraph (b)(2)(i) of this section, within a reasonable 
time after the account is opened. The procedures must describe when the 
bank will use documents, non-documentary methods, or a combination of 
both methods as described in this paragraph (b)(2)(ii).
    (A) Verification through documents. For a bank relying on documents, 
the CIP must contain procedures that set forth the documents that the 
bank will use. These documents may include:
    (1) For an individual, unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard, such as a driver's license or passport; and
    (2) For a person other than an individual (such as a corporation, 
partnership, or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or trust instrument.
    (B) Verification through non-documentary methods. For a bank relying 
on non-documentary methods, the CIP must contain procedures that 
describe the non-documentary methods the bank will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; and obtaining a financial statement.
    (2) The bank's non-documentary procedures must address situations 
where an individual is unable to present an unexpired government-issued 
identification document that bears a photograph or similar safeguard; 
the bank is not familiar with the documents presented; the account is 
opened without obtaining documents; the customer opens the account 
without appearing in person at the bank; and where the bank is otherwise 
presented with circumstances that increase the risk that the bank will 
be unable to verify the true identity of a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the bank's risk assessment of a new 
account opened by a customer that is not an individual, the bank will 
obtain information about individuals with authority or control over such 
account, including signatories, in order to verify the customer's 
identity. This verification method applies only when the bank cannot 
verify

[[Page 473]]

the customer's true identity using the verification methods described in 
paragraphs (b)(2)(ii)(A) and (B) of this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the bank cannot form a reasonable 
belief that it knows the true identity of a customer. These procedures 
should describe:
    (A) When the bank should not open an account;
    (B) The terms under which a customer may use an account while the 
bank attempts to verify the customer's identity;
    (C) When the bank should close an account, after attempts to verify 
a customer's identity have failed; and
    (D) When the bank should file a Suspicious Activity Report in 
accordance with applicable law and regulation.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under the procedures 
implementing paragraph (b) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (b)(2)(i) of this section;
    (B) A description of any document that was relied on under paragraph 
(b)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance 
and, if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of the customer under paragraph 
(b)(2)(ii)(B) or (C) of this section; and
    (D) A description of the resolution of any substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. The bank must retain the information in 
paragraph (b)(3)(i)(A) of this section for five years after the date the 
account is closed or, in the case of credit card accounts, five years 
after the account is closed or becomes dormant. The bank must retain the 
information in paragraphs (b)(3)(i)(B), (C), and (D) of this section for 
five years after the record is made.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether the customer appears on any list of 
known or suspected terrorists or terrorist organizations issued by any 
Federal government agency and designated as such by Treasury in 
consultation with the Federal functional regulators. The procedures must 
require the bank to make such a determination within a reasonable period 
of time after the account is opened, or earlier, if required by another 
Federal law or regulation or Federal directive issued in connection with 
the applicable list. The procedures must also require the bank to follow 
all Federal directives issued in connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing bank customers with adequate notice that the bank is 
requesting information to verify their identities.
    (ii) Adequate notice. Notice is adequate if the bank generally 
describes the identification requirements of this section and provides 
the notice in a manner reasonably designed to ensure that a customer is 
able to view the notice, or is otherwise given notice, before opening an 
account. For example, depending upon the manner in which the account is 
opened, a bank may post a notice in the lobby or on its website, include 
the notice on its account applications, or use any other form of written 
or oral notice.
    (iii) Sample notice. If appropriate, a bank may use the following 
sample language to provide notice to its customers:

    IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth, and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on another financial institution. The CIP may include 
procedures

[[Page 474]]

specifying when a bank will rely on the performance by another financial 
institution (including an affiliate) of any procedures of the bank's 
CIP, with respect to any customer of the bank that is opening, or has 
opened, an account or has established a similar formal banking or 
business relationship with the other financial institution to provide or 
engage in services, dealings, or other financial transactions, provided 
that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h) and is regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the bank that it has implemented its 
anti-money laundering program, and that it will perform (or its agent 
will perform) the specified requirements of the bank's CIP.
    (c) Exemptions. The appropriate Federal functional regulator, with 
the concurrence of the Secretary, may, by order or regulation, exempt 
any bank or type of account from the requirements of this section. The 
Federal functional regulator and the Secretary shall consider whether 
the exemption is consistent with the purposes of the Bank Secrecy Act 
and with safe and sound banking, and may consider other appropriate 
factors. The Secretary will make these determinations for any bank or 
type of account that is not subject to the authority of a Federal 
functional regulator.
    (d) Other requirements unaffected. Nothing in this section relieves 
a bank of its obligation to comply with any other provision in this 
part, including provisions concerning information that must be obtained, 
verified, or maintained in connection with any account or transaction.

[68 FR 25109, May 9, 2003]



Sec. 103.122  Customer identification programs for broker-dealers.

    (a) Definitions. For the purposes of this section:
    (1)(i) Account means a formal relationship with a broker-dealer 
established to effect transactions in securities, including, but not 
limited to, the purchase or sale of securities and securities loaned and 
borrowed activity, and to hold securities or other assets for 
safekeeping or as collateral.
    (ii) Account does not include:
    (A) An account that the broker-dealer acquires through any 
acquisition, merger, purchase of assets, or assumption of liabilities; 
or
    (B) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (2) Broker-dealer means a person registered or required to be 
registered as a broker or dealer with the Commission under the 
Securities Exchange Act of 1934 (15 U.S.C 77a et seq.), except persons 
who register pursuant to 15 U.S.C 78o(b)(11).
    (3) Commission means the United States Securities and Exchange 
Commission.
    (4)(i) Customer means: (A) A person that opens a new account; and 
(B) an individual who opens a new account for: (1) An individual who 
lacks legal capacity; or (2) an entity that is not a legal person.
    (ii) Customer does not include: (A) A financial institution 
regulated by a Federal functional regulator or a bank regulated by a 
state bank regulator; (B) a person described in Sec. 103.22(d)(2)(ii) 
through (iv); or (C) a person that has an existing account with the 
broker-dealer, provided the broker-dealer has a reasonable belief that 
it knows the true identity of the person.
    (5) Federal functional regulator is defined at Sec. 103.120(a)(2).
    (6) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).
    (7) Taxpayer identification number is defined by section 6109 of the 
Internal Revenue Code of 1986 (26 U.S.C. 6109) and the Internal Revenue 
Service regulations implementing that section (e.g., social security 
number or employer identification number).
    (8) U.S. person means: (i) A United States citizen; or (ii) a person 
other than an individual (such as a corporation, partnership or trust) 
that is established or organized under the laws of a State or the United 
States.

[[Page 475]]

    (9) Non-U.S. person means a person that is not a U.S. person.
    (b) Customer identification program: minimum requirements--(1) In 
general. A broker-dealer must establish, document, and maintain a 
written Customer Identification Program (``CIP'') appropriate for its 
size and business that, at a minimum, includes each of the requirements 
of paragraphs (b)(1) through (b)(5) of this section. The CIP must be a 
part of the broker-dealer's anti-money laundering compliance program 
required under 31 U.S.C. 5318(h).
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable the 
broker-dealer to form a reasonable belief that it knows the true 
identity of each customer. The procedures must be based on the broker-
dealer's assessment of the relevant risks, including those presented by 
the various types of accounts maintained by the broker-dealer, the 
various methods of opening accounts provided by the broker-dealer, the 
various types of identifying information available and the broker-
dealer's size, location and customer base. At a minimum, these 
procedures must contain the elements described in this paragraph (b)(2).
    (i)(A) Customer information required. The CIP must contain 
procedures for opening an account that specify identifying information 
that will be obtained from each customer. Except as permitted by 
paragraph (b)(2)(i)(B) of this section, the broker-dealer must obtain, 
at a minimum, the following information prior to opening an account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be: (i) For an individual, a residential or 
business street address; (ii) for an individual who does not have a 
residential or business street address, an Army Post Office (APO) or 
Fleet Post Office (FPO) box number, or the residential or business 
street address of a next of kin or another contact individual; or (iii) 
for a person other than an individual (such as a corporation, 
partnership or trust), a principal place of business, local office or 
other physical location; and
    (4) Identification number, which shall be: (i) For a U.S. person, a 
taxpayer identification number; or (ii) for a non-U.S. person, one or 
more of the following: a taxpayer identification number, a passport 
number and country of issuance, an alien identification card number, or 
the number and country of issuance of any other government-issued 
document evidencing nationality or residence and bearing a photograph or 
similar safeguard.

    Note to paragraph (b)(2)(i)(A)(4)(ii):
    When opening an account for a foreign business or enterprise that 
does not have an identification number, the broker-dealer must request 
alternative government-issued documentation certifying the existence of 
the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening an account, the CIP may include procedures for 
opening an account for a customer that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
customer opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of each customer, using information obtained in 
accordance with paragraph (b)(2)(i) of this section, within a reasonable 
time before or after the customer's account is opened. The procedures 
must describe when the broker-dealer will use documents, non-documentary 
methods, or a combination of both methods, as described in this 
paragraph (b)(2)(ii).
    (A) Verification through documents. For a broker-dealer relying on 
documents, the CIP must contain procedures that set forth the documents 
the broker-dealer will use. These documents may include:
    (1) For an individual, an unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard, such as a driver's license or passport; and

[[Page 476]]

    (2) For a person other than an individual (such as a corporation, 
partnership or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or a trust instrument.
    (B) Verification through non-documentary methods. For a broker-
dealer relying on non-documentary methods, the CIP must contain 
procedures that set forth the non-documentary methods the broker-dealer 
will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; or obtaining a financial statement.
    (2) The broker-dealer's non-documentary procedures must address 
situations where an individual is unable to present an unexpired 
government-issued identification document that bears a photograph or 
similar safeguard; the broker-dealer is not familiar with the documents 
presented; the account is opened without obtaining documents; the 
customer opens the account without appearing in person at the broker-
dealer; and where the broker-dealer is otherwise presented with 
circumstances that increase the risk that the broker-dealer will be 
unable to verify the true identity of a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the broker-dealer's risk assessment 
of a new account opened by a customer that is not an individual, the 
broker-dealer will obtain information about individuals with authority 
or control over such account. This verification method applies only when 
the broker-dealer cannot verify the customer's true identity using the 
verification methods described in paragraphs (b)(2)(ii)(A) and (B) of 
this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the broker-dealer cannot form a 
reasonable belief that it knows the true identity of a customer. These 
procedures should describe:
    (A) When the broker-dealer should not open an account;
    (B) The terms under which a customer may conduct transactions while 
the broker-dealer attempts to verify the customer's identity;
    (C) When the broker-dealer should close an account after attempts to 
verify a customer's identity fail; and
    (D) When the broker-dealer should file a Suspicious Activity Report 
in accordance with applicable law and regulation.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under procedures 
implementing paragraph (b) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (b)(2)(i) of this section,
    (B) A description of any document that was relied on under paragraph 
(b)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance, 
and if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of a customer under paragraphs 
(b)(2)(ii)(B) and (C) of this section; and
    (D) A description of the resolution of each substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. The broker-dealer must retain the records 
made under paragraph (b)(3)(i)(A) of this section for five years after 
the account is closed and the records made under paragraphs 
(b)(3)(i)(B), (C) and (D) of this section for five years after the 
record is made. In all other respects, the records must be maintained 
pursuant to the provisions of 17 CFR 240.17a-4.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether a customer appears on any list of 
known or suspected terrorists or terrorist organizations issued by any 
Federal government

[[Page 477]]

agency and designated as such by Treasury in consultation with the 
Federal functional regulators. The procedures must require the broker-
dealer to make such a determination within a reasonable period of time 
after the account is opened, or earlier if required by another Federal 
law or regulation or Federal directive issued in connection with the 
applicable list. The procedures also must require the broker-dealer to 
follow all Federal directives issued in connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing customers with adequate notice that the broker-dealer is 
requesting information to verify their identities.
    (ii) Adequate notice. Notice is adequate if the broker-dealer 
generally describes the identification requirements of this section and 
provides such notice in a manner reasonably designed to ensure that a 
customer is able to view the notice, or is otherwise given notice, 
before opening an account. For example, depending upon the manner in 
which the account is opened, a broker-dealer may post a notice in the 
lobby or on its Web site, include the notice on its account applications 
or use any other form of oral or written notice.
    (iii) Sample notice. If appropriate, a broker-dealer may use the 
following sample language to provide notice to its customers:

    Important Information About Procedures for Opening a New Account

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on another financial institution. The CIP may include 
procedures specifying when the broker-dealer will rely on the 
performance by another financial institution (including an affiliate) of 
any procedures of the broker-dealer's CIP, with respect to any customer 
of the broker-dealer that is opening an account or has established an 
account or similar business relationship with the other financial 
institution to provide or engage in services, dealings, or other 
financial transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h), and regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the broker-dealer that it has 
implemented its anti-money laundering program, and that it will perform 
(or its agent will perform) specified requirements of the broker-
dealer's CIP.
    (c) Exemptions. The Commission, with the concurrence of the 
Secretary, may by order or regulation exempt any broker-dealer that 
registers with the Commission pursuant to 15 U.S.C. 78o or 15 U.S.C. 
78o-4 or any type of account from the requirements of this section. The 
Secretary, with the concurrence of the Commission, may exempt any 
broker-dealer that registers with the Commission pursuant to 15 U.S.C. 
78o-5. In issuing such exemptions, the Commission and the Secretary 
shall consider whether the exemption is consistent with the purposes of 
the Bank Secrecy Act, and in the public interest, and may consider other 
necessary and appropriate factors.
    (d) Other requirements unaffected. Nothing in this section relieves 
a broker-dealer of its obligation to comply with any other provision of 
this part, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.

[68 FR 25129, May 9, 2003]



Sec. 103.123  Customer identification programs for futures commission 

merchants and introducing brokers.

    (a) Definitions. For the purposes of this section:
    (1)(i) Account means a formal relationship with a futures commission 
merchant, including, but not limited to, those established to effect 
transactions in contracts of sale of a commodity for future delivery, 
options on

[[Page 478]]

any contract of sale of a commodity for future delivery, or options on a 
commodity.
    (ii) Account does not include:
    (A) An account that the futures commission merchant acquires through 
any acquisition, merger, purchase of assets, or assumption of 
liabilities; or
    (B) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (2) Commission means the United States Commodity Futures Trading 
Commission.
    (3) Commodity means any good, article, service, right, or interest 
described in Section 1a(4) of the Commodity Exchange Act (7 U.S.C. 
1a(4)).
    (4) Contract of sale means any sale, agreement of sale or agreement 
to sell as described in Section 1a(7) of the Commodity Exchange Act (7 
U.S.C. 1a(7)).
    (5)(i) Customer means:
    (A) A person that opens a new account with a futures commission 
merchant; and
    (B) An individual who opens a new account with a futures commission 
merchant for:
    (1) An individual who lacks legal capacity; or
    (2) An entity that is not a legal person.
    (ii) Customer does not include:
    (A) A financial institution regulated by a Federal functional 
regulator or a bank regulated by a state bank regulator;
    (B) A person described in Sec. 103.22(d)(2)(ii) through (iv); or
    (C) A person that has an existing account, provided the futures 
commission merchant or introducing broker has a reasonable belief that 
it knows the true identity of the person.
    (iii) When an account is introduced to a futures commission merchant 
by an introducing broker, the person or individual opening the account 
shall be deemed to be a customer of both the futures commission merchant 
and the introducing broker for the purposes of this section.
    (6) Federal functional regulator is defined at Sec. 103.120(a)(2).
    (7) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).
    (8) Futures commission merchant means any person registered or 
required to be registered as a futures commission merchant with the 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.), except 
persons who register pursuant to Section 4f(a)(2) of the Commodity 
Exchange Act (7 U.S.C. 6f(a)(2)).
    (9) Introducing broker means any person registered or required to be 
registered as an introducing broker with the Commission under the 
Commodity Exchange Act (7 U.S.C. 1 et seq.), except persons who register 
pursuant to Section 4f(a)(2) of the Commodity Exchange Act (7 U.S.C. 
6f(a)(2)).
    (10) Option means an agreement, contract or transaction described in 
Section 1a(26) of the Commodity Exchange Act (7 U.S.C. 1a(26)).
    (11) Taxpayer identification number is defined by section 6109 of 
the Internal Revenue Code of 1986 (26 U.S.C. 6109) and the Internal 
Revenue Service regulations implementing that section (e.g., social 
security number or employer identification number).
    (12) U.S. person means:
    (i) A United States citizen; or
    (ii) A person other than an individual (such as a corporation, 
partnership or trust) that is established or organized under the laws of 
a State or the United States.
    (13) Non-U.S. person means a person that is not a U.S. person.
    (b) Customer identification program: minimum requirements--(1) In 
general. Each futures commission merchant and introducing broker must 
implement a written Customer Identification Program (CIP) appropriate 
for its size and business that, at a minimum, includes each of the 
requirements of paragraphs (b)(1) through (b)(5) of this section. The 
CIP must be a part of each futures commission merchant's and introducing 
broker's anti-money laundering compliance program required under 31 
U.S.C. 5318(h).
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable each 
futures commission merchant and introducing broker to form a

[[Page 479]]

reasonable belief that it knows the true identity of each customer. The 
procedures must be based on the futures commission merchant's or 
introducing broker's assessment of the relevant risks, including those 
presented by the various types of accounts maintained, the various 
methods of opening accounts, the various types of identifying 
information available, and the futures commission merchant's or 
introducing broker's size, location and customer base. At a minimum, 
these procedures must contain the elements described in paragraph (b)(2) 
of this section.
    (i)(A) Customer information required. The CIP must include 
procedures for opening an account that specify identifying information 
that will be obtained from each customer. Except as permitted by 
paragraph (b)(2)(i)(B) of this section, each futures commission merchant 
and introducing broker must obtain, at a minimum, the following 
information prior to opening an account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) For an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of a next of kin 
or another contact individual; or
    (iii) For a person other than an individual (such as a corporation, 
partnership or trust), a principal place of business, local office or 
other physical location; and
    (4) Identification number, which shall be:
    (i) For a U.S. person, a taxpayer identification number; or
    (ii) For a non-U.S. person, one or more of the following: a taxpayer 
identification number, a passport number and country of issuance, an 
alien identification card number, or the number and country of issuance 
of any other government-issued document evidencing nationality or 
residence and bearing a photograph or similar safeguard.

    Note to paragraph (b)(2)(i)(A)(4)(ii):
    When opening an account for a foreign business or enterprise that 
does not have an identification number, the futures commission merchant 
or introducing broker must request alternative government-issued 
documentation certifying the existence of the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening an account, the CIP may include procedures for 
opening an account for a customer that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
customer opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of each customer, using information obtained in 
accordance with paragraph (b)(2)(i) of this section, within a reasonable 
time before or after the customer's account is opened. The procedures 
must describe when the futures commission merchant or introducing broker 
will use documents, non-documentary methods, or a combination of both 
methods, as described in this paragraph (b)(2)(ii).
    (A) Verification through documents. For a futures commission 
merchant or introducing broker relying on documents, the CIP must 
contain procedures that set forth the documents the futures commission 
merchant or introducing broker will use. These documents may include:
    (1) For an individual, an unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard, such as a driver's license or passport; and
    (2) For a person other than an individual (such as a corporation, 
partnership or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or a trust instrument.
    (B) Verification through non-documentary methods. For a futures 
commission merchant or introducing broker relying on non-documentary 
methods, the

[[Page 480]]

CIP must contain procedures that set forth the non-documentary methods 
the futures commission merchant or introducing broker will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; or obtaining a financial statement.
    (2) The futures commission merchant's or introducing broker's non-
documentary procedures must address situations where an individual is 
unable to present an unexpired government-issued identification document 
that bears a photograph or similar safeguard; the futures commission 
merchant or introducing broker is not familiar with the documents 
presented; the account is opened without obtaining documents; the 
customer opens the account without appearing in person at the futures 
commission merchant or introducing broker; and where the futures 
commission merchant or introducing broker is otherwise presented with 
circumstances that increase the risk that the futures commission 
merchant or introducing broker will be unable to verify the true 
identity of a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the futures commission merchant's or 
introducing broker's risk assessment of a new account opened by a 
customer that is not an individual, the futures commission merchant or 
introducing broker will obtain information about individuals with 
authority or control over such account in order to verify the customer's 
identity. This verification method applies only when the futures 
commission merchant or introducing broker cannot verify the customer's 
true identity after using the verification methods described in 
paragraphs (b)(2)(ii)(A) and (B) of this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the futures commission merchant or 
introducing broker cannot form a reasonable belief that it knows the 
true identity of a customer. These procedures should describe:
    (A) When an account should not be opened;
    (B) The terms under which a customer may conduct transactions while 
the futures commission merchant or introducing broker attempts to verify 
the customer's identity;
    (C) When an account should be closed after attempts to verify a 
customer's identity have failed; and
    (D) When the futures commission merchant or introducing broker 
should file a Suspicious Activity Report in accordance with applicable 
law and regulation.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under procedures 
implementing paragraph (b) of this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (b)(2)(i) of this section;
    (B) A description of any document that was relied on under paragraph 
(b)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance, 
and if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of a customer under paragraphs 
(b)(2)(ii)(B) and (C) of this section; and
    (D) A description of the resolution of each substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. Each futures commission merchant and 
introducing broker must retain the records made under paragraph 
(b)(3)(i)(A) of this section for five years after the account is closed 
and the records made under paragraphs (b)(3)(i)(B), (C), and (D) of this 
section for five years after the record is made. In all other respects, 
the records must be maintained pursuant to the provisions of 17 CFR 
1.31.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether a customer appears on any list of 
known or suspected

[[Page 481]]

terrorists or terrorist organizations issued by any Federal government 
agency and designated as such by Treasury in consultation with the 
Federal functional regulators. The procedures must require the futures 
commission merchant or introducing broker to make such a determination 
within a reasonable period of time after the account is opened, or 
earlier if required by another Federal law or regulation or Federal 
directive issued in connection with the applicable list. The procedures 
also must require the futures commission merchant or introducing broker 
to follow all Federal directives issued in connection with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing customers with adequate notice that the futures commission 
merchant or introducing broker is requesting information to verify their 
identities.
    (ii) Adequate notice. Notice is adequate if the futures commission 
merchant or introducing broker generally describes the identification 
requirements of this section and provides such notice in a manner 
reasonably designed to ensure that a customer is able to view the 
notice, or is otherwise given notice, before opening an account. For 
example, depending upon the manner in which the account is opened, a 
futures commission merchant or introducing broker may post a notice in 
the lobby or on its Web site, include the notice on its account 
applications or use any other form of written or oral notice.
    (iii) Sample notice. If appropriate, a futures commission merchant 
or introducing broker may use the following sample language to provide 
notice to its customers:

    Important Information About Procedures For Opening a New Account

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on another financial institution. The CIP may include 
procedures specifying when the futures commission merchant or 
introducing broker will rely on the performance by another financial 
institution (including an affiliate) of any procedures of its CIP, with 
respect to any customer of the futures commission merchant or 
introducing broker that is opening an account, or has established an 
account or similar business relationship with the other financial 
institution to provide or engage in services, dealings, or other 
financial transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h), and is regulated by a Federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the futures commission merchant or 
introducing broker that it has implemented its anti-money laundering 
program, and that it will perform (or its agent will perform) specified 
requirements of the futures commission merchant's or introducing 
broker's CIP.
    (c) Exemptions. The Commission, with the concurrence of the 
Secretary, may by order or regulation exempt any futures commission 
merchant or introducing broker that registers with the Commission or any 
type of account from the requirements of this section. In issuing such 
exemptions, the Commission and the Secretary shall consider whether the 
exemption is consistent with the purposes of the Bank Secrecy Act, and 
in the public interest, and may consider other necessary and appropriate 
factors.
    (d) Other requirements unaffected. Nothing in this section relieves 
a futures commission merchant or introducing broker of its obligation to 
comply with any other provision of this part, including provisions 
concerning information that must be obtained, verified, or maintained in 
connection with any account or transaction.

[68 FR 25160, May 9, 2003]

[[Page 482]]



Sec. 103.125  Anti-money laundering programs for money services businesses.

    (a) Each money services business, as defined by Sec. 103.11(uu), 
shall develop, implement, and maintain an effective anti-money 
laundering program. An effective anti-money laundering program is one 
that is reasonably designed to prevent the money services business from 
being used to facilitate money laundering and the financing of terrorist 
activities.
    (b) The program shall be commensurate with the risks posed by the 
location and size of, and the nature and volume of the financial 
services provided by, the money services business.
    (c) The program shall be in writing, and a money services business 
shall make copies of the anti-money laundering program available for 
inspection to the Department of the Treasury upon request.
    (d) At a minimum, the program shall:
    (1) Incorporate policies, procedures, and internal controls 
reasonably designed to assure compliance with this part.
    (i) Policies, procedures, and internal controls developed and 
implemented under this section shall include provisions for complying 
with the requirements of this part including, to the extent applicable 
to the money services business, requirements for:
    (A) Verifying customer identification;
    (B) Filing reports;
    (C) Creating and retaining records; and
    (D) Responding to law enforcement requests.
    (ii) Money services businesses that have automated data processing 
systems should integrate their compliance procedures with such systems.
    (iii) A person that is a money services business solely because it 
is an agent for another money services business as set forth in Sec. 
103.41(a)(2), and the money services business for which it serves as 
agent, may by agreement allocate between them responsibility for 
development of policies, procedures, and internal controls required by 
this paragraph (d)(1). Each money services business shall remain solely 
responsible for implementation of the requirements set forth in this 
section, and nothing in this paragraph (d)(1) relieves any money 
services business from its obligation to establish and maintain an 
effective anti-money laundering program.
    (2) Designate a person to assure day to day compliance with the 
program and this part. The responsibilities of such person shall include 
assuring that:
    (i) The money services business properly files reports, and creates 
and retains records, in accordance with applicable requirements of this 
part;
    (ii) The compliance program is updated as necessary to reflect 
current requirements of this part, and related guidance issued by the 
Department of the Treasury; and
    (iii) The money services business provides appropriate training and 
education in accordance with paragraph (d)(3) of this section.
    (3) Provide education and/or training of appropriate personnel 
concerning their responsibilities under the program, including training 
in the detection of suspicious transactions to the extent that the money 
services business is required to report such transactions under this 
part.
    (4) Provide for independent review to monitor and maintain an 
adequate program. The scope and frequency of the review shall be 
commensurate with the risk of the financial services provided by the 
money services business. Such review may be conducted by an officer or 
employee of the money services business so long as the reviewer is not 
the person designated in paragraph (d)(2) of this section.
    (e) Effective date. A money services business must develop and 
implement an anti-money laundering program that complies with the 
requirements of this section on or before the later of July 24, 2002, 
and the end of the 90-day period beginning on the day following the date 
the business is established.

[67 FR 21116, Apr. 29, 2002]



Sec. 103.130  Anti-money laundering programs for mutual funds.

    (a) For purposes of this section, ``mutual fund'' means an open-end 
company as defined in section 5(a)(1) of

[[Page 483]]

the Investment Company act of 1940 (15 U.S.C. 80a-5(a)(1)).
    (b) Effective July 24, 2002, each mutual fund shall develop and 
implement a written anti-money laundering program reasonably designed to 
prevent the mutual fund from being used for money laundering or the 
financing of terrorist activities and to achieve and monitor compliance 
with the applicable requirements of the Bank Secrecy Act (31 U.S.C. 
5311, et seq.), and the implementing regulations promulgated thereunder 
by the Department of the Treasury. Each mutual fund's anti-money 
laundering program must be approved in writing by its board of directors 
or trustees. A mutual fund shall make its anti-money laundering program 
available for inspection by the Commission.
    (c) The anti-money laundering program shall at a minimum:
    (1) Establish and implement policies, procedures, and internal 
controls reasonably designed to prevent the mutual fund from being used 
for money laundering or the financing of terrorist activities and to 
achieve compliance with the applicable provisions of the Bank Secrecy 
Act and the implementing regulations thereunder;
    (2) Provide for independent testing for compliance to be conducted 
by the mutual fund's personnel or by a qualified outside party;
    (3) Designate a person or persons responsible for implementing and 
monitoring the operations and internal controls of the program; and
    (4) Provide ongoing training for appropriate persons.

[67 FR 21121, Apr. 29, 2002]



Sec. 103.131  Customer identification programs for mutual funds.

    (a) Definitions. For purposes of this section:
    (1)(i) Account means any contractual or other business relationship 
between a person and a mutual fund established to effect transactions in 
securities issued by the mutual fund, including the purchase or sale of 
securities.
    (ii) Account does not include:
    (A) An account that a mutual fund acquires through any acquisition, 
merger, purchase of assets, or assumption of liabilities; or
    (B) An account opened for the purpose of participating in an 
employee benefit plan established under the Employee Retirement Income 
Security Act of 1974.
    (2)(i) Customer means:
    (A) A person that opens a new account; and
    (B) An individual who opens a new account for:
    (1) An individual who lacks legal capacity, such as a minor; or
    (2) An entity that is not a legal person, such as a civic club.
    (ii) Customer does not include:
    (A) A financial institution regulated by a federal functional 
regulator or a bank regulated by a state bank regulator;
    (B) A person described in Sec. 103.22(d)(2)(ii) through (iv); or
    (C) A person that has an existing account with the mutual fund, 
provided that the mutual fund has a reasonable belief that it knows the 
true identity of the person.
    (3) Federal functional regulator is defined at Sec. 103.120(a)(2).
    (4) Financial institution is defined at 31 U.S.C. 5312(a)(2) and 
(c)(1).
    (5) Mutual fund means an ``investment company'' (as the term is 
defined in section 3 of the Investment Company Act (15 U.S.C. 80a-3)) 
that is an ``open-end company'' (as that term is defined in section 5 of 
the Investment Company Act (15 U.S.C. 80a-5)) that is registered or is 
required to register with the Commission under section 8 of the 
Investment Company Act (15 U.S.C. 80a-8).
    (6) Non-U.S. person means a person that is not a U.S. person.
    (7) Taxpayer identification number is defined by section 6109 of the 
Internal Revenue Code of 1986 (26 U.S.C. 6109) and Internal Revenue 
Service regulations implementing that section (e.g., social security 
number or employer identification number).
    (8) U.S. person means:
    (i) A United States citizen; or
    (ii) A person other than an individual (such as a corporation, 
partnership or trust), that is established or organized under the laws 
of a State or the United States.
    (b) Customer identification program: minimum requirements--(1) In 
general. A

[[Page 484]]

mutual fund must implement a written Customer Identification Program 
(``CIP'') appropriate for its size and type of business that, at a 
minimum, includes each of the requirements of paragraphs (b)(1) through 
(5) of this section. The CIP must be a part of the mutual fund's anti-
money laundering program required under the regulations implementing 31 
U.S.C. 5318(h).
    (2) Identity verification procedures. The CIP must include risk-
based procedures for verifying the identity of each customer to the 
extent reasonable and practicable. The procedures must enable the mutual 
fund to form a reasonable belief that it knows the true identity of each 
customer. The procedures must be based on the mutual fund's assessment 
of the relevant risks, including those presented by the manner in which 
accounts are opened, fund shares are distributed, and purchases, sales 
and exchanges are effected, the various types of accounts maintained by 
the mutual fund, the various types of identifying information available, 
and the mutual fund's customer base. At a minimum, these procedures must 
contain the elements described in this paragraph (b)(2).
    (i) Customer information required--(A) In general. The CIP must 
contain procedures for opening an account that specify the identifying 
information that will be obtained with respect to each customer. Except 
as permitted by paragraph (b)(2)(i)(B) of this section, a mutual fund 
must obtain, at a minimum, the following information prior to opening an 
account:
    (1) Name;
    (2) Date of birth, for an individual;
    (3) Address, which shall be:
    (i) For an individual, a residential or business street address;
    (ii) For an individual who does not have a residential or business 
street address, an Army Post Office (APO) or Fleet Post Office (FPO) box 
number, or the residential or business street address of next of kin or 
of another contact individual; or
    (iii) For a person other than an individual (such as a corporation, 
partnership, or trust), a principal place of business, local office or 
other physical location; and
    (4) Identification number, which shall be:
    (i) For a U.S. person, a taxpayer identification number; or
    (ii) For a non-U.S. person, one or more of the following: a taxpayer 
identification number; passport number and country of issuance; alien 
identification card number; or number and country of issuance of any 
other government-issued document evidencing nationality or residence and 
bearing a photograph or similar safeguard.

