[Federal Register Volume 59, Number 199 (Monday, October 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25490]


[[Page Unknown]]

[Federal Register: October 17, 1994]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

31 CFR Part 103

 

Amendments to the Bank Secrecy Act Regulations Relating to 
Identification Required To Purchase Bank Checks and Drafts, Cashier's 
Checks, Money Orders, and Traveler's Checks

AGENCY: Departmental Offices, Treasury.

ACTION: Final Rule.

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

SUMMARY: The Bank Secrecy Act prohibits financial institutions from 
issuing or selling bank checks or drafts, cashier's checks, money 
orders or traveler's checks for $3,000 or more in currency unless the 
financial institution verifies and records the identity of the 
purchaser. On May 15, 1990, Treasury published in the Federal Register, 
a Final Rule requiring financial institutions to verify and record such 
identifying information, to record certain information regarding the 
instruments purchased, such as the amount of the instruments, and to 
maintain a centralized chronological log of the sales. Today's Final 
Rule rescinds the requirement to maintain a chronological log and 
reduces substantially the amount of information required to be 
recorded.


EFFECTIVE DATE: This Final Rule is effective on October 17, 1994.

ADDRESSES: Peter G. Djinis, Director, Office of Financial Enforcement, 
Financial Crimes Enforcement Network (FinCEN), Department of the 
Treasury, Room 3210 Annex, 1500 Pennsylvania Avenue, NW., Washington DC 
20220.

FOR FURTHER INFORMATION CONTACT: A. Carlos Correa, Chief, Regulations 
and Rulings, Office of Financial Enforcement, (202) 622-0400.

SUPPLEMENTARY INFORMATION: The Bank Secrecy Act (codified at 12 U.S.C. 
1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5328) requires the 
Secretary of the Treasury to prescribe regulations requiring financial 
institutions to verify and record the identity of purchasers of bank 
checks, cashier's checks, traveler's checks and money orders for 
currency in amounts of $3,000 or more. 31 U.S.C. 5325. The purpose of 
Section 5325 is to deter and detect persons seeking to evade Bank 
Secrecy Act reporting requirements through purchases in currency of 
multiple monetary instruments in amounts under $10,000. On May 15, 
1990, Treasury published in the Federal Register, 55 FR 20139-20144, a 
Final Rule implementing these new recordkeeping requirements by 
amending the Bank Secrecy Act regulations at 31 CFR 103.29 (Section 
103.29).
    Section 103.29, which was effective August 13, 1990, established 
recordkeeping requirements for purchases of bank checks and drafts, 
cashier's checks, money orders and traveler's checks with currency in 
amounts of $3,000 to $10,000, inclusive. This section required that the 
recorded data be kept on a centralized chronological log(s) and 
maintained for five years. The specific data to be recorded depended 
upon whether the purchaser had a deposit account at the institution 
issuing or selling the monetary instrument(s).
    For a deposit accountholder, a financial institution was required 
to obtain and record: the purchaser's name and account number; the date 
of purchase; the branch where the purchase occurred; the types(s) and 
serial number(s) of each of the instrument(s) purchased; and the dollar 
amount(s) of each of the instrument(s) purchased in currency. Further, 
the financial institution was required to verify that the individual 
purchaser was a deposit accountholder, or to verify the individual's 
identity. If the individual's identity had not been verified previously 
and recorded, the financial institution was required to do so by 
examination of a document containing the name and address of the 
purchaser. Such information was required to be recorded on a 
centralized chronological log kept at the financial institution.
    If a purchaser did not have a deposit account, Section 103.29 
required financial institutions to obtain and log the purchaser's name, 
date of birth, address, and social security or alien identification 
number. If the individual was purchasing the instrument(s) on behalf of 
another person, the name and account number of that person or, if there 
were no account number, the name, address and social security number, 
as well as the taxpayer identification number, or alien identification 
number, of such person also had to be recorded. Further, the financial 
institution was required to log: the date of purchase; the branch where 
the purchase occurred; the type(s), serial number(s), and dollar 
amount(s) of each of the instrument(s) purchased; the payee(s) on each 
purchased cashier's check(s), bank check(s) and draft(s); and the 
amount of the purchase in currency. Finally, the financial institution 
had to verify the purchaser's name and address by examination of a 
document containing that information. The specific identifying 
information was required to be recorded on the log (e.g., state of 
issuance and number of driver's license).
    Financial institutions were required by Section 103.29 to treat 
contemporaneous purchases of the same or different types of instruments 
totaling $3,000 or more as one purchase. Multiple purchases during one 
business day totaling $3,000 or more had to be treated as one purchase 
if the financial institution had knowledge that these purchases had 
occurred. Multiple sales had to be noted as such on the log(s).
    Finally, the financial institution was required to maintain 
chronological log(s) in a centralized location, retain them for at 
least five years, and make them available to the Secretary upon 
request.

