[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: 94-25491]


[[Page Unknown]]

[Federal Register: October 17, 1994]


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DEPARTMENT OF THE TREASURY

31 CFR Part 103

 

Withdrawal of Proposed Amendment to the Bank Secrecy Act 
Regulations for Mandatory Aggregation of Currency Transactions for 
Certain Financial Institutions and Mandatory Magnetic Media Reporting 
of Currency Transaction Reports

AGENCY: Departmental Offices, Treasury.

ACTION: Withdrawal of Regulatory Proposal.

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SUMMARY: On September 6, 1990, Treasury published a Notice of Proposed 
Rulemaking (NPRM) proposing requirements for banks with deposits over 
$100 million, and certain nonbank financial institutions, regardless of 
asset size, to maintain specific systems to aggregate currency 
transactions and proposing requirements for financial institutions that 
file more than 1,000 Currency Transaction Reports per year to file by 
magnetic media. After analysis of the comments received in response to 
this NPRM and further study and review, Treasury has decided to 
withdraw it.

DATES: The proposal is withdrawn on October 17, 1994.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: PA. Carlos Correa, Chief, Rules and 
Regulations, Office of Financial Enforcement, (202) 622-0400.

SUPPLEMENTARY INFORMATION: On September 6, 1990 (55 FR 36663), Treasury 
published a Notice of Proposed Rulemaking (NPRM) with two separate 
proposals. The first would have required: (1) banks with deposits in 
excess of $100 million to maintain systems to aggregate currency 
transactions that are conducted by or on behalf of accountholders at 
the bank and that affect an account during a business day; and (2) 
currency dealers and exchangers, check cashers, and transmitters of 
funds to maintain systems and procedures to aggregate currency 
transactions that are conducted by or on behalf of customers at the 
financial institution during a business day. The second proposal would 
have required financial institutions that file more than 1,000 Currency 
Transaction Reports (CTRs) a year, to file by magnetic media. Treasury 
sought comments on each proposal.
    Following publication of the NPRM, numerous financial institutions 
implemented aggregation and magnetic media filing systems. Some 
implemented these systems in anticipation of a Final Rule. Others 
adopted aggregation systems because those systems save costs and 
enhance financial institutions' ability to monitor currency activity 
for BSA compliance, as well as for other management and marketing 
purposes.
    In 1990, multiple transaction CTRs accounted for only 51% of the 
total number of CTRs filed, while in 1993, multiple transaction CTRs 
comprised 70% of all CTRs received by Treasury. Treasury believes the 
increased reporting of multiple transactions reflects an increased 
awareness in the financial services industry of the importance of BSA 
compliance and the availability of automated systems to assist in this 
endeavor. Because these systems also meet other important needs of 
financial institutions, it is not expected that financial institutions 
will discontinue using their aggregation systems upon withdrawal of the 
NPRM.
    The number of banks filing CTRs magnetically has increased 
dramatically. (In 1989, only 50 banks magnetically filed CTRs. By mid-
1994, the number of banks filing magnetically has increased to 532.) 
Because magnetic filing reduces financial institutions' CTR processing 
and storage costs, it is unlikely that banks will return to paper 
processing when the proposed NPRM is withdrawn.
    Treasury is currently considering ways to reduce the regulatory 
burden of complying with the BSA while enhancing the utility of 
information it receives from financial institutions. After careful 
consideration of comments describing the potential costs that would be 
incurred by financial institutions not yet using automated systems to 
aggregate currency transactions, as well as Treasury's intention to 
implement additional regulatory changes, Treasury has decided to 
withdraw the NPRM.
    In reaching this decision, Treasury analyzed comments received in 
response to the NPRM and consulted with the Bank Secrecy Act Advisory 
Group. The Group, a committee which comprises 30 representatives from 
the financial services industry, trades and businesses and state and 
federal government, expressed the view that financial institution 
resources would be better devoted to programs specifically geared 
toward the detection and reporting of suspicious transactions, and the 
implementation of mandatory ``know your customer'' programs. Treasury 
agrees with this reasoning and is considering regulatory changes 
including reporting of suspicious transactions, mandatory ``know your 
customer'' programs, and federal licensing and state registration of 
nonbank financial institutions.

    Dated: September 20, 1994.
Stanley E. Morris,
Director, Financial Crimes Enforcement Network.
[FR Doc. 94-25491 Filed 10-14-94; 8:45 am]
BILLING CODE 4810-25-P