    Note to paragraph (b)(2)(i)(A)(4)(ii):
    When opening an account for a foreign business or enterprise that 
does not have an identification number, the mutual fund must request 
alternative government-issued documentation certifying the existence of 
the business or enterprise.

    (B) Exception for persons applying for a taxpayer identification 
number. Instead of obtaining a taxpayer identification number from a 
customer prior to opening an account, the CIP may include procedures for 
opening an account for a person that has applied for, but has not 
received, a taxpayer identification number. In this case, the CIP must 
include procedures to confirm that the application was filed before the 
person opens the account and to obtain the taxpayer identification 
number within a reasonable period of time after the account is opened.
    (ii) Customer verification. The CIP must contain procedures for 
verifying the identity of the customer, using the information obtained 
in accordance with paragraph (b)(2)(i) of this section, within a 
reasonable time after the account is opened. The procedures must 
describe when the mutual fund will use documents, non-documentary 
methods, or a combination of both methods as described in this paragraph 
(b)(2)(ii).
    (A) Verification through documents. For a mutual fund relying on 
documents, the CIP must contain procedures that set forth the documents 
that the mutual fund will use. These documents may include:
    (1) For an individual, unexpired government-issued identification 
evidencing nationality or residence and bearing a photograph or similar 
safeguard, such as a driver's license or passport; and

[[Page 485]]

    (2) For a person other than an individual (such as a corporation, 
partnership, or trust), documents showing the existence of the entity, 
such as certified articles of incorporation, a government-issued 
business license, a partnership agreement, or trust instrument.
    (B) Verification through non-documentary methods. For a mutual fund 
relying on non-documentary methods, the CIP must contain procedures that 
describe the non-documentary methods the mutual fund will use.
    (1) These methods may include contacting a customer; independently 
verifying the customer's identity through the comparison of information 
provided by the customer with information obtained from a consumer 
reporting agency, public database, or other source; checking references 
with other financial institutions; and obtaining a financial statement.
    (2) The mutual fund's non-documentary procedures must address 
situations where an individual is unable to present an unexpired 
government-issued identification document that bears a photograph or 
similar safeguard; the mutual fund is not familiar with the documents 
presented; the account is opened without obtaining documents; the 
customer opens the account without appearing in person; and where the 
mutual fund is otherwise presented with circumstances that increase the 
risk that the mutual fund will be unable to verify the true identity of 
a customer through documents.
    (C) Additional verification for certain customers. The CIP must 
address situations where, based on the mutual fund's risk assessment of 
a new account opened by a customer that is not an individual, the mutual 
fund will obtain information about individuals with authority or control 
over such account, including persons authorized to effect transactions 
in the shareholder of record's account, in order to verify the 
customer's identity. This verification method applies only when the 
mutual fund cannot verify the customer's true identity using the 
verification methods described in paragraphs (b)(2)(ii)(A) and (B) of 
this section.
    (iii) Lack of verification. The CIP must include procedures for 
responding to circumstances in which the mutual fund cannot form a 
reasonable belief that it knows the true identity of a customer. These 
procedures should describe:
    (A) When the mutual fund should not open an account;
    (B) The terms under which a customer may use an account while the 
mutual fund attempts to verify the customer's identity;
    (C) When the mutual fund should file a Suspicious Activity Report in 
accordance with applicable law and regulation; and
    (D) When the mutual fund should close an account, after attempts to 
verify a customer's identity have failed.
    (3) Recordkeeping. The CIP must include procedures for making and 
maintaining a record of all information obtained under paragraph (b) of 
this section.
    (i) Required records. At a minimum, the record must include:
    (A) All identifying information about a customer obtained under 
paragraph (b)(2)(i) of this section;
    (B) A description of any document that was relied on under paragraph 
(b)(2)(ii)(A) of this section noting the type of document, any 
identification number contained in the document, the place of issuance, 
and if any, the date of issuance and expiration date;
    (C) A description of the methods and the results of any measures 
undertaken to verify the identity of the customer under paragraph 
(b)(2)(ii)(B) or (C) of this section; and
    (D) A description of the resolution of any substantive discrepancy 
discovered when verifying the identifying information obtained.
    (ii) Retention of records. The mutual fund must retain the 
information in paragraph (b)(3)(i)(A) of this section for five years 
after the date the account is closed. The mutual fund must retain the 
information in paragraphs (b)(3)(i)(B), (C), and (D) of this section for 
five years after the record is made.
    (4) Comparison with government lists. The CIP must include 
procedures for determining whether the customer appears on any list of 
known or suspected

[[Page 486]]

terrorists or terrorist organizations issued by any federal government 
agency and designated as such by the Department of the Treasury in 
consultation with the federal functional regulators. The procedures must 
require the mutual fund to make such a determination within a reasonable 
period of time after the account is opened, or earlier, if required by 
another federal law or regulation or federal directive issued in 
connection with the applicable list. The procedures must also require 
the mutual fund to follow all federal directives issued in connection 
with such lists.
    (5)(i) Customer notice. The CIP must include procedures for 
providing mutual fund customers with adequate notice that the mutual 
fund is requesting information to verify their identities.
    (ii) Adequate notice. Notice is adequate if the mutual fund 
generally describes the identification requirements of this section and 
provides the notice in a manner reasonably designed to ensure that a 
customer is able to view the notice, or is otherwise given notice, 
before opening an account. For example, depending on the manner in which 
the account is opened, a mutual fund may post a notice on its website, 
include the notice on its account applications, or use any other form of 
written or oral notice.
    (iii) Sample notice. If appropriate, a mutual fund may use the 
following sample language to provide notice to its customers:

    IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

    To help the government fight the funding of terrorism and money 
laundering activities, Federal law requires all financial institutions 
to obtain, verify, and record information that identifies each person 
who opens an account.
    What this means for you: When you open an account, we will ask for 
your name, address, date of birth, and other information that will allow 
us to identify you. We may also ask to see your driver's license or 
other identifying documents.

    (6) Reliance on other financial institutions. The CIP may include 
procedures specifying when a mutual fund will rely on the performance by 
another financial institution (including an affiliate) of any procedures 
of the mutual fund's CIP, with respect to any customer of the mutual 
fund that is opening, or has opened, an account or has established a 
similar formal business relationship with the other financial 
institution to provide or engage in services, dealings, or other 
financial transactions, provided that:
    (i) Such reliance is reasonable under the circumstances;
    (ii) The other financial institution is subject to a rule 
implementing 31 U.S.C. 5318(h) and is regulated by a federal functional 
regulator; and
    (iii) The other financial institution enters into a contract 
requiring it to certify annually to the mutual fund that it has 
implemented its anti-money laundering program, and that it (or its 
agent) will perform the specific requirements of the mutual fund's CIP.
    (c) Exemptions. The Commission, with the concurrence of the 
Secretary, may, by order or regulation, exempt any mutual fund or type 
of account from the requirements of this section. The Commission and the 
Secretary shall consider whether the exemption is consistent with the 
purposes of the Bank Secrecy Act and is in the public interest, and may 
consider other appropriate factors.
    (d) Other requirements unaffected. Nothing in this section relieves 
a mutual fund of its obligation to comply with any other provision in 
this part, including provisions concerning information that must be 
obtained, verified, or maintained in connection with any account or 
transaction.

[68 FR 25147, May 9, 2003]



Sec. 103.135  Anti-money laundering programs for operators of credit card 

systems.

    (a) Definitions. For purposes of this section:
    (1) Operator of a credit card system means any person doing business 
in the United States that operates a system for clearing and settling 
transactions in which the operator's credit card, whether acting as a 
credit or debit card, is used to purchase goods or services or to obtain 
a cash advance. To fall within this definition, the operator must also 
have authorized another person (whether located in the United

[[Page 487]]

States or not) to be an issuing or acquiring institution for the 
operator's credit card.
    (2) Issuing institution means a person authorized by the operator of 
a credit card system to issue the operator's credit card.
    (3) Acquiring institution means a person authorized by the operator 
of a credit card system to contract, directly or indirectly, with 
merchants or other persons to process transactions, including cash 
advances, involving the operator's credit card.
    (4) Operator's credit card means a credit card capable of being used 
in the United States that:
    (i) Has been issued by an issuing institution; and
    (ii) Can be used in the operator's credit card system.
    (5) Credit card has the same meaning as in 15 U.S.C. 1602(k). It 
includes charge cards as defined in 12 CFR 226.2(15).
    (6) Foreign bank means any organization that is organized under the 
laws of a foreign country; engages in the business of banking; is 
recognized as a bank by the bank supervisory or monetary authority of 
the country of its organization or the country of its principal banking 
operations; and receives deposits in the regular course of its business. 
For purposes of this definition:
    (i) The term foreign bank includes a branch of a foreign bank in a 
territory of the United States, Puerto Rico, Guam, American Samoa, or 
the U.S. Virgin Islands.
    (ii) The term foreign bank does not include:
    (A) A U.S. agency or branch of a foreign bank; and
    (B) An insured bank organized under the laws of a territory of the 
United States, Puerto Rico, Guam, American Samoa, or the U.S. Virgin 
Islands.
    (b) Anti-money laundering program requirement. Effective July 24, 
2002, each operator of a credit card system shall develop and implement 
a written anti-money laundering program reasonably designed to prevent 
the operator of a credit card system from being used to facilitate money 
laundering and the financing of terrorist activities. The program must 
be approved by senior management. Operators of credit card systems must 
make their anti-money laundering programs available to the Department of 
the Treasury or the appropriate Federal regulator for review.
    (c) Minimum requirements. At a minimum, the program must:
    (1) Incorporate policies, procedures, and internal controls designed 
to ensure the following:
    (i) That the operator does not authorize, or maintain authorization 
for, any person to serve as an issuing or acquiring institution without 
the operator taking appropriate steps, based upon the operator's money 
laundering or terrorist financing risk assessment, to guard against that 
person issuing the operator's credit card or acquiring merchants who 
accept the operator's credit card in circumstances that facilitate money 
laundering or the financing of terrorist activities;
    (ii) For purposes of making the risk assessment required by 
paragraph (c)(1)(i) of this section, the following persons are presumed 
to pose a heightened risk of money laundering or terrorist financing 
when evaluating whether and under what circumstances to authorize, or to 
maintain authorization for, any such person to serve as an issuing or 
acquiring institution:
    (A) A foreign shell bank that is not a regulated affiliate, as those 
terms are defined in 31 CFR 104.10(e) and (j);
    (B) A person appearing on the Specially Designated Nationals List 
issued by Treasury's Office of Foreign Assets Control;
    (C) A person located in, or operating under a license issued by, a 
jurisdiction whose government has been identified by the Department of 
State as a sponsor of international terrorism under 22 U.S.C. 2371;
    (D) A foreign bank operating under an offshore banking license, 
other than a branch of a foreign bank if such foreign bank has been 
found by the Board of Governors of the Federal Reserve System under the 
Bank Holding Company Act (12 U.S.C. 1841, et seq.) or the International 
Banking Act (12 U.S.C. 3101, et seq.) to be subject to comprehensive 
supervision or regulation on a consolidated basis by the relevant 
supervisors in that jurisdiction;

[[Page 488]]

    (E) A person located in, or operating under a license issued by, a 
jurisdiction that has been designated as noncooperative with 
international anti-money laundering principles or procedures by an 
intergovernmental group or organization of which the United States is a 
member, with which designation the United States representative to the 
group or organization concurs; and
    (F) A person located in, or operating under a license issued by, a 
jurisdiction that has been designated by the Secretary of the Treasury 
pursuant to 31 U.S.C. 5318A as warranting special measures due to money 
laundering concerns;
    (iii) That the operator is in compliance with all applicable 
provisions of subchapter II of chapter 53 of title 31, United States 
Code and this part;
    (2) Designate a compliance officer who will be responsible for 
assuring that:
    (i) The anti-money laundering program is implemented effectively;
    (ii) The anti-money laundering program is updated as necessary to 
reflect changes in risk factors or the risk assessment, current 
requirements of part 103, and further guidance issued by the Department 
of the Treasury; and
    (iii) Appropriate personnel are trained in accordance with paragraph 
(c)(3) of this section;
    (3) Provide for education and training of appropriate personnel 
concerning their responsibilities under the program; and
    (4) Provide for an independent audit to monitor and maintain an 
adequate program. The scope and frequency of the audit shall be 
commensurate with the risks posed by the persons authorized to issue or 
accept the operator's credit card. Such audit may be conducted by an 
officer or employee of the operator, so long as the reviewer is not the 
person designated in paragraph (c)(2) of this section or a person 
involved in the operation of the program.

[67 FR 21126, Apr. 29, 2002]



Sec. 103.137  Anti-money laundering programs for insurance companies.

    (a) Definitions. For purposes of this section:
    (1) Annuity contract means any agreement between the insurer and the 
contract owner whereby the insurer promises to pay out a fixed or 
variable income stream for a period of time.
    (2) Bank has the same meaning as provided in Sec. 103.11(c).
    (3) Broker-dealer in securities has the same meaning as provided in 
Sec. 103.11(f).
    (4) Covered product means:
    (i) A permanent life insurance policy, other than a group life 
insurance policy;
    (ii) An annuity contract, other than a group annuity contract; and
    (iii) Any other insurance product with features of cash value or 
investment.
    (5) Group annuity contract means a master contract providing 
annuities to a group of persons under a single contract.
    (6) Group life insurance policy means any life insurance policy 
under which a number of persons and their dependents, if appropriate, 
are insured under a single policy.
    (7) Insurance agent means a sales and/or service representative of 
an insurance company. The term ``insurance agent'' encompasses any 
person that sells, markets, distributes, or services an insurance 
company's covered products, including, but not limited to, a person who 
represents only one insurance company, a person who represents more than 
one insurance company, and a bank or broker-dealer in securities that 
sells any covered product of an insurance company.
    (8) Insurance broker means a person who, by acting as the customer's 
representative, arranges and/or services covered products on behalf of 
the customer.
    (9) Insurance company or insurer. (i) Except as provided in 
paragraph (a)(9)(ii) of this section, the term ``insurance company'' or 
``insurer'' means any person engaged within the United States as a 
business in the issuing or underwriting of any covered product.
    (ii) The term ``insurance company'' or ``insurer'' does not include 
an insurance agent or insurance broker.
    (10) Permanent life insurance policy means an agreement that 
contains a cash value or investment element and that obligates the 
insurer to indemnify

[[Page 489]]

or to confer a benefit upon the insured or beneficiary to the agreement 
contingent upon the death of the insured.
    (11) Person has the same meaning as provided in Sec. 103.11(z).
    (12) United States has the same meaning as provided in Sec. 
103.11(nn).
    (b) Anti-money laundering program requirements for insurance 
companies. Not later than May 2, 2006, each insurance company shall 
develop and implement a written anti-money laundering program applicable 
to its covered products that is reasonably designed to prevent the 
insurance company from being used to facilitate money laundering or the 
financing of terrorist activities. The program must be approved by 
senior management. An insurance company shall make a copy of its anti-
money laundering program available to the Department of the Treasury, 
the Financial Crimes Enforcement Network, or their designee upon 
request.
    (c) Minimum requirements. At a minimum, the program required by 
paragraph (b) of this section shall:
    (1) Incorporate policies, procedures, and internal controls based 
upon the insurance company's assessment of the money laundering and 
terrorist financing risks associated with its covered products. 
Policies, procedures, and internal controls developed and implemented by 
an insurance company under this section shall include provisions for 
complying with the applicable requirements of subchapter II of chapter 
53 of title 31, United States Code and this part, integrating the 
company's insurance agents and insurance brokers into its anti-money 
laundering program, and obtaining all relevant customer-related 
information necessary for an effective anti-money laundering program.
    (2) Designate a compliance officer who will be responsible for 
ensuring that:
    (i) The anti-money laundering program is implemented effectively, 
including monitoring compliance by the company's insurance agents and 
insurance brokers with their obligations under the program;
    (ii) The anti-money laundering program is updated as necessary; and
    (iii) Appropriate persons are educated and trained in accordance 
with paragraph (c)(3) of this section.
    (3) Provide for on-going training of appropriate persons concerning 
their responsibilities under the program. An insurance company may 
satisfy this requirement with respect to its employees, insurance 
agents, and insurance brokers by directly training such persons or 
verifying that persons have received training by another insurance 
company or by a competent third party with respect to the covered 
products offered by the insurance company.
    (4) Provide for independent testing to monitor and maintain an 
adequate program, including testing to determine compliance of the 
company's insurance agents and insurance brokers with their obligations 
under the program. The scope and frequency of the testing shall be 
commensurate with the risks posed by the insurance company's covered 
products. Such testing may be conducted by a third party or by any 
officer or employee of the insurance company, other than the person 
designated in paragraph (c)(2) of this section.
    (d) Anti-money laundering program requirements for insurance 
companies registered or required to register with the Securities and 
Exchange Commission as broker-dealers in securities. An insurance 
company that is registered or required to register with the Securities 
and Exchange Commission as a broker-dealer in securities shall be deemed 
to have satisfied the requirements of this section for its broker-dealer 
activities to the extent that the company is required to establish and 
has established an anti-money laundering program pursuant to Sec. 
103.120 and complies with such program.
    (e) Compliance. Compliance with this section shall be examined by 
the Department of the Treasury, through the Financial Crimes Enforcement 
Network or its delegees, under the terms of the Bank Secrecy Act. 
Failure to comply with the requirements of this section may constitute a 
violation of the Bank Secrecy Act and of this part.

[70 FR 66760, Nov. 3, 2005]

[[Page 490]]



Sec. 103.140  Anti-money laundering programs for dealers in precious metals, 

precious stones, or jewels.

    (a) Definitions. For purposes of this section:
    (1) Covered goods means:
    (i) Jewels (as defined in paragraph (a)(3) of this section);
    (ii) Precious metals (as defined in paragraph (a)(4) of this 
section);
    (iii) Precious stones (as defined in paragraph (a)(5) of this 
section); and
    (iv) Finished goods (including, but not limited to, jewelry, 
numismatic items, and antiques), that derive 50 percent or more of their 
value from jewels, precious metals, or precious stones contained in or 
attached to such finished goods;
    (2) Dealer. (i) Except as provided in paragraphs (a)(2)(ii) and 
(a)(2)(iii) of this section, the term ``dealer'' means a person engaged 
within the United States as a business in the purchase and sale of 
covered goods and who, during the prior calendar or tax year:
    (A) Purchased more than $50,000 in covered goods; and
    (B) Received more than $50,000 in gross proceeds from the sale of 
covered goods.
    (ii) For purposes of this section, the term ``dealer'' does not 
include:
    (A) A retailer (as defined in paragraph (a)(7) of this section), 
unless the retailer, during the prior calendar or tax year, purchased 
more than $50,000 in covered goods from persons other than dealers or 
other retailers (such as members of the general public or foreign 
sources of supply); or
    (B) A person licensed or authorized under the laws of any State (or 
political subdivision thereof) to conduct business as a pawnbroker, but 
only to the extent such person is engaged in pawn transactions 
(including the sale of pawn loan collateral).
    (iii) For purposes of paragraph (a)(2) of this section, the terms 
``purchase'' and ``sale'' do not include a retail transaction in which a 
retailer or a dealer accepts from a customer covered goods, the value of 
which the retailer or dealer credits to the account of the customer, and 
the retailer or dealer does not provide funds to the customer in 
exchange for such covered goods.
    (iv) For purposes of paragraphs (a)(2) and (b) of this section, the 
terms ``purchase'' and ``sale'' do not include the purchase of jewels, 
precious metals, or precious stones that are incorporated into machinery 
or equipment to be used for industrial purposes, and the purchase and 
sale of such machinery or equipment.
    (v) For purposes of applying the $50,000 thresholds in paragraphs 
(a)(2)(i) and (a)(2)(ii)(A) of this section to finished goods defined in 
paragraph (a)(1)(iv) of this section, only the value of jewels, precious 
metals, or precious stones contained in, or attached to, such goods 
shall be taken into account.
    (3) Jewel means an organic substance with gem quality market-
recognized beauty, rarity, and value, and includes pearl, amber, and 
coral.
    (4) Precious metal means:
    (i) Gold, iridium, osmium, palladium, platinum, rhodium, ruthenium, 
or silver, having a level of purity of 500 or more parts per thousand; 
and
    (ii) An alloy containing 500 or more parts per thousand, in the 
aggregate, of two or more of the metals listed in paragraph (a)(3)(i) of 
this section.
    (5) Precious stone means a substance with gem quality market-
recognized beauty, rarity, and value, and includes diamond, corundum 
(including rubies and sapphires), beryl (including emeralds and 
aquamarines), chrysoberyl, spinel, topaz, zircon, tourmaline, garnet, 
crystalline and cryptocrystalline quartz, olivine peridot, tanzanite, 
jadeite jade, nephrite jade, spodumene, feldspar, turquoise, lapis 
lazuli, and opal.
    (6) Person shall have the same meaning as provided in Sec. 
103.11(z).
    (7) Retailer means a person engaged within the United States in the 
business of sales primarily to the public of covered goods.
    (b) Anti-money laundering program requirement. (1) Each dealer shall 
develop and implement a written anti-money laundering program reasonably 
designed to prevent the dealer from being used to facilitate money 
laundering and the financing of terrorist activities through the 
purchase and sale of covered goods. The program must be approved by 
senior management. A dealer shall make its anti-money laundering

[[Page 491]]

program available to the Department of Treasury through FinCEN or its 
designee upon request.
    (2) To the extent that a retailer's purchases from persons other 
than dealers and other retailers exceeds the $50,000 threshold contained 
in paragraph (a)(2)(ii)(A), the anti-money laundering compliance program 
required of the retailer under this paragraph need only address such 
purchases.
    (c) Minimum requirements. At a minimum, the anti-money laundering 
program shall:
    (1) Incorporate policies, procedures, and internal controls based 
upon the dealer's assessment of the money laundering and terrorist 
financing risks associated with its line(s) of business. Policies, 
procedures, and internal controls developed and implemented by a dealer 
under this section shall include provisions for complying with the 
applicable requirements of the Bank Secrecy Act (31 U.S.C. 5311 et 
seq.), and this part.
    (i) For purposes of making the risk assessment required by paragraph 
(c)(1) of this section, a dealer shall take into account all relevant 
factors including, but not limited to:
    (A) The type(s) of products the dealer buys and sells, as well as 
the nature of the dealer's customers, suppliers, distribution channels, 
and geographic locations;
    (B) The extent to which the dealer engages in transactions other 
than with established customers or sources of supply, or other dealers 
subject to this rule; and
    (C) Whether the dealer engages in transactions for which payment or 
account reconciliation is routed to or from accounts located in 
jurisdictions that have been identified by the Department of State as a 
sponsor of international terrorism under 22 U.S.C. 2371; designated as 
non-cooperative with international anti-money laundering principles or 
procedures by an intergovernmental group or organization of which the 
United States is a member and with which designation the United States 
representative or organization concurs; or designated by the Secretary 
of the Treasury pursuant to 31 U.S.C. 5318A as warranting special 
measures due to money laundering concerns.
    (ii) A dealer's program shall incorporate policies, procedures, and 
internal controls to assist the dealer in identifying transactions that 
may involve use of the dealer to facilitate money laundering or 
terrorist financing, including provisions for making reasonable 
inquiries to determine whether a transaction involves money laundering 
or terrorist financing, and for refusing to consummate, withdrawing 
from, or terminating such transactions. Factors that may indicate a 
transaction is designed to involve use of the dealer to facilitate money 
laundering or terrorist financing include, but are not limited to:
    (A) Unusual payment methods, such as the use of large amounts of 
cash, multiple or sequentially numbered money orders, traveler's checks, 
or cashier's checks, or payment from third parties;
    (B) Unwillingness by a customer or supplier to provide complete or 
accurate contact information, financial references, or business 
affiliations;
    (C) Attempts by a customer or supplier to maintain an unusual degree 
of secrecy with respect to the transaction, such as a request that 
normal business records not be kept;
    (D) Purchases or sales that are unusual for the particular customer 
or supplier, or type of customer or supplier; and
    (E) Purchases or sales that are not in conformity with standard 
industry practice.
    (2) Designate a compliance officer who will be responsible for 
ensuring that:
    (i) The anti-money laundering program is implemented effectively;
    (ii) The anti-money laundering program is updated as necessary to 
reflect changes in the risk assessment, requirements of this part, and 
further guidance issued by the Department of the Treasury; and
    (iii) Appropriate personnel are trained in accordance with paragraph 
(c)(3) of this section.
    (3) Provide for on-going education and training of appropriate 
persons concerning their responsibilities under the program.

[[Page 492]]

    (4) Provide for independent testing to monitor and maintain an 
adequate program. The scope and frequency of the testing shall be 
commensurate with the risk assessment conducted by the dealer in 
accordance with paragraph (c)(1) of this section. Such testing may be 
conducted by an officer or employee of the dealer, so long as the tester 
is not the person designated in paragraph (c)(2) of this section or a 
person involved in the operation of the program.
    (d) Effective date. A dealer must develop and implement an anti-
money laundering program that complies with the requirements of this 
section on or before the later of January 1, 2006, or six months after 
the date a dealer becomes subject to the requirements of this section.

[70 FR 33716, June 9, 2005]



Sec. 103.170  Exempted anti-money laundering programs for certain financial 

institutions.

    (a) Exempt financial institutions. Subject to the provisions of 
paragraphs (c) and (d) of this section, the following financial 
institutions (as defined in 31 U.S.C. 5312(a)(2) or (c)(1)) are exempt 
from the requirement in 31 U.S.C. 5318(h)(1) concerning the 
establishment of anti-money laundering programs:
    (1) An agency of the United States Government, or of a State or 
local government, carrying out a duty or power of a business described 
in 31 U.S.C. 5312(a)(2); and
    (2) [Reserved]
    (b) Temporary exemption for certain financial institutions. (1) 
Subject to the provisions of paragraphs (c) and (d) of this section, the 
following financial institutions (as defined in 31 U.S.C. 5312(a)(2) or 
(c)(1)) are exempt from the requirement in 31 U.S.C. 5318(h)(1) 
concerning the establishment of anti-money laundering programs:
    (i) Pawnbroker;
    (ii) Loan or finance company;
    (iii) Travel agency;
    (iv) Telegraph company;
    (v) Seller of vehicles, including automobiles, airplanes, and boats;
    (vi) Person involved in real estate closings and settlements;
    (vii) Private banker;
    (viii) Commodity pool operator;
    (ix) Commodity trading advisor; or
    (x) Investment company.
    (2) Subject to the provisions of paragraphs (c) and (d) of this 
section, a bank (as defined in Sec. 103.11(c)) that is not subject to 
regulation by a Federal functional regulator (as defined in Sec. 
103.120(a)(2)) is exempt from the requirement in 31 U.S.C. 5318(h)(1) 
concerning the establishment of anti-money laundering programs.
    (3) Subject to the provisions of paragraphs (c) and (d) of this 
section, a person described in Sec. 103.11(n)(7) is exempt from the 
requirement in 31 U.S.C. 5318(h)(1) concerning the establishment of 
anti-money laundering programs.
    (c) Limitation on exemption. The exemptions described in paragraphs 
(a)(2) and (b) of this section shall not apply to any financial 
institution that is otherwise required to establish an anti-money 
laundering program by this subpart I.
    (d) Compliance obligations of deferred financial institutions. 
Nothing in this section shall be deemed to relieve an exempt financial 
institution from its responsibility to comply with any other applicable 
requirement of law or regulation, including title 31 of the U.S.C. and 
this part.

[67 FR 21113, Apr. 29, 2002, as amended at 67 FR 67549, Nov. 6, 2002; 67 
FR 68935, Nov. 14, 2002; 73 FR 1976, Jan. 11, 2008]

  Special Due Diligence for Correspondent Accounts and Private Banking 
                                Accounts

    Source: 67 FR 48351, July 23, 2002, unless otherwise noted.



Sec. 103.175  Definitions.