Reviewing Section 103.29 Requirements

    Treasury established a Money Laundering Task Force (Task Force) to 
consider ways to reduce the regulatory burden of complying with the BSA 
while enhancing the utility of information received from financial 
institutions. The Task Force considered the costs to financial 
institutions of obtaining and recording specific financial data 
concerning cash purchases of monetary instruments and the value of this 
information to law enforcement.
    Based upon the Task Force's review, Treasury determined that, while 
Section 103.29 remains a useful deterrent, its required records, 
informally referred to as $3,000 logs, had been requested and used 
infrequently by law enforcement. Because Section 103.29 does not 
specify the format in which the $3,000 logs should be maintained, law 
enforcement use of the logs is labor intensive. Log information must be 
retrieved manually and computerized. This is a cumbersome process 
which, when weighed against other immediate leads in the hands of law 
enforcement, such as suspicious transaction reports, criminal referrals 
and informants, may have discouraged requests for the $3,000 logs.
    Treasury has evaluated the cost of compliance with the $3,000 log 
requirement to financial institutions against its benefits to the law 
enforcement community. Treasury believes that Section 103.29 imposes an 
expensive and time-consuming burden on financial institutions and that 
its recordkeeping requirements can be reduced substantially without 
compromising its deterrent effect or utility to law enforcement.
    In reaching this determination, Treasury consulted with the Bank 
Secrecy Act Advisory Group (Advisory Group), a committee comprising 30 
representatives from the financial services industry, trades and 
businesses, and state and federal government. The Advisory Group stated 
that the financial institution's resources could be more effectively 
devoted to the detection and reporting of suspicious transactions and 
implementation of ``know your customer'' programs and procedures. 
Treasury expects to issue a Notice of Proposed Rulemaking outlining the 
elements of anti-money laundering programs, including ``know your 
customer'' policies and procedures incorporating, among other things, 
verification of identity when establishing a customer relationship, and 
suspicious transaction reporting. In light of these initiatives, 
Treasury has determined that Section 103.29 should be modified to 
lessen the amount of information that must be obtained and recorded and 
to permit retention of this information in records kept in the ordinary 
course of business, in a manner consistent with the record systems that 
may already exist in financial institutions.

Recordkeeping Required

    Today's rule requires deposit accountholders' financial 
institutions when issuing or selling a bank check or draft, cashier's 
check, money order or traveler's check for $3,000 or more in currency 
to obtain and maintain records of: the name of the purchaser; the date 
of purchase; and, the type(s), serial number, and the amount in dollars 
of each of the instrument(s) purchased. The financial institution must 
verify that the purchaser is a deposit accountholder and has been 
identified previously, or verify his or her identity and record the 
method of verification.
    The new rule requires a financial institution issuing or selling 
the same monetary instruments to a person that does not have a deposit 
account to obtain and maintain records of: the name, address, social 
security or alien identification number and date of birth of the 
purchaser; the date of purchase; and, the type(s), serial number and 
the amount in dollars of each of the instrument(s) purchased. The 
financial institution must verify the purchaser's identity and record 
the method of verification and specific identifying information (e.g. 
state of issuance and number of driver's license).
    Financial institutions must continue to treat contemporaneous 
purchases by an individual as one purchase. Multiple purchases by an 
individual must also still be treated as one purchase if they are known 
to the financial institution. Information to be maintained may be 
recorded on copies of, or other records relating to, the instruments 
purchased. All records must still be maintained for five years and made 
available to the Secretary upon request at any time. As with all 
records required to be maintained under the BSA, the records must be 
filed or stored in a way as to be accessible within a reasonable period 
of time. Section 103.38.
    Much of the information, required formerly to be kept in 
centralized chronological logs, is available generally in account or 
other records, or on the originals or copies of the monetary 
instruments. These copies, along with other records kept in the 
ordinary course of business, may satisfy the requirements of this Final 
Rule and may be kept in any format. These records must be accessible 
within a reasonable period of time, taking into consideration the 
nature of the record, and the amount of time expired since the record 
was made.

Recordkeeping Requirements Eliminated

    To relieve the burden imposed on financial institutions by Section 
103.29, today's Final Rule reduces substantially the amount of 
information required to be maintained and eliminates the requirement 
for a centralized chronological log. Because Treasury is reducing 
requirements already imposed by Section 103.29 of the BSA regulations, 
and not adding any new requirements, this rule is published as a Final 
Rule, effective upon publication in the Federal Register. For the sake 
of clarity and for ease of understanding, amended Section 103.29 is 
published in its entirety.

Information Eliminated

    Treasury rescinds the requirement for centralized chronological 
log(s) for sales of monetary instruments. Instead, financial 
institutions will be required to obtain and maintain records of certain 
information and may keep them in any format.
    In the case of deposit accountholders, Treasury eliminates the 
requirement to log the purchaser's account number, the branch where the 
purchase occurred, and the requirement to note on the log whether the 
transaction is part of a multiple sale.
    In the case of persons who do not hold deposit accounts with the 
financial institution, Treasury eliminates the requirement to obtain 
and record information regarding the person(s) ``on whose behalf'' the 
instrument is being purchased, the branch where the purchase occurred, 
payee(s) on each cashier's check and bank checks and drafts purchased, 
and the amount of the purchase in currency. The requirement to note 
whether the transaction is part of a multiple sale is also eliminated. 
Although Treasury rescinds the requirement to record whether a given 
transaction is part of a multiple sale, Treasury retains the 
requirement that a financial institution treat as a single purchase, 
multiple sales to an individual of which the institution has knowledge.