    Except as otherwise provided, the following definitions apply for 
purposes of Sec. Sec. 103.176 through 103.185:
    (a) Attorney General means the Attorney General of the United 
States.
    (b) Beneficial owner of an account means an individual who has a 
level of control over, or entitlement to, the funds or assets in the 
account that, as a practical matter, enables the individual, directly or 
indirectly, to control, manage or direct the account. The ability to 
fund the account or the entitlement to the funds of the account

[[Page 493]]

alone, however, without any corresponding authority to control, manage 
or direct the account (such as in the case of a minor child 
beneficiary), does not cause the individual to be a beneficial owner.
    (c) Certification and recertification mean the certification and 
recertification forms described in appendices A and B, respectively, to 
this subpart.
    (d) Correspondent account. (1) The term correspondent account means:
    (i) For purposes of Sec. 103.176(a), (d) and (e), an account 
established for a foreign financial institution to receive deposits 
from, or to make payments or other disbursements on behalf of, the 
foreign financial institution, or to handle other financial transactions 
related to such foreign financial institution; and
    (ii) For purposes of Sec. Sec. 103.176(b) and (c), 103.177 and 
103.185, an account established for a foreign bank to receive deposits 
from, or to make payments or other disbursements on behalf of, the 
foreign bank, or to handle other financial transactions related to such 
foreign bank.
    (2) For purposes of this definition, the term account:
    (i) As applied to banks (as set forth in paragraphs (f)(1)(i) 
through (vii) of this section):
    (A) Means any formal banking or business relationship established by 
a bank to provide regular services, dealings, and other financial 
transactions; and
    (B) Includes a demand deposit, savings deposit, or other transaction 
or asset account and a credit account or other extension of credit;
    (ii) As applied to brokers or dealers in securities (as set forth in 
paragraph (f)(1)(viii) of this section) means any formal relationship 
established with a broker or dealer in securities to provide regular 
services to effect transactions in securities, including, but not 
limited to, the purchase or sale of securities and securities loaned and 
borrowed activity, and to hold securities or other assets for 
safekeeping or as collateral;
    (iii) As applied to futures commission merchants and introducing 
brokers (as set forth in paragraph (f)(1)(ix) of this section) means any 
formal relationship established by a futures commission merchant to 
provide regular services, including, but not limited to, those 
established to effect transactions in contracts of sale of a commodity 
for future delivery, options on any contract of sale of a commodity for 
future delivery, or options on a commodity; and
    (iv) As applied to mutual funds (as set forth in paragraph (f)(1)(x) 
of this section) means any contractual or other business relationship 
established between a person and a mutual fund to provide regular 
services to effect transactions in securities issued by the mutual fund, 
including the purchase or sale of securities.
    (e) Correspondent relationship has the same meaning as correspondent 
account for purposes of Sec. Sec. 103.177 and 103.185.
    (f) Covered financial institution means: (1) For purposes of 
Sec. Sec. 103.176 and 103.178:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);
    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons 
who register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to be registered, with the Commodity Futures 
Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et 
seq.), except persons who register pursuant to section 4(f)(a)(2) of the 
Commodity Exchange Act; and
    (x) A mutual fund, which means an investment company (as defined in 
section 3(a)(1) of the Investment Company Act of 1940 (``Investment 
Company Act'') (15 U.S.C. 80a-3(a)(1))) that is an

[[Page 494]]

open-end company (as defined in section 5(a)(1) of the Investment 
Company Act (15 U.S.C. 80a-5(a)(1))) and that is registered, or is 
required to register, with the Securities and Exchange Commission 
pursuant to the Investment Company Act.
    (2) For purposes of Sec. Sec. 103.177 and 103.185:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank or trust company;
    (iii) A private banker;
    (iv) An agency or branch of a foreign bank in the United States;
    (v) A credit union;
    (vi) A savings association;
    (vii) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.); and
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons 
who register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934.
    (g) Foreign bank. The term foreign bank has the meaning provided in 
Sec. 103.11(o).
    (h) Foreign financial institution. (1) The term foreign financial 
institution means:
    (i) A foreign bank;
    (ii) Any branch or office located outside the United States of any 
covered financial institution described in paragraphs (f)(1)(viii) 
through (x) of this section;
    (iii) Any other person organized under foreign law (other than a 
branch or office of such person in the United States) that, if it were 
located in the United States, would be a covered financial institution 
described in paragraphs (f)(1)(viii) through (x) of this section; and
    (iv) Any person organized under foreign law (other than a branch or 
office of such person in the United States) that is engaged in the 
business of, and is readily identifiable as:
    (A) A currency dealer or exchanger; or
    (B) A money transmitter.
    (2) For purposes of paragraph (h)(1)(iv) of this section, a person 
is not ``engaged in the business'' of a currency dealer, a currency 
exchanger or a money transmitter if such transactions are merely 
incidental to the person's business.
    (i) Foreign shell bank means a foreign bank without a physical 
presence in any country.
    (j) Non-United States person or non-U.S. person means a natural 
person who is neither a United States citizen nor is accorded the 
privilege of residing permanently in the United States pursuant to title 
8 of the United States Code. For purposes of this paragraph (j), the 
definition of person in Sec. 103.11(z) does not apply, notwithstanding 
paragraph (m) of this section.
    (k) Offshore banking license means a license to conduct banking 
activities that prohibits the licensed entity from conducting banking 
activities with the citizens of, or in the local currency of, the 
jurisdiction that issued the license.
    (l) Owner. (1) The term owner means any person who, directly or 
indirectly:
    (i) Owns, controls, or has the power to vote 25 percent or more of 
any class of voting securities or other voting interests of a foreign 
bank; or
    (ii) Controls in any manner the election of a majority of the 
directors (or individuals exercising similar functions) of a foreign 
bank.
    (2) For purposes of this definition:
    (i) Members of the same family shall be considered to be one person.
    (ii) The term same family means parents, spouses, children, 
siblings, uncles, aunts, grandparents, grandchildren, first cousins, 
stepchildren, stepsiblings, parents-in-law, and spouses of any of the 
foregoing.
    (iii) Each member of the same family who has an ownership interest 
in a foreign bank must be identified if the family is an owner as a 
result of aggregating the ownership interests of the members of the 
family. In determining the ownership interests of the same family, any 
voting interest of any family member shall be taken into account.
    (iv) Voting securities or other voting interests means securities or 
other interests that entitle the holder to vote for

[[Page 495]]

or to select directors (or individuals exercising similar functions).
    (m) Person has the meaning provided in Sec. 103.11(z).
    (n) Physical presence means a place of business that:
    (1) Is maintained by a foreign bank;
    (2) Is located at a fixed address (other than solely an electronic 
address or a post-office box) in a country in which the foreign bank is 
authorized to conduct banking activities, at which location the foreign 
bank:
    (i) Employs one or more individuals on a full-time basis; and
    (ii) Maintains operating records related to its banking activities; 
and
    (3) Is subject to inspection by the banking authority that licensed 
the foreign bank to conduct banking activities.
    (o) Private banking account means an account (or any combination of 
accounts) maintained at a covered financial institution that:
    (1) Requires a minimum aggregate deposit of funds or other assets of 
not less than $1,000,000;
    (2) Is established on behalf of or for the benefit of one or more 
non-U.S. persons who are direct or beneficial owners of the account; and
    (3) Is assigned to, or is administered or managed by, in whole or in 
part, an officer, employee, or agent of a covered financial institution 
acting as a liaison between the covered financial institution and the 
direct or beneficial owner of the account.
    (p) Regulated affiliate. (1) The term regulated affiliate means a 
foreign shell bank that:
    (i) Is an affiliate of a depository institution, credit union, or 
foreign bank that maintains a physical presence in the United States or 
a foreign country, as applicable; and
    (ii) Is subject to supervision by a banking authority in the country 
regulating such affiliated depository institution, credit union, or 
foreign bank.
    (2) For purposes of this definition:
    (i) Affiliate means a foreign bank that is controlled by, or is 
under common control with, a depository institution, credit union, or 
foreign bank.
    (ii) Control means:
    (A) Ownership, control, or power to vote 50 percent or more of any 
class of voting securities or other voting interests of another company; 
or
    (B) Control in any manner the election of a majority of the 
directors (or individuals exercising similar functions) of another 
company.
    (q) Secretary means the Secretary of the Treasury.
    (r) Senior foreign political figure. (1) The term senior foreign 
political figure means:
    (i) A current or former:
    (A) Senior official in the executive, legislative, administrative, 
military, or judicial branches of a foreign government (whether elected 
or not);
    (B) Senior official of a major foreign political party; or
    (C) Senior executive of a foreign government-owned commercial 
enterprise;
    (ii) A corporation, business, or other entity that has been formed 
by, or for the benefit of, any such individual;
    (iii) An immediate family member of any such individual; and
    (iv) A person who is widely and publicly known (or is actually known 
by the relevant covered financial institution) to be a close associate 
of such individual.
    (2) For purposes of this definition:
    (i) Senior official or executive means an individual with 
substantial authority over policy, operations, or the use of government-
owned resources; and
    (ii) Immediate family member means spouses, parents, siblings, 
children and a spouse's parents and siblings.
    (s) Territories and Insular Possessions has the meaning provided in 
Sec. 103.11(tt).
    (t) United States has the meaning provided in Sec. 103.11(nn).

[71 FR 512, Jan. 4, 2006]



Sec. 103.176  Due diligence programs for correspondent accounts for foreign 

financial institutions.

    (a) In general. A covered financial institution shall establish a 
due diligence program that includes appropriate, specific, risk-based, 
and, where necessary, enhanced policies, procedures, and controls that 
are reasonably designed to enable the covered financial institution to 
detect and report, on an ongoing basis, any known or suspected money 
laundering activity conducted

[[Page 496]]

through or involving any correspondent account established, maintained, 
administered, or managed by such covered financial institution in the 
United States for a foreign financial institution. The due diligence 
program required by this section shall be a part of the anti-money 
laundering program otherwise required by this subpart. Such policies, 
procedures, and controls shall include:
    (1) Determining whether any such correspondent account is subject to 
paragraph (b) of this section;
    (2) Assessing the money laundering risk presented by such 
correspondent account, based on a consideration of all relevant factors, 
which shall include, as appropriate:
    (i) The nature of the foreign financial institution's business and 
the markets it serves;
    (ii) The type, purpose, and anticipated activity of such 
correspondent account;
    (iii) The nature and duration of the covered financial institution's 
relationship with the foreign financial institution (and any of its 
affiliates);
    (iv) The anti-money laundering and supervisory regime of the 
jurisdiction that issued the charter or license to the foreign financial 
institution, and, to the extent that information regarding such 
jurisdiction is reasonably available, of the jurisdiction in which any 
company that is an owner of the foreign financial institution is 
incorporated or chartered; and
    (v) Information known or reasonably available to the covered 
financial institution about the foreign financial institution's anti-
money laundering record; and
    (3) Applying risk-based procedures and controls to each such 
correspondent account reasonably designed to detect and report known or 
suspected money laundering activity, including a periodic review of the 
correspondent account activity sufficient to determine consistency with 
information obtained about the type, purpose, and anticipated activity 
of the account.
    (b) Enhanced due diligence for certain foreign banks. In the case of 
a correspondent account established, maintained, administered, or 
managed in the United States for a foreign bank described in paragraph 
(c) of this section, the due diligence program required by paragraph (a) 
of this section shall include enhanced due diligence procedures designed 
to ensure that the covered financial institution, at a minimum, takes 
reasonable steps to:
    (1) Conduct enhanced scrutiny of such correspondent account to guard 
against money laundering and to identify and report any suspicious 
transactions in accordance with applicable law and regulation. This 
enhanced scrutiny shall reflect the risk assessment of the account and 
shall include, as appropriate:
    (i) Obtaining and considering information relating to the foreign 
bank's anti-money laundering program to assess the risk of money 
laundering presented by the foreign bank's correspondent account;
    (ii) Monitoring transactions to, from, or through the correspondent 
account in a manner reasonably designed to detect money laundering and 
suspicious activity; and
    (iii)(A) Obtaining information from the foreign bank about the 
identity of any person with authority to direct transactions through any 
correspondent account that is a payable-through account, and the sources 
and beneficial owner of funds or other assets in the payable-through 
account.
    (B) For purposes of paragraph (b)(1)(iii)(A) of this section, a 
payable-through account means a correspondent account maintained by a 
covered financial institution for a foreign bank by means of which the 
foreign bank permits its customers to engage, either directly or through 
a subaccount, in banking activities usual in connection with the 
business of banking in the United States.
    (2) Determine whether the foreign bank for which the correspondent 
account is established or maintained in turn maintains correspondent 
accounts for other foreign banks that use the foreign correspondent 
account established or maintained by the covered financial institution 
and, if so, take reasonable steps to obtain information relevant to 
assess and mitigate money laundering risks associated with the foreign 
bank's correspondent accounts

[[Page 497]]

for other foreign banks, including, as appropriate, the identity of 
those foreign banks.
    (3)(i) Determine, for any correspondent account established or 
maintained for a foreign bank whose shares are not publicly traded, the 
identity of each owner of the foreign bank and the nature and extent of 
each owner's ownership interest.
    (ii) For purposes of paragraph (b)(3)(i) of this section:
    (A) Owner means any person who directly or indirectly owns, 
controls, or has the power to vote 10 percent or more of any class of 
securities of a foreign bank. For purposes of this paragraph 
(b)(3)(ii)(A):
    (1) Members of the same family shall be considered to be one person; 
and
    (2) Same family has the meaning provided in Sec. 103.175(l)(2)(ii).
    (B) Publicly traded means shares that are traded on an exchange or 
an organized over-the-counter market that is regulated by a foreign 
securities authority as defined in section 3(a)(50) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(50)).
    (c) Foreign banks to be accorded enhanced due diligence. The due 
diligence procedures described in paragraph (b) of this section are 
required for any correspondent account maintained for a foreign bank 
that operates under:
    (1) An offshore banking license;
    (2) A banking license issued by a foreign country that has been 
designated as non-cooperative with international anti-money laundering 
principles or procedures by an intergovernmental group or organization 
of which the United States is a member and with which designation the 
U.S. representative to the group or organization concurs; or
    (3) A banking license issued by a foreign country that has been 
designated by the Secretary as warranting special measures due to money 
laundering concerns.
    (d) Special procedures when due diligence or enhanced due diligence 
cannot be performed. The due diligence program required by paragraphs 
(a) and (b) of this section shall include procedures to be followed in 
circumstances in which a covered financial institution cannot perform 
appropriate due diligence or enhanced due diligence with respect to a 
correspondent account, including when the covered financial institution 
should refuse to open the account, suspend transaction activity, file a 
suspicious activity report, or close the account.
    (e) Applicability rules for general due diligence. The provisions of 
paragraph (a) of this section apply to covered financial institutions as 
follows:
    (1) General rules--(i) Correspondent accounts established on or 
after July 5, 2006. Effective July 5, 2006, the requirements of 
paragraph (a) of this section shall apply to each correspondent account 
established on or after that date.
    (ii) Correspondent accounts established before July 5, 2006. 
Effective October 2, 2006, the requirements of paragraph (a) of this 
section shall apply to each correspondent account established before 
July 5, 2006.
    (2) Special rules for certain banks. Until the requirements of 
paragraph (a) of this section become applicable as set forth in 
paragraph (e)(1) of this section, the due diligence requirements of 31 
U.S.C. 5318(i)(1) shall continue to apply to any covered financial 
institution listed in Sec. 103.175(f)(1)(i) through (vi).
    (3) Special rules for all other covered financial institutions. The 
due diligence requirements of 31 U.S.C 5318(i)(1) shall not apply to a 
covered financial institution listed in Sec. 103.175(f)(1)(vii) through 
(x) until the requirements of paragraph (a) of this section become 
applicable as set forth in paragraph (e)(1) of this section.
    (f) Applicability rules for enhanced due diligence. The provisions 
of paragraph (b) of this section apply to covered financial institutions 
as follows:
    (1) General rules--(i) Correspondent accounts established on or 
after February 5, 2008. Effective February 5, 2008, the requirements of 
paragraph (b) of this section shall apply to each correspondent account 
established on or after such date.
    (ii) Correspondent accounts established before February 5, 2008. 
Effective May 5, 2008, the requirements of paragraph (b) of this section 
shall apply to each correspondent account established before February 5, 
2008.
    (2) Special rules for certain banks. Until the requirements of 
paragraph (b)

[[Page 498]]

of this section become applicable as set forth in paragraph (f)(1) of 
this section, the enhanced due diligence requirements of 31 U.S.C. 
5318(i)(2) shall continue to apply to any covered financial institutions 
listed in Sec. 103.175(f)(1)(i) through (vi).
    (3) Special rules for all other covered financial institutions. The 
enhanced due diligence requirements of 31 U.S.C. 5318(i)(2) shall not 
apply to a covered financial institution listed in Sec. 
103.175(f)(1)(vii) through (x) until the requirements of paragraph (b) 
of this section become applicable, as set forth in paragraph (f)(1) of 
this section.
    (g) Exemptions--(1) Exempt financial institutions. Except as 
provided in this section, a financial institution defined in 31 U.S.C. 
5312(a)(2) or (c)(1), or Sec. 103.11(n) is exempt from the requirements 
of 31 U.S.C. 5318(i)(1) and (i)(2) pertaining to correspondent accounts.
    (2) Other compliance obligations of financial institutions 
unaffected. Nothing in paragraph (g) of this section shall be construed 
to relieve a financial institution from its responsibility to comply 
with any other applicable requirement of law or regulation, including 
title 31, United States Code, and this part.

[71 FR 514, Jan. 4, 2006, as amended at 71 FR 16041, Mar. 30, 2006; 72 
FR 44774, Aug. 9, 2007]



Sec. 103.177  Prohibition on correspondent accounts for foreign shell banks; 

records concerning owners of foreign banks and agents for service of legal 

process.

    (a) Requirements for covered financial institutions--(1) Prohibition 
on correspondent accounts for foreign shell banks. (i) A covered 
financial institution shall not establish, maintain, administer, or 
manage a correspondent account in the United States for, or on behalf 
of, a foreign shell bank.
    (ii) A covered financial institution shall take reasonable steps to 
ensure that any correspondent account established, maintained, 
administered, or managed by that covered financial institution in the 
United States for a foreign bank is not being used by that foreign bank 
to indirectly provide banking services to a foreign shell bank.
    (iii) Nothing in paragraph (a)(1) of this section prohibits a 
covered financial institution from providing a correspondent account or 
banking services to a regulated affiliate.
    (2) Records of owners and agents. (i) Except as provided in 
paragraph (a)(2)(ii) of this section, a covered financial institution 
that maintains a correspondent account in the United States for a 
foreign bank shall maintain records in the United States identifying the 
owners of each such foreign bank whose shares are not publicly traded 
and the name and street address of a person who resides in the United 
States and is authorized, and has agreed to be an agent to accept 
service of legal process for records regarding each such account.
    (ii) A covered financial institution need not maintain records of 
the owners of any foreign bank that is required to have on file with the 
Federal Reserve Board a Form FR Y-7 that identifies the current owners 
of the foreign bank as required by such form.
    (iii) For purposes of paragraph (a)(2)(i) of this section, publicly 
traded refers to shares that are traded on an exchange or on an 
organized over-the-counter market that is regulated by a foreign 
securities authority as defined in section 3(a)(50) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(50)).
    (b) Safe harbor. Subject to paragraphs (c) and (d) of this section, 
a covered financial institution will be deemed to be in compliance with 
the requirements of paragraph (a) of this section with respect to a 
foreign bank if the covered financial institution obtains, at least once 
every three years, a certification or recertification from the foreign 
bank.
    (c) Interim verification. If at any time a covered financial 
institution knows, suspects, or has reason to suspect, that any 
information contained in a certification or recertification provided by 
a foreign bank, or otherwise relied upon by the covered financial 
institution for purposes of this section, is no longer correct, the 
covered financial institution shall request that the foreign bank verify 
or correct such information, or shall take other appropriate measures to 
ascertain the accuracy of the information or to obtain correct 
information, as appropriate. See paragraph (d)(3) of this section for 
additional requirements if a foreign bank

[[Page 499]]

fails to verify or correct the information or if a covered financial 
institution cannot ascertain the accuracy of the information or obtain 
correct information.
    (d) Closure of correspondent accounts--(1) Accounts existing on 
October 28, 2002. In the case of any correspondent account that was in 
existence on October 28, 2002, if the covered financial institution has 
not obtained a certification (or recertification) from the foreign bank, 
or has not otherwise obtained documentation of the information required 
by such certification (or recertification), on or before March 31, 2003, 
and at least once every three years thereafter, the covered financial 
institution shall close all correspondent accounts with such foreign 
bank within a commercially reasonable time, and shall not permit the 
foreign bank to establish any new positions or execute any transaction 
through any such account, other than transactions necessary to close the 
account.
    (2) Accounts established after October 28, 2002. In the case of any 
correspondent account established after October 28, 2002, if the covered 
financial institution has not obtained a certification (or 
recertification), or has not otherwise obtained documentation of the 
information required by such certification (or recertification) within 
30 calendar days after the date the account is established, and at least 
once every three years thereafter, the covered financial institution 
shall close all correspondent accounts with such foreign bank within a 
commercially reasonable time, and shall not permit the foreign bank to 
establish any new positions or execute any transaction through any such 
account, other than transactions necessary to close the account.
    (3) Verification of previously provided information. In the case of 
a foreign bank with respect to which the covered financial institution 
undertakes to verify information pursuant to paragraph (c) of this 
section, if the covered financial institution has not obtained, from the 
foreign bank or otherwise, verification of the information or corrected 
information within 90 calendar days after the date of undertaking the 
verification, the covered financial institution shall close all 
correspondent accounts with such foreign bank within a commercially 
reasonable time, and shall not permit the foreign bank to establish any 
new positions or execute any transaction through any such account, other 
than transactions necessary to close the account.
    (4) Reestablishment of closed accounts and establishment of new 
accounts. A covered financial institution shall not reestablish any 
account closed pursuant to this paragraph (d), and shall not establish 
any other correspondent account with the concerned foreign bank, until 
it obtains from the foreign bank the certification or the 
recertification, as appropriate.
    (5) Limitation on liability. A covered financial institution shall 
not be liable to any person in any court or arbitration proceeding for 
terminating a correspondent account in accordance with this paragraph 
(d).
    (e) Recordkeeping requirement. A covered financial institution shall 
retain the original of any document provided by a foreign bank, and the 
original or a copy of any document otherwise relied upon by the covered 
financial institution, for purposes of this section, for at least 5 
years after the date that the covered financial institution no longer 
maintains any correspondent account for such foreign bank. A covered 
financial institution shall retain such records with respect to any 
foreign bank for such longer period as the Secretary may direct.
    (f) Special rules concerning information requested prior to October 
28, 2002--(1) Definition. For purposes of this paragraph (f) the term 
``Interim Guidance'' means:
    (i) The Interim Guidance of the Department of the Treasury dated 
November 20, 2001 and published in the Federal Register on November 27, 
2001; or
    (ii) The guidance issued in a document published in the Federal 
Register on December 28, 2001.
    (2) Use of Interim Guidance certification. In the case of a 
correspondent account in existence on October 28, 2002, the term 
``certification'' as used in paragraphs (b), (c), (d)(1), and (d)(3) of 
this section shall also include the certification appended to the 
Interim

[[Page 500]]

Guidance, provided that such certification was requested prior to 
October 28, 2002 and obtained by the covered financial institution on or 
before December 26, 2002.
    (3) Recordkeeping requirement. Paragraph (e) of this section shall 
apply to any document provided by a foreign bank, or otherwise relied 
upon by a covered financial institution, for purposes of the Interim 
Guidance.

(Approved by the Office of Management and Budget under Control Number 
1505-0184.)

[67 FR 60570, Sept. 26, 2002, as amended at 67 FR 78384, Dec. 24, 2002]



Sec. 103.178  Due diligence programs for private banking accounts.

    (a) In general. A covered financial institution shall maintain a due 
diligence program that includes policies, procedures, and controls that 
are reasonably designed to detect and report any known or suspected 
money laundering or suspicious activity conducted through or involving 
any private banking account that is established, maintained, 
administered, or managed in the United States by such financial 
institution. The due diligence program required by this section shall be 
a part of the anti-money laundering program otherwise required by this 
subpart.
    (b) Minimum requirements. The due diligence program required by 
paragraph (a) of this section shall be designed to ensure, at a minimum, 
that the financial institution takes reasonable steps to:
    (1) Ascertain the identity of all nominal and beneficial owners of a 
private banking account;
    (2) Ascertain whether any person identified under paragraph (b)(1) 
of this section is a senior foreign political figure;
    (3) Ascertain the source(s) of funds deposited into a private 
banking account and the purpose and expected use of the account; and
    (4) Review the activity of the account to ensure that it is 
consistent with the information obtained about the client's source of 
funds, and with the stated purpose and expected use of the account, as 
needed to guard against money laundering, and to report, in accordance 
with applicable law and regulation, any known or suspected money 
laundering or suspicious activity conducted to, from, or through a 
private banking account.
    (c) Special requirements for senior foreign political figures. (1) 
In the case of a private banking account for which a senior foreign 
political figure is a nominal or beneficial owner, the due diligence 
program required by paragraph (a) of this section shall include enhanced 
scrutiny of such account that is reasonably designed to detect and 
report transactions that may involve the proceeds of foreign corruption.
    (2) For purposes of this paragraph (c), the term proceeds of foreign 
corruption means any asset or property that is acquired by, through, or 
on behalf of a senior foreign political figure through misappropriation, 
theft, or embezzlement of public funds, the unlawful conversion of 
property of a foreign government, or through acts of bribery or 
extortion, and shall include any other property into which any such 
assets have been transformed or converted.
    (d) Special procedures when due diligence cannot be performed. The 
due diligence program required by paragraph (a) of this section shall 
include procedures to be followed in circumstances in which a covered 
financial institution cannot perform appropriate due diligence with 
respect to a private banking account, including when the covered 
financial institution should refuse to open the account, suspend 
transaction activity, file a suspicious activity report, or close the 
account.
    (e) Applicability rules. The provisions of this section apply to 
covered financial institutions as follows:
    (1) General rules--(i) Private banking accounts established on or 
after July 5, 2006. Effective July 5, 2006, the requirements of this 
section shall apply to each private banking account established on or 
after such date.
    (ii) Private banking accounts established before July 5, 2006. 
Effective October 2, 2006, the requirements of this section shall apply 
to each private banking account established before July 5, 2006.
    (2) Special rules for certain banks and for brokers or dealers in 
securities, futures commission merchants, and introducing brokers. Until 
the requirements of this section become applicable as set forth

[[Page 501]]

in paragraph (e)(1) of this section, the requirements of 31 U.S.C. 
5318(i)(3) shall continue to apply to a covered financial institution 
listed in Sec. 103.175(f)(1)(i) through (vi), (viii), or (ix).
    (3) Special rules for federally regulated trust banks or trust 
companies, and mutual funds. Until the requirements of this section 
become applicable as set forth in paragraph (e)(1) of this section, the 
requirements of 31 U.S.C. 5318(i)(3) shall not apply to a covered 
financial institution listed in Sec. 103.175(f)(1)(vii), or (x).
    (4) Exemptions--(i) Exempt financial institutions. Except as 
provided in this section, a financial institution defined in 31 U.S.C. 
5312(a)(2) or (c)(1) or Sec. 103.11(n) is exempt from the requirements 
of 31 U.S.C. 5318(i)(3) pertaining to private banking accounts.
    (ii) Other compliance obligations of financial institutions 
unaffected. Nothing in paragraph (e)(4) of this section shall be 
construed to relieve a financial institution from its responsibility to 
comply with any other applicable requirement of law or regulation, 
including title 31, United States Code, and this part.

[71 FR 515, Jan. 4, 2006, as amended at 71 FR 16041, Mar. 30, 2006]

             Law Enforcement Access to Foreign Bank Records



Sec. 103.185  Summons or subpoena of foreign bank records; Termination of 

correspondent relationship.

    (a) Definitions. The definitions in Sec. 103.175 apply to this 
section.
    (b) Issuance to foreign banks. The Secretary or the Attorney General 
may issue a summons or subpoena to any foreign bank that maintains a 
correspondent account in the United States and may request records 
related to such correspondent account, including records maintained 
outside of the United States relating to the deposit of funds into the 
foreign bank. The summons or subpoena may be served on the foreign bank 
in the United States if the foreign bank has a representative in the 
United States, or in a foreign country pursuant to any mutual legal 
assistance treaty, multilateral agreement, or other request for 
international law enforcement assistance.
    (c) Issuance to covered financial institutions. Upon receipt of a 
written request from a Federal law enforcement officer for information 
required to be maintained by a covered financial institution under 
paragraph (a)(2) of Sec. 103.177, the covered financial institution 
shall provide the information to the requesting officer not later than 7 
days after receipt of the request.
    (d) Termination upon receipt of notice. A covered financial 
institution shall terminate any correspondent relationship with a 
foreign bank not later than 10 business days after receipt of written 
notice from the Secretary or the Attorney General (in each case, after 
consultation with the other) that the foreign bank has failed:
    (1) To comply with a summons or subpoena issued under paragraph (b) 
of this section; or
    (2) To initiate proceedings in a United States court contesting such 
summons or subpoena.
    (e) Limitation on liability. A covered financial institution shall 
not be liable to any person in any court or arbitration proceeding for 
terminating a correspondent relationship in accordance with paragraph 
(d) of this section.
    (f) Failure to terminate relationship. Failure to terminate a 
correspondent relationship in accordance with this section shall render 
the covered financial institution liable for a civil penalty of up to 
$10,000 per day until the correspondent relationship is so terminated.

[67 FR 60572, Sept. 26, 2002]



Sec. 103.186  Special measures against Burma.

    (a) Definitions. For purposes of this section:
    (1) Correspondent account has the same meaning as provided in Sec. 
103.175(d).
    (2) Covered financial institution has the same meaning as provided 
in Sec. 103.175(f)(2) and also includes the following:
    (i) A futures commission merchant or an introducing broker 
registered, or required to register, with the Commodity Futures Trading 
Commission under the

[[Page 502]]

Commodity Exchange Act (7 U.S.C. 1 et seq.); and
    (ii) An investment company (as defined in section 3 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-5)) that is an open-end 
company (as defined in section 5 of the Investment Company Act (15 
U.S.C. 80a-5)) and that is registered, or required to register, with the 
Securities and Exchange Commission pursuant to that Act.
    (3) Burmese banking institution means any foreign bank, as that term 
is defined in Sec. 103.11(o), chartered or licensed by Burma, including 
branches and offices located outside Burma.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on correspondent accounts. A covered financial institution shall 
terminate any correspondent account that is established, maintained, 
administered, or managed in the United States for, or on behalf of, a 
Burmese banking institution.
    (2) Prohibition on indirect correspondent accounts. (i) If a covered 
financial institution has or obtains knowledge that a correspondent 
account established, maintained, administered, or managed by that 
covered financial institution in the United States for a foreign bank is 
being used by the foreign bank to provide banking services indirectly to 
a Burmese banking institution, the covered financial institution shall 
ensure that the correspondent account is no longer used to provide such 
services, including, where necessary, terminating the correspondent 
account; and
    (ii) A covered financial institution required to terminate an 
account pursuant to paragraph (b)(2)(i) of this section:
    (A) Shall do so within a commercially reasonable time, and shall not 
permit the foreign bank to establish any new positions or execute any 
transactions through such account, other than those necessary to close 
the account; and
    (B) May reestablish an account closed pursuant to this paragraph if 
it determines that the account will not be used to provide banking 
services indirectly to a Burmese banking institution.
    (3) Exception. The provisions of paragraphs (b)(1) and (2) of this 
section shall not apply to a correspondent account provided that the 
operation of such account is not prohibited by Executive Order 13310 and 
the transactions involving Burmese banking institutions that are 
conducted through the correspondent account are limited solely to 
transactions that are exempted from, or otherwise authorized by 
regulation, order, directive, or license pursuant to, Executive Order 
13310.
    (4) Reporting and recordkeeping not required. Nothing in this 
section shall require a covered financial institution to maintain any 
records, obtain any certification, or report any information not 
otherwise required by law or regulation.

[69 FR 19098, Apr. 12, 2004]



Sec. 103.187  Special measures against Myanmar Mayflower Bank and Asia Wealth 

Bank.

    (a) Definitions. For purposes of this section:
    (1) Correspondent account has the same meaning as provided in Sec. 
103.175(d).
    (2) Covered financial institution has the same meaning as provided 
in Sec. 103.175(f)(2) and also includes the following:
    (i) A futures commission merchant or an introducing broker 
registered, or required to register, with the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.); and
    (ii) An investment company (as defined in section 3 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-5)) that is an open-end 
company (as defined in section 5 of the Investment Company Act (15 
U.S.C. 80a-5)) and that is registered, or required to register, with the 
Securities and Exchange Commission pursuant to that Act.
    (3) Myanmar Mayflower Bank means all headquarters, branches, and 
offices of Myanmar Mayflower Bank operating in Burma or in any 
jurisdiction.
    (4) Asia Wealth Bank means all headquarters, branches, and offices 
of Asia Wealth Bank operating in Burma or in any jurisdiction.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on correspondent accounts. A covered financial

[[Page 503]]

institution shall terminate any correspondent account that is 
established, maintained, administered, or managed in the United States 
for, or on behalf of, Myanmar Mayflower Bank or Asia Wealth Bank.
    (2) Prohibition on indirect correspondent accounts. (i) If a covered 
financial institution has or obtains knowledge that a correspondent 
account established, maintained, administered, or managed by that 
covered financial institution in the United States for a foreign bank is 
being used by the foreign bank to provide banking services indirectly to 
Myanmar Mayflower Bank or Asia Wealth Bank, the covered financial 
institution shall ensure that the correspondent account is no longer 
used to provide such services, including, where necessary, terminating 
the correspondent account; and
    (ii) A covered financial institution required to terminate an 
account pursuant to paragraph (b)(2)(i) of this section:
    (A) Shall do so within a commercially reasonable time, and shall not 
permit the foreign bank to establish any new positions or execute any 
transactions through such account, other than those necessary to close 
the account; and
    (B) May reestablish an account closed pursuant to this paragraph if 
it determines that the account will not be used to provide banking 
services indirectly to Myanmar Mayflower Bank or Asia Wealth Bank.
    (3) Reporting and recordkeeping not required. Nothing in this 
section shall require a covered financial institution to maintain any 
records, obtain any certification, or to report any information not 
otherwise required by law or regulation.

[69 FR 19103, Apr. 12, 2004]



Sec. 103.188  Special measures against Commercial Bank of Syria.

    (a) Definitions. For purposes of this section:
    (1) Commercial Bank of Syria means any branch, office, or subsidiary 
of Commercial Bank of Syria operating in Syria or in any other 
jurisdiction, including Syrian Lebanese Commercial Bank.
    (2) Correspondent account has the same meaning as provided in Sec. 
103.175(d)(1)(ii).
    (3) Covered financial institution includes:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);
    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the Securities and Exchange Commission under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons 
who register pursuant to section 15(b)(11) of the Securities Exchange 
Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to be registered, with the Commodity Futures 
Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et 
seq.), except persons who register pursuant to section 4(f)(a)(2) of the 
Commodity Exchange Act; and
    (x) A mutual fund, which means an investment company (as defined in 
section 3(a)(1) of the Investment Company Act of 1940 ((``Investment 
Company Act'') (15 U.S.C. 80a-3(a)(1))) that is an open-end company (as 
defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-
5(a)(1))) and that is registered, or is required to register, with the 
Securities and Exchange Commission pursuant to the Investment Company 
Act.
    (4) Subsidiary means a company of which more than 50 percent of the 
voting stock or analogous equity interest is owned by another company.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on direct use of correspondent accounts. A covered financial institution 
shall terminate any correspondent account that is open or maintained in 
the United States for, or

[[Page 504]]

on behalf of, Commercial Bank of Syria.
    (2) Due diligence of correspondent accounts to prohibit indirect 
use. (i) A covered financial institution shall apply due diligence to 
its correspondent accounts that is reasonably designed to guard against 
their indirect use by Commercial Bank of Syria. At a minimum, that due 
diligence must include:
    (A) Notifying correspondent account holders that the correspondent 
account may not be used to provide Commercial Bank of Syria with access 
to the covered financial institution; and
    (B) Taking reasonable steps to identify any indirect use of its 
correspondent accounts by Commercial Bank of Syria, to the extent that 
such indirect use can be determined from transactional records 
maintained in the covered financial institution's normal course of 
business.
    (ii) A covered financial institution shall take a risk-based 
approach when deciding what, if any, additional due diligence measures 
it should adopt to guard against the indirect use of its correspondent 
accounts by Commercial Bank of Syria.
    (iii) A covered financial institution that obtains knowledge that a 
correspondent account is being used by the foreign bank to provide 
indirect access to Commercial Bank of Syria shall take all appropriate 
steps to prevent such indirect access, including, where necessary, 
terminating the correspondent account.
    (iv) A covered financial institution required to terminate a 
correspondent account pursuant to paragraph (b)(2)(iii) of this section:
    (A) Should do so within a commercially reasonable time, and should 
not permit the foreign bank to establish any new positions or execute 
any transaction through such correspondent account, other than those 
necessary to close the correspondent account; and
    (B) May reestablish a correspondent account closed pursuant to this 
paragraph if it determines that the correspondent account will not be 
used to provide banking services indirectly to Commercial Bank of Syria.
    (3) Recordkeeping and reporting. (i) A covered financial institution 
is required to document its compliance with the notice requirement set 
forth in paragraph (b)(2)(i)(A) of this section.
    (ii) Nothing in this section shall require a covered financial 
institution to report any information not otherwise required to be 
reported by law or regulation.

[71 FR 13267, Mar. 15, 2006]



Sec. 103.192  Special measures against VEF Bank.

    (a) Definitions. For purposes of this section:
    (1) Correspondent account has the same meaning as provided in Sec. 
103.175(d)(1)(ii).
    (2) Covered financial institution includes:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);
    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the U.S. Securities and Exchange Commission under 
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except 
persons who register pursuant to section 15(b)(11) of the Securities 
Exchange Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to be registered, with the Commodity Futures 
Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et 
seq.), except persons who register pursuant to section 4(f)(a)(2) of the 
Commodity Exchange Act; and
    (x) A mutual fund, which means an investment company (as defined in 
section 3(a)(1) of the Investment Company Act of 1940 ((``Investment 
Company Act'') (15 U.S.C. 80a-3(a)(1))) that is an open-end company (as 
defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-
5(a)(1))) and that is

[[Page 505]]

registered, or is required to register, with the U.S. Securities and 
Exchange Commission pursuant to the Investment Company Act.
    (3) Subsidiary means a company of which more than 50 percent of the 
voting stock or analogous equity interest is owned by another company.
    (4) VEF Bank means any branch, office, or subsidiary of joint stock 
company VEF Banka operating in the Republic of Latvia or in any other 
jurisdiction. The one known VEF Bank subsidiary, Veiksmes lizings, and 
any branches or offices, are included in the definition.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on direct use of correspondent accounts. A covered financial institution 
shall terminate any correspondent account that is opened or maintained 
in the United States for, or on behalf of, VEF Bank.
    (2) Due diligence of correspondent accounts to prohibit indirect 
use. (i) A covered financial institution shall apply due diligence to 
its correspondent accounts that is reasonably designed to guard against 
their indirect use by VEF Bank. At a minimum, that due diligence must 
include:
    (A) Notifying correspondent accountholders that the correspondent 
account may not be used to provide VEF Bank with access to the covered 
financial institution; and
    (B) Taking reasonable steps to identify any indirect use of its 
correspondent accounts by VEF Bank, to the extent that such indirect use 
can be determined from transactional records maintained in the covered 
financial institution's normal course of business.
    (ii) A covered financial institution shall take a risk-based 
approach when deciding what, if any, additional due diligence measures 
it should adopt to guard against the indirect use of its correspondent 
accounts by VEF Bank.
    (iii) A covered financial institution that obtains knowledge that a 
correspondent account is being used by the foreign bank to provide 
indirect access to VEF Bank shall take all appropriate steps to prevent 
such indirect access, including, where necessary, terminating the 
correspondent account.
    (iv) A covered financial institution required to terminate a 
correspondent account pursuant to paragraph (b)(2)(iii) of this section:
    (A) Should do so within a commercially reasonable time, and should 
not permit the foreign bank to establish any new positions or execute 
any transaction through such correspondent account, other than those 
necessary to close the correspondent account; and
    (B) May reestablish a correspondent account closed pursuant to this 
paragraph if it determines that the correspondent account will not be 
used to provide banking services indirectly to VEF Bank.
    (3) Recordkeeping and reporting. (i) A covered financial institution 
is required to document its compliance with the notice requirement set 
forth in paragraph (b)(2)(i)(A) of this section.
    (ii) Nothing in this section shall require a covered financial 
institution to report any information not otherwise required to be 
reported by law or regulation.

[71 FR 39560, July 13, 2006]



Sec. 103.193  Special measures against Banco Delta Asia.

    (a) Definitions. For purposes of this section:
    (1) Banco Delta Asia means all branches, offices, and subsidiaries 
of Banco Delta Asia operating in any jurisdiction, including its 
subsidiaries Delta Asia Credit Limited and Delta Asia Insurance Limited.
    (2) Correspondent account has the same meaning as provided in Sec. 
103.175(d)(1)(ii).
    (3) Covered financial institution includes:
    (i) An insured bank (as defined in section 3(h) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(h)));
    (ii) A commercial bank;
    (iii) An agency or branch of a foreign bank in the United States;
    (iv) A federally insured credit union;
    (v) A savings association;
    (vi) A corporation acting under section 25A of the Federal Reserve 
Act (12 U.S.C. 611 et seq.);

[[Page 506]]

    (vii) A trust bank or trust company that is federally regulated and 
is subject to an anti-money laundering program requirement;
    (viii) A broker or dealer in securities registered, or required to 
be registered, with the U.S. Securities and Exchange Commission under 
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except 
persons who register pursuant to section 15(b)(11) of the Securities 
Exchange Act of 1934;
    (ix) A futures commission merchant or an introducing broker 
registered, or required to register, with the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.), except 
persons who register pursuant to section 4(f)(a)(2) of the Commodity 
Exchange Act; and
    (x) A mutual fund, which means an investment company (as defined in 
section 3(a)(1) of the Investment Company Act of 1940 (``Investment 
Company Act'') (15 U.S.C. 80a-3(a)(1))) that is an open-end company (as 
defined in section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-
5(a)(1))) and that is registered, or is required to register, with the 
U.S. Securities and Exchange Commission pursuant to the Investment 
Company Act.
    (4) Subsidiary means a company of which more than 50 percent of the 
voting stock or analogous equity interest is owned by another company.
    (b) Requirements for covered financial institutions--(1) Prohibition 
on direct use of correspondent accounts. A covered financial institution 
shall terminate any correspondent account that is established, 
maintained, administered, or managed in the United States for, or on 
behalf of, Banco Delta Asia.
    (2) Due diligence of correspondent accounts to prohibit indirect 
use.
    (i) A covered financial institution shall apply due diligence to its 
correspondent accounts that is reasonably designed to guard against 
their indirect use by Banco Delta Asia. At a minimum, that due diligence 
must include:
    (A) Notifying correspondent accountholders the correspondent account 
may not be used to provide Banco Delta Asia with access to the covered 
financial institution; and
    (B) Taking reasonable steps to identify any indirect use of its 
correspondent accounts by Banco Delta Asia, to the extent that such 
indirect use can be determined from transactional records maintained in 
the covered financial institution's normal course of business.
    (ii) A covered financial institution shall take a risk-based 
approach when deciding what, if any, additional due diligence measures 
it should adopt to guard against the indirect use of its correspondent 
accounts by Banco Delta Asia.
    (iii) A covered financial institution that obtains knowledge that a 
correspondent account is being used by the foreign bank to provide 
indirect access to Banco Delta Asia shall take all appropriate steps to 
prevent such indirect access, including, where necessary, terminating 
the correspondent account.
    (iv) A covered financial institution required to terminate a 
correspondent account pursuant to paragraph (b)(2)(iii) of this section:
    (A) Should do so within a commercially reasonable time, and should 
not permit the foreign bank to establish any new positions or execute 
any transaction through such correspondent account, other than those 
necessary to close the correspondent account; and
    (B) May reestablish a correspondent account closed pursuant to this 
paragraph if it determines that the correspondent account will not be 
used to provide banking services indirectly to Banco Delta Asia.
    (3) Recordkeeping and reporting. (i) A covered financial institution 
is required to document its compliance with the notice requirement set 
forth in paragraph (b)(2)(i)(A) of this section.
    (ii) Nothing in this section shall require a covered financial 
institution to report any information not otherwise required to be 
reported by law or regulation.

[72 FR 12739, Mar. 19, 2007]

[[Page 507]]



   Sec. Appendix A to Subpart I of Part 103--Certification Regarding 
                Correspondent Accounts for Foreign Banks

[GRAPHIC] [TIFF OMITTED] TR26SE02.008


[[Page 508]]


[GRAPHIC] [TIFF OMITTED] TR26SE02.009


[[Page 509]]


[GRAPHIC] [TIFF OMITTED] TR26SE02.010


[[Page 510]]


[GRAPHIC] [TIFF OMITTED] TR26SE02.011


[67 FR 60573, Sept. 26, 2002]

[[Page 511]]



  Sec. Appendix B to Subpart I of Part 103--Recertification Regarding 
                 Correspodent Accounts for Foreign Banks

[GRAPHIC] [TIFF OMITTED] TR26SE02.012


[[Page 512]]


[GRAPHIC] [TIFF OMITTED] TR26SE02.013


[67 FR 60573, Sept. 26, 2002]



           Sec. Appendix A to Part 103--Administrative Rulings

                          88-1 (June 22, 1988)

                                  Issue

    What action should a financial institution take when it believes 
that it is being misused by persons who are intentionally structuring 
transactions to evade the reporting requirement or engaging in 
transactions that may involve illegal activity such as drug trafficking, 
tax evasion or money laundering?

                                  Facts

    A teller at X State Bank notices that the same person comes into the 
bank each day and purchases, with cash, between $9,000 and $9,900 in 
cashier's checks. Even when aggregated, these purchases never exceed 
$10,000 during any one business day. The teller also notices that this 
person tries to go to different tellers for each transaction and is very 
reluctant to provide information about his frequent transactions or 
other information such as name, address, etc. Likewise, the payees on 
these cashier's checks all have common names such as ``John Smith'' or 
``Mary Jones.'' The teller informs the bank's compliance officer that 
she believes that this person is structuring his transactions in order 
to evade the reporting requirements under the Bank Secrecy Act. X State 
Bank wants to know what actions it should take in this situation or in 
any other situation where a transaction or a person conducting a 
transaction appears suspicious.

                            Law and Analysis

    As it appears that the person may be intentionally structuring the 
transactions to evade the Bank Secrecy Act reporting requirements, X 
State Bank should immediately telephone the local office of the Internal 
Revenue Service (``IRS'') and speak to a Special Agent in the IRS 
Criminal Investigation Division, or should call 1-800-BSA-CTRS, where 
his call will be referred to a Special Agent.
    Any information provided to the IRS should be given within the 
confines of Sec. 1103(c) of the Right to Financial Privacy Act. 12 
U.S.C. 3401-3422. Section 1103(c) of that Act permits a financial 
institution to

[[Page 513]]

notify a government authority of information relevant to a possible 
violation of any statute or regulation. Such information may consist of 
the names of any individuals or corporate entities involved in the 
suspicious transactions; account numbers; home and business addresses; 
social security numbers; type of account; interest paid on account; 
location of the branch or office where the suspicious transaction 
occurred; a specification of the offense that the financial institution 
believes has been committed; and a description of the activities giving 
rise to the bank's suspicion. S. Rep. 99-433, 99th Cong., 2d Sess., pp. 
15-16.
    Additionally, the bank may be required, by the Federal regulatory 
agency which supervises it, to submit a criminal referral form. Thus, 
the bank should check with its regulatory agency to determine whether a 
referral form should be submitted.
    Lastly, under the facts as described above, X State Bank is not 
required to file a Currency Transaction Report (``CTR'') because the 
currency transaction (i.e. purchase of cashier's checks) did not exceed 
$10,000 during one business day. If the bank had found that on a 
particular day the person had in fact used a total of more than $10,000 
in currency to purchase cashier's checks, but had each individual 
cashier's check made out in amounts of less than $10,000, the bank is 
obligated to file a CTR, and should follow the other steps described 
above.

                                 Holding

    If X State Bank notices that a person may be misusing it by 
intentionally structuring transactions to evade the BSA reporting 
requirements or engaging in transactions that may involve other illegal 
activity, the bank should telephone the local office of the Internal 
Revenue Service, Criminal Investigation Division, and report that 
information to a Special Agent, or should call 1-800-BSA-CTRS. In 
addition, the Federal regulatory agency which supervises X State Bank 
may require the bank to submit a criminal referral form. All disclosures 
to the Government should be made in accordance with the provisions of 
the Right to Financial Privacy Act.

                          88-2 (June 22, 1988)

                                  Issue

    When, if ever, should a bank file a CMIR on behalf of its customer, 
when the customer is importing or exporting more than $10,000 in 
currency or monetary instruments?

                                  Facts

    A customer walks into B National Bank (``B'') with $15,000 in cash 
for deposit into her account. As is required, the bank teller begins to 
fill out a Currency Transaction Report (``CTR'', IRS Form 4789) in order 
to report a transaction in currency of more than $10,000. While the 
teller is filling out the CTR, the customer mentions to the teller that 
she has just received the money in a letter from a relative in France. 
Should the teller also file a CMIR, either on the customer's behalf or 
on the bank's behalf?

                            Law and Analysis

    B National Bank should not file a CMIR when a customer deposits 
currency in excess of $10,000 into her account, even if the bank has 
knowledge that the customer received the currency from a place outside 
the United States. 31 CFR 103.23 requires that a CMIR be filed by anyone 
who transports, mails, ships or receives, or attempts, causes or 
attempts to cause the transportation, mailing, shipping or receiving of 
currency or monetary instruments in excess of $10,000, from or to a 
place outside the United States. The term ``monetary instruments'' 
includes currency and instruments such as negotiable instruments 
endorsed without restriction. See 31 CFR 103.11(k).
    The obligation to file the CMIR is solely on the person who 
transports, mails, ships or receives, or causes or attempts to 
transport, mail, ship or receive. No other person is under any 
obligation to file a CMIR. Thus, if a customer walks into the bank and 
declares that he or she has received or transported currency in an 
aggregate amount exceeding $10,000 from a place outside the United 
States and wishes to deposit the currency into his or her account, the 
bank is under no obligation to file a CMIR on the customer's behalf. 
Likewise, because the bank itself did not receive the money from a 
customer outside the United States, it has no obligation to file a CMIR 
on its own behalf. The same holds true if a customer declares his intent 
to transport currency or monetary instruments in excess of $10,000 to a 
place outside the United States.
    However, the bank is strongly encouraged to inform the customer of 
the CMIR reporting requirement. If the bank has knowledge that the 
customer is aware of the CMIR reporting requirement, but is nevertheless 
disregarding the requirement or if information about the transaction is 
otherwise suspicious, the bank should contact the local office of the 
U.S. Customs Service or 1-800-BE ALERT. The United States Customs 
Service has been delegated authority by the Assistant Secretary 
(Enforcement) to investigate criminal violations of 31 CFR 103.23. See 
31 CFR 103.36(c)(1).
    Any information provided to Customs should be given within the 
confines of section 1103(c) of the Right to Financial Privacy Act, 12 
U.S.C. 3401-3422. Section 1103(c) permits a financial institution to 
notify a Government authority of information relevant to a possible 
violation of any statute or regulation. Such information may consist of 
the

[[Page 514]]

name (including those of corporate entities) of any individual involved 
in the suspicious transaction; account numbers; home and business 
addresses; social security numbers; type of account; interest paid on 
account; location of branch where the suspicious transaction occurred; a 
specification of the offense that the financial institution believes has 
been committed; and a description of the activities giving rise to the 
bank's suspicions. See S. Rep. 99-433, 99th Cong., 2nd Sess., pp. 15-16. 
Therefore, under the facts above, the teller need only file a CTR for 
the deposit of the customer's $15,000 in currency.
    A previous interpretation of Sec. 103.23(b) by Treasury held that 
if a bank received currency or monetary instruments over the counter 
from a person who may have transported them into the United States, and 
knows that such items have been transported into the country, it must 
file a report on Form 4790 if a complete and truthful report has not 
been filed by the customer. See 31 CFR 103 appendix, Sec. 103.23, 
interpretation 2, at 364 (1987). This ruling hereby supersedes that 
interpretation.

                                 Holding

    A bank should not file a CMIR when a customer deposits currency or 
monetary instruments in excess of $10,000 into her account even if the 
bank has knowledge that the currency or monetary instruments were 
received or transported from a place outside the United States. 31 CFR 
103.23. The same is true if the bank has knowledge that the customer 
intends to transport the currency or monetary instruments to a place 
outside the United States. However, the bank is required to file a CTR 
if it receives in excess of $10,000 in cash from its customer, and is 
strongly encouraged to inform the customer of the CMIR requirements. In 
addition, if the bank has knowledge that the customer is aware of the 
CMIR reporting requirement and is nevertheless planning to disregard it 
or if the transaction is otherwise suspicious, the bank should notify 
the local office of the United States Customs Service (or 1-800-Be 
Alert) of the suspicious transaction. Such notice should be made within 
the confines of the Right to Financial Privacy Act, 12 U.S.C. 3403(c).

                          88-3 (June 22, 1988)

                                  Issue

    Whether a bank may exempt ``cash-back'' transactions of a customer 
whose primary business is of a type that may be exempted either 
unilaterally by the bank or pursuant to additional authority granted by 
the IRS.

                                  Facts

    The ABC Grocery (``ABC''), a retail grocery store, has an account at 
the X State Bank for its daily deposits of currency. Because ABC 
regularly and frequently deposits amounts ranging from $20,000 to 
$30,000, the bank has properly granted ABC an exemption for daily 
deposits up to a limit of $30,000.
    Recently, ABC began providing its customers with a check-cashing 
service as an adjunct to its primary business of selling groceries. 
ABC's primary business still consists of the sale of groceries. However, 
the unexpectedly heavy demand for ABC's check-cashing service has 
required ABC to maintain a substantially greater quantity of cash in the 
store than was necessary for the grocery business in the past. To 
facilitate the operations of its check-cashing service, ABC is 
presenting the bank with large numbers of checks in ``cash-back'' 
transactions, rather than depositing the checks into its account and 
withdrawing cash from that account. X State Bank has just been presented 
with a ``cash-back'' transaction wherein an employee of ABC is 
exchanging $15,000 worth of checks for cash. How should the bank treat 
this transaction?

                            Law and Analysis

    A cash back transaction is one where one or more checks or other 
monetary instruments are presented in exchange for cash or a portion of 
the checks or monetary instruments are deposited while the remainder is 
exchanged for cash. ``Cash back'' transactions can never be exempted 
from the Bank Secrecy Act reporting requirements. Thus, the bank must 
file a Currency Transaction Report on IRS Form 4789 reporting this 
$15,000 ``cash back'' transaction, even though the customer's account 
has been granted an exemption for daily deposits of up to $30,000. This 
is because Sec. 103.22(b)(i) permits a bank to exempt only ``(d)eposits 
or withdrawals of currency from an existing account by an established 
depositor who is a United States resident and operates a retail type of 
business in the United States'' (emphasis added). As ``cash-back'' 
transactions do not constitute either a ``deposit or withdrawal of 
currency'' within the meaning of the regulations, the bank must report 
on a CTR any ``cash-back'' transaction that results in the transfer of 
more than $10,000 in currency to a customer during a single banking day, 
regardless of whether the customer has properly been granted an 
exemption for its deposits or withdrawals.
    Moreover, because ``cash back'' transactions are never exemptible, 
the bank may not unilaterally exempt ``cash-back'' transactions by ABC, 
or seek additional authority from the IRS to grant a special exemption 
for ABC's ``cash-back'' transactions. Instead, the bank must report 
ABC's ``cash back'' transaction on a CTR, listing it as a $15,000 
``check cashed'' transaction.

[[Page 515]]

                                 Holding

    A bank may never grant a unilateral exemption, or obtain additional 
authority from the IRS to grant a special exemption to the ``cash-back'' 
transactions of a customer. A ``cash back'' transaction is one where one 
or more checks or other monetary instruments are presented in exchange 
for cash or a portion of the checks or monetary instruments are 
deposited while the remainder is exchanged for cash. If a bank handles a 
``cash-back'' transaction that results in the transfer of more than 
$10,000 to a customer during a single banking day, it must report that 
transaction on IRS Form 4789, the Currency Transaction Report, as a 
``check cashed'' transaction, regardless of whether the customer has 
been properly granted an exemption for daily deposits or withdrawals.

                          88-4 (August 2, 1988)

                                  Issue

    If a bank has exempted a single account of a customer into which 
multiple establishments of that customer make deposits, must the bank 
list all of the establishments on its exemption list or may the bank 
list only the Sec. 103.22(f) information of the customer's headquarters 
or its principal business establishment on its exemption list?

                                  Facts

    A fast food company operates a chain of fast-food restaurants in 
several states. In New York, the company has established a single 
deposit account at Bank A, into which all of the company's 
establishments in that area make deposits. In Connecticut, the company 
has established ten bank accounts at Bank B; each of the company's ten 
establishments in Connecticut have been assigned a separate account into 
which it makes deposits. Banks A and B have properly exempted the 
company's accounts, but now seek guidance on the manner in which they 
should add these accounts to their exemption lists. All of the company's 
establishments use the same taxpayer identification number (``TIN'').

                            Law and Analysis

    Under the regulations, the bank must keep ``in a centralized list,'' 
Sec. 103.22(f) information for ``each depositor that has engaged in 
currency transactions which have not been reported because of (an) 
exemption * * *'' However, where all of the company's establishments 
deposit into one exempt account as at Bank A, above, the bank need only 
maintain Sec. 103.22(f) information on its list for the customer's 
corporate headquarters or the principal establishment that obtained the 
exemption. The bank may, but is not required to, list identifying 
information for all of the customers' establishments depositing into the 
one account. If the bank chooses to list only the information for the 
customer's headquarters or principal establishment, it should briefly 
note that on the exemption list and should ensure that the individual 
addresses for each establishment are readily available upon request. 
Where each of the company's establishments deposit into separate exempt 
accounts as at Bank B, the bank must maintain separate Sec. 103.22(f) 
information on the exemption list for each establishment.
    Under Sec. 103.22(b)(2) (i), (ii), and (iv) and Sec. 103.22(e) of 
the regulation, a bank can only grant an exemption for ``an existing 
account (of) an established depositor who is a United States resident.'' 
Under these provisions, therefore, the bank can only grant an exemption 
for an existing individual account, not for an individual customer or 
group of accounts. Thus, if a customer has a separate account for each 
of its business establishments, the bank must consider each account for 
a separate exemption. If the bank grants exemptions for more than one 
account, it should prepare a separate exemption statement and establish 
a separate dollar limit for each account.
    Once an exemption has been granted for an account, Sec. 103.22(f) 
requires the bank to maintain a centralized exemption list that includes 
the name, address, business, types of transactions exempted, the dollar 
limit of the exemption, taxpayer identification number, and account 
number of the customers whose accounts have been exempted.

                                 Holding

    Under 31 CFR 103.22, when a bank has exempted a single account of a 
customer into which more than one of the customer's establishments make 
deposits, the bank may include the name, address, business, type of 
transactions exempted, the dollar limit of the exemption, taxpayer 
identification number, and account number (``Sec. 103.22(f) 
information'') of either the customer's headquarters or the principal 
business establishment, or it may separately list Sec. 103.22(f) 
information for each of the establishments using that account. If the 
bank chooses to list only the information for the customer's 
headquarters or principal establishment, it should briefly note that 
fact on the exemption list, and it should ensure that the individual 
addresses of those establishments not on the list are readily available 
upon request. If a bank has granted separate exemptions to several 
accounts, each of which is used by a single establishment of the same 
customer, the bank must include on its exemption list Sec. 103.22(f) 
information for each of those establishments. Previous Treasury 
correspondence or interpretations contrary to this policy are hereby 
rescinded.

[[Page 516]]

                          88-5 (August 2, 1988)

                                  Issue

    Does a financial institution have a duty to file a CTR on currency 
transactions where the financial institution never physically receives 
the cash because it uses an armored car service to collect, transport 
and process its customer's cash receipts?

                                  Facts

    X State Bank (the ``Bank'') and Acme Armored Car Service (``Acme'') 
have entered into a contract which provides for Acme to collect, 
transport and process revenues received from Bank customers:
    Each day, Acme picks up cash, checks, and deposit tickets from 
Little Z, a non-exempt customer of the Bank. Recently, receipts of cash 
from Little Z have exceeded $10,000. Acme delivers the checks and 
deposit tickets to the Bank where they are processed and Little Z's 
account is credited. All cash collected, however, is taken by Acme to 
its central office where it is counted and processed. The cash is then 
delivered by Acme to the Federal Reserve Bank for deposit into the 
Bank's account. Must the Bank file a CTR to report a receipt of cash in 
excess of $10,000 by Acme from Little Z?

                            Law and Anaylsis

    Yes. Since Acme is receiving cash in excess of $10,000 on behalf of 
the Bank, the Bank must file a CTR in order to report these 
transactions.
    Section 103.22(a)(1) requires ``(e)ach financial institution * * * 
[to] file a report of each deposit, withdrawal, exchange of currency or 
other payment or transfer, by, through or to such financial institution 
which involves a transaction in currency of more than $10,000.'' Section 
103.11 (a) and (g) defines ``Bank'' and ``Financial Institution'' to 
include agents of those banks and financial institutions.
    Under the facts presented, Acme is acting as an agent of the Bank. 
This is because Acme and the Bank have a contractual relationship 
whereby the Bank has authorized Acme to pick up, transport and process 
Little Z's receipts on behalf of the Bank. The Federal Reserve Bank's 
acceptance of deposits from Acme into the Bank's account at the Fed, is 
additional evidence of the agency relationship between the Bank and 
Acme.
    Therefore, when Acme receives currency in excess of $10,000 from 
Little Z, the Bank must report that transaction on Form 4789. Likewise, 
if Acme receives currency from Little Z in multiple transactions, Sec. 
103.22(a)(1) requires the Bank to aggregate these transactions and file 
a single CTR for the total amount of currency received by Acme, if the 
Bank has knowledge of these multiple transactions. Knowledge by the 
Bank's agent, i.e., Acme, that the currency was received in multiple 
transactions, is attributable to the Bank. The Bank must assure that 
Acme, as its agent, obtains all the information and identification 
necessary to complete the CTR.

                                 Holding

    Financial institutions must file a CTR for the currency received by 
an armored car service from the financial institution's customer when 
the armored car service physically receives the cash from the customer, 
transports it and processes the receipts, even though the currency may 
never physically be received by the financial institution. This is 
because the armored car service is acting as an agent of the financial 
institution.

                         89-1 (January 12, 1989)

                                  Issue

    Under Sec. 103.22 of the BSA regulations, may a bank unilaterally 
grant one exemption or establish a single dollar exemption limit for a 
group of existing accounts of the same customer? If not, may a bank 
obtain additional authority from the IRS to grant a single exemption for 
a group of exemptible accounts belonging to the same customer?

                                  Facts

    ABC Inc. (``ABC''), with TIN 12-3456789, owns five fast food 
restaurants. Each restaurant has its own account at the X State Bank and 
each restaurant routinely deposits less than $10,000 into its individual 
account. However, when the deposits into these five accounts are 
aggregated they regularly and frequently exceed $10,000. Accordingly, 
the bank prepares and files one CTR for ABC Inc., on each business day 
that ABC's aggregated currency transactions exceed $10,000. X State Bank 
wants to know whether it can unilaterally exempt these five accounts 
having the same TIN, and, if not, whether it can obtain additional 
authority from the IRS to grant a single exemption to the group of five 
accounts belonging to ABC.

                            Law and Analysis

    Under Sec. 103.22(b)(2) (i) and (ii) of the Bank Secrecy Act 
(``BSA'') regulations, 31 CFR part 103, only an individual account of a 
customer may be unilaterally exempted from the currency transaction 
reporting provisions. The bank may not unilaterally grant one exemption 
or establish a single dollar exemption limit for multiple accounts of 
the same customer. This is because Sec. Sec. 103.22(b)(2)(i) and 
103.22(b)(2)(ii) of the BSA regulations only permit a bank to 
unilaterally exempt ``[d]eposits or withdrawals of currency from an 
existing account by an established depositor who is a United States

[[Page 517]]

resident and operates a retail type of business in the United States.'' 
31 CFR 103.22(b)(2) (i) and (ii).
    Section 103.22(e) of the BSA regulations provides, however, that 
``[a] bank may apply to the * * * [IRS] for additional authority to 
grant exemptions to the reporting requirements not otherwise permitted 
under paragraph (b) of this section * * *'' 31 CFR 103.22(e). Therefore, 
under this authority, and at the request of a bank, the IRS may, in its 
discretion, grant the requesting bank additional authority to exempt a 
group of accounts when the following conditions are met:
    (1) Each of the accounts in the group is owned by the same person 
and has the same taxpayer identification number.
    (2) The deposits or withdrawals into each account are made by a 
customer that operates a business that may be either unilaterally or 
specially exemptible and each account meets the other exemption criteria 
(except for the dollar amount).
    (3) Currency transactions for each account individually do not 
exceed $10,000 on a regular and frequent basis.
    (4) Aggregated currency transactions for all accounts included in 
the group regularly and frequently exceed $10,000.
    If a bank determines that an exemption would be appropriate in a 
situation involving a group of accounts belonging to a single customer, 
it must apply to the IRS for authority to grant one special exemption 
covering the accounts in question. As with all requests for special 
exemptions, any request for additional authority to grant a special 
exemption must be made in writing and accompanied by a statement of the 
circumstances that warrant special exemption treatment and a copy of the 
statement signed by the customer as required by Sec. 103.22(d). 31 CFR 
103.22(d).
    Additional authority to grant a special exemption for a group of 
accounts must be obtained from the IRS regardless of whether the 
businesses may be unilaterally exempted under Sec. 103.22(b)(2), 
because the exemption, if granted, would apply to a group of existing 
accounts as opposed to an individual existing account. 31 CFR 
103.22(b)(2).
    Also, if any one of a given customer's accounts has regular and 
frequent currency transactions which exceed $10,000, that account may 
not be included in the group exemption. This is because the bank may, as 
provided by Sec. 103.22(b)(2), either unilaterally exempt that account 
or obtain authority from the IRS to grant a special exemption for that 
account if it meets the other criteria for exemption. Thus, only 
accounts of exemptible businesses which do not have regular and frequent 
(e.g., daily, weekly or twice a month) currency transactions in excess 
of $10,000 may be eligible for a group exemption.
    The intention of this special exemption is to permit banks to exempt 
the accounts of established customers, such as the ABC Inc. restaurants 
described above, which are owned by the same person and have the same 
TIN but which individually do not have sufficient currency deposit or 
withdrawal activity that regularly and frequently exceed $10,000.