Conclusion

    Treasury is rescinding those provisions of Section 103.29 as 
described above and clarifying revised recordkeeping requirements.

Executive Order 12866

    This Final Rule is not a ``significant'' rule for purposes of 
Executive Order 12866. Consistent with that Order, it reduces 
regulatory burden. It rescinds a requirement that financial 
institutions maintain centralized chronological log(s) of the issuance 
or sale for cash of certain monetary instruments, and substantially 
reduces data required to be recorded regarding such issuances or sales. 
Therefore, it is not anticipated to have an annual effect on the 
economy of $100 million or more. Rather, it will reduce the costs of 
doing business for financial institutions. It will not affect adversely 
in a material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or state, 
local, or tribal governments or communities. It is not inconsistent 
with, nor does it interfere with actions taken or planned by other 
agencies. Finally, it raises no novel legal or policy issues. A cost 
and benefit analysis, therefore, is not required.

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
provisions of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., do 
not apply.

Paperwork Reduction Act

    The collection of information requirements contained in this Final 
Rule has been reviewed and approved previously by the Office of 
Management and Budget for review in accordance with the Paperwork 
Reduction Act of 1980 (under control number 1505-0063).

Drafting Information

    The principal author of this document is the Office of Financial 
Enforcement.

List of Subjects in 31 CFR Part 103

    Authority delegations (Government agencies), Banks and banking, 
Currency, Foreign banking, Investigations, Law enforcement, Reporting 
and recordkeeping requirements, Taxes.

Amendment

    For the reasons set forth in the preamble, 31 CFR Part 103 is 
amended as set forth below:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND 
FOREIGN TRANSACTIONS

    1. The authority citation for Part 103 is revised to read as 
follows:

    Authority: Pub. L. 91-508, Title I, 84 Stat. 1114 (12 U.S.C. 
1829b and 1951-1959); 31 U.S.C. 5311-5328.

    2. Section 103.29 is revised to read as follows:


Sec. 103.29  Purchases of bank checks and drafts, cashier's checks, 
money orders and traveler's checks.

    (a) No financial institution may issue or sell a bank check or 
draft, cashier's check, money order or traveler's check for $3,000 or 
more in currency unless it maintains records of the following 
information, which must be obtained for each issuance or sale of one or 
more of these instruments to any individual purchaser which involves 
currency in amounts of $3,000-$10,000 inclusive:
    (1) If the purchaser has a deposit account with the financial 
institution:
    (i)(A) The name of the purchaser;
    (B) The date of purchase;
    (C) The type(s) of instrument(s) purchased;
    (D) The serial number(s) of each of the instrument(s) purchased; 
and
    (E) The amount in dollars of each of the instrument(s) purchased.
    (ii) In addition, the financial institution must verify that the 
individual is a deposit accountholder or must verify the individual's 
identity. Verification may be either through a signature card or other 
file or record at the financial institution provided the deposit 
accountholder's name and address were verified previously and that 
information was recorded on the signature card or other file or record; 
or by examination of a document which is normally acceptable within the 
banking community as a means of identification when cashing checks for 
nondepositors and which contains the name and address of the purchaser. 
If the deposit accountholder's identity has not been verified 
previously, the financial institution shall verify the deposit 
accountholder's identity by examination of a document which is normally 
acceptable within the banking community as a means of identification 
when cashing checks for nondepositors and which contains the name and 
address of the purchaser, and shall record the specific identifying 
information (e.g., State of issuance and number of driver's license).
    (2) If the purchaser does not have a deposit account with the 
financial institution:
    (i)(A) The name and address of the purchaser;
    (B) The social security number of the purchaser, or if the 
purchaser is an alien and does not have a social security number, the 
alien identification number;
    (C) The date of birth of the purchaser;
    (D) The date of purchase;
    (E) The type(s) of instrument(s) purchased;
    (F) The serial number(s) of the instrument(s) purchased; and
    (G) The amount in dollars of each of the instrument(s) purchased.
    (ii) In addition, the financial institution shall verify the 
purchaser's name and address by examination of a document which is 
normally acceptable within the banking community as a means of 
identification when cashing checks for nondepositors and which contains 
the name and address of the purchaser, and shall record the specific 
identifying information (e.g., State of issuance and number of driver's 
license).
    (b) Contemporaneous purchases of the same or different types of 
instruments totaling $3,000 or more shall be treated as one purchase. 
Multiple purchases during one business day totaling $3,000 or more 
shall be treated as one purchase if an individual employee, director, 
officer, or partner of the financial institution has knowledge that 
these purchases have occurred.
    (c) Records required to be kept shall be retained by the financial 
institution for a period of five years and shall be made available to 
the Secretary upon request at any time.

    Dated: September 20, 1994.
Stanley E. Morris,
Director, Financial Crimes Enforcement Network.
[FR Doc. 94-25490 Filed 10-14-94; 8:45 am]
BILLING CODE 4810-25-P