                                 Holding

    If X State Bank determines that an exemption would be appropriate 
for ABC Inc., it must apply to the IRS for authority to grant one 
special exemption covering ABC's five separate accounts. As with all 
requests for special exemptions, ABC's request for additional authority 
to grant a special exemption must be made in writing and accompanied by 
a statement of the circumstances that warrant special exemption 
treatment and a copy of the statement signed by the customer as required 
by Sec. 103.22(d). 31 CFR 103.22(d). The IRS may, in its discretion, 
grant additional authority to exempt the ABC accounts if: (1) They have 
the same taxpayer identification number; (2) they each are for customers 
that operate a business that may be either unilaterally or specially 
exemptible and each account meets the other exemption criteria (except 
for dollar amount); (3) the currency transactions for each account 
individually do not exceed $10,000 on a regular and frequent basis; but 
(4) when aggregated the currency transactions for all the accounts 
regularly and frequently do exceed $10,000.

                          89-2 (June 21, 1989)

                                  Issue

    When a customer has established bank accounts for each of several 
establishments that it owns, and the bank has exempted one or more of 
those accounts, how does the bank aggregate the customer's currency 
transactions?

                                  Facts

    X Company (``X'') operates two fast-food restaurants and a wholesale 
food business. X has opened separate bank accounts at the A National 
Bank (the ``Bank'') for each of its two restaurants, account numbers 1 
and 2 respectively. Each of these two accounts has been properly 
exempted by the bank. Account number 1 has an exemption limit of $25,000 
for deposits, and account number 2 has an exemption limit of $40,000 for 
deposits. X also has a third account, account number 3, at the bank for 
use in the operation of its wholesale food business. On occasion, cash 
deposits of more than $10,000 are made into this third account. Because 
these cash

[[Page 518]]

deposits are infrequent, the bank cannot obtain additional authority to 
grant this account a special exemption.
    During the same business day, two $15,000 cash deposits totalling 
$30,000 are made into account number 1, a separate cash deposit of 
$35,000 is made into account number 2 and a deposit of $9,000 in 
currency is made into account number 3 (X's account for its wholesale 
food business).
    The bank must now determine how to aggregate and report all of these 
transactions on a Form 4789, Currency Transaction Report, (``CTR''). 
Must they aggregate all of the deposits made into account numbers 1, 2 
and 3 and report them on a single CTR?

                            Law and Analysis

    Section 103.22 of the Bank Secrecy Act (``BSA''), 31 CFR part 103, 
requires a financial institution to treat multiple currency transactions 
``as a single transaction if the financial institution has knowledge 
that they are by or on behalf of any person and result in either cash-in 
or cash-out totalling more than $10,000 during any one business day.'' 
This means that a financial institution must file a CTR if it knows that 
multiple currency transactions involving two or more accounts have been 
conducted by or on behalf of the same person and, those transactions, 
when aggregated, exceed $10,000. Knowledge, in this context, means 
knowledge on the part of a partner, director, officer or employee of the 
institution or on the part of any existing computer or manual system at 
the institution that permits it to aggregate transactions.
    Thus, if the bank has knowledge of multiple transactions, the bank 
should aggregate the transactions in the following manner.
    First, the bank should separately review and total all cash-in and 
cash-out transactions within each account. Cash-in transactions should 
be aggregated with other cash-in transactions and cash-out transactions 
should be aggregated with cash-out transactions. Cash-in and cash-out 
transactions should not be aggregated together or offset against each 
other.
    Second, the bank should determine whether the account has an 
exemption limit. If the account has an exemption limit, the bank should 
determine whether it has been exceeded. If the exemption limit has not 
been exceeded, the transactions for the exempted account should not be 
aggregated with other transactions.
    If the total transactions during the same business day for a 
particular account exceed the exemption limit, the total of all of the 
transactions for that account should be aggregated with the total amount 
of the transactions for other accounts that exceed their respective 
exemption limits, with any accounts without exemption limits, and with 
transactions conducted by or on behalf of the same person that do not 
involve accounts (e.g., purchases of bank checks with cash) of which the 
bank has knowledge.
    In the example discussed above, all of the transactions have been 
conducted ``on behalf of'' X, as X owns the restaurants and the 
wholesale food business. The total $30,000 deposit for account 1 exceeds 
the $25,000 exemption limit for that account. The $35,000 deposit into 
account number 2 is less than the $40,000 exemption limit for that 
account. Finally, the $9,000 deposit into account number 3, does not by 
itself constitute a reportable transaction.
    Therefore, under the facts above, the bank should aggregate the 
entire $30,000 deposit into account number 1 (not just the amount that 
exceeds the exemption limit), with the $9,000 deposit into account 
number 3, for a total of $39,000. The bank should not include the 
$35,000 deposit into account number 2, as that deposit does not exceed 
the exemption limit for that account. Accordingly, the bank should 
complete and file a single CTR for $39,000.
    If the bank does not have knowledge that multiple currency 
transactions have been conducted in these accounts on the same business 
day (e.g., because it does not have a system that aggregates among 
accounts and the deposits were made by three different individuals at 
different times) the bank should file one CTR for $30,000 for account 
number 1, as the activity into that account exceeds its exemption limit.

                                 Holding

    When a customer has more than one account and a bank employee has 
knowledge that multiple currency transaction have been conducted in the 
accounts or the bank has an existing computer or manual system that 
permits it to aggregate transactions for multiple accounts, the bank 
should aggregate the transactions in the following manner.
    First, the bank should aggregate for each account all cash-in or 
cash-out transactions conducted during one business day. If the account 
has an exemption limit, the bank should determine whether the exemption 
limit of that account has been exceeded. If the exemption limit has not 
been exceeded, the total of the transactions for that particular account 
does not have to be aggregated with other transactions. If the total 
transactions during the same business day for a particular account 
exceed the exemption limit, however, the total of all of the 
transactions for that account should be aggregated with any total from 
other accounts that exceed their respective exemption limits, with any 
accounts without exemption limits, and with any reportable transactions 
conducted by or on behalf of the customer not involving accounts (e.g., 
purchases of

[[Page 519]]

bank checks or ``cash back'' transactions) of which the bank has 
knowledge. The bank should then file a CTR for the aggregated amount.

                        89-5 (December 21, 1989)

                                  Issue

    How does a financial institution fulfill the requirement that it 
furnish information about the person on whose behalf a reportable 
currency transaction is being conducted?

                                  Facts

    No. 1. Linda Scott has had an account relationship with the Bank for 
15 years. Ms. Scott enters the bank and deposits $15,000 in cash into 
her personal checking account. The bank knows that Ms. Scott is an 
artist who on occasions exhibits and sells her art work and that her art 
work currently is on exhibit at the local gallery. The bank further 
knows that cash deposits in the amount of $15,000 are commensurate with 
Ms. Scott's art sales.
    No. 2. Dick Wallace has recently opened a personal account at the 
Bank. Although the bank verified his identity when the account was 
opened, the bank has no additional information about Mr. Wallace. Mr. 
Wallace enters the bank with $18,000 in currency and asks that it be 
wire transferred to a bank in a foreign country.
    No. 3. Dorothy Green, a partner at a law firm, makes a $50,000 cash 
deposit into the firm's trust account. \1\ The bank knows that this is a 
trust account. The $50,000 represents cash received from three clients.
---------------------------------------------------------------------------

    \1\ This type of account is sometimes called a trust account, 
attorney account or special account. It is an account established by an 
attorney into which commingled funds of clients may be deposited. It is 
not necessarily a ``trust'' in the legal sense of the term.
---------------------------------------------------------------------------

    No. 4. Carlos Gomez enters a Currency Dealer and asks to buy $12,000 
in traveler's checks with cash.
    No. 5. Gail Julian, a trusted employee of Q-mart, a large retail 
chain, enters the bank three times during one business day and makes 
three large cash deposits totalling $48,000 into Q-mart's account. The 
Bank knows that Ms. Julian is responsible for making the deposits on 
behalf of Q-mart. Q-mart has an exemption limit of $45,000.

                            Law and Analysis

    Under Sec. 103.28 of the Bank Secrecy Act (``BSA'') regulations, 31 
CFR part 103, a financial institution must report on a Currency 
Transaction Report (``CTR'') the name and address of the individual 
conducting the transaction, and the identity, account number, and the 
social security or taxpayer identification number of any person on whose 
behalf the transaction was conducted. See 31 U.S.C. 5313. ``A 
participant acting for another person shall make the report as the agent 
or bailee of the person and identify the person for whom the transaction 
is being made.'' Identifying information about the person on whose 
behalf the transaction is conducted must always be furnished if the 
transaction is reportable under the BSA, regardless of whether the 
transaction involves an account.
    Because the BSA requires financial institutions to file complete and 
accurate CTR's, it is the financial institution's responsibility to 
ascertain the real party in interest. 31 U.S.C. 5313. One way that a 
financial institution can obtain information about the identity of the 
person on whose behalf the transaction is being conducted is to ask the 
person conducting the transaction whether he is acting for himself or on 
behalf of another person. Only if as a result of strong ``know your 
customer'' or other internal control policies, the financial institution 
is satisfied that its records contain information concerning the true 
identity of the person on whose behalf the transaction is conducted, may 
the financial institution rely on those records to complete the CTR.
    No. 1. Linda Scott, an artist, is a known customer of the bank. The 
bank is aware that she is exhibiting her work at a local gallery and 
that cash deposits in the amount of $15,000 would not be unusual or 
inconsistent with Ms. Scott's business practices. Therefore, if the bank 
through its stringent ``know your customer'' policies is satisfied that 
the money being deposited by Ms. Scott into her personal account is for 
her benefit, the bank need not ask Ms. Scott whether she is acting on 
behalf of someone else.
    No. 2. Because Dick Wallace is a new customer of the bank and 
because the bank has no additional information about him or his business 
activity, the bank should ask Mr. Wallace whether he is acting on his 
own behalf or on behalf of someone else. This is particularly true given 
the nature of the transaction--a wire transfer with cash for an 
individual to a foreign country.
    No. 3. Dorothy Green's cash deposit of $50,000 into the law firm's 
trust account clearly is being done on behalf of someone else. The bank 
should ask Ms. Green to identify the clients on whose behalf the 
transaction is being conducted. Because Ms. Green is acting both on 
behalf of her employer and the clients, the names of the three clients 
and the law firm should be included on the CTR filed by the bank.
    No. 4. The currency dealer, having no account relationship with 
Carlos Gomez, should ask Mr. Gomez if he is acting on behalf of someone 
else.
    No. 5. Gail Julian is known to the bank as a trusted employee of Q-
mart, who often deposits cash into Q-mart's account. If the

[[Page 520]]

bank, through its strong ``know your customer'' policies is satisfied 
that Ms. Julian makes these deposits on behalf of Q-mart, the bank need 
not ask her if she is acting on behalf of someone other than Q-mart.

                                 Holding

    It is the responsibility of a financial institution to file complete 
and accurate CTRs. This includes providing identifying information about 
the person on whose behalf the transaction is conducted in Part II of 
the CTR. One way that a financial institution can obtain information 
about the true identity of the person on whose behalf the transaction is 
being conducted is to ask the person conducting the transaction whether 
he is acting for himself or on behalf of another person. Only if as a 
result of strong ``know your customer'' or other internal control 
policies, the financial institution is satisfied that its record contain 
the necessary information concerning the true identity of the person on 
whose behalf the transaction is being conducted, may the financial 
institutions rely on those records in completing the CTR.

                        92-1 (November 16, 1992)

31 U.S.C. 5313--Reports on Domestic Coins and Currency Transactions
31 U.S.C. 5325--Identification Required to Purchase Certain Monetary 
          Instruments
31 CFR 103.28--Identification Required
31 CFR 103.29--Purchases of Bank Checks and Drafts, Cashier's Checks, 
          Money Orders and Traveler's Checks

    Identification of elderly or disabled patrons conducting large 
currency transactions. Financial institutions must file a form 4789, 
Currency Transaction Report (CTR) on transactions in currency in excess 
of $10,000, and must verify and record information about the identity of 
the person(s) who conduct(s) the transaction in Part I of the CTR. 
Financial institutions also must record on a chronological log sales of, 
and verify the identity of individuals who purchase, certain monetary 
instruments with currency in amounts between $3,000 and $10,000, 
inclusive. Many financial institutions have asked Treasury how they can 
meet the requirement to examine an identifying document that contains 
the person's name and address when s/he does not possess such a document 
(e.g., a driver's license). Financial institutions have indicated that 
this question arises almost exclusively with their elderly and/or 
disabled patrons. This Administrative Ruling answers those inquiries.

                                  Issue

    How does a financial institution fulfill the requirement to verify 
and record the name and address of an elderly or disabled individual who 
conducts a currency transaction in excess of $10,000 or who purchases 
certain monetary instruments with currency valued between $3,000 and 
$10,000 when he/she does not possess a passport, alien identification 
card or other official document, or other document that is normally 
acceptable within the banking community as a means of identification 
when cashing checks for nondepositors?

                                 Holding

    It is the responsibility of a financial institution to file complete 
and accurate CTRs and to maintain complete and accurate monetary 
instrument logs pursuant to 31 CFR Sec. Sec. 103.27(d) and 103.29 of 
the BSA regulations. It is also the responsibility of a financial 
institution to verify and to record the identity of individuals 
conducting reportable currency transactions and/or cash purchases of 
certain monetary instruments as required by BSA regulations Sec. Sec. 
103.28 and 103.29. Only if the financial institution is confident that 
an elderly or disabled patron is who s/he says s/he is may it complete 
these transactions. A financial institution shall use whatever 
information it has available, in accordance with its established 
policies and procedures, to determine its patron's identity. This 
includes review of its internal records for any information on file, and 
asking for other forms of identification, including a social security or 
medicare/medicaid card along with another document which contains both 
the patron's name and address such as an organizational membership card, 
voter registration card, utility bill or real estate tax bill. These 
forms of identification shall also be identified as acceptable in the 
bank's formal written policy and operating procedures as identification 
for transactions involving the elderly or the disabled. Once 
implemented, the financial institution should permit no exception to its 
policy and procedures. In these cases, the financial institution should 
record the word ``Elderly'' or ``Disabled'' on the CTR and/or 
chronological log and the method used to identify the elderly, or 
disabled patron such as ``Social Security and (organization) Membership 
Card only ID.''

                            Law and Analysis

    Before concluding a transaction for which a Currency Transaction 
Report is required pursuant to 31 CFR 103.22, a financial institution 
must verify and record the name and address of the individual conducting 
the transaction. 31 CFR 103.28. Verification of the individual's 
identity must be made by examination of a document, other than a bank 
signature card, that is normally acceptable within the banking community 
as a means of identification when cashing checks for nondepositors 
(e.g., a driver's license). A bank signature card may be relied upon 
only if it was issued after documents establishing the

[[Page 521]]

identity of the individual were examined and a notation of the method 
and specific information regarding identification (e.g., state of 
issuance and driver's license number) was made on the signature card. In 
each instance, the specific identifying information noted above and used 
to verify the identity of the individual must be recorded on the CTR. 
The notation of ``known customer'' or ``bank signature card on file'' on 
the CTR is prohibited. 31 CFR 103.28.
    Before issuing or selling bank checks or drafts, cashier's checks, 
traveler's checks or money orders to an individual(s), for currency 
between $3,000 and $10,000, a financial institution must verify whether 
the individual has a deposit account or verify the individual's 
identity. 31 CFR 103.29. Verification may be made by examination of a 
signature card or other account record at the financial institution if 
the deposit accountholder's name and address were verified at the time 
the account was opened, or at any subsequent time, and that information 
was recorded on the signature card or record being examined.
    Verification may also be made by examination of a document that 
contains the name and address of the purchaser and which is normally 
acceptable within the banking community as a means of identification 
when cashing checks for nondepositors. In the case of a deposit 
accountholder whose identity has not been previously verified, the 
financial institution shall record the specific identifying information 
on its chronological log (e.g. state of issuance and driver's license 
number). In all situations, the financial institution must record all 
the appropriate information required by Sec. 103.29(a)(1)(i) for 
deposit account holders or 103.29(a)(2)(i) for nondeposit account 
holders.
    Certain elderly or disabled patrons do not possess identification 
documents that would normally be considered acceptable within the 
banking community (e.g., driver's licenses, passports, or state-issued 
identification cards). Accordingly, the procedure set forth below should 
be followed to fulfill the identification verification requirements of 
Sec. Sec. 103.28 and 103.29.
    Financial institutions may accept as appropriate identification a 
social security, medicare, medicaid or other insurance card presented 
along with another document that contains both the name and address of 
the patron (e.g. an organization membership or voter registration card, 
utility or real estate tax bill). Such forms of identification shall be 
specified in the bank's formal written policy and operating procedures 
as acceptable identification for transactions involving elderly or 
disabled patrons who do not possess identification documents normally 
considered acceptable within the banking community for cashing checks 
for nondepositors.
    This procedure may only be applied if the following circumstances 
exist. First, the financial institution must establish that the 
identification the elderly or disabled patron has is limited to a social 
security or medicare/medicaid card plus another document which contains 
the patron's name and address. Second, the financial institution must 
use whatever information it has available, or policies and procedures it 
has in place, to determine the patron's identity. If the patron is a 
deposit accountholder, the financial institution should review its 
internal records to determine if there is information on file to verify 
his/her identity. Only if the financial institution is confident that 
the elderly or disabled patron is who s/he says s/he is, may the 
transaction be concluded. Failure to identify an elderly or a disabled 
customer's identity as required by 31 CFR Sec. 103.28 and as described 
herein may result in the imposition of civil and or criminal penalties. 
Finally, the financial institution shall establish a formal written 
policy and implement operating procedures for processing reportable 
currency transactions or recording cash sales of certain monetary 
instruments to elderly or disabled patrons who do not have forms of 
identification ordinarily considered ``acceptable.'' Once implemented, 
the financial institution shall permit no exceptions to its policy and 
procedures. In addition, financial institutions are encouraged to record 
the elderly or disabled patron's identity and address as well as the 
method of identification on a signature card or other record when it is 
obtained and verified.
    In completing a CTR, if all of the above conditions are satisfied, 
the financial institution should enter the words ``Elderly'' or 
``Disabled'' and the method used to verify the patron's identity, such 
as ``Social Security and (organization) Membership Cards Only ID,'' in 
Item 15a.
    Similarly, when logging the cash purchase of a monetary 
instrument(s), the financial institution shall enter on its 
chronological log the words, ``Elderly'' or ``Disabled,'' and the method 
used to verify such patron's identity.

                                 Example

    Jesse Fleming, a 75 year old retiree, has been saving $10 bills for 
twenty years in order to help pay for his granddaughter's college 
education. He enters the Trustworthy National Bank where he has no 
account but his granddaughter has a savings account, and presents 
$13,000 in $10 bills to the teller. He instructs the teller to deposit 
$9,000 into his granddaughter's savings account, and requests a 
cashier's check for $4,000 made payable to State University.
    Because of poor eyesight, Mr. Fleming no longer drives and does not 
possess a valid

[[Page 522]]

driver's license. When asked for identification by the teller he 
presents a social security card and his retirement organization 
membership card that contains his name and address.

                      Application of Law to Example

    In this example, the Trustworthy National Bank must check to 
determine if Mr. Fleming's social security and organizational membership 
cards are acceptable forms of identification as defined in the bank's 
policy and procedures. If so, and the bank is confident that Mr. Fleming 
is who he says he is, it may complete the transaction. Because Mr. 
Fleming conducted a transaction in currency which exceeded $10,000 
(deposit of $9,000 and purchase of $4,000 monetary instrument), First 
National Bank must complete a CTR. It should record information about 
Mr. Fleming in Part I of the CTR and in Item 15a record the words 
``Elderly--Social Security and (organization) Membership Cards Only 
ID.'' The balance of the CTR must be appropriately completed as required 
by Sec. Sec. 103.22 and 103.27(d). First National Bank must also record 
the transaction in its monetary instrument sales log because it issued 
to Mr. Fleming a cashier's check for $4,000 in currency. Mr. Fleming 
must be listed as the purchaser and the bank should record on the log 
the words ``Elderly--Social Security and (organization) Membership Cards 
Only ID'' as the method used to verify his identity. In addition, 
because Mr. Fleming is not a deposit accountholder at First National 
Bank, the bank is required to record on the log all the information 
required under Sec. 103.29(a)(2)(i) for cash purchases of monetary 
instruments by nondeposit accountholders.

                        92-2 (November 16, 1992)

31 U.S.C. 5313--Reports on Domestic Coins and Currency Transactions
31 CFR 103.22--Reporting of Currency Transactions
31 CFR 103.28--Identification Required

    Proper completion of the Currency Transaction Report (CTR), IRS Form 
4789, when reporting multiple transactions. Financial institutions must 
report transactions in currency that exceed $10,000 or an exempted 
account's established exemption limit and provide certain information 
including verified identifying information about the individual 
conducting the transaction. Multiple currency transactions must be 
treated as a single transaction, aggregated, and reported on a single 
Form 4789, if the financial institution has knowledge that the 
transactions are by or on behalf of any person and result in either cash 
in or cash out totalling more than $10,000, or the exemption limit, 
during any one business day. All CTRs must be fully and accurately 
completed. Some or all of the individual transactions which comprise an 
aggregated CTR are frequently below the $10,000 reporting or applicable 
exemption threshold and, as such, are not reportable and financial 
institutions do not gather the information required to complete a CTR.

                                  Issue

    How should a financial institution complete a CTR when multiple 
transactions are aggregated and reported on a single form and all or 
part of the information called for in the form may not be known?

                                 Holding

    Multiple transactions that total in excess of $10,000, or an 
established exemption limit, when aggregated must be reported on a CTR 
if the financial institution has knowledge that the transactions have 
occurred. In many cases, the individual transactions being reported are 
each under $10,000, or the exemption limit, and the institution was not 
aware at the time of any one of the transactions that a CTR would be 
required. Therefore, the identifying information on the person 
conducting the transaction was not required to be obtained at the time 
the transaction was conducted.
    If after a reasonable effort to obtain the information required to 
complete items 4 through 15 of the CTR, all or part of such information 
is not available, the institution must check item 3d to indicate that 
the information is not being provided because the report involves 
multiple transactions for which complete information is not available. 
The institution must, however, provide as much of the information as is 
reasonably available.
    All subsections of item 48 on the CTR must be completed to report 
the number of transactions involved and the number of locations of the 
financial institution and zip codes of those locations where the 
transactions were conducted.

                            Law and Analysis

    Sections 103.22(a)(1) and (c) of the Bank Secrecy Act (BSA) 
regulations, 31 CFR part 103, require a financial institution to file a 
CTR for each deposit, withdrawal, exchange of currency, or other payment 
or transfer, by, through, or to the financial institution, which 
involves a transaction in currency of more than $10,000 or the 
established exemption limit for an exempt account. Multiple transactions 
must be treated as a single transaction if the financial institution has 
knowledge that they are by, or on behalf of, any person and result in 
either cash in or cash out of the financial institution totalling more 
than $10,000 or the exemption limit during any one business day. 
Knowledge, in this context, means knowledge on the part of a partner, 
director, officer or employee of

[[Page 523]]

the financial institution or on the part of any existing automated or 
manual system at the financial institution that permits it to aggregate 
transactions.
    The purpose of item 3 on the CTR is to indicate why all or part of 
the information required in items 4 through 15 is not being provided on 
the form. If the reason information is missing is solely because the 
transaction(s) occurred through an armored car service, a mail deposit 
or shipment, or a night deposit or Automated Teller Machine (ATM), the 
financial institution must check either box a, b, or c, as appropriate, 
in item 3. CTR instructions state that item 3d is to be checked for 
multiple transactions where none of the individual transactions exceeds 
$10,000 or the exemption limit and all of the required information might 
not be available.
    As described in Example No. 5 below, there may be situations where 
one transaction among several exceeds the applicable threshold. Item 3d 
should be checked whenever multiple transactions are being reported and 
all or part of the information necessary to complete items 4 through 15 
is not available because at the time of any one of the individual 
transactions, a CTR was not required and the financial institution did 
not obtain the appropriate information.
    When reporting multiple transactions, the financial institution must 
complete as many of items 4 through 15 as possible. In the event the 
institution learns that more than one person conducted the multiple 
transactions being reported, it must check item 2 on the CTR and is 
encouraged to make reasonable efforts to obtain and report any 
appropriate information on each of the persons in items 4 through 15 on 
the front and back of the CTR form, and if necessary, on additional 
sheets of paper attached to the report.
    The purpose of item 48 is to indicate that multiple transactions are 
involved in the CTR being filed. Items 48 a, b, and c require 
information about the number of transactions being reported and the 
number of bank branches and the zip code of each branch where the 
transactions took place. If multiple transactions exceeding $10,000 or 
an account exemption limit occur at the same time, the financial 
institution should treat the transactions in a manner consistent with 
its internal transaction posting procedures. For example, if a customer 
presents four separate deposits, at the same time, totalling over 
$10,000, the institution may report the transactions in item 48a to be 
one or four separate transactions. If the transactions are posted as 
four separate transactions the financial institution should enter the 
number 4 in item 48a and the number 1 in item 48b. If the transactions 
are posted as one transaction the institution should enter the 1 in both 
48a and 48b. Reporting the transactions in this manner will guarantee 
the integrity of the paper trail being created, that is, the number of 
transactions reported on the CTR will be the same as the number of 
transactions showing in the institution's records.
    These situations should be differentiated from those cases where 
separate transactions occur at different times during the same business 
day, and which, when aggregated, exceed $10,000 or the exemption limit. 
For instance, if the same or another individual conducts two of the same 
type of transactions at different times during the same business day at 
two different branches of the financial institution on behalf of the 
same person, and the institution has knowledge that the transactions 
occurred and exceed $10,000 or the exemption limit, then the financial 
institution must enter the number 2 in items 48a and 48b.

               Examples and Application of Law to Examples

                              Example No. 1

    Dorothy Fishback presents a teller with three cash deposits to the 
same account, at the same time, in amounts of $5,000, $6,000, and $8,500 
requesting that the deposits be posted to the account separately. It is 
the bank's procedure to post the transactions separately. A CTR is 
completed while the customer is at the teller window.

                   Application of Law to Example No. 1

    A CTR is completed based upon the information obtained at the time 
Dorothy Fishback presents the multiple transactions. Item 3d would not 
be checked on the CTR because all of the information in items 4 through 
15 is being provided contemporaneously with the transaction. As it is 
the bank's procedure to post the transactions separately, the number of 
transactions reported in item 48a would be 3 and the number of branches 
reported in item 48b would be 1. The zip code for the location where the 
transactions were conducted would be entered in item 48c.

                              Example No. 2

    Andrew Weiner makes a $7,000 cash deposit to his account at ABC 
Federal Savings Bank. Later the same day, Mr. Weiner returns to the same 
teller and deposits $5,000 in cash to a different account. At the time 
Mr. Weiner makes the second deposit, the teller realizes that the two 
deposits exceed $10,000 and prepares a CTR obtaining all of the 
necessary identifying information directly from Mr. Weiner.

                   Application of Law to Example No. 2

    Even though the two transactions were conducted at different times 
during the same business day, Mr. Weiner conducted both

[[Page 524]]

transactions at the same place and the appropriate identifying 
information was obtained by the teller at the time of the second 
transaction. Item 3d would not be checked on the CTR. The number of 
transactions reported in item 48a must be 2 and the number of branches 
reported in item 48b would be 1. The zip code for the location where the 
transactions took place would be entered in item 48c.

                              Example No. 3

    Internal auditor Mike Pelzer is reviewing the daily cash 
transactions report for People's Bank and notices that five cash 
deposits were made the previous day to account 12345. The total 
of the deposits is $25,000 and they were made at three different offices 
of the bank. Mike researches the account data base and finds that the 
account belongs to a department store and that the account is exempted 
for deposits up to $17,000 per day. Each of the five transactions was 
under $17,000.

                   Application of Law to Example No. 3

    Having reviewed the report of aggregated transactions, Mike Pelzer 
has knowledge that transactions exceeding the account exemption limit 
have occurred during a single business day. A CTR must be filed. 
People's Bank is encouraged to make a reasonable effort to provide the 
information for items 4 through 15 on the CTR. Such efforts could 
include a search of the institution's records or a phone call to the 
department store to identify the persons that conducted the 
transactions. If all of the information is not contained in the 
institution's records or otherwise obtained, item 3d must be checked. 
The number of transactions reported in item 48a must be 5 and the number 
of branches reported in 48b would be 3. The zip codes for the three 
locations where the transactions occurred must be entered in item 48c.

                              Example No. 4

    Mrs. Saunders makes a cash withdrawal, for $4,000, from a joint 
savings account she owns with her husband. That day her husband, Mr. 
Saunders, withdraws $7,000 cash using the same teller. Realizing that 
the withdrawals exceed $10,000, the teller obtains identifying 
information on Mr. Saunders required to complete a CTR.

                   Application of Law to Example No. 4

    In this case, item 2 on the CTR must be checked because the teller 
knows that more than one person conducted the transactions. Information 
on Mr. Saunders would appear in Part I and the bank is encouraged to ask 
him for, or to check its records for the required identifying 
information on Mrs. Saunders. If after taking reasonable efforts to 
locate the desired information, all of the required information is not 
found on file in the institution's records or is not otherwise obtained, 
box 3d must be checked to indicate that all information is not being 
provided because multiple transactions are being reported. Whatever 
information on Mrs. Saunders is contained in the records of the 
institution must be reported in the continuation of Part I on the back 
of Form 4789. The number of transactions reported in item 48a must be 2 
and the number of branches reported in item 48b would be 1. The zip code 
for the branch where the transactions took place would be entered in 
item 48c.

                              Example No. 5

    On another day, Mrs. Saunders makes a deposit of $3,000 cash and no 
information required for Part I of the CTR is requested of her. She is 
followed later the same day by her husband, Mr. Saunders, who deposits 
$12,000 in currency and who provides all data required to complete Part 
I for himself.

                   Application of Law to Example No. 5

    Item 2 on the CTR must be checked because the teller knows that more 
than one person conducted the transactions. Information on Mr. Saunders 
would appear in Part I and the bank is encouraged to ask him for, or to 
check its records for the required identifying information on Mrs. 
Saunders. If after taking reasonable efforts to locate the desired 
information, all of the required information is not found on file in the 
institution's records or is not otherwise obtained, box 3d must be 
checked to indicate that all information is not being provided because 
multiple transactions are being reported. Whatever information on Mrs. 
Saunders is contained in the records of the institution must be reported 
in the continuation of Part I on the back of Form 4789. The number of 
transactions reported in item 48a must be 2 and the number of branches 
reported in item 48b would be 1. The zip code for the branch where the 
transactions took place would be entered in item 48c.

                              Example No. 6

    A review of First Federal Bank's daily cash transactions report for 
a given day indicates several cash deposits to a single account totaling 
more than $10,000. Two separate deposits were made in the night 
depository at the institution's main office, and two deposits were 
conducted at the teller windows of two other branch locations. Each 
deposit was under $10,000.

                   Application of Law to Example No. 6

    Item 3c should be checked to indicate that identifying information 
is not provided because transactions were received through the night 
deposit box. If the tellers involved with the two face to face deposits 
remember who

[[Page 525]]

conducted the transactions, institution records can be checked for 
identifying information. If the records contain some of the information 
required by items 4 through 15, that information must be provided, and 
item 3d must be checked to indicate that some information is missing 
because multiple transactions are being reported and the information was 
not obtained at the time the transactions were conducted. Item 48a must 
indicate 4 transactions and item 48b must indicate 3 locations. The zip 
code of those locations would be provided in item 48c.

[53 FR 40064, Oct. 13, 1988, as amended at 54 FR 21214, May 17, 1989; 54 
FR 30543, July 21, 1989; 55 FR 1022, Jan. 11, 1990; 58 FR 7048, Feb. 4, 
1993. Redesignated and amended at 67 FR 9877, Mar. 4, 2002]

[[Page 526]]

Appendix B to Part 103--Certification for Purposes of Section 314(b) of 
                 the USA Patriot Act and 31 CFR 103.110
[GRAPHIC] [TIFF OMITTED] TR04MR02.026


[[Page 527]]



[67 FR 9877, Mar. 4, 2002]



             Sec. Appendix C to Part 103--Interpretive Rules

                           Release No. 2004-01

    This Interpretive Guidance sets forth our interpretation of the 
regulation requiring Money Services Businesses that are required to 
register with FinCEN to establish and maintain anti-money laundering 
programs. See 31 CFR 103.125. Specifically, this Interpretive Guidance 
clarifies that the anti-money laundering program regulation requires 
Money Services Businesses to establish adequate and appropriate 
policies, procedures, and controls commensurate with the risks of money 
laundering and the financing of terrorism posed by their relationship 
with foreign agents or foreign counterparties of the Money Services 
Business. \1\
---------------------------------------------------------------------------

    \1\ This Interpretive Guidance focuses on the need to control risks 
arising out of the relationship between a Money Service Business and its 
foreign counterparty or agent. Under existing FinCEN regulations, only 
Money Service Business principals are required to register with FinCEN, 
and only Money Service Business principals establish the counterparty or 
agency relationships. 31 CFR 103.41. Accordingly, this Interpretive 
Guidance only applies to those Money Service Businesses required to 
register with FinCEN, that is, only those Money Service Businesses that 
may have a relationship with a foreign agent or counterparty.
---------------------------------------------------------------------------

    Under existing Bank Secrecy Act regulations, we have defined Money 
Services Businesses to include five distinct types of financial services 
providers and the U.S. Postal Service: (1) Currency dealers or 
exchangers; (2) check cashers; (3) issuers of traveler's checks, money 
orders, or stored value; (4) sellers or redeemers of traveler's checks, 
money orders, or stored value; and (5) money transmitters. See 31 CFR 
103.11(uu). With limited exception, Money Services Businesses are 
subject to the full range of Bank Secrecy Act regulatory controls, 
including the anti-money laundering program rule, suspicious activity 
and currency transaction reporting rules, and various other 
identification and recordkeeping rules. \2\
---------------------------------------------------------------------------

    \2\ See 31 CFR 103.125 (requirement for Money Service Businesses to 
establish and maintain an anti-money laundering compliance program); 31 
CFR 103.22 (requirement for Money Service Businesses to file currency 
transaction reports); 31 CFR 103.20 (requirement for Money Service 
Businesses, other than check cashers and issuers, sellers, or redeemers 
of stored value, to file suspicious activity reports); 31 CFR 103.29 
(requirement for Money Service Businesses that sell money orders, 
traveler's checks, or other instruments for cash to verify the identity 
of the customer and create and maintain a record of each cash purchase 
between $3,000 and $10,000, inclusive); 31 CFR 103.33(f) (requirement 
for Money Service Businesses that send or accept instructions to 
transmit funds of $3,000 or more to verify the identity of the sender or 
receiver and create and maintain a record of the transmittal regardless 
of the method of payment); and 31 CFR 103.37 (requirement for currency 
exchangers to create and maintain a record of each exchange of currency 
in excess of $1,000).
---------------------------------------------------------------------------

    Many Money Services Businesses, including the vast majority of money 
transmitters in the United States, operate through a system of agents 
both domestically and internationally. We estimate that a substantial 
majority of all cross-border remittances by money transmitters are 
conducted using this model. Other Money Services Businesses may operate 
through more informal relationships, such as the trust-based hawala 
system. \3\ Regardless of the form of the relationship between a Money 
Services Business and its foreign agents or counterparties, Money 
Services Business transactions generally are initiated by customers 
seeking to send or receive funds, cash checks, buy or sell money orders 
or traveler's checks, or buy or sell currency. The customer directs the 
Money Services Business to execute the transactions; the Money Services 
Business does not unilaterally determine the recipient of its products 
or services. Although the customer can use the Money Services Business' 
services, the customer does not typically establish an account 
relationship with the Money Services Business. The focus of this 
Interpretive Guidance is the establishment of, and ongoing relationship 
between, a Money Services Business and its foreign agent or foreign 
counterparty that facilitates the flow of funds cross-border into and 
out of the United States on behalf of customers.
---------------------------------------------------------------------------

    \3\ For an analysis of informal value transfer systems, see FinCEN's 
Report to Congress Pursuant to Section 359 of the Patriot Act, available 
on www.fincen.gov.
---------------------------------------------------------------------------

  The Cross-Border Flow of Funds through Money Services Businesses and 
                            Associated Risks

    Ensuring that financial institutions based in the United States 
establish and apply adequate and appropriate policies, procedures, and 
controls in their anti-money laundering compliance programs to protect 
the international gateways to the U.S. financial system is an essential 
element of the Bank Secrecy Act regulatory regime. This Interpretive 
Guidance forms a part of our comprehensive approach to accomplishing 
this

[[Page 528]]

goal. To the extent Money Services Businesses utilize relationships with 
foreign agents or counterparties to facilitate the movement of funds 
into or out of the United States, they must take reasonable steps to 
guard against the flow of illicit funds, or the flow of funds from 
legitimate sources to persons seeking to use those funds for illicit 
purposes, through such relationships.
    The money laundering or terrorism financing risks associated with 
foreign agents or counterparties are similar to the risks presented by 
domestic agents of Money Services Businesses. For example, the foreign 
agent of the domestic Money Services Business may have lax anti-money 
laundering policies, procedures, and internal controls, or actually may 
be complicit with those seeking to move illicit funds. In some 
instances, the risk with foreign agents can be greater than with 
domestic agents because foreign agents are not subject to the Bank 
Secrecy Act regulatory regime; the extent to which they are subject to 
anti-money laundering regulation, and the quality of that regulation, 
will vary with the jurisdictions in which they are located.
    There are a variety of ways in which a Money Services Business may 
be susceptible to the unwitting facilitation of money laundering through 
foreign agents or counterparties. For example, our review of Bank 
Secrecy Act data revealed several instances of suspected criminal 
activity--detected by existing anti-money laundering and suspicious 
activity reporting programs of Money Services Businesses and banks--
where foreign agents of Money Services Business have engaged in bulk 
sales of sequentially numbered, U.S. denominated traveler's checks or 
blocks of money orders, to one or two individuals. The individuals 
involved frequently purchased the instruments on multiple dates and in 
different locations, structuring the purchases to avoid reporting 
thresholds and issuer limits on daily instrument sales. The instruments 
usually had illegible signatures or failed to designate a beneficiary or 
payor. The instruments were then negotiated with one or more dealers in 
goods, such as diamonds, gems, or precious metals, deposited in foreign 
banks, and cleared through U.S. banks. In such cases, the clearing banks 
were so far removed from the transactions that they could not trace back 
or screen either the intervening transactions or the individuals 
involved in the transactions.
    A case involving suspicious activity in a Money Services Business' 
domestic agent provides a further example of the type of high-risk 
activity that also may be engaged in by foreign agents or 
counterparties. In this instance, the domestic Money Service Business 
had policies, procedures, and controls that facilitated the detection of 
illicit activity at the agent. A group of six customers entered a money 
transmitter agent at approximately five-minute intervals to send the 
same structured amounts ($2,500) to the same receiver in a foreign 
country. Several weeks later, another group of six customers entered the 
same agent location and conducted an identical pattern of successive 
$2,500 transfers (a few minutes apart) to the same recipient in the same 
foreign country as the first set of transactions. Some of the 
individuals in the second group had the same last names as customers in 
the first group. Additional suspicious activity reports filed by the 
primary Money Services Business identified several other groups of 
customers initiating money transfers at this same agent business 
location, in the same manner, and in the same overall time frame. This 
activity by an agent drew the scrutiny of the Money Services Business, 
and in addition to the filing of suspicious activity reports, led to the 
termination of the relationship of the Money Services Business with the 
agent.
    These examples of illicit activity occurring at the agents of Money 
Services Businesses underscore the need for Money Services Businesses to 
include, as a part of their anti-money laundering programs, procedures, 
policies, and controls to govern relationships with foreign agents and 
counterparties to enable the Money Services Business to perform the 
appropriate level of suspicious activity and risk monitoring. We believe 
that this obligation is an essential part of each Money Services 
Business' existing obligation under 31 CFR 103.125 to develop and 
implement an effective anti-money laundering program. \4\ This 
Interpretive Guidance will aid Money Services Businesses in adopting 
appropriate risk-based policies, procedures, and controls on cross-
border relationships with foreign agents and counterparties.
---------------------------------------------------------------------------

    \4\ FinCEN previously interpreted 31 CFR 103.125 to impose a similar 
obligation on a money transmitter with respect to its domestic agents. 
See Matter of Western Union, No. 2003-2 (Mar. 6, 2003) (www.fincen.gov).
---------------------------------------------------------------------------

 Anti-Money Laundering Program Elements Relating to Foreign Agents and 
                             Counterparties

    Under 31 CFR 103.125(a), Money Services Businesses are required to 
develop, implement, and maintain an effective anti-money laundering 
program reasonably designed to prevent the Money Services Business from 
being used to facilitate money laundering and the financing of terrorist 
activities. The program must be commensurate with the risks posed by the 
location, size, nature, and volume of the financial services provided by 
the Money Services Business. Additionally, the program must incorporate 
policies, procedures, and controls reasonably designed to assure 
compliance with the Bank Secrecy Act and implementing regulations.

[[Page 529]]

    With respect to Money Services Businesses that utilize foreign 
agents or counterparties, a Money Services Business' anti-money 
laundering program must include risk-based policies, procedures, and 
controls designed to identify and minimize money laundering and 
terrorist financing risks associated with foreign agents and 
counterparties that facilitate the flow of funds into and out of the 
United States. The program must be aimed at preventing the products and 
services of the Money Services Business from being used to facilitate 
money laundering or terrorist financing through these relationships and 
detecting the use of these products and services for money laundering or 
terrorist financing by the Money Services Business or agent. Relevant 
risk factors may include, but are not limited to:
     The foreign agent or counterparty's location and 
jurisdiction of organization, chartering, or licensing. This would 
include considering the extent to which the relevant jurisdiction is 
internationally recognized as presenting a greater risk for money 
laundering or is considered to have more robust anti-money laundering 
standards.
     The ownership of the foreign agent or 
counterparty. This includes whether the owners are known, upon 
reasonable inquiry, to be associated with criminal conduct or terrorism. 
For example, have the individuals been designated by Treasury's Office 
of Foreign Assets Control as Specially Designated Nationals or Blocked 
Persons (i.e., involvement in terrorism, drug trafficking, or the 
proliferation of weapons of mass destruction)?
     The extent to which the foreign agent or 
counterparty is subject to anti-money laundering requirements in its 
jurisdiction and whether it has established such controls.
     Any information known or readily available to the 
Money Services Business about the foreign agent or counterparty's anti-
money laundering record, including public information in industry 
guides, periodicals, and major publications.
     The nature of the foreign agent or counterparty's 
business, the markets it serves, and the extent to which its business 
and the markets it serves present an increased risk for money laundering 
or terrorist financing.
     The types and purpose of services to be provided 
to, and anticipated activity with, the foreign agent or counterparty.
     The nature and duration of the Money Services 
Business' relationship with the foreign agent or counterparty.
    Specifically, a Money Services Business' anti-money laundering 
program should include procedures for the following:

    1. Conduct of Due Diligence on Foreign Agents and Counterparties

    Money Services Businesses should establish procedures for conducting 
reasonable, risk-based due diligence on potential and existing foreign 
agents and counterparties to help ensure that such foreign agents and 
counterparties are not themselves complicit in illegal activity 
involving the Money Services Business' products and services, and that 
they have in place appropriate anti-money laundering controls to guard 
against the abuse of the Money Services Business' products and services. 
Such due diligence must, at a minimum, include reasonable procedures to 
identify the owners of the Money Services Business' foreign agents and 
counterparties, as well as to evaluate, on an ongoing basis, the 
operations of those foreign agents and counterparties and their 
implementation of policies, procedures, and controls reasonably designed 
to help assure that the Money Services Business' products and services 
are not subject to abuse by the foreign agent's or counterparty's 
customers, employees, or contractors. \5\ The extent of the due 
diligence required will depend on a variety of factors specific to each 
agent or counterparty. We expect Money Services Businesses to assess 
such risks and perform due diligence in a manner consistent with that 
risk, in light of the availability of information.
---------------------------------------------------------------------------

    \5\ Our anti-money laundering program rule, 31 CFR 103.125(d)(iii), 
permits Money Service Businesses to satisfy this last requirement with 
regard to their domestic agents (which are also Money Service Businesses 
under the BSA regulations), by allocating responsibility for the program 
to their agents. Such an allocation, however, does not relieve a Money 
Service Business from ultimate responsibility for establishing and 
maintaining an effective anti-money laundering program. Id.
---------------------------------------------------------------------------

      2. Risk-based Monitoring of Foreign Agents or Counterparties

    In addition to the due diligence described above, in order to detect 
and report suspected money laundering or terrorist financing, Money 
Services Businesses should establish procedures for risk-based 
monitoring and review of transactions from, to, or through the United 
States that are conducted through foreign agents and counterparties. \6\ 
Such procedures should also focus

[[Page 530]]

on identifying material changes in the agent's risk profile, such as a 
change in ownership, business, or the regulatory scrutiny to which it is 
subject.
---------------------------------------------------------------------------

    \6\ Nothing in this Interpretive Guidance is intended to require 
Money Service Businesses to monitor or review, for purposes of the Bank 
Secrecy Act, transactions or activities of foreign agents or 
counterparties that occur entirely outside of the United States and do 
not flow from, to, or through the United States.
---------------------------------------------------------------------------

    The review of transactions should enable the Money Services Business 
to identify and, where appropriate, report as suspicious such 
occurrences as: instances of unusual wire activity, bulk sales or 
purchases of sequentially numbered instruments, multiple purchases or 
sales that appear to be structured, and illegible or missing customer 
information. Additionally, Money Services Businesses should establish 
procedures to assure that their foreign agents or counterparties are 
effectively implementing an anti-money laundering program and to discern 
obvious breakdowns in the implementation of the program by the foreign 
agent or counterparty.
    Similarly, money transmitters should have procedures in place to 
enable them to review foreign agent or counterparty activity for signs 
of structuring or unnecessarily complex transmissions through multiple 
jurisdictions that may be indicative of layering. Such procedures should 
also enable them to discern attempts to evade identification or other 
requirements, whether imposed by applicable law or by the Money Services 
Business' own internal policies. Activity by agents or counterparties 
that appears aimed at evading the Money Services Business' own controls 
can be indicative of complicity in illicit conduct; this activity must 
be scrutinized, reported as appropriate, and corrective action taken as 
warranted.

                  3. Corrective Action and Termination

    Money Services Businesses should have procedures for responding to 
foreign agents or counterparties that present unreasonable risks of 
money laundering or the financing of terrorism. Such procedures should 
provide for the implementation of corrective action on the part of the 
foreign agent or counterparty or for the termination of the relationship 
with any foreign agent or counterparty that the Money Services Business 
determines poses an unacceptable risk of money laundering or terrorist 
financing, or that has demonstrated systemic, willful, or repeated 
lapses in compliance with the Money Services Business' own anti-money 
laundering procedures or requirements.
    While Money Services Businesses may already have implemented some or 
all of the procedures described in this Interpretive Guidance as a part 
of their anti-money laundering programs, we wish to provide a reasonable 
period of time for all affected Money Services Businesses to assess 
their operations, review their existing policies and programs for 
compliance with this Advisory, and implement any additional necessary 
changes. We will expect full compliance with this Interpretive Release 
within 180 days.
    Finally, we are mindful of the potential impact that this 
Interpretive Release may have on continuing efforts to bring informal 
value transfer systems into compliance with the existing regulatory 
framework of the Bank Secrecy Act. Experience has demonstrated the 
challenges in securing compliance by, for instance, hawalas and other 
informal value transfer systems. Further specification of Bank Secrecy 
Act compliance obligations carries with it the risk of driving these 
businesses underground, thereby undermining our ultimate regulatory 
goals. On balance, however, we believe that outlining the requirements 
for dealing with foreign agents and counterparties, including informal 
networks, is appropriate in light of the risks of money laundering and 
the financing of terrorism.

                           Release No. 2004-02

    This FinCEN interpretive guidance clarifies that reports filed with 
the Department of the Treasury's Office of Foreign Assets Control 
(``OFAC'') of blocked transactions with Specially Designated Global 
Terrorists, Specially Designated Terrorists, Foreign Terrorist 
Organizations, Specially Designated Narcotics Trafficker Kingpins, and 
Specially Designated Narcotics Traffickers will be deemed by FinCEN to 
fulfill the requirement to file suspicious activity reports on such 
transactions for purposes of FinCEN's suspicious activity reporting 
rules. However, the filing of a blocking report with OFAC will not be 
deemed to satisfy a financial institution's obligation to file a 
suspicious activity report if the transactions would be reportable under 
FinCEN's suspicious activity reporting rules even if there were no OFAC 
match. Moreover, to the extent that the financial institution is in 
possession of information not included on the blocking report filed with 
OFAC, a separate suspicious activity report should be filed with FinCEN 
including that information.

                               Background

    The Bank Secrecy Act authorizes the Secretary of the Treasury to 
require financial institutions to report ``any suspicious transaction 
relevant to a possible violation of law or regulation.'' \1\ Under this 
authority, FinCEN has issued regulations requiring banks, securities 
broker-dealers, introducing

[[Page 531]]

brokers, casinos, futures commission merchants, and money services 
businesses, to report suspicious activity that meets a particular dollar 
threshold. \2\ Each rule includes filing procedures requiring that a 
suspicious transaction shall be reported by completing a suspicious 
activity report and filing it with FinCEN in a central location to be 
determined by FinCEN. Generally, the rules provide a financial 
institution with thirty days from the date of the initial detection of 
suspicious activity to file a report, with an additional thirty days if 
the financial institution is unable to identify a suspect. Reports are 
filed on forms developed for each industry subject to the reporting 
requirement. \3\
---------------------------------------------------------------------------

    \1\ See 31 U.S.C. 5318(g)(1).
    \2\ See 31 CFR 103.17-21. The threshold for most financial 
institutions is $5,000; transactions conducted at points of sale for 
money services businesses have a reporting threshold of $2,000. See 31 
CFR 103.20.
    \3\ See TD F 90-22.47 (depository institutions); TD F 22.56 (money 
services businesses); FinCEN Form 101 (securities and futures 
industries); FinCEN Form 102 (casinos and card clubs).
---------------------------------------------------------------------------

    OFAC administers and enforces economic and trade sanctions based on 
U.S. foreign policy and national security goals against targeted foreign 
countries, terrorists, international narcotics traffickers, and those 
engaged in activities related to the proliferation of weapons of mass 
destruction. OFAC's Reporting, Procedures and Penalties Regulations at 
31 CFR part 501 require U.S. financial institutions to block and file 
reports on accounts, payments, or transfers in which an OFAC-designated 
country, entity, or individual has any interest. \4\ These reports must 
be filed with OFAC within ten business days of the blocking of the 
property. \5\
---------------------------------------------------------------------------

    \4\ 31 CFR 501.603.
    \5\ 31 CFR 501.603(b)(1)(i).
---------------------------------------------------------------------------

                             Prior Guidance

    Transactions involving an individual or entity designated on OFAC's 
list of Specially Designated Nationals and Blocked Persons as a global 
terrorist, terrorist, terrorist organization, narcotics trafficker, or 
narcotics kingpin \6\ may be in furtherance of a criminal act, and 
therefore relevant to a possible violation of law. Thus, blocking 
reports related to such persons also describe potentially suspicious 
activity. In the November 2003 edition of its ``SAR Activity Review,'' 
\7\ FinCEN instructed financial institutions to file suspicious activity 
reports on verified matches of persons designated by OFAC. While this 
guidance ensured that the relevant information would be available to law 
enforcement, it also resulted in financial institutions being required 
to make two separate filings with the Department of the Treasury--one 
with OFAC pursuant to its Reporting, Procedures and Penalties 
Regulations, and one with FinCEN pursuant to its suspicious activity 
reporting rules.
---------------------------------------------------------------------------

    \6\ The specific designations are as follows: Specially designated 
terrorist; foreign terrorist organization; specially designated global 
terrorist; specially designated narcotics trafficker; specially 
designated narcotics trafficker kingpin. See 31 CFR parts 595, 597, 598 
and the Foreign Narcotics Kingpin Act, 21 U.S.C. 1901-08, 8 U.S.C. 1182. 
These categories of designations are subject solely to blocking 
requirements.
    \7\ Issue 6 (Nov. 2003).
---------------------------------------------------------------------------

                            Revised Guidance

    FinCEN is hereby revising its prior guidance to eliminate the need 
for duplicative reporting in cases where a financial institution 
identifies a verified match with individuals or entities designated by 
OFAC. As of the date of publication of this interpretation, FinCEN will 
deem its rules requiring the filing of suspicious activity reports to be 
satisfied by the filing of a blocking report with OFAC in accordance 
with OFAC's Reporting, Penalties and Procedures Regulations. OFAC will 
then provide the information to FinCEN for inclusion in the suspicious 
activity reporting database where it will be made available to law 
enforcement. This construction of the suspicious activity reporting 
rules will serve the public interest by enabling FinCEN to obtain and 
provide potentially important information about terrorists and major 
drug traffickers to law enforcement on an expedited basis without 
imposing duplicative reporting burdens on the regulated industry.
    Accordingly, a financial institution that files a blocking report 
with OFAC due to the involvement in a transaction or account of a person 
designated as a Specially Designated Global Terrorist, a Specially 
Designated Terrorist, a Foreign Terrorist Organization, a Specially 
Designated Narcotics Trafficker Kingpin, or a Specially Designated 
Narcotics Trafficker, shall be deemed to have simultaneously filed a 
suspicious activity report on the fact of the match with FinCEN, in 
satisfaction of the requirements of the applicable suspicious activity 
reporting rule. This interpretation does not affect a financial 
institution's obligation to identify and report suspicious activity 
beyond the fact of the OFAC match. To the extent that the financial 
institution is in possession of information not included on the blocking 
report filed with OFAC, a separate suspicious activity report should be 
filed with FinCEN including that information. This interpretation also 
does not affect a financial institution's obligation to file a 
suspicious activity report even if it has filed a blocking report with 
OFAC, to the extent that the facts and circumstances surrounding the 
OFAC match

[[Page 532]]

are independently suspicious--and are otherwise required to be reported 
under existing FinCEN regulations. In those cases, the OFAC blocking 
report would not satisfy a financial institution's suspicious activity 
report filing obligation.
    Further, nothing in this interpretation is intended to preclude a 
financial institution from filing a suspicious activity report to 
disclose additional information concerning the OFAC match, \8\ nor does 
it preclude a financial institution from filing a suspicious activity 
report if the financial institution has reason to believe that terrorism 
or drug trafficking is taking place, even though there is no OFAC match. 
Finally, this interpretation does not apply to blocking reports filed to 
report transactions and accounts involving persons owned by, or who are 
nationals of, countries subject to OFAC-administered sanctions programs. 
Such transactions should be reported on suspicious activity reports 
under the suspicious activity reporting rules if, and only, if, the 
activity itself appears to be suspicious under the criteria established 
by the suspicious activity reporting rules.
---------------------------------------------------------------------------

    \8\ Such a report would be a voluntary report under the statute and 
regulations. See 31 U.S.C. 5318(g)(3) (extending safe harbor protection 
from civil liability to voluntary filings).

[69 FR 74439, Dec. 14, 2004, as amended at 69 FR 76847, Dec. 23, 2004]

                           PART 123 [RESERVED]



PART 128_REPORTING OF INTERNATIONAL CAPITAL AND FOREIGN-CURRENCY TRANSACTIONS 

AND POSITIONS--Table of Contents




                      Subpart A_General Information

Sec.
128.1 General reporting requirements.
128.2 Manner of reporting.
128.3 Use of information reported.
128.4 Penalties.
128.5 Recordkeeping requirements.

  Subpart B_Reports on International Capital Transactions and Positions

128.11 Purpose of reports.
128.12 Periodic reports.
128.13 Special survey reports.

             Subpart C_Reports on Foreign Currency Positions

128.21 Purpose of reports.
128.22 Periodic reports.
128.23 Special survey reports.

Appendix A to Part 128--Determination Made by National Advisory Council 
          Pursuant to Section 2 (a) and (b) of E.O. 10033

    Authority: 22 U.S.C. 286f and 3101 et seq.; 31 U.S.C. 5315 and 5321.

    Source: 58 FR 58495, Nov. 2, 1993, unless otherwise noted.



                      Subpart A_General Information



Sec. 128.1  General reporting requirements.

    (a) International capital transactions and positions. (1) In order 
to implement the International Investment and Trade in Services Survey 
Act, as amended (22 U.S.C. 3101 et seq.); and E.O. 11961, and to obtain 
information requested by the International Monetary Fund under the 
articles of agreement of the Fund pursuant to section 8(a) of the 
Bretton Woods Agreements Act (22 U.S.C. 286f) and E.O. 10033, persons 
subject to the jurisdiction of the United States are required to report 
information pertaining to--
    (i) United States claims on, and liabilities to, foreigners;
    (ii) Transactions in securities and other financial assets with 
foreigners; and
    (iii) The monetary reserves of the United States.
    (2) Data pertaining to direct investment transactions are not 
required to be reported under this Part.
    (3) Reports shall be made in such manner and at such intervals as 
specified by the Secretary of the Treasury. See subpart B of this part 
for additional requirements concerning these reports.
    (b) Foreign currency positions. (1) In order to provide data on the 
nature and source of flows of mobile capital, including transactions by 
large United States business enterprises (as determined by the 
Secretary) and their foreign affiliates as required by 31 U.S.C. 5315, 
persons subject to the jurisdiction of the United States are required to 
report information pertaining to--
    (i) Transactions in foreign exchange;
    (ii) Transfers of credit that are, in whole or part, denominated in 
a foreign currency; and

[[Page 533]]

    (iii) The creation or acquisition of claims that reference 
transactions, holdings, or evaluations of foreign exchange.
    (2) Reports shall be made in such manner and at such intervals as 
specified by the Secretary. See subpart C of this part for additional 
requirements concerning these reports.
    (c) Notice of reports. Notice of reports required by this part, 
specification of persons required to file report, and forms to be used 
to file reports will be published in the Federal Register. Persons 
currently required to file reports shall continue to file such reports 
using existing Treasury International Capital Forms BL-1/BL-1(SA), BL-2/
BL-2(SA), BL-3, BC/BC(SA), BQ-1, BQ-2, CM, CQ-1, CQ-2, S, and existing 
Treasury Foreign Currency Forms FC-1, FC-2, FC-3, and FC-4 until further 
notice is published in the Federal Register.



Sec. 128.2  Manner of reporting.

    (a) Methods of reporting--(1) Prescribed forms. (i) Except as 
provided in Sec. 128.2(a)(2), reports required by this part shall be 
made on forms prescribed by the Secretary. The forms and accompanying 
instructions will be published in accordance with Sec. 128.1(c).
    (ii) Copies of forms and instructions prescribed by the Secretary 
for reporting under this Part may be obtained from any Federal Reserve 
Bank, or from the Office of the Assistant Secretary (Economic Policy), 
Department of the Treasury, Washington, DC 20220.
    (2) Alternative methods of reporting. In lieu of reporting on forms 
prescribed by the Secretary pursuant to this part, reports may be filed 
on magnetic tape or other media acceptable to, and approved in writing 
by, the Federal Reserve district bank with which the report is filed, or 
by the Assistant Secretary (Economic Policy) in the case of a special 
exception filing pursuant to Sec. 128.2(b)(3). The Secretary may 
require that magnetic tape or other machine-readable media, or other 
rapid means of communication be used for filing special survey reports 
under subpart B or C of this part.
    (b) Filing of periodic reports--(1) Banks and other depository 
institutions, International Banking Facilities, and bank holding 
companies. Except as provided in Sec. 128.2(b)(3), each bank, 
depository institution, International Banking Facility, and bank holding 
company in the United States required to file periodic reports under 
subpart B or C of this part shall file such reports with the Federal 
Reserve bank of the district in which such bank, depository institution, 
International Banking Facility or bank holding company has its principal 
place of business in the United States.
    (2) Nonbanking enterprises and other persons. Except as provided in 
Sec. 128.2(b)(3), nonbanking enterprises and other persons in the 
United States required to file periodic reports under subpart B or C of 
this part shall file such reports with the Federal Reserve Bank of New 
York.
    (3) Special exceptions. If a respondent described in Sec. 
128.2(b)(1) or (2) is unable to file with a Federal Reserve district 
bank, such respondent shall file periodic reports with the Office of the 
Assistant Secretary (Economic Policy), Department of the Treasury, 
Washington, DC 20220, or as otherwise provided in the instructions to 
the periodic report forms.
    (c) Filing of special survey reports. All respondents required to 
file special survey reports under subpart B or C of this part file such 
reports as provided in Sec. 128.2(b) unless otherwise provided in the 
instructions to the special survey reports.



Sec. 128.3  Use of information reported.

    (a) Except for use in violation and enforcement proceedings pursuant 
to the International Investment and Trade in Services Survey Act, 22 
U.S.C. 3101 et seq., information submitted by any individual respondent 
on reports required under subpart B of this part may be used only for 
analytical and statistical purposes within the United States Government 
and will not be disclosed publicly by the Department of the Treasury, or 
by any other Federal agency or Federal Reserve district bank having 
access to the information as provided herein. Aggregate data derived 
from these forms may be published or otherwise publicly disclosed only 
in a manner which will not reveal the amounts reported by any individual 
respondent.

[[Page 534]]

The Department may furnish information from these forms to the Federal 
Reserve Board and to Federal agencies to the extent permitted by 
applicable law.
    (b) The information submitted by any individual respondent on 
reports required under subpart C of this part will not be disclosed 
publicly. Aggregated data may be published or disclosed only in a manner 
which will not reveal the information reported by any individual 
respondent. The Department may furnish to Federal agencies, the Board of 
Governors of the Federal Reserve System, and to Federal Reserve district 
banks data reported pursuant to subpart C of this part to the extent 
permitted by applicable law.



Sec. 128.4  Penalties.

    (a) Whoever fails to file a report required by subpart B of this 
part shall be subject to a civil penalty of not less than $2,500 and not 
more than $25,000
    (b) Whoever willfully fails to file a report required by subpart B 
of this part may be criminally prosecuted and upon conviction fined not 
more than $10,000 and, if an individual (including any officer, 
director, employee, or agent of any corporation who knowingly 
participates in such violation), may be imprisoned for not more than one 
year, or both.
    (c) Whoever fails to file a report required by subpart C of this 
part shall be subject to a civil penalty of not more than $10,000.



Sec. 128.5  Recordkeeping requirements.

    Banks, other depository institutions, International Banking 
Facilities, bank holding companies, brokers and dealers, and nonbanking 
enterprises subject to the jurisdiction of the United States shall 
maintain all information necessary to make a complete report pursuant to 
this Part for not less than three years from the date such report is 
required to be filed or was filed, whichever is later, or for such 
shorter period as may be specified in the instructions to the applicable 
report form.

(Approved by the Office of Management and Budget under control number 
1505-0149)



  Subpart B_Reports on International Capital Transactions and Positions



Sec. 128.11  Purpose of reports.

    Reports on international capital transactions and positions provide 
timely and reliable information on international portfolio capital 
movements by U.S. persons. This information is needed for preparation of 
the capital accounts of the United States balance of payments and the 
international investment position of the United States.



Sec. 128.12  Periodic reports.

    (a) International capital positions. (1) Banks and other depository 
institutions, International Banking Facilities, bank holding companies, 
and brokers and dealers in the United States shall file monthly, 
quarterly and semiannual reports with respect to specified claims and 
liabilities positions with foreigners held for their own account and for 
the accounts of their customers.
    (2) Nonbanking enterprises in the United States not described in 
Sec. 128.12(a)(1) shall file monthly and quarterly reports with respect 
to deposits and certificates of deposit with banks outside the United 
States and specified claims and liabilities positions with unaffiliated 
foreigners.
    (b) Transactions in certain domestic and foreign long-term 
securities. Banks and nonbanking enterprises in the United States shall 
file monthly reports on their transactions in domestic and foreign long-
term securities or other financial assets with foreign residents.
    (c) Notice of periodic reports. Notice of periodic reports will be 
published in accordance with Sec. 128.1(c).



Sec. 128.13  Special survey reports.

    The Secretary may prescribe special survey reports at such times as 
the Secretary determines there is a need for detailed information on the 
aggregate data derived from current periodic reports or to provide 
additional qualitative information with respect to such data. Notice of 
special survey reports

[[Page 535]]

will be published in accordance with Sec. 128.1(c).



             Subpart C_Reports on Foreign Currency Positions



Sec. 128.21  Purpose of reports.

    Reports by respondents on foreign currency positions provide data on 
the nature and source of flows of mobile capital, including transactions 
by large United States business enterprises (as determined by the 
Secretary) and their foreign affiliates as required by 31 U.S.C. 5315.



Sec. 128.22  Periodic reports.

    Respondents shall file reports weekly, monthly and quarterly on the 
value of such items as outstanding foreign exchange contracts, dealing 
positions, derivative foreign currency instruments, and other assets and 
liabilities denominated in the currencies specified on the forms. Notice 
of periodic reports will be published in accordance with Sec. 128.1(c).



Sec. 128.23  Special survey reports.

    The Secretary may prescribe special survey reports with respect to 
foreign exchange positions and related information at such times as the 
Secretary determines that there is a need for prompt or expanded 
information on current conditions in the foreign exchange markets. 
Notice of special survey reports will be published in accordance with 
Sec. 128.1(c).



  Sec. Appendix A to Part 128--Determination Made by National Advisory 
         Council Pursuant to Section 2 (a) and (b) of E.O. 10033

I. Determination of the National Advisory Council pursuant to E.O. 10033

    In an action dated September 7, 1965, the National Advisory Council 
on International Monetary and Financial Problems made the following 
determination pursuant to section 2(a) of E.O. 10033 of February 8, 
1949.
    Action 65 (E.O.)-49. The National Advisory Council, having consulted 
with the Director of the Bureau of the Budget, determines the current 
information with respect to international capital movements, derived 
from data on U.S. liabilities to and claims on foreigners and 
transactions in securities with foreigners, and current information with 
respect to U.S. gold holdings, foreign-currency holdings, and dollar 
liabilities to foreigners, are essential in order that the United States 
may comply with official requests of the International Monetary Fund for 
information with respect to the U.S. balance of payments and monetary 
reserves.
    Action No. 320, March 17, 1949 is superseded by this determination 
and is hereby revoked.
    II. Designation of the Treasury Department by the Director of the 
Bureau of the Budget pursuant to section 2(b) of E.O. 10033.
    On December 1, 1965, the Treasury Department was designated, 
pursuant to section 2(b) of E.O. 10033 of February 8, 1949, to collect 
information for the International Monetary Fund under the National 
Advisory Council determination of September 7, 1965. The letter 
containing the designation reads as follows:

                            December 1, 1965.

Hon. Henry H. Fowler,
Secretary of the Treasury, Washington, DC 20220.

    Dear Mr. Secretary: On September 7, 1965, the National Advisory 
Council after consultation with this Bureau in accordance with section 
2(a) of Executive Order 10033, made the following determination (Action 
65 (E.O.)-49:
    ``The National Advisory Council, having consulted with the Director 
of the Bureau of the Budget, determines that current information with 
respect to international capital movements, derived from data on U.S. 
liabilities to claims on foreigners and transactions in securities with 
foreigners, and current information with respect to U.S. gold holdings, 
foreign-currency holdings, and dollar liabilities to foreigners, are 
essential in order that the United States may comply with official 
requests of the International Monetary Fund for information with respect 
to the U.S. balance of payments and monetary reserves.''
    It is hereby determined pursuant to section 2(b) of Executive Order 
10033, that the Treasury Department shall collect information pertaining 
to capital movements between the United States and foreign countries and 
pertaining to the monetary reserves of the United States, except 
information pertaining to direct-investment transactions, U.S. 
Government foreign lending operations, and claims and liabilities of 
U.S. Government agencies (other than public debt obligations), which is 
collected by the Department of Commerce.
    This letter supersedes the earlier determination as to the 
responsibilities of the Treasury Department in this area, dated April 
21, 1949, as amended May 4, 1950.

                            Sincerely yours,

Raymond T. Bowman,

[[Page 536]]

Assistant Director for Statistical Standards.



PART 129_PORTFOLIO INVESTMENT SURVEY REPORTING--Table of Contents




Sec.
129.1 Purpose.
129.2 Definitions.
129.3 Reporting requirements.
129.4 Recordkeeping requirements.
129.5 Confidentiality.
129.6 Penalties specified by law.

    Authority: 22 U.S.C. 3101 et seq.; E.O. 11961, 42 FR 4321, 3 CFR, 
1977 Comp., p. 86.

    Source: 58 FR 30707, May 27, 1993, unless otherwise noted.



Sec. 129.1  Purpose.

    The purpose of this part is to provide general information on 
portfolio investment survey data collection programs and analyses under 
the International Investment and Trade in Services Survey Act ((formerly 
the International Investment Survey Act of 1976) (the ``Act'')). The 
purpose of the Act is to provide for the collection of comprehensive and 
reliable information concerning international investment, including 
portfolio investment. The Act specifies that regular data collection 
programs and surveys specified by the Act or deemed necessary by the 
Secretary of the Treasury shall be conducted to secure information on 
international capital flows and other information related to 
international portfolio investment, including information that may be 
necessary for computing and analyzing the United States balance of 
payments.



Sec. 129.2  Definitions.

    For purposes of the Act and for reporting requirements under this 
Part:
    (a) United States, when used in a geographic sense, means the 
several States, the District of Columbia, the Commonwealth of Puerto 
Rico, and the territories and possessions of the United States.
    (b) Foreign, when used in a geographic sense, means that which is 
situated outside the United States or which belongs to or is 
characteristic of a country other than the United States.
    (c) Person means any individual, branch, partnership, associated 
group, association, estate, trust, corporation, or other organization 
(whether or not organized under the laws of any State), and any 
government (including a foreign government, the United States 
Government, a State or local government, and any agency, corporation, 
financial institution, or other entity or instrumentality thereof, 
including a government-sponsored agency).
    (d) United States person means any person resident in the United 
States or subject to the jurisdiction of the United States.
    (e) Foreign person means any person resident outside the United 
States or subject to the jurisdiction of a country other than the United 
States.
    (f) Foreign parent means any foreign person who owns or controls, 
directly or indirectly, 10 percent or more of the voting securities of 
an incorporated United States business enterprise, or an equivalent 
interest in an unincorporated United States business enterprise.
    (g) Reporter means a United States person required to file a report.
    (h) Foreign official institution means central governments of 
foreign countries and their possessions, including recognized central 
banks of issue.



Sec. 129.3  Reporting requirements.

    (a) Notice of specific reporting requirements, including who is 
required to report, the information to be reported, the manner of 
reporting, and the time and place of filing reports, will be published 
by the Secretary of the Treasury in the Federal Register prior to the 
implementation of each survey or study.
    (b) Written responses are required from all reporters.
    (c) Information required from reporters shall be furnished under 
oath.



Sec. 129.4  Recordkeeping requirement.

    Reporters shall maintain all information used in preparing a report 
under this part for the period specified in the notice published by the 
Secretary of the Treasury pursuant to section 129.3, and shall make this 
information available for review and inspection at the request of the 
Department of the Treasury.

[[Page 537]]



Sec. 129.5  Confidentiality.

    (a) Information collected pursuant to the Act will be kept in 
confidence.
    (b) Access to information collected pursuant to the Act shall be 
available only to officials and employees (including consultants and 
contractors and their employees) designated by the Secretary of the 
Treasury to perform functions under the Act.
    (c) Nothing in this part shall be construed to require any Federal 
agency to disclose information otherwise protected by law.
    (d) No person can compel the submission or disclosure of reports, or 
constituent parts thereof, or copies of such reports or constituents 
parts thereof, prepared pursuant to this part, without the prior written 
consent of the person who maintained or who furnished the report and the 
customer of the person who furnished the report, where the information 
supplied is identifiable as being derived from the records of the 
customer. As required by the Act, any published reports issued by the 
Treasury based upon information pursuant to this part will only contain 
data aggregated in such a way that neither the person supplying the 
information nor the investor can be identified.



Sec. 129.6  Penalties specified by law.

    Reporters are advised that the Act provides the following penalties:
    (a) Civil Penalties. Whoever fails to furnish any information 
required under the Act, whether required to be furnished in the form of 
a report or otherwise, or to comply with any other rule, regulation, 
order, or instruction promulgated under the Act, shall be subject to a 
civil penalty of not less than $2,500 and not more than $25,000.
    (b) Criminal Penalties. Whoever willfully violates any rule, 
regulation, order, or instruction promulgated under the Act, upon 
conviction, shall be fined not more than $10,000 and, if an individual, 
may be imprisoned for not more than one year, or both, and any officer, 
director, employee, or agent of any corporation who knowingly 
participates in such violation, upon conviction, may be punished by a 
like fine, imprisonment or both.

                        PARTS 130-131 [RESERVED]



PART 132_PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING--Table of 

Contents




Sec.
132.1 Authority, purpose, and incorporation by reference.
132.2 Definitions.
132.3 Designated payment systems.
132.4 Exemptions.
132.5 Policies and procedures required.
132.6 Non-exclusive examples of policies and procedures.
132.7 Regulatory enforcement.

Appendix A to Part 132--Model Notice

    Authority: 31 U.S.C. 321 and 5364.

    Source: 73 FR 69405, Nov. 18, 2008, unless otherwise noted.



Sec. 132.1  Authority, purpose, collection of information, and incorporation 

by reference.

    (a) Authority. This part is issued jointly by the Board of Governors 
of the Federal Reserve System (Board) and the Secretary of the 
Department of the Treasury (Treasury) under section 802 of the Unlawful 
Internet Gambling Enforcement Act of 2006 (Act) (enacted as Title VIII 
of the Security and Accountability For Every Port Act of 2006, Pub. L. 
No. 109-347, 120 Stat. 1884, and codified at 31 U.S.C. 5361-5367). The 
Act states that none of its provisions shall be construed as altering, 
limiting, or extending any Federal or State law or Tribal-State compact 
prohibiting, permitting, or regulating gambling within the United 
States. See 31 U.S.C. 5361(b). In addition, the Act states that its 
provisions are not intended to change which activities related to 
horseracing may or may not be allowed under Federal law, are not 
intended to change the existing relationship between the Interstate 
Horseracing Act of 1978 (IHA) (15 U.S.C. 3001 et seq.) and other Federal 
statutes in effect on October 13, 2006, the date of the Act's enactment, 
and are not intended to resolve any existing disagreements over how to 
interpret the relationship between the IHA and other Federal statutes. 
See 31 U.S.C. 5362(10)(D)(iii). This part is intended to be consistent 
with these provisions.

[[Page 538]]

    (b) Purpose. The purpose of this part is to issue implementing 
regulations as required by the Act. The part sets out necessary 
definitions, designates payment systems subject to the requirements of 
this part, exempts certain participants in designated payment systems 
from certain requirements of this part, provides nonexclusive examples 
of policies and procedures reasonably designed to identify and block, or 
otherwise prevent and prohibit, restricted transactions, and sets out 
the Federal entities that have exclusive regulatory enforcement 
authority with respect to the designated payments systems and non-exempt 
participants therein.
    (c) Collection of information. The Office of Management and Budget 
(OMB) has approved the collection of information requirements in this 
part for the Department of the Treasury and assigned OMB control number 
1505-0204. The Board has approved the collection of information 
requirements in this part under the authority delegated to the Board by 
OMB, and assigned OMB control number 7100-0317.
    (d) Incorporation by reference--relevant definitions from ACH rules. 
(1) This part incorporates by reference the relevant definitions of ACH 
terms as published in the ``2008 ACH Rules: A Complete Guide to Rules & 
Regulations Governing the ACH Network'' (the ``ACH Rules''). The 
Director of the Federal Register approves this incorporation by 
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
of the ``2008 ACH Rules'' are available from the National Automated 
Clearing House Association, Suite 100, 13450 Sunrise Valley Drive, 
Herndon, Virginia 20171, http://nacha.org, (703) 561-1100. Copies also 
are available for public inspection at the Department of Treasury 
Library, Room 1428, Main Treasury Building, 1500 Pennsylvania Avenue, 
NW., Washington, DC 20220, and the National Archives and Records 
Administration (NARA). Before visiting the Treasury library, you must 
call (202) 622-0990 for an appointment. For information on the 
availability of this material at NARA, call (202) 741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html 20002.
    (2) Any amendment to definitions of the relevant ACH terms in the 
ACH Rules shall not apply to this part unless the Treasury and the Board 
jointly accept such amendment by publishing notice of acceptance of the 
amendment to this part in the Federal Register. An amendment to the 
definition of a relevant ACH term in the ACH Rules that is accepted by 
the Treasury and the Board shall apply to this part on the effective 
date of the rulemaking specified by the Treasury and the Board in the 
joint Federal Register notice expressly accepting such amendment.



Sec. 132.2  Definitions.

    The following definitions apply solely for purposes of this part:
    (a) Actual knowledge with respect to a transaction or commercial 
customer means when a particular fact with respect to that transaction 
or commercial customer is known by or brought to the attention of:
    (1) An individual in the organization responsible for the 
organization's compliance function with respect to that transaction or 
commercial customer; or
    (2) An officer of the organization.
    (b) Automated clearing house system or ACH system means a funds 
transfer system, primarily governed by the ACH Rules, which provides for 
the clearing and settlement of batched electronic entries for 
participating financial institutions. When referring to ACH systems, the 
terms in this regulation (such as ``originating depository financial 
institution,'' ``operator,'' ``originating gateway operator,'' 
``receiving depository financial institution,'' ``receiving gateway 
operator,'' and ``third-party sender'') are defined as those terms are 
defined in the ACH Rules.
    (c) Bet or wager. (1) Means the staking or risking by any person of 
something of value upon the outcome of a contest of others, a sporting 
event, or a game subject to chance, upon an agreement or understanding 
that the person or another person will receive something of value in the 
event of a certain outcome;

[[Page 539]]

    (2) Includes the purchase of a chance or opportunity to win a 
lottery or other prize (which opportunity to win is predominantly 
subject to chance);
    (3) Includes any scheme of a type described in 28 U.S.C. 3702;
    (4) Includes any instructions or information pertaining to the 
establishment or movement of funds by the bettor or customer in, to, or 
from an account with the business of betting or wagering (which does not 
include the activities of a financial transaction provider, or any 
interactive computer service or telecommunications service); and
    (5) Does not include--
    (i) Any activity governed by the securities laws (as that term is 
defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(47)) for the purchase or sale of securities (as that term 
is defined in section 3(a)(10) of that act (15 U.S.C. 78c(a)(10));
    (ii) Any transaction conducted on or subject to the rules of a 
registered entity or exempt board of trade under the Commodity Exchange 
Act (7 U.S.C. 1 et seq.);
    (iii) Any over-the-counter derivative instrument;
    (iv) Any other transaction that--
    (A) Is excluded or exempt from regulation under the Commodity 
Exchange Act (7 U.S.C. 1 et seq.); or
    (B) Is exempt from State gaming or bucket shop laws under section 
12(e) of the Commodity Exchange Act (7 U.S.C. 16(e)) or section 28(a) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78bb(a));
    (v) Any contract of indemnity or guarantee;
    (vi) Any contract for insurance;
    (vii) Any deposit or other transaction with an insured depository 
institution;
    (viii) Participation in any game or contest in which participants do 
not stake or risk anything of value other than--
    (A) Personal efforts of the participants in playing the game or 
contest or obtaining access to the Internet; or
    (B) Points or credits that the sponsor of the game or contest 
provides to participants free of charge and that can be used or redeemed 
only for participation in games or contests offered by the sponsor; or
    (ix) Participation in any fantasy or simulation sports game or 
educational game or contest in which (if the game or contest involves a 
team or teams) no fantasy or simulation sports team is based on the 
current membership of an actual team that is a member of an amateur or 
professional sports organization (as those terms are defined in 28 
U.S.C. 3701) and that meets the following conditions:
    (A) All prizes and awards offered to winning participants are 
established and made known to the participants in advance of the game or 
contest and their value is not determined by the number of participants 
or the amount of any fees paid by those participants.
    (B) All winning outcomes reflect the relative knowledge and skill of 
the participants and are determined predominantly by accumulated 
statistical results of the performance of individuals (athletes in the 
case of sports events) in multiple real-world sporting or other events.
    (C) No winning outcome is based--
    (1) On the score, point-spread, or any performance or performances 
of any single real-world team or any combination of such teams, or
    (2) Solely on any single performance of an individual athlete in any 
single real-world sporting or other event.
    (d) Block means to reject a particular transaction before or during 
processing, but it does not require freezing or otherwise prohibiting 
subsequent transfers or transactions regarding the proceeds or account.
    (e) Card issuer means any person who issues a credit card, debit 
card, pre-paid card, or stored value card, or the agent of such person 
with respect to such card.
    (f) Card system means a system for authorizing, clearing and 
settling transactions in which credit cards, debit cards, pre-paid 
cards, or stored value cards (such cards being issued or authorized by 
the operator of the system), are used to purchase goods or services or 
to obtain a cash advance. The term includes systems both in which the 
merchant acquirer, card issuer, and system operator are separate 
entities and in which more than one of these roles are performed by the 
same entity.

[[Page 540]]

    (g) Check clearing house means an association of banks or other 
payors that regularly exchange checks for collection or return.
    (h) Check collection system means an interbank system for 
collecting, presenting, returning, and settling for checks or intrabank 
system for settling for checks deposited in and drawn on the same bank. 
When referring to check collection systems, the terms in this regulation 
(such as ``paying bank,'' ``collecting bank,'' ``depositary bank,'' 
``returning bank,'' and ``check'') are defined as those terms are 
defined in 12 CFR 229.2. For purposes of this part, ``check'' also 
includes an electronic representation of a check that a bank agrees to 
handle as a check.
    (i) Commercial customer means a person that is not a consumer and 
that contracts with a non-exempt participant in a designated payment 
system to receive, or otherwise accesses, payment transaction services 
through that non-exempt participant.
    (j) Consumer means a natural person.
    (k) Designated payment system means a system listed in Sec. 132.3.
    (l) Electronic fund transfer has the same meaning given the term in 
section 903 of the Electronic Fund Transfer Act (15 U.S.C. 1693a), 
except that such term includes transfers that would otherwise be 
excluded under section 903(6)(E) of that act (15 U.S.C. 1693a(6)(E)), 
and includes any funds transfer covered by Article 4A of the Uniform 
Commercial Code, as in effect in any State.
    (m) Financial institution means a State or national bank, a State or 
Federal savings and loan association, a mutual savings bank, a State or 
Federal credit union, or any other person that, directly or indirectly, 
holds an account belonging to a consumer. The term does not include a 
casino, sports book, or other business at or through which bets or 
wagers may be placed or received.
    (n) Financial transaction provider means a creditor, credit card 
issuer, financial institution, operator of a terminal at which an 
electronic fund transfer may be initiated, money transmitting business, 
or international, national, regional, or local payment network utilized 
to effect a credit transaction, electronic fund transfer, stored value 
product transaction, or money transmitting service, or a participant in 
such network, or other participant in a designated payment system.
    (o) Foreign banking office means:
    (1) Any non-U.S. office of a financial institution; and
    (2) Any non-U.S. office of a foreign bank as described in 12 U.S.C. 
3101(7).
    (p) Interactive computer service means any information service, 
system, or access software provider that provides or enables computer 
access by multiple users to a computer server, including specifically a 
service or system that provides access to the Internet and such systems 
operated or services offered by libraries or educational institutions.
    (q) Internet means the international computer network of 
interoperable packet switched data networks.
    (r) Internet gambling business means the business of placing, 
receiving or otherwise knowingly transmitting a bet or wager by any 
means which involves the use, at least in part, of the Internet, but 
does not include the performance of the customary activities of a 
financial transaction provider, or any interactive computer service or 
telecommunications service.
    (s) Intrastate transaction means placing, receiving, or otherwise 
transmitting a bet or wager where--
    (1) The bet or wager is initiated and received or otherwise made 
exclusively within a single State;
    (2) The bet or wager and the method by which the bet or wager is 
initiated and received or otherwise made is expressly authorized by and 
placed in accordance with the laws of such State, and the State law or 
regulations include--
    (i) Age and location verification requirements reasonably designed 
to block access to minors and persons located out of such State; and
    (ii) Appropriate data security standards to prevent unauthorized 
access by any person whose age and current location has not been 
verified in accordance with such State's law or regulations; and

[[Page 541]]

    (3) The bet or wager does not violate any provision of--
    (i) The Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.);
    (ii) 28 U.S.C. chapter 178 (professional and amateur sports 
protection);
    (iii) The Gambling Devices Transportation Act (15 U.S.C. 1171 et 
seq.); or
    (iv) The Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.).
    (t) Intratribal transaction means placing, receiving or otherwise 
transmitting a bet or wager where--
    (1) The bet or wager is initiated and received or otherwise made 
exclusively--
    (i) Within the Indian lands of a single Indian tribe (as such terms 
are defined under the Indian Gaming Regulatory Act (25 U.S.C. 2703)); or
    (ii) Between the Indian lands of two or more Indian tribes to the 
extent that intertribal gaming is authorized by the Indian Gaming 
Regulatory Act (25 U.S.C. 2701 et seq.);
    (2) The bet or wager and the method by which the bet or wager is 
initiated and received or otherwise made is expressly authorized by and 
complies with the requirements of--
    (i) The applicable tribal ordinance or resolution approved by the 
Chairman of the National Indian Gaming Commission; and
    (ii) With respect to class III gaming, the applicable Tribal-State 
compact;
    (3) The applicable tribal ordinance or resolution or Tribal-State 
compact includes--
    (i) Age and location verification requirements reasonably designed 
to block access to minors and persons located out of the applicable 
Tribal lands; and
    (ii) Appropriate data security standards to prevent unauthorized 
access by any person whose age and current location has not been 
verified in accordance with the applicable tribal ordinance or 
resolution or Tribal-State Compact; and
    (4) The bet or wager does not violate any provision of--
    (i) The Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.);
    (ii) 28 U.S.C. chapter 178 (professional and amateur sports 
protection);
    (iii) The Gambling Devices Transportation Act (15 U.S.C. 1171 et 
seq.); or
    (iv) The Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.).
    (u) Money transmitting business has the meaning given the term in 31 
U.S.C. 5330(d)(1) (determined without regard to any regulations 
prescribed by the Secretary of the Treasury thereunder).
    (v) Operator of a designated payment system means an entity that 
provides centralized clearing and delivery services between participants 
in the designated payment system and maintains the operational framework 
for the system. In the case of an automated clearinghouse system, the 
term ``operator'' has the same meaning as provided in the ACH Rules.
    (w) Participant in a designated payment system means an operator of 
a designated payment system, a financial transaction provider that is a 
member of, or has contracted for financial transaction services with, or 
is otherwise participating in, a designated payment system, or a third-
party processor. This term does not include a customer of the financial 
transaction provider, unless the customer is also a financial 
transaction provider otherwise participating in the designated payment 
system on its own behalf.
    (x) Reasoned legal opinion means a written expression of 
professional judgment by a State-licensed attorney that addresses the 
facts of a particular client's business and the legality of the client's 
provision of its services to relevant customers in the relevant 
jurisdictions under applicable federal and State law, and, in the case 
of intratribal transactions, applicable tribal ordinances, tribal 
resolutions, and Tribal-State compacts. A written legal opinion will not 
be considered ``reasoned'' if it does nothing more than recite the facts 
and express a conclusion.
    (y) Restricted transaction means any of the following transactions 
or transmittals involving any credit, funds, instrument, or proceeds 
that the Act prohibits any person engaged in the business of betting or 
wagering (which does not include the activities of a financial 
transaction provider, or any interactive computer service or 
telecommunications service) from knowingly accepting, in connection with 
the

[[Page 542]]

participation of another person in unlawful Internet gambling--
    (1) Credit, or the proceeds of credit, extended to or on behalf of 
such other person (including credit extended through the use of a credit 
card);
    (2) An electronic fund transfer, or funds transmitted by or through 
a money transmitting business, or the proceeds of an electronic fund 
transfer or money transmitting service, from or on behalf of such other 
person; or
    (3) Any check, draft, or similar instrument that is drawn by or on 
behalf of such other person and is drawn on or payable at or through any 
financial institution.
    (z) State means any State of the United States, the District of 
Columbia, or any commonwealth, territory, or other possession of the 
United States, including the Commonwealth of Puerto Rico, the 
Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and 
the Virgin Islands.
    (aa) Third-party processor means a service provider that--
    (1) In the case of a debit transaction payment, such as an ACH debit 
entry or card system transaction, has a direct relationship with the 
commercial customer that is initiating the debit transfer transaction 
and acts as an intermediary between the commercial customer and the 
first depository institution to handle the transaction;
    (2) In the case of a credit transaction payment, such as an ACH 
credit entry, has a direct relationship with the commercial customer 
that is to receive the proceeds of the credit transfer and acts as an 
intermediary between the commercial customer and the last depository 
institution to handle the transaction; and
    (3) In the case of a cross-border ACH debit or check collection 
transaction, is the first service provider located within the United 
States to receive the ACH debit instructions or check for collection.
    (bb) Unlawful Internet gambling means to place, receive, or 
otherwise knowingly transmit a bet or wager by any means which involves 
the use, at least in part, of the Internet where such bet or wager is 
unlawful under any applicable Federal or State law in the State or 
Tribal lands in which the bet or wager is initiated, received, or 
otherwise made. The term does not include placing, receiving, or 
otherwise transmitting a bet or wager that is excluded from the 
definition of this term by the Act as an intrastate transaction or an 
intra-tribal transaction, and does not include any activity that is 
allowed under the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et 
seq.; see Sec. 132.1(a)). The intermediate routing of electronic data 
shall not determine the location or locations in which a bet or wager is 
initiated, received, or otherwise made.
    (cc) Wire transfer system means a system through which an 
unconditional order to a bank to pay a fixed or determinable amount of 
money to a beneficiary upon receipt, or on a day stated in the order, is 
transmitted by electronic or other means through the network, between 
banks, or on the books of a bank. When referring to wire transfer 
systems, the terms in this regulation (such as ``bank,'' ``originator's 
bank,'' ``beneficiary's bank,'' and ``intermediary bank'') are defined 
as those terms are defined in 12 CFR part 210, appendix B.



Sec. 132.3  Designated payment systems.

    The following payment systems could be used by participants in 
connection with, or to facilitate, a restricted transaction:
    (a) Automated clearing house systems;
    (b) Card systems;
    (c) Check collection systems;
    (d) Money transmitting businesses solely to the extent they
    (1) Engage in the transmission of funds, which does not include 
check cashing, currency exchange, or the issuance or redemption of money 
orders, travelers' checks, and other similar instruments; and
    (2) Permit customers to initiate transmission of funds transactions 
remotely from a location other than a physical office of the money 
transmitting business; and
    (e) Wire transfer systems.

[[Page 543]]



Sec. 132.4  Exemptions.

    (a) Automated clearing house systems. The participants processing a 
particular transaction through an automated clearing house system are 
exempt from this regulation's requirements for establishing written 
policies and procedures reasonably designed to prevent or prohibit 
restricted transactions with respect to that transaction, except for--
    (1) The receiving depository financial institution and any third-
party processor receiving the transaction on behalf of the receiver in 
an ACH credit transaction;
    (2) The originating depository financial institution and any third-
party processor initiating the transaction on behalf of the originator 
in an ACH debit transaction; and
    (3) The receiving gateway operator and any third-party processor 
that receives instructions for an ACH debit transaction directly from a 
foreign sender (which could include a foreign banking office, a foreign 
third-party processor, or a foreign originating gateway operator).
    (b) Check collection systems. The participants in a particular check 
collection through a check collection system are exempt from this 
regulation's requirements for establishing written policies and 
procedures reasonably designed to prevent or prohibit restricted 
transactions with respect to that check collection, except for the 
depositary bank.
    (c) Money transmitting businesses. The participants in a money 
transmitting business are exempt from this regulation's requirements for 
establishing written policies and procedures reasonably designed to 
prevent or prohibit restricted transactions, except for the operator.
    (d) Wire transfer systems. The participants in a particular wire 
transfer through a wire transfer system are exempt from this 
regulation's requirements for establishing written policies and 
procedures reasonably designed to prevent or prohibit restricted 
transactions with respect to that transaction, except for the 
beneficiary's bank.



Sec. 132.5  Policies and procedures required.

    (a) All non-exempt participants in designated payment systems shall 
establish and implement written policies and procedures reasonably 
designed to identify and block or otherwise prevent or prohibit 
restricted transactions.
    (b) A non-exempt financial transaction provider participant in a 
designated payment system shall be considered to be in compliance with 
the requirements of paragraph (a) of this section if--
    (1) It relies on and complies with the written policies and 
procedures of the designated payment system that are reasonably designed 
to--
    (i) Identify and block restricted transactions; or
    (ii) Otherwise prevent or prohibit the acceptance of the products or 
services of the designated payment system or participant in connection 
with restricted transactions; and
    (2) Such policies and procedures of the designated payment system 
comply with the requirements of this part.
    (c) For purposes of paragraph (b)(2) in this section, a participant 
in a designated payment system may rely on a written statement or notice 
by the operator of that designated payment system to its participants 
that states that the operator has designed or structured the system's 
policies and procedures for identifying and blocking or otherwise 
preventing or prohibiting restricted transactions to comply with the 
requirements of this part as conclusive evidence that the system's 
policies and procedures comply with the requirements of this part, 
unless the participant is notified otherwise by its Federal functional 
regulator or, in the case of participants that are not directly 
supervised by a Federal functional regulator, the Federal Trade 
Commission.
    (d) As provided in the Act, a person that identifies and blocks a 
transaction, prevents or prohibits the acceptance of its products or 
services in connection with a transaction, or otherwise refuses to honor 
a transaction, shall not be liable to any party for such action if--
    (1) The transaction is a restricted transaction;

[[Page 544]]

    (2) Such person reasonably believes the transaction to be a 
restricted transaction; or
    (3) The person is a participant in a designated payment system and 
blocks or otherwise prevents the transaction in reliance on the policies 
and procedures of the designated payment system in an effort to comply 
with this regulation.
    (e) Nothing in this part requires or is intended to suggest that 
designated payment systems or participants therein must or should block 
or otherwise prevent or prohibit any transaction in connection with any 
activity that is excluded from the definition of ``unlawful Internet 
gambling'' in the Act as an intrastate transaction, an intratribal 
transaction, or a transaction in connection with any activity that is 
allowed under the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et 
seq.; see Sec. 132.1(a)).
    (f) Nothing in this part modifies any requirement imposed on a 
participant by other applicable law or regulation to file a suspicious 
activity report to the appropriate authorities.
    (g) The requirement of this part to establish and implement written 
policies and procedures applies only to the U.S. offices of participants 
in designated payment systems.



Sec. 132.6  Non-exclusive examples of policies and procedures.

    (a) In general. The examples of policies and procedures to identify 
and block or otherwise prevent or prohibit restricted transactions set 
out in this section are non-exclusive. In establishing and implementing 
written policies and procedures to identify and block or otherwise 
prevent or prohibit restricted transactions, a non-exempt participant in 
a designated payment system is permitted to design and implement 
policies and procedures tailored to its business that may be different 
than the examples provided in this section. In addition, non-exempt 
participants may use different policies and procedures with respect to 
different business lines or different parts of the organization.
    (b) Due diligence. If a non-exempt participant in a designated 
payment system establishes and implements procedures for due diligence 
of its commercial customer accounts or commercial customer relationships 
in order to comply, in whole or in part, with the requirements of this 
regulation, those due diligence procedures will be deemed to be 
reasonably designed to identify and block or otherwise prevent or 
prohibit restricted transactions if the procedures include the steps set 
out in paragraphs (b)(1), (b)(2), and (b)(3) of this section and subject 
to paragraph (b)(4) of this section.
    (1) At the establishment of the account or relationship, the 
participant conducts due diligence of a commercial customer and its 
activities commensurate with the participant's judgment of the risk of 
restricted transactions presented by the customer's business.
    (2) Based on its due diligence, the participant makes a 
determination regarding the risk the commercial customer presents of 
engaging in an Internet gambling business and follows either paragraph 
(b)(2)(i) or (b)(2)(ii) of this section.
    (i) The participant determines that the commercial customer presents 
a minimal risk of engaging in an Internet gambling business.
    (ii) The participant cannot determine that the commercial customer 
presents a minimal risk of engaging in an Internet gambling business, in 
which case it obtains the documentation in either paragraph 
(b)(2)(ii)(A) or (b)(2)(ii)(B) of this section--
    (A) Certification from the commercial customer that it does not 
engage in an Internet gambling business; or
    (B) If the commercial customer does engage in an Internet gambling 
business, each of the following--
    (1) Evidence of legal authority to engage in the Internet gambling 
business, such as--
    (i) A copy of the commercial customer's license that expressly 
authorizes the customer to engage in the Internet gambling business 
issued by the appropriate State or Tribal authority or, if the 
commercial customer does not have such a license, a reasoned legal 
opinion that demonstrates that the commercial customer's Internet 
gambling business does not involve restricted transactions; and

[[Page 545]]

    (ii) A written commitment by the commercial customer to notify the 
participant of any changes in its legal authority to engage in its 
Internet gambling business.
    (2) A third-party certification that the commercial customer's 
systems for engaging in the Internet gambling business are reasonably 
designed to ensure that the commercial customer's Internet gambling 
business will remain within the licensed or otherwise lawful limits, 
including with respect to age and location verification.
    (3) The participant notifies all of its commercial customers, 
through provisions in the account or commercial customer relationship 
agreement or otherwise, that restricted transactions are prohibited from 
being processed through the account or relationship.
    (4) With respect to the determination in paragraph (b)(2)(i) of this 
section, participants may deem the following commercial customers to 
present a minimal risk of engaging in an Internet gambling business--
    (i) An entity that is directly supervised by a Federal functional 
regulator as set out in Sec. 132.7(a); or
    (ii) An agency, department, or division of the Federal government or 
a State government.
    (c) Automated clearing house system examples. (1) The policies and 
procedures of the originating depository financial institution and any 
third party processor in an ACH debit transaction, and the receiving 
depository financial institution and any third party processor in an ACH 
credit transaction, are deemed to be reasonably designed to identify and 
block or otherwise prevent or prohibit restricted transactions if they--
    (i) Address methods to conduct due diligence in establishing a 
commercial customer account or relationship as set out in Sec. 
132.6(b);
    (ii) Address methods to conduct due diligence as set out in Sec. 
132.6(b)(2)(ii)(B) in the event that the participant has actual 
knowledge that an existing commercial customer of the participant 
engages in an Internet gambling business; and
    (iii) Include procedures to be followed with respect to a commercial 
customer if the originating depository financial institution or third-
party processor has actual knowledge that its commercial customer has 
originated restricted transactions as ACH debit transactions or if the 
receiving depository financial institution or third-party processor has 
actual knowledge that its commercial customer has received restricted 
transactions as ACH credit transactions, such as procedures that 
address--
    (A) The circumstances under which the commercial customer should not 
be allowed to originate ACH debit transactions or receive ACH credit 
transactions; and
    (B) The circumstances under which the account should be closed.
    (2) The policies and procedures of a receiving gateway operator and 
third-party processor that receives instructions to originate an ACH 
debit transaction directly from a foreign sender are deemed to be 
reasonably designed to prevent or prohibit restricted transactions if 
they include procedures to be followed with respect to a foreign sender 
if the receiving gateway operator or third-party processor has actual 
knowledge, obtained through notification by a government entity, such as 
law enforcement or a regulatory agency, that such instructions included 
instructions for restricted transactions. Such procedures may address 
sending notification to the foreign sender, such as in the form of the 
notice contained in appendix A to this part.
    (d) Card system examples. The policies and procedures of a card 
system operator, a merchant acquirer, third-party processor, or a card 
issuer, are deemed to be reasonably designed to identify and block or 
otherwise prevent or prohibit restricted transactions, if the policies 
and procedures--
    (1) Provide for either--
    (i) Methods to conduct due diligence--
    (A) In establishing a commercial customer account or relationship as 
set out in Sec. 132.6(b); and
    (B) As set out in Sec. 132.6(b)(2)(ii)(B) in the event that the 
participant has actual knowledge that an existing commercial customer of 
the participant engages in an Internet gambling business; or

[[Page 546]]

    (ii) Implementation of a code system, such as transaction codes and 
merchant/business category codes, that are required to accompany the 
authorization request for a transaction, including--
    (A) The operational functionality to enable the card system operator 
or the card issuer to reasonably identify and deny authorization for a 
transaction that the coding procedure indicates may be a restricted 
transaction; and
    (B) Procedures for ongoing monitoring or testing by the card system 
operator to detect potential restricted transactions, including--
    (1) Conducting testing to ascertain whether transaction 
authorization requests are coded correctly; and
    (2) Monitoring and analyzing payment patterns to detect suspicious 
payment volumes from a merchant customer; and
    (2) For the card system operator, merchant acquirer, or third-party 
processor, include procedures to be followed when the participant has 
actual knowledge that a merchant has received restricted transactions 
through the card system, such as--
    (i) The circumstances under which the access to the card system for 
the merchant, merchant acquirer, or third-party processor should be 
denied; and
    (ii) The circumstances under which the merchant account should be 
closed.
    (e) Check collection system examples. (1) The policies and 
procedures of a depositary bank are deemed to be reasonably designed to 
identify and block or otherwise prevent or prohibit restricted 
transactions, if they--
    (i) Address methods for the depositary bank to conduct due diligence 
in establishing a commercial customer account or relationship as set out 
in Sec. 132.6(b);
    (ii) Address methods for the depositary bank to conduct due 
diligence as set out in Sec. 132.6(b)(2)(ii)(B) in the event that the 
depositary bank has actual knowledge that an existing commercial 
customer engages in an Internet gambling business; and
    (iii) Include procedures to be followed if the depositary bank has 
actual knowledge that a commercial customer of the depositary bank has 
deposited checks that are restricted transactions, such as procedures 
that address--
    (A) The circumstances under which check collection services for the 
customer should be denied; and
    (B) The circumstances under which the account should be closed.
    (2) The policies and procedures of a depositary bank that receives 
checks for collection from a foreign banking office are deemed to be 
reasonably designed to identify and block or otherwise prevent or 
prohibit restricted transactions if they include procedures to be 
followed by the depositary bank when it has actual knowledge, obtained 
through notification by a government entity, such as law enforcement or 
a regulatory agency, that a foreign banking office has sent checks to 
the depositary bank that are restricted transactions. Such procedures 
may address sending notification to the foreign banking office, such as 
in the form of the notice contained in the appendix to this part.
    (f) Money transmitting business examples. The policies and 
procedures of an operator of a money transmitting business are deemed to 
be reasonably designed to identify and block or otherwise prevent or 
prohibit restricted transactions if they--
    (1) Address methods for the operator to conduct due diligence in 
establishing a commercial customer relationship as set out in Sec. 
132.6(b);
    (2) Address methods for the operator to conduct due diligence as set 
out in Sec. 132.6(b)(2)(ii)(B) in the event that the operator has 
actual knowledge that an existing commercial customer engages in an 
Internet gambling business;
    (3) Include procedures regarding ongoing monitoring or testing by 
the operator to detect potential restricted transactions, such as 
monitoring and analyzing payment patterns to detect suspicious payment 
volumes to any recipient; and
    (4) Include procedures when the operator has actual knowledge that a 
commercial customer of the operator has received restricted transactions 
through the money transmitting business, that address--
    (i) The circumstances under which money transmitting services should 
be

[[Page 547]]

denied to that commercial customer; and
    (ii) The circumstances under which the commercial customer account 
should be closed.
    (g) Wire transfer system examples. The policies and procedures of 
the beneficiary's bank in a wire transfer are deemed to be reasonably 
designed to identify and block or otherwise prevent or prohibit 
restricted transactions if they--
    (1) Address methods for the beneficiary's bank to conduct due 
diligence in establishing a commercial customer account as set out in 
Sec. 132.6(b);
    (2) Address methods for the beneficiary's bank to conduct due 
diligence as set out in Sec. 132.6(b)(2)(ii)(B) in the event that the 
beneficiary's bank has actual knowledge that an existing commercial 
customer of the bank engages in an Internet gambling business;
    (3) Include procedures to be followed if the beneficiary's bank 
obtains actual knowledge that a commercial customer of the bank has 
received restricted transactions through the wire transfer system, such 
as procedures that address
    (i) The circumstances under which the beneficiary bank should deny 
wire transfer services to the commercial customer; and
    (ii) The circumstances under which the commercial customer account 
should be closed.



Sec. 132.7  Regulatory enforcement.

    The requirements under this part are subject to the exclusive 
regulatory enforcement of--
    (a) The Federal functional regulators, with respect to the 
designated payment systems and participants therein that are subject to 
the respective jurisdiction of such regulators under section 505(a) of 
the Gramm-Leach-Bliley Act (15 U.S.C. 6805(a)) and section 5g of the 
Commodity Exchange Act (7 U.S.C. 7b-2); and
    (b) The Federal Trade Commission, with respect to designated payment 
systems and participants therein not otherwise subject to the 
jurisdiction of any Federal functional regulators (including the 
Commission) as described in paragraph (a) of this section.



                Sec. Appendix A to Part 132--Model Notice

[Date]
[Name of foreign sender or foreign banking office]
[Address]
Re: U.S. Unlawful Internet Gambling Enforcement Act Notice

Dear [Name of foreign counterparty]:

    On [date], U.S. government officials informed us that your 
institution processed payments through our facilities for Internet 
gambling transactions restricted by U.S. law on [dates, recipients, and 
other relevant information if available].
    We provide this notice to comply with U.S. Government regulations 
implementing the Unlawful Internet Gambling Enforcement Act of 2006 
(Act), a U.S. federal law. Our policies and procedures established in 
accordance with those regulations provide that we will notify a foreign 
counterparty if we learn that the counterparty has processed payments 
through our facilities for Internet gambling transactions restricted by 
the Act. This notice ensures that you are aware that we have received 
information that your institution has processed payments for Internet 
gambling restricted by the Act.
    The Act is codified in subchapter IV, chapter 53, title 31 of the 
U.S. Code (31 U.S.C. 5361 et seq.). Implementing regulations that 
duplicate one another can be found at part 233 of title 12 of the U.S. 
Code of Federal Regulations (12 CFR part 233) and part 132 of title 31 
of the U.S. Code of Federal Regulations (31 CFR part 132).

                        PARTS 133-199 [RESERVED]


[[Page 549]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 551]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2009)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 100--
                199)
        II  Office of Management and Budget Circulars and Guidance 
                (200--299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300-- 
                399)
        VI  Department of State (Parts 600--699)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1880--1899)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Housing and Urban Development (Parts 2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)
     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)

[[Page 552]]

      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
    XXXVII  Peace Corps (Parts 3700--3799)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600-- 3699)
    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
      XXXV  Office of Personnel Management (Parts 4500--4599)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)

[[Page 553]]

     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)
     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
      XCIX  Department of Defense Human Resources Management and 
                Labor Relations Systems (Department of Defense--
                Office of Personnel Management) (Parts 9900--9999)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture

[[Page 554]]

         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)

[[Page 555]]

    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)
         L  Rural Business-Cooperative Service, Rurual Housing 
                Service, and Rural Utilities Service, Department 
                of Agriculture (Parts 5000--5099)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1303--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

[[Page 556]]

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

[[Page 557]]

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)

[[Page 558]]

      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)

[[Page 559]]

         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millenium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                HousingCommissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)

[[Page 560]]

      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)

[[Page 561]]

       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)

[[Page 562]]

       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)

[[Page 563]]

        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvmeent, 
                Department of Education [Reserved]
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

[[Page 564]]

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                301--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Chapters 62--100 [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
            Chapters 103--104 [Reserved]
       105  General Services Administration (Parts 105-1--105-999)

[[Page 565]]

       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Chapters 129--200 [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

[[Page 566]]

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899) 
                [Reserved]
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)

[[Page 567]]

        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement [Reserved]

[[Page 568]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)

[[Page 569]]

         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 571]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2009)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII, L
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV, L
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII, L
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 572]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 573]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Human Resources Management and Labor Relations  5, XCIX
       Systems
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99

[[Page 574]]

  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II

[[Page 575]]

General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A,
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII

[[Page 576]]

Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                2, XXVII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V

[[Page 577]]

  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
  Copyright Royalty Board                         37, III
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Millenium Challenge Corporation                   22, XIII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII

[[Page 578]]

National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Human Resources Management and Labor Relations  5, XCIX
       Systems, Department of Defense
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII, L
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV, L
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII, L
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
   National Security Council
[[Page 579]]

Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8

[[Page 580]]

Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 581]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations that were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, 1986-2000'' published in 11 
separate volumes.

                                  2001

31 CFR
                                                                   66 FR
                                                                    Page
Subtitle A
1.36 (c)(1)(i) table, (iv) table, (g)(1)(i) table, (ii) table, 
        (iv) table, (m)(1)(ii) table and (v) table amended.........16603
    (h)(1)(i), (ii), (2)(i)(A), (B), (C), (ii), (iv) and (6)(iii) 
revised; (h)(2) introductory text, (iii), (4) introductory text 
and (6) introductory text amended..................................18192
    (g)(1)(viii) table amended.....................................48556
1.20--1.36 (Subpart C) Appendix D amended...........................9959
29 Authority citation revised......................................36705
29.102 (a) revised; (f) added; interim.............................36705
29.103 (a) amended; interim........................................36705
29.501--29.526 (Subpart E) Added; interim..........................36705
Chapter I
103 Exception......................................................32746
    Policy statement...............................................67086
    Authority citation revised.....................................67681
103.30 Added; interim..............................................67680

                                  2002

31 CFR
                                                                   67 FR
                                                                    Page
Subtitle A
1.1--1.7 (Subpart A) Appendix I amended............................34402
1.20--1.36 (Subpart C) Appendix C amended..........................34402
1.36 (c)(1)(iii) and (g)(1)(iii) amended...........................34403
    (g)(1)(viii) table amended..............................48387, 62886
5 Revised; interim.................................................65845
10.1--10.8 (Subpart A) Revised.....................................48765
10.20 Revised......................................................48771
10.21 Revised......................................................48771
10.22 Revised......................................................48771
10.23 Revised......................................................48771
10.24 Revised......................................................48771
10.25 Revised......................................................48771
10.26 Revised......................................................48771
10.27 Revised......................................................48771
10.28 Revised......................................................48771
10.29 Revised......................................................48771
10.30 Revised......................................................48771
10.31 Revised......................................................48771
10.32 Revised......................................................48771
10.34 Revised......................................................48771
10.50--10.53 (Subpart C) Revised...................................48774
10.60--10.82 (Subpart D) Revised...................................48774
10.90--10.93 (Subpart E) Revised...................................48774
Chapter I
103 Authority citation revised...9876, 21113, 48351, 60570, 67549, 78384
    Policy statement...............................................48388
    Appendix redesignated as Appendix A; Appendix B added; interim
                                                                    9877
103.11 (ii)(1) revised; (ww) added.................................44055
    (n)(5)(ii), (iii), (6)(i) and (ii) amended; (n)(6)(ii)(1) 
revised............................................................60729
103.19 Added.......................................................44056
103.21 Added.......................................................60729

[[Page 582]]

103.56 (b)(6) revised; interim.....................................21121
103.64 (a)(2)(ii) and (v)(B) revised; (a)(2)(iii) amended..........60730
103.90--103.110 (Subpart H) Added; interim..........................9876
    Appendix A added...............................................60587
103.90 Revised.....................................................60585
103.100 Added......................................................60585
103.110 Revised....................................................60587
103.120--103.170 (Subpart I) Added; interim........................21113
    Appendices A and B added.......................................60573
103.120 Undesignated center heading added..........................48351
103.125 Added; interim.............................................21116
103.130 Added; interim.............................................21121
103.135 Added; interim.............................................21126
103.170 Heading, (b) and (c) revised; (d) added; interim...........67549
    Corrected......................................................68935
103.175 Added......................................................60570
103.177 Added......................................................60570
    (d)(1) revised.................................................78384
103.181 Undesignated center heading and section added..............48351
103.182 Added......................................................48351
103.183 Added......................................................48351
103.185 Added......................................................60572

                                  2003

31 CFR
                                                                   68 FR
                                                                    Page
Subtitle A
1.1 (a)(1)(i)(k) and (2) revised; (a)(1)(xiii) added...............55310
1.1--1.7 (Subpart A) Appendix M added..............................55310
1.8 Amended; interim...............................................12586
1.10 (a) revised; interim..........................................12586
1.11 Revised; interim..............................................12586
1.12 Amended; interim..............................................12588
1.20 (a)(11) revised; (m) and concluding text amended..............55311
1.36 (c)(1)(i) table, (viii) table, (g)(1)(i) table and (viii) 
        table amended..............................................32638
    (c)(1)(i), (e)(1) and (g)(1)(i) amended; (c)(1)(xiii), 
(g)(1)(xiii) and (m)(1)(xiii) added; (c)(2), (g)(2) and (m)(2) 
revised............................................................55311
    (g)(1)(x) amended..............................................67944
1.20--1.36 (Subpart C) Appendix N added............................55311
19 Revised; interim.........................................66544, 66605
19.440 Added; interim..............................................66607
20 Added; interim...........................................66557, 66607
20.510 (c) amended; interim........................................66607
20.605 (a)(2) removed; interim.....................................66607
50 Added; interim...................................................9811
50.2 Added.........................................................41264
50.5 (c), (d)(1), (f)(1) and (l) revised...........................41264
    (d) introductory text, (1) and (3) revised.....................48281
50.8 Added.........................................................41266
50.9 Added.........................................................41266
50.10 Added; interim...............................................19306
50.11 Added; interim...............................................19306
50.12 Added; interim...............................................19306
    (d) revised....................................................59727
50.13 Added; interim...............................................19306
50.14 Added; interim...............................................19306
    Revised........................................................59727
50.17 Added; interim...............................................19306
50.18 Added; interim...............................................19306
    (b)(2) revised.................................................59727
50.19 Added; interim...............................................19306
    Revised........................................................59719
50.20 Added; interim...............................................19307
50.21 Added; interim...............................................19307
    (a) revised....................................................59727
50.23 Added; interim...............................................19307
50.24 Added; interim...............................................19307
50.30 Added........................................................59720
50.33 Added........................................................59720
50.35 Added........................................................59720
50.36 Added........................................................59720
Chapter I
103 Technical correction.............................................493
    Request for public comments....................................10965
    Authority citation revised..............................25109, 25159
    Exemption extension............................................26996
    Policy statement...............................................66708
103.11 (j) amended.................................................25109
    (f) and (ii)(1) revised; (n)(8), (9), (xx), (yy), (zz), (aaa) 
and (bbb) added....................................................65398
103.17 Added.......................................................65398
103.19 (b)(1), (2), (3), (c)(1), (d) and (e) amended................6617
103.20 (a)(1) and (b)(3) amended; (a)(2)(iv) added..................6617
103.33 (e)(6)(i)(E), (F), (G), (f)(6)(i)(E), (F) and (G) 
        redesignated as (e)(6)(i)(G), (H), (I), (f)(6)(i)(G), (H) 
        and (I); new (e)(6)(i)(E), (F), (f)(6)(i)(E) and (F) added
                                                                   65399
103.34 (a)(1), (b)(11), and (12) amended...........................25109

[[Page 583]]

103.35 (a)(1) amended..............................................25129
103.56 (g) added...................................................26489
    (b)(8) revised; (b)(9) added...................................65399
103.72 (b) revised.................................................26489
103.121 Added......................................................25109
103.122 Added......................................................25129
103.123 Added......................................................25160
103.131 Added......................................................25147

                                  2004

31 CFR
                                                                   69 FR
                                                                    Page
Subtitle A
1.8 Revised........................................................54003
1.9 Revised........................................................54003
1.10 Revised.......................................................54003
1.11 Revised.......................................................54003
1.12 Revised.......................................................54003
1.36 (c)(1)(i) table, (g)(1)(i) table, (m)(1)(i) table and (o)(1) 
        table amended..............................................17299
10 Authority citation revised......................................75841
10.33 Revised......................................................75841
10.35 Added........................................................75842
10.36 Added........................................................75842
10.37 Added........................................................75842
10.38 Added........................................................75842
10.52 Revised......................................................75845
50.5 (e) revised; eff. 7-29-04.....................................39306
50.50--50.54 (Subpart F) Added; eff. 7-29-04.......................39307
50.60--50.61 (Subpart G) Added; eff. 7-29-04.......................39309
50.80--50.84 (Subpart I) Added.....................................44941
Chapter I
103 Authority citation revised..............................19098, 19103
103.11 (ii)(1) corrected............................................4237
103.186 Added......................................................19098
103.187 Added......................................................19098
103 Appendix C added...............................................74439
    Appendix C amended.............................................76847

                                  2005

31 CFR
                                                                   70 FR
                                                                    Page
Subtitle A
1.36 (g)(1)(viii) table amended.....................................2806
10.35 (b)(2)(ii)(B) introductory text and (4)(i) revised...........19892
    (b)(2)(ii) and (8) revised; (b)(10) added......................28825
10.37 (b) corrected.........................................19559, 20805
29 Authority citation revised......................................60004
29.101 (a) and (c) revised; (e) added..............................60004
29.103 (a) amended.................................................60004
29.201 Revised.....................................................60005
29.401 (a)(2) and (3) revised; (c) added...........................60005
29.402 Amended.....................................................60005
29.501 (e) added...................................................60005
50.5 (g)(3) added...................................................7404
    (c)(6) added; eff. 7-14-05.....................................34351
50.20 (b) revised...................................................7405
50.21 (a) revised...................................................7405
50.55 Added; eff. 7-14-05..........................................34351
Chapter I
103 Authority citation revised.....................................66760
103.16 Added.......................................................66767
103.137 Added......................................................66760
103.140 Added; interim; eff. 7-11-05...............................33716

                                  2006

31 CFR
                                                                   71 FR
                                                                    Page
Subtitle A
1.36 (g)(1)(viii) table amended; interim...........................69483
10.53 Reinstated; CFR correction...................................13018
50 Authority citation revised......................................27569
    Regulation at 71 FR 27569 confirmed............................50347
50.1 (a) revised; interim..........................................27569
    Regulation at 71 FR 27569 confirmed............................50347
50.5 (j) through (p) redesignated as (k) and (m) through (r); new 
        (j) and (l) added; (g) and new (m) and (n) revised; 
        interim....................................................27569
    Regulation at 71 FR 27569 confirmed............................50347
50.7 Revised; interim..............................................27570
    Regulation at 71 FR 27570 confirmed............................50347
50.10 (d) revised; interim.........................................27570
    Regulation at 71 FR 27570 confirmed............................50347
50.12 (e) revised; interim.........................................27570
    Regulation at 71 FR 27570 confirmed............................50347
50.17 (e) revised; interim.........................................27570
    Regulation at 71 FR 27570 confirmed............................50347
50.20 Revised; interim.............................................27570
    Regulation at 71 FR 27570 confirmed............................50347

[[Page 584]]

50.21 Revised; interim.............................................27570
    Regulation at 71 FR 27570 confirmed............................50347
50.50 Revised; interim.............................................27571
    Regulation at 71 FR 27571 confirmed............................50347
50.55 Revised; interim.............................................27572
    Regulation at 71 FR 27572 confirmed............................50347
50.85 Added; interim...............................................27572
    Regulation at 71 FR 27572 confirmed............................50347
Chapter I
82 Added; interim; eff. through 4-14-07............................76150
103 Authority citation revised.....................................13267
103.12 Redesignated from 103.15....................................26219
103.15 Redesignated as 103.12; new 103.15 added....................26219
103.16 (b)(3)(iii) added...........................................26220
103.120 (b) and (c)(1) amended.......................................512
103.175 Revised......................................................512
103.176 Added........................................................514
    (e)(1) revised.................................................16041
103.178 Added........................................................515
    (e)(1) revised.................................................16041
103.181 Removed......................................................515
103.182 Removed......................................................515
103.183 Removed......................................................515
103.188 Added......................................................13267
103.192 Added......................................................39560

                                  2007

31 CFR
                                                                   72 FR
                                                                    Page
Subtitle A
Chapter I
1.36 (c)(1)(viii) and (m)(1)(viii) amended.........................54353
2 Revised..........................................................63104
10.1 Revised.......................................................54544
10.2 Revised.......................................................54544
10.3 (a) and (b) revised; (e), (f) and (g) redesignated as (f), 
        (g) and (h); new (e) and (i) added.........................54545
10.4 Revised.......................................................54545
10.5 (c), (d) and (e) amended......................................54544
    Heading, (a) and (b) revised; (f) added........................54546
10.6 (a)(5), (b), (g)(2)(iii), (iv), (4), (j)(1), (2), (4), 
        (k)(1), (2) and (n) amended................................54544
    Heading, (d) introductory text, (4) through (7), (e), (f)(1), 
(2)(iv)(A), (g)(5), (k)(4), (7) and (l) revised; (a) removed; (c) 
redesignated as new (a); new (c) and (p) added.....................54546
10.7 (c)(2)(iii) and (d) amended...................................54544
    (c)(2)(ii) revised; (g) added..................................54547
10.20 Heading, (b) and (c) amended.................................54544
10.22 (b) revised; (c) added.......................................54547
10.25 Revised......................................................54548
10.27 Revised......................................................54548
10.29 Revised......................................................54549
10.30 (a)(1) revised; (e) added....................................54549
10.34 Revised......................................................54549
10.35 (b)(1) amended...............................................54549
10.50 Revised......................................................54549
10.51 Revised......................................................54550
10.52 Revised......................................................54551
10.53 Revised......................................................54551
10.60 (b) amended..................................................54544
    (a) revised; (d) added.........................................54551
10.61 Revised......................................................54551
10.62 Revised......................................................54551
10.63 (c) amended..................................................54544
    Heading and (a)(4) revised; (d) redesignated as (e); new (d) 
and (f) added......................................................54552
10.64 (a) amended..................................................54544
10.65 Revised......................................................54552
10.66 Amended......................................................54544
10.68 Revised......................................................54552
10.69 (a)(1) and (b) amended.......................................54544
10.70 (a) and (b)(6) revised; (c) added............................54552
10.71 Redesignated as 10.72; new 10.71 added.......................54552
10.72 Redesignated as new 10.73; new 10.72 redesignated from 10.71
                                                                   54552
    (b), (c) and (d) redesignated as (d), (e) and (f); (a) and new 
(d) revised; new (b), (c) and (g) added............................54553
10.73 (a) amended..................................................54544
    Removed; new 10.73 redesignated from 10.72.....................54552
    (c), (d) and (e) redesignated as (d), (e) and (f); (b) and new 
(d) revised; new (c) and (g) added.................................54554
10.76 Revised......................................................54554
10.77 Revised......................................................54555
10.78 Revised......................................................54555
10.79 (a) through (d) amended......................................54544
10.80 Amended......................................................54544

[[Page 585]]

10.81 Amended......................................................54544
10.82 (a), (c) introductory text, (3), (d), (e), (f)(1) and (g) 
        amended....................................................54544
    Heading and (b) revised; (h) added.............................54555
10.90 Revised......................................................54555
10.91 Revised......................................................54555
Chapter I
82 Correctly added.................................................61055
82.2 (a)(2) revised; (c) redesignated as (f); new (c), (d) and (e) 
        added......................................................18883
92 Heading and authority citation revised..........................60776
92.1--92.4 (Subpart A) Heading added...............................60776
92.5--92.6 (Subpart B) Heading added...............................60776
92.11--92.18 (Subpart C) Added.....................................60776
103.22 (b)(2)(i)(A), (E), (G), (H), (2)(ii)(A), (E), (F), (H) and 
        (I) revised; (b)(2)(i)(I), (ii)(J) and (iii) added.........35013
103.176 (b), (c), (f) and (g) added; (d) and (e) revised...........44774
103.193 Added......................................................12739

                                  2008

31 CFR
                                                                   73 FR
                                                                    Page
Subtitle A
1.20 (b) revised; interim..........................................51221
1.36 (g)(1)(viii) table amended; interim............................1819
    (g)(1)(viii) table amended.....................................15671
    (c)(1)(ii), (g)(1)(ii) and (m)(1)(ii) revised; (h)(5) 
introductory text and (j)(5) introductory text amended; interim....51221
30 Added; interim..................................................62208
50 Authority citation revised......................................53363
50.1 (a) revised; interim..........................................53363
50.5 (b)(1)(iv), (g)(1)(vi), (l) and (m) revised; interim..........53363
50.7 (b)(3) and (4) revised; (b)(5) added; interim.................53364
50.11 Revised; interim.............................................53364
50.12 (b) redesignated as (b)(1); (b)(2) and (e)(3) added; interim
                                                                   53364
50.15 Added; interim...............................................53364
50.17 (a)(2) amended; (e) redesignated as (f); new (e) added; 
        interim....................................................53364
50.18 Heading revised; interim.....................................53364
50.20 (c) revised; (d) and (e) added; interim......................53364
50.21 Revised; interim.............................................53364
50.50 (a)(1)(ii), (b)(2) and (d)(5) revised; interim...............53365
50.53 (b)(2)(iv) revised; interim..................................53365
Chapter I
103.22 (d)(5) and (11) removed; (d)(6) through (10) redesignated 
        as new (d)(5) through (9); (d)(1), (2)(iv), (vi) 
        introductory text, (A), (vii)(A), (3), (4) and new (5)(i), 
        (iii), (7)(ii), (8)(i) and (9) introductory text revised; 
        new (d)(5)(viii) and (8)(ii) amended.......................74016
103.170 (b)(1)(i) and (ix) removed; (b)(1)(ii) through (viii), 
        (x), (xi) and (xii) redesignated as (b)(1)(i) through (x) 
                                                                    1976
132 Added..........................................................69405

                                  2009

   (Regulations published from January 1, 2009, through July 1, 2009)

31 CFR
                                                                   74 FR
                                                                    Page
Subtitle A
30 Revised; interim................................................28405
31 Added; interim...................................................3433
50 Regulation at 73 FR 53363 confirmed.............................18138
50.1 Regulation at 73 FR 53363 confirmed...........................18138
50.5 Regulation at 73 FR 53363 confirmed...........................18138
50.7 Regulation at 73 FR 53364 confirmed...........................18138
50.11 Regulation at 73 FR 53364 confirmed..........................18138
50.12 Regulation at 73 FR 53364 confirmed..........................18138
50.15 Regulation at 73 FR 53364 confirmed..........................18138
50.17 Regulation at 73 FR 53364 confirmed..........................18138
50.18 Regulation at 73 FR 53364 confirmed..........................18138
50.20 Regulation at 73 FR 53364 confirmed..........................18138
50.21 Regulation at 73 FR 53364 confirmed..........................18138
50.50 Regulation at 73 FR 53365 confirmed..........................18138

[[Page 586]]

50.53 Regulation at 73 FR 53365 confirmed..........................18138